1. Heirs of Leonilo P. Nuñez, Sr. v. Heirs of Gabino T. Villanoza, G.R. No.

218666,
April 26, 2017, 825 SCRA 264

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 Certiorari1 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
1
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

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

2
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.

The dispositive portion of Regional Director Nieto's reconsidered Order40 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

3
 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;

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
4
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 retain58 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 denied64 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 Reform 67 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

5
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 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

Comment84 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.

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,
6
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 tenants103 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 area acquisitions into 16 hectares for private individuals and 1,024
hectares for corporations.109 The 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

7
To address the farmers' unrest, the government began initiating various land reform
programs, roughly divided into three (3) stages.

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.

8
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 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

9
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

10
 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
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.

11
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.
12
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

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
13
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 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).
14
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

Neither was any right of retention exercised within 60 days from the notice of Comprehensive
Agrarian Reform Program coverage. The Court of Appeals properly considered this as a
waiver of the right of retention,191 pursuant to Section 6.1 of Administrative Order No. 02-03.

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 retention.

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 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.

15
WHEREFORE, the Petition is DENIED. The Court of Appeals' Decision dated September 26,
2014 and Resolution dated June 4, 2015 in CA-G.R. SP No. 130544, which affirmed the
Office of the President's Decision dated August 11, 2011 and reinstated the Department of
Agrarian Reform Regional Director's Order dated February 23, 2005, are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ., concur.

16
2. Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 78742 July 14, 1989

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

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

G.R. No. 79310 July 14, 1989

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

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

G.R. No. 79744 July 14, 1989

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

G.R. No. 79777 July 14, 1989

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

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

CRUZ, J.:

17
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for
his life on his way to Mycenae after performing his eleventh labor. The two wrestled mightily
and Hercules flung his adversary to the ground thinking him dead, but Antaeus rose even
stronger to resume their struggle. This happened several times to Hercules' increasing
amazement. Finally, as they continued grappling, it dawned on Hercules that Antaeus was
the son of Gaea and could never die as long as any part of his body was touching his Mother
Earth. Thus forewarned, Hercules then held Antaeus up in the air, beyond the reach of the
sustaining soil, and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.

The cases before us are not as fanciful as the foregoing tale. But they also tell of the
elemental forces of life and death, of men and women who, like Antaeus need the sustaining
strength of the precious earth to stay alive.

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

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

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

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

Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had
already been enacted by the Congress of the Philippines on August 8, 1963, in line with the
above-stated principles. This was substantially superseded almost a decade later by P.D.
No. 27, which was promulgated on October 21, 1972, along with martial law, to provide for
the compulsory acquisition of private lands for distribution among tenant-farmers and to
specify maximum retention limits for landowners.
18
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.
19
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the
owners of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so
violated due process. Worse, the measure would not solve the agrarian problem because
even the small farmers are deprived of their lands and the retention rights guaranteed by the
Constitution.

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

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

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

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

G.R. No. 79310

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

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

20
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
21
is unjustly required to immediately pay the corresponding taxes on the land, in violation of the
uniformity rule.

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

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

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

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

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

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

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

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

G.R. No. 79744

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

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

22
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

23
cultivate the same. Their respective lands do not exceed the statutory limit but are occupied
by tenants who are actually cultivating such lands.

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

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall

be ejected or removed from his farmholding until such time as the respective
rights of the tenant- farmers and the landowner shall have been determined in
accordance with the rules and regulations implementing P.D. No. 27.

The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the
implementing rules required under the above-quoted decree. They therefore ask the Court
for a writ of mandamus to compel the respondent to issue the said rules.

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

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

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

Although holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to annul
the acts of either the legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the doctrine of judicial
supremacy. Even so, this power is not lightly assumed or readily exercised. The doctrine of
24
separation of powers imposes upon the courts a proper restraint, born of the nature of their
functions and of their respect for the other departments, in striking down the acts of the
legislative and the executive as unconstitutional. The policy, indeed, is a blend of courtesy
and caution. To doubt is to sustain. The theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.

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

With particular regard to the requirement of proper party as applied in the cases before us,
we hold that the same is satisfied by the petitioners and intervenors because each of them
has sustained or is in danger of sustaining an immediate injury as a result of the acts or
measures complained of. 13 And even if, strictly speaking, they are not covered by the
definition, it is still within the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the serious constitutional questions
raised.

In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders issued by President Quirino
although they were invoking only an indirect and general interest shared in common with the
public. The Court dismissed the objection that they were not proper parties and ruled that
"the transcendental importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must, technicalities of procedure." We have
since then applied this exception in many other cases. 15

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

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

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

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

... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the solemn and sacred
25
 obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual
controversy the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the Constitution. 16

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

II

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

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

The said measures were issued by President Aquino before July 27, 1987, when the
Congress of the Philippines was formally convened and took over legislative power from her.
They are not "midnight" enactments intended to pre-empt the legislature because E.O. No.
228 was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No.
229, were both issued on July 22, 1987. Neither is it correct to say that these measures
ceased to be valid when she lost her legislative power for, like any statute, they continue to
be in force unless modified or repealed by subsequent law or declared invalid by the courts.
A statute does not ipso facto become inoperative simply because of the dissolution of the
legislature that enacted it. By the same token, President Aquino's loss of legislative power
did not have the effect of invalidating all the measures enacted by her when and as long as
she possessed it.

Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they shall
be suppletory to R.A. No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some
portions of the said measures, like the creation of the P50 billion fund in Section 2 of Proc.
No. 131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in
the CARP Law. 18

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

It should follow that the specific constitutional provisions invoked, to wit, Section 24 and
Section 25(4) of Article VI, are not applicable. With particular reference to Section 24, this
obviously could not have been complied with for the simple reason that the House of
Representatives, which now has the exclusive power to initiate appropriation measures, had
not yet been convened when the proclamation was issued. The legislative power was then
26
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.

27
 Whenever a duty is imposed upon a public official and an unnecessary and
unreasonable delay in the exercise of such duty occurs, if it is a clear duty
imposed by law, the courts will intervene by the extraordinary legal remedy of
mandamus to compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the courts
by mandamus will require action only. For example, if an inferior court, public
official, or board should, for an unreasonable length of time, fail to decide a
particular question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a decision, and in
the second to require that jurisdiction be taken of the cause. 22

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

III

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

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

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

28
 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:
29
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
30
argument that not only landowners but also owners of other properties must be made to
share the burden of implementing land reform must be rejected. There is a substantial
distinction between these two classes of owners that is clearly visible except to those who
will not see. There is no need to elaborate on this matter. In any event, the Congress is
allowed a wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion is abused to
the detriment of the Bill of Rights.

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

One of the basic principles of the democratic system is that where the rights of the individual
are concerned, the end does not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to pursue it be in keeping with the
Constitution. Mere expediency will not excuse constitutional shortcuts. There is no question
that not even the strongest moral conviction or the most urgent public need, subject only to a
few notable exceptions, will excuse the bypassing of an individual's rights. It is no
exaggeration to say that a, person invoking a right guaranteed under Article III of the
Constitution is a majority of one even as against the rest of the nation who would deny him
that right.

That right covers the person's life, his liberty and his property under Section 1 of Article III of
the Constitution. With regard to his property, the owner enjoys the added protection of
Section 9, which reaffirms the familiar rule that private property shall not be taken for public
use without just compensation.

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly

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

But for all its primacy and urgency, the power of expropriation is by no means absolute (as
indeed no power is absolute). The limitation is found in the constitutional injunction that
"private property shall not be taken for public use without just compensation" and in the
31
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.
32
6657 are only an elaboration of the constitutional injunction that the State adopt the
necessary measures "to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or collectively the lands they till."
That public use, as pronounced by the fundamental law itself, must be binding on us.

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

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

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

As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the

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

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

Upon receipt by the landowner of the corresponding payment or, in case of

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

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

... the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other
interested parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from the receipt of the notice. After the expiration of the
33
 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.
34
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although
the proceedings are described as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real value of the property. But
more importantly, the determination of the just compensation by the DAR is not by any
means final and conclusive upon the landowner or any other interested party, for Section
16(f) clearly provides:

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

The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the
said determination in the exercise of what is admittedly a judicial function.

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

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

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

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

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

(a) For lands above fifty (50) hectares, insofar as

the excess hectarage is concerned — Twenty-five
percent (25%) cash, the balance to be paid in
government financial instruments negotiable at any
time.

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

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

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

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

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

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

(3) Tax credits which can be used against any tax liability;
35
(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
36
 (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.)

37
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
38
On the other hand, there is nothing in the records either that militates against the
assumptions we are making of the general sentiments and intention of the members on the
content and manner of the payment to be made to the landowner in the light of the
magnitude of the expenditure and the limitations of the expropriator.

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

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

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

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

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

39
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,
40
1972 (pending transfer of ownership after full payment of just compensation), shall be
considered as advance payment for the land."

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

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

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

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

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

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

By the decision we reach today, all major legal obstacles to the comprehensive agrarian
reform program are removed, to clear the way for the true freedom of the farmer. We may
now glimpse the day he will be released not only from want but also from the exploitation and
disdain of the past and from his own feelings of inadequacy and helplessness. At last his
41
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.

42
43
44
 3. Roxas & Co., Inc. v. CA, G.R. No. 127876, December 17, 1999, 321 SCRA 106

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
45
and Banilad were later placed under compulsory acquisition by respondent DAR in
accordance with the CARL.

Hacienda Palico

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

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

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

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

Roxas y Cia, Limited

Soriano Bldg., Plaza Cervantes

Manila, Metro Manila. 10

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject
to immediate acquisition and distribution by the government under the CARL; that based on
the DAR's valuation criteria, the government was offering compensation of P3.4 million for
333.0800 hectares; that whether this offer was to be accepted or rejected, petitioner was to
inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of
petitioner's rejection or failure to reply within thirty days, respondent DAR shall conduct
summary administrative proceedings with notice to petitioner to determine just compensation
for the land; that if petitioner accepts respondent DAR's offer, or upon deposit of the
compensation with an accessible bank if it rejects the same, the DAR shall take immediate
possession of the land. 11
46
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
47
property, 234.6498 hectares under Tax Declaration No. 0390 be subject to compulsory
acquisition and distribution by CLOA. 23 The following day, September 22, 1989, a second
Summary Investigation was submitted by the same officers. They recommended that
737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be likewise placed under
compulsory acquisition for distribution. 24

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

Roxas y Cia. Limited

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

Makati, Metro Manila. 25

Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190

hectares and P4,428,496.00 for 234.6498 hectares. 26

On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation
Manager a "Request to Open Trust Account" in petitioner's name as compensation for
234.6493 hectares of Hacienda Banilad. 27 A second "Request to Open Trust Account" was
sent on November 18, 1991 over 723.4130 hectares of said Hacienda. 28

On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and
P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for
petitioner's land in Hacienda Banilad. 29

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

Hacienda Caylaway

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

Roxas & Company, Inc.

7th Flr. Cacho-Gonzales Bldg.

Aguirre, Legaspi Village

Makati, M. M 31

On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the
LBP Regional Manager requesting for the valuation of the land under TCT Nos. T-44664 and
48
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.

49
In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the
prejudicial question of whether the property was subject to agrarian reform, hence, this
question should be submitted to the Office of the Secretary of Agrarian Reform for
determination. 38

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

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

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

Hence, this recourse. Petitioner assigns the following errors:

A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING

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

B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING

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

C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT

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

D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT

FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND
ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST
50
 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.
51
 II. The Validity of the Acquisition Proceedings Over the Haciendas.

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

A. Modes of Acquisition of Land under R. A. 6657

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

Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of

acquisition of private lands, the following procedures shall be followed:

a). After having identified the land, the landowners and the

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

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

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

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

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

e) Upon receipt by the landowner of the corresponding payment,

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

52
 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:
53
 a) CARP CA Form 1 — MARO Investigation Report

b) CARP CA Form 2 — Summary Investigation

Report of Findings and Evaluation

c) CARP CA Form 3 — Applicant's Information

Sheet

d) CARP CA Form 4 — Beneficiaries Undertaking

e) CARP CA Form 5 — Transmittal Report to the

PARO

The MARO/BARC shall certify that all information contained in the

above-mentioned forms have been examined and verified by him
and that the same are true and correct.

3. Send a Notice of Coverage and a letter of invitation to a

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

4. Submit all completed case folders to the Provincial Agrarian

Reform Officer (PARO).

B. The PARO shall:

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

his MAROs.

2. Immediately upon receipt of a case folder, compute the

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

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

4. Upon determination of the valuation, forward the case folder,

together with the duly accomplished valuation forms and his
54
 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

55
or agreements of the parties. At the meeting, the landowner is asked to indicate his retention
area.

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

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

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

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

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

B. MARO

1. Receives the duly accomplished CARP Form

Nos. 1 & 1.1 including supporting documents.

56
 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.
57
 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/recommenda
tions 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
58
public hearing, the parties shall discuss the results of the field investigation, issues that may
be raised in relation thereto, inputs to the valuation of the subject landholding, and other
comments and recommendations by all parties concerned. The Minutes of the
conference/public hearing shall form part of the VOCF or CACF which files shall be
forwarded by the MARO to the PARO. The PARO reviews, evaluates and validates the Field
Investigation Report and other documents in the VOCF/CACF. He then forwards the records
to the RARO for another review.

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

IV. OPERATING PROCEDURES:

Steps Responsible Activity Forms/

Agency/Unit Document

(requirements)

A. Identification and

Documentation

x x x           x x x          x x x

5 DARMO Issue Notice of Coverage CARP

to LO by personal delivery Form No. 2

with proof of service, or

registered mail with return

card, informing him that his

property is now under CARP

coverage and for LO to select

his retention area, if he desires

to avail of his right of retention;

and at the same time invites him

to join the field investigation to

be conducted on his property

which should be scheduled at

least two weeks in advance of

59
said notice.

A copy of said Notice shall CARP

be posted for at least one Form No. 17

week on the bulletin board of

the municipal and barangay

halls where the property is

located. LGU office concerned

notifies DAR about compliance

with posting requirements thru

return indorsement on CARP

Form No. 17.

6 DARMO Send notice to the LBP, CARP

BARC, DENR representatives Form No. 3

and prospective ARBs of the schedule of the field investigation

to be conducted on the subject

property.

7 DARMO With the participation of CARP

BARC the LO, representatives of Form No. 4

LBP the LBP, BARC, DENR Land Use

DENR and prospective ARBs, Map

Local Office conducts the investigation on

subject property to identify

the landholding, determines

its suitability and productivity;

and jointly prepares the Field

Investigation Report (FIR)

60
and Land Use Map. However,

the field investigation shall

proceed even if the LO, the

representatives of the DENR and

prospective ARBs are not available

provided, they were given due

notice of the time and date of

investigation to be conducted.

Similarly, if the LBP representative

is not available or could not come

on the scheduled date, the field

investigation shall also be conducted,

after which the duly accomplished

Part I of CARP Form No. 4 shall

be forwarded to the LBP

representative for validation. If he agrees

to the ocular inspection report of DAR,

he signs the FIR (Part I) and

accomplishes Part II thereof.

In the event that there is a

difference or variance between

the findings of the DAR and the

LBP as to the propriety of

covering the land under CARP,

whether in whole or in part, on

the issue of suitability to agriculture,

61
degree of development or slope,

and on issues affecting idle lands,

the conflict shall be resolved by

a composite team of DAR, LBP,

DENR and DA which shall jointly

conduct further investigation

thereon. The team shall submit its

report of findings which shall be

binding to both DAR and LBP,

pursuant to Joint Memorandum

Circular of the DAR, LBP, DENR

and DA dated 27 January 1992.

8 DARMO Screen prospective ARBs

BARC and causes the signing of CARP

the Application of Purchase Form No. 5

and Farmer's Undertaking

(APFU).

9 DARMO Furnishes a copy of the CARP

duly accomplished FIR to Form No. 4

the landowner by personal

delivery with proof of

service or registered mail

will return card and posts

a copy thereof for at least

one week on the bulletin

board of the municipal

62
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.

63
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the
number of government agencies involved in the identification and delineation of the land
subject to acquisition. 56 This time, the Notice of Coverage is sent to the landowner before
the conduct of the field investigation and the sending must comply with specific
requirements. Representatives of the DAR Municipal Office (DARMO) must send the Notice
of Coverage to the landowner by "personal delivery with proof of service, or by registered
mail with return card," informing him that his property is under CARP coverage and that if he
desires to avail of his right of retention, he may choose which area he shall retain. The Notice
of Coverage shall also invite the landowner to attend the field investigation to be scheduled
at least two weeks from notice. The field investigation is for the purpose of identifying the
landholding and determining its suitability for agriculture and its productivity. A copy of the
Notice of Coverage shall be posted for at least one week on the bulletin board of the
municipal and barangay halls where the property is located. The date of the field
investigation shall also be sent by the DAR Municipal Office to representatives of the LBP,
BARC, DENR and prospective farmer beneficiaries. The field investigation shall be
conducted on the date set with the participation of the landowner and the various
representatives. If the landowner and other representatives are absent, the field investigation
shall proceed, provided they were duly notified thereof. Should there be a variance between
the findings of the DAR and the LBP as to whether the land be placed under agrarian reform,
the land's suitability to agriculture, the degree or development of the slope, etc., the conflict
shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly
conduct further investigation. The team's findings shall be binding on both DAR and LBP.
After the field investigation, the DAR Municipal Office shall prepare the Field Investigation
Report and Land Use Map, a copy of which shall be furnished the landowner "by personal
delivery with proof of service or registered mail with return card." Another copy of the Report
and Map shall likewise be posted for at least one week in the municipal or barangay halls
where the property is located.

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

B. The Compulsory Acquisition of Haciendas Palico and Banilad

In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a
letter of invitation entitled "Invitation to Parties" dated September 29, 1989 to petitioner
corporation, through Jaime Pimentel, the administrator of Hacienda Palico. 57 The invitation
was received on the same day it was sent as indicated by a signature and the date received
at the bottom left corner of said invitation. With regard to Hacienda Banilad, respondent DAR
claims that Jaime Pimentel, administrator also of Hacienda Banilad, was notified and sent an
invitation to the conference. Pimentel actually attended the conference on September 21,
1989 and signed the Minutes of the meeting on behalf of petitioner corporation. 58 The
Minutes was also signed by the representatives of the BARC, the LBP and farmer

64
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
65
duties is so integrated with the corporation that he would immediately realize his
responsibilities and know what he should do with any legal papers served on him. At the time
the notices were sent and the preliminary conference conducted, petitioner's principal place
of business was listed in respondent DAR's records as "Soriano Bldg., Plaza Cervantes,
Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro
Manila." 67 Pimentel did not hold office at the principal place of business of petitioner. Neither
did he exercise his functions in Plaza Cervantes, Manila nor in Cacho-Gonzales Bldg.,
Makati, Metro Manila. He performed his official functions and actually resided in the
haciendas in Nasugbu, Batangas, a place over two hundred kilometers away from Metro
Manila.

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

Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices
and letters of invitation were validly served on petitioner through him, there is no showing
that Pimentel himself was duly authorized to attend the conference meeting with the MARO,
BARC and LBP representatives and farmer beneficiaries for purposes of compulsory
acquisition of petitioner's landholdings. Even respondent DAR's evidence does not indicate
this authority. On the contrary, petitioner claims that it had no knowledge of the letter-
invitation, hence, could not have given Pimentel the authority to bind it to whatever matters
were discussed or agreed upon by the parties at the preliminary conference or public
hearing. Notably, one year after Pimentel was informed of the preliminary conference, DAR
A.O. No. 9, Series of 1990 was issued and this required that the Notice of Coverage must be
sent "to the landowner concerned or his duly authorized representative." 69

Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the
areas found actually subject to CARP were not properly identified before they were taken
over by respondent DAR. Respondents insist that the lands were identified because they are
all registered property and the technical description in their respective titles specifies their
metes and bounds. Respondents admit at the same time, however, that not all areas in the
haciendas were placed under the comprehensive agrarian reform program invariably by
reason of elevation or character or use of the land. 70

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

Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires
that the land subject to land reform be first identified. The two haciendas in the instant case
cover vast tracts of land. Before Notices of Acquisition were sent to petitioner, however, the
exact areas of the landholdings were not properly segregated and delineated. Upon receipt
of this notice, therefore, petitioner corporation had no idea which portions of its estate were
subject to compulsory acquisition, which portions it could rightfully retain, whether these
retained portions were compact or contiguous, and which portions were excluded from
66
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
67
 Section 6. Such transaction shall be exempt from the payment of capital gains
tax and other taxes and fees.

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

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

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

III. The Conversion of the three Haciendas.

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

Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991
when it approved conversion of 1,827 hectares in Nasugbu into a tourist area known as the
Batulao Resort Complex, and 13.52 hectares in Barangay Caylaway as within the potential
tourist belt. 85 Petitioner present evidence before us that these areas are adjacent to the
68
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
69
 Land Use Policy, pursuant to R.A. No. 6657 and E.O. No. 129-
A. 87

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

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

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

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

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence. 91 Respondent DAR is in a better position to
resolve petitioner's application for conversion, being primarily the agency possessing the
necessary expertise on the matter. The power to determine whether Haciendas Palico,
Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the CARL
lies with the DAR, not with this Court.
70
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.
71
In Province of Camarines Sur, et al. vs. Court of Appeals, et al. (222 SCRA 173, 182 [1993]),
we ruled that local governments need not obtain the approval of DAR to reclassify lands from
agricultural to non-agricultural use. In the present case, more than the exercise of that power,
the local governments were merely putting into effect a law when they enacted the zoning
ordinances in question.

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

I agree with the ponencia's rejection of respondent's argument that agriculture is not

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

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

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

1. DAR Administrative Order No. 6, Series of 1994, subscribes to Department of Justice

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

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

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

4. DAR Administrative Order No. 3, Series of 1996 identifies the land outside of CARP
coverage as:

(a) Land found by DAR as no longer suitable for agriculture and

which cannot be given appropriate valuation by the Land Bank;

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

72
 (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.

73
However, I respectfully dissent from the judgment which remands the case to the DAR. If the
acts of DAR are patently illegal and the rights of Roxas & Co. violated, the wrong decisions
of DAR should be reversed and set aside. It follows that the fruits of the wrongful acts, in this
case the illegally issued CLOAs, must be declared null and void.

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

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

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

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

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

Equally important, there was no payment of just compensation. I agree with

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

Petitioner states that the notices of acquisition were sent by respondents by ordinary mail
only, thereby disregarding the procedural requirement that notices be served personally or by
registered mail. This is not disputed by respondents, but they allege that petitioner changed
its address without notifying the DAR. Notably, the procedure prescribed speaks of only two
modes of service of notices of acquisition — personal service and service by registered mail.
The non-inclusion of other modes of service can only mean that the legislature intentionally
omitted them. In other words, service of a notice of acquisition other than personally or by
registered mail is not valid. Casus omissus pro omisso habendus est. The reason is obvious.
Personal service and service by registered mail are methods that ensure the receipt by the
addressee, whereas service by ordinary mail affords no reliable proof of receipt.
74
Since it governs the extraordinary method of expropriating private property, the CARL should
be strictly construed. Consequently, faithful compliance with its provisions, especially those
which relate to the procedure for acquisition of expropriated lands, should be observed.
Therefore, the service by respondent DAR of the notices of acquisition to petitioner by
ordinary mail, not being in conformity with the mandate of R.A. 6657, is invalid and
ineffective.

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

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

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

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

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

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

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

On 20 March 1992 the Sangguniang Bayan of Nasugbu promulgated its Resolution No. 19, a
zonification ordinance (Rollo, pp. 124-200), pursuant to its powers under Republic Act No.
7160, i.e., the Local Government Code of 1991. The municipal ordinance was approved by
the Sangguniang Panlalawigan of Batangas (Rollo, p. 201). Under this enactment, portions
of the petitioner's properties within the municipality were re-zonified as intended and
appropriate for non-agricultural uses. These two issuances, together with Proclamation 1520,
should be sufficient to determine the nature of the land as non-agricultural. But there is more.
75
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)

76
In Luz Farms v. Secretary of the Department of Agrarian Reform and Natalia Realty,
Inc. v. Department of Agrarian Reform, this Court had occasion to rule that agricultural lands
are only those which are arable and suitable.

It is at once noticeable that the common factor that classifies land use as agricultural,
whether it be public or private land, is its suitability for agriculture. In this connection, RA
6657 defines "agriculture" as follows:

Agriculture, Agricultural Enterprises or Agricultural Activity means the

cultivation of the soil, planting of crops, growing of fruit trees, raising of
livestock, poultry or fish, including the harvesting of such farm products, and
other farm activities, and practices performed by a farmer in conjunction with
such farming operations done by persons whether natural or juridical. (RA
6657, sec. 3[b])

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

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

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

The contention is untenable. Tourist attractions are not limited to scenic landscapes and lush
greeneries. Verily, tourism is enhanced by structures and facilities such as hotels, resorts,
rest houses, sports clubs and golf courses, all of which bind the land and render it
unavailable for cultivation. As aptly described by petitioner:

77
 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.

78
To make the picture clearer, I would like to summarize the law, regulations, ordinances, and
official acts which show beyond question that the disputed property is non-agricultural,
namely:

(a) The Law. Proclamation 1520 dated November 20, 1975 is part of the law of
the land. It declares the area in and around Nasugbu, Batangas, as a Tourist
Zone. It has not been repealed, and has in fact been used by DAR to justify
conversion of other contiguous and nearby properties of other parties.

(b) Ordinances of Local Governments. Zoning ordinance of the Sangguniang

Bayan of Nasugbu, affirmed by the Sangguniang Panlalawigan of Batangas,
expressly defines the property as tourist, not agricultural. The power to classify
its territory is given by law to the local governments.

(c) Certification of the Department of Agriculture that the property is not suitable

and viable for agriculture. The factual nature of the land, its marginal
productivity and non-economic feasibility for cultivation, are described in detail.

(d) Acts of DAR itself which approved conversion of contiguous or adjacent

land into the Batulao Resorts Complex. DAR described at length the non-
agricultural nature of Batulao and of portion of the disputed property,
particularly Hacienda Caylaway.

(e) DAR Circulars and Regulations. DAR Administrative Order No. 6, Series of

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

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

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

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

Petitioner assails respondent's refusal to convert its lands to non-agricultural use and to
recognize Presidential Proclamation No. 1520, stating that respondent DAR has not been
consistent in its treatment of applications of this nature. It points out that in the other case
involving adjoining lands in Nasugbu, Batangas, respondent DAR ordered the conversion of
the lands upon application of Group Developers and Financiers, Inc. Respondent DAR, in
that case, issued an Order dated January 22, 1991 denying the motion for reconsideration
filed by the farmers thereon and finding that:
79
 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

80
 In the present suit, the DAR clearly overstepped the limits of its powers to enact
rules and regulations when it issued Administrative Circular No. 9. There is no
basis in allowing the opening of a trust account in behalf of the landowner as
compensation for his property because, as heretofore discussed, section 16(e)
of RA 6657 is very specific that the deposit must be made only in "cash" or in
"LBP bonds." In the same vein, petitioners cannot invoke LRA Circular Nos. 29,
29-A and 54 because these implementing regulations cannot outweigh the
clear provision of the law. Respondent court therefore did not commit any error
in striking down Administrative Circular No. 9 for being null and void.

There being no valid payment of just compensation, title to petitioner's landholdings cannot
be validly transferred to the Government. A close scrutiny of the procedure laid down in
Section 16 of RA 6657 shows the clear legislative intent that there must first be payment of
the fair value of the land subject to agrarian reform, either directly to the affected landowner
or by deposit of cash or LBP bonds in the DAR-designated bank, before the DAR can take
possession of the land and request the register of deeds to issue a transfer certificate of title
in the name of the Republic of the Philippines. This is only proper inasmuch as title to private
property can only be acquired by the government after payment of just compensation
In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform (175
SCRA 343, 391 [1989]), this Court held:

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

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

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

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

Finally, we stress that the failure of respondent DAR to comply with the
requisites of due process in the acquisition proceedings does not give this
Court the power to nullify the CLOA's already issued to the farmer
beneficiaries. To assume the power is to short-circuit the administrative
81
 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
82
Nasugbu properties owned by the Manila Southcoast Development Corporation near subject
Roxas landholdings. These lands were found not suitable for agricultural purposes because
of soil and topographical characteristics similar to those of the disputed properties in this
case.

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

1. Is, as contended by the petitioner GDFI "hilly, mountainous, and

characterized by poor soil condition and nomadic method of cultivation, hence
not suitable to agriculture."

2. Has as contiguous properties two haciendas of Roxas y Cia and found by

Agrarian Reform Team Leader Benito Viray to be "generally rolling, hilly and
mountainous and strudded (sic) with long and narrow ridges and deep gorges.
Ravines are steep grade ending in low dry creeks."

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

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

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

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

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

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

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

2.9 The enhanced value of land in Nasugbu, Batangas, has attracted

unscrupulous individuals who distort the spirit of the Agrarian Reform Program
83
 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
84
 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.

85
86
 4. Apo Fruits Corporation v. LBP, G.R. No. 164195, October 12, 2010, 632 SCRA
727; and April 5, 2011, 647 SCRA 207

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.

87
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.

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:

88
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
89
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.

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

90
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.

91
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:

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.

92
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
93
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 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

94
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
95
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

We deny as well the LBP’s motion to set the case for oral arguments. The submissions of the
parties, as well as the records of the case, have already provided this Court with enough
arguments and particulars to rule on the issues involved. Oral arguments at this point would
be superfluous and would serve no useful purpose.

The OSG’s Intervention

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 through the long years that this
case had been pending but it chose to show its hand only at this very late stage 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 exists to deny the intervention prayed for.

WHEREFORE, premises considered, the respondent’s second motion for reconsideration

and the motion to set 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 disregarded or disobeyed,
that no further pleadings shall be entertained. Let judgment be entered in due course.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

(On leave)
PRESBITERO J. VELASCO, JR.
ANTONIO EDUARDO B. NACHURA*
Associate Justice
Associate Justice

TERESITA J. LEONARDO-DE
DIOSDADO M. PERALTA
CASTRO
Associate Justice
Associate Justice

LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

96
 ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.
Associate Justice Associate Justice

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARIA LOURDES P.A. SERENO

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Resolution were reached in consultation before the case was
assigned to the writer of the opinion of the Court.

RENATO C. CORONA
Chief Justice

97
98
 5. Heirs of Augusto Salas, Jr. v. Cabungcal, G.R. No. 191545, March 29, 2017, 822
SCRA 1

SECOND DIVISION

March 29, 2017

G.R. No. 191545

HEIRS OF AUGUSTO SALAS, JR., represented by TERESITA D. SALAS, Petitioners

vs
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, 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 AMAZON A, LUZVIMINDA DE
OCAMPO, DANILO DE OCAMPO, JOSE DARWIN LISTANCO, NEMESIO CABUNGCAL,
RENATO ALZATE, BERNARDO AQUINO, RODRIGO CABUNGCAL, CHON A 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
Decision2 dated October 26, 2009 and Resolution3 dated March 1, 2010 in the case docketed
as CA-G.R. SP No. 103703.

99
Augusto Salas, Jr. (Salas) was the registered owner of a vast tract of agricultural
land4 traversing five barangays-Pusil, Bulacnin, Balintawak, Marawoy, and Inosluban-in Lipa
City, Batangas.5 Respondents 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, 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. Lorena, 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 p1ans, 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 government[ s]."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
subdivision20 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

100
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

Former Lot 1 Area in square meters New Titles Issued

Description
Lot A (Bgy. Inosluban) 234,967 (23.4967 ha.) TCT No. 67660
Lot B (Bgy. Inosluban) 9,366 (.9366 ha.) TCT No. 67661
Lot C (Bgy. Marawoy) 317,028 (31.7028 ha.) TCT No. 67662
Total 561,361 (56.1361 ha.)  
 
Former Lot 2 Area in square meters New Titles Issued
Description
Lot A (Bgy. Balintawak) 3,058 (.3058 ha.) TCT No. 67663
Lot B (Bgy. Balintawak) 90,587 (9.0587 ha.) TCT No. 67664
Lot C (Bgy. Bulacnin) 2,925 (.2925 ha.) TCT No. 67665
Lot D (Bgy. Bulacnin) 75,934 (7.5934 ha.) TCT No. 67666
Lot E (Bgy. Bulacnin) 13,909 (1.3909 ha.) TCT No. 67667
Lot F (Bgy. Pusil) 106,509 (10.6509 ha.) TCT No. 67668
Lot G (Bgy. Pusil) 60,121 (6.0121 ha.) TCT No. 67669
Lot H (Bgy. Pusil) 89,202 (8.9202 ha.) TCT No. 67670
Lot I (Bgy. Pusil) 9,086 (.9086 ha.) TCT No. 67671
Lot J (Bgy. Pusil) 460,633 (46.0633 ha.) TCT No. 67672
Lot K (Bgy. Pusil) 11,029 (1.1029 ha.) TCT No. 67673
Total 922,993 (92.2993 ha.)  
 

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 1 7 smaller lots under 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

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 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

Before HLURB, Salas applied for a permission to sell his subdivided lots.36 On July 12, 1988,
HLURB issued a License to Sel137 Phase 1 of the farmlot subdivision, consisting of 31 lots.38

101
From July 12, 1988 to October 1989, Laperal Realty sold unspecified portions of the
subdivided lots.39

Salas also executed in favor of Laperal Realty a Special Power of Attorney "to exercise
general control, supervision and management of the sale of his land[holdings ]".40

On June 10, 1989, Salas went on a business trip to Nueva Ecija and never came back.41

Pursuant to the Special Power of Attomey,42 Laperal Realty subdivided Salas' property and
sold unspecified 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 June 27, 1991.43

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

Salas' remaining lots Area (in hectares) TCT No.

Lot A 23.4967 67660
Lot B 0.9366 67661
Lot C 31.7028 67662
Lot B 9.0587 67664
Lot J-7 1.2159 68223
Lot J-8 1.0757 68224
Lot J-9 1.2158 68225
Lot J-10 1.3356 68226
Lot J-11 1.0000 68227
Lot J-12 1.0000 68228
Lot J-13 1.4802 68229
Lot J-14 2.0443 68230
Lot J-15 1.8060 68231
Lot J-16 2.1663 68232
Lot J-17 1.5454 68233
Lot J-18 1.4769 68234
Total 82.5569 hectares  

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, 1991, and before the Department of Agrarian
Reform Adjudication Board on April 12, 1991.47

102
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 beneficiaries.

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

The Notice of Land Valuation and Acquisition was sent on December 28, 1993.50

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

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 distributed to agrarian reform beneficiaries.52 The lots were registered in
their names, as follows:53

Lot Former Agrarian Reform Beneficiaries Area (has.) CLOANo.

TCT No.
Lot A 67660 Romeo Mantuano 0.0252 00189533
    Respondent Rustico G. Amazona 0.0277
    Jaime Latayan 0.0308
    Rogelio Q. Valencia 0.0252 00189534
    Jose B. Guerra 0.0359 00189535
    Respondent Gerardo Guerra 0.0327 00189536
    Alberto B. Guerra 0.0384 00189537
    Respondent Nenita M. Llorca 0.0457 00189538
    Respondent Maria L. Valencia 0.0383 00189539
    (Church/basketball court) 0.0843
    Respondent Marciano V. 0.0686 00189542
Cabungcal
    Ernesto Latayan 0.0509
    Feliciano Cuenca 0.0578
    Respondent Gregorio M. Latayan 0.0509 00189541
    Francisco Cabungcal 0.0696 00189540
    Antonina Mantuano 0.0729
    Lorenzo Ritan 0.0934
    Bernardo P. Loza 0.0678 00189543
    Respondent Domingo M. Manalo 0.5979 00189544
    Eduardo Castillo 0.5979 00189545
103
    Respondent Nestor V. Latina 1.1958 00189546
    Romeo Mantuano 1.1958
    Respondent Alfredo L. Valencia 1.1958 00189547
    Sergio I. Valencia 1.1959 00189548
    Manuel L. Castillo 1.1958 00189550
    Respondent Nenita M. Llorca 1.1959 00189551
    Jose V. Malibiran 1.1959 00189552
    Alberto B. Guerra 1.1958 00189553
    Jose B. Guerra 1.1958 00189554
    Respondent Gregorio M. Latayan 1.1957 00189555
    Rustico O. Roxas 1.1959 00189556
    Dominador C. Castillo 0.5979 00189557
    Nemesio V. Cabungcal 0.5957 00189558
    Francisco V. Cabungcal 1.1951 00189559
    Marciano V. Cabungcal 1.1958 00189560
    Mario Castillo 1.1985 00189561
    Mario Castillo 1.1958 00189562
    Rosemarie C. De Guzman 0.5976 00189563
    Rosemarie C. De Guzman 0.5976 00189563
    Ronnie D. Binay 0.5976 00189564
Lot J-7 68223 Jaime and Clemente Latayan 1.2159 00305426
Lot J-8 68224 Amado Conrado Latayan and 1.0757 00305427
Clemente Latayan
Lot J-9 68225 Amado Conrado Latayan and 1.2158 00305428
Clemente Latayan
Lot J- 68226 Candido L. Amazon, et al. 1.3356 00305429
10
Lot J- 68227 Ernesto M. and Diomedes H. 1 00305430
11 Latayan
LotJ- 68228 Ernesto M. Latayan 1 00305431
12
LotJ- 68229   1.4802  
13
LotJ- 68230 Conchita M. Latayan 2.0443 00305417
14
Lot J- 68231 Eugenia v. Latina and Conchita 1.8060 00305433
15 M. Latayan
104
 LotJ- 68232 Eugenia v. Latina and Gabino 2.1663 00305418
16 Latayan
    Gabino Latayan 1.5454 00305419
    Gabino Latayan 1.4769 00305434
    Total 40.8588  

Hectares
 

The 14th lot, Lot C from the former Lot 1, consisting of 31.7028 hectares, was also
distributed to the beneficiaries.54

Thus, of the 16 lots unsold and remaining under Salas' name,55 14 lots were awarded to
agrarian reform beneficiaries.56 Only two lots remained with Salas: 9.0587 hectares (Lot B
from the former Lot 2) and 9.3864 (Lot B from the former Lot 1).57

Meanwhile, the 17th lot, Lot C from the former Lot 2, 0.2925 hectares, was designated as a
school site;58 thus, it was not included in the scope of the agrarian reform program.59

On December 8, 1995, before the Department of Agrarian Reform Adjudication Board, an

action was filed for the cancellation of the Certificates of Land Ownership Award, with a
prayer for the issuance of a temporary restraining order to enjoin the distribution of their
landholdings to qualified farmer beneficiaries.60

By 1996, Salas, Jr. had already been missing for more than seven (7) years.61 On August 6,
1996, Salas' wife, Teresita Diaz Salas (Teresita), petitioned the court to declare him
presumptively dead.62 The court granted the petition on December 12, 1996,63 and Teresita
was appointed as administrator of his estate.64

In 1997, the Department of Agrarian Reform Adjudication Board denied petitioners' action for
the cancellation of respondents' Certificates of Land Ownership Award.65

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 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 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

On April 29, 2001,71 the Estate of Salas again filed an application for exemption from the
coverage of the 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

105
Petitioners prayed that an aggregate area of 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

  Lots Area (has.) TCT No.

From the former Lot 1 (subdivided 1. Lot A 23.4967 67660
under Psd-04-0262541)
2. Lot B 0.9366 67661
3. Lot C 31.7028 67662
From the former Lot 2 (subdivided 4. Lot B 9.0587 67664
under Psd-04-0262542)
5. Lot C 0.2925 67665
6. LotJ-7 1.2159 68223
7. LotJ-8 1.0757 68224
8. Lot J-9 1.2158 68225
9. LotJ-10 1.3356 68226
10. Lot J-11 1.0000 68227
11. Lot J-12 1.0000 68228
12. Lot J-13 1.4802 68229
13. Lot J-14 2.0443 68230
14. Lot J-15 1.8060 68231
15. Lot J-16 2.1663 68232
16. Lot J-17 1.5454 68233
17. Lot J-18 1.4769 68234
 

The Estate of Salas claimed that the property had been reclassified as non-agricultural prior
to the effectivity of Republic Act No. 6657.76 It anchored the alleged exclusion of the 17 lots
on Department of Justice Opinion No. 44, series of 1990.77

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 effectivity of Republic Act No. 6657 on June 15,
1988.78 Thus:

Based on the foregoing premises, we reiterate the view that with respect to conversions of
agricultural lands 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 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

106
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

To resolve the matter, the Department of Agrarian Reform Center for Land Use, Policy,
Planning, and 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 former Lot 1 were not covered under the
Comprehensive Agrarian Reform Program, while Lot B of the former Lot 2 was pending
inclusion.83

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:

2. The southern points, specifically Lot Nos. A [Psd-04-262541 of the former Lot l], 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 1 7 lots from the
Comprehensive Agrarian Reform Program.88 The dispositive portion read:

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,

107
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:

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.

108
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 Certiorari109 with this
Court. The petition was granted due course.110

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 ₱2,000,000.00
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 nonagricultural 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.

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:

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, taking into account ecological, developmental, or equity considerations, and
109
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 Reform125 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;

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.

110
The Comprehensive Agrarian Reform Law covers all agricultural lands, save for those not
used or suitable for agricultural activities.1âwphi1

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:

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

111
In Natalia Realty Inc. v. Department of Agrarian Reform,138 lands not devoted to agricultural
activity, including lands previously converted to nonagricultural 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:

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.

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 BLURB Regulations provides:

….

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 limited144 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 BLURB 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 BLURB 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
112
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:

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. 001-15154 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 years156 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.
113
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

Petitioners cite other cases where, with the approval of BLURB, the local government
converted agricultural lands into residential162 or commercial163 lands, or reclassified an
agricultural zone into an urban zone164 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."

114
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:

III. Coverage

Agricultural land refers to those devoted to agricultural activity as definedin [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.

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;

115
(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 BLURB (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.1avvphi1 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.
116
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.

The temporary restraining order dated November 22, 2010 is PERMANENTLY LIFTED.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

On Official Leave
FRANCIS H. JARDELEZA**
*
JOSE CATRAL MENDOZA Associate Justice
Associate Justice

SAMUEL R. MARTIRES
Associate Justice

ATTESTATION

117
I attest 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.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to the 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

118
 6. DAR v. Woodland Agro-Development, G.R. No. 188174, June 29, 2015, 760 SCRA
503

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 Decision1 dated 2
February 2009 issued by the Regional Trial Court of Davao City Branch 14 (RTC) and its
Order2 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

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
119
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 Complaint9 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.

120
 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

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
121
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.

122
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

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

123
124
 7. Vianzon v. Macaraeg, G.R. No. 171107, September 5, 2012, 680 SCRA 111

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 Resolution2 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

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
125
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.

Aggrieved, Anita appealed to the OP. On June 18, 2003, the OP issued a minute
decision12 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
126
 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.

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
127
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
128
 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:

(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 estates26 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
129
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
130
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

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

Section 10. Upon full payment of the purchase price as herein stipulated including all interest
thereon and the performance by the PROMISSEE of all the conditions herein required, the
Administration shall execute a Deed of Sale conveying the property subject of this
Agreement to the PROMISSEE."37 (Underscoring supplied)

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:

After a thorough evaluation of the records of the case, together with its supporting
documents, this Office finds the appeal to be impressed with merit, considering the fact that
Minople Macaraeg is the actual 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 dated April 23, 1997 issued by
the BARC Chairman (Punong Barangay) of Dinalupihan Bataan.

The act of Lucila Candelaria Gonzales in allowing Minople Macaraeg to perform all the
farming activities in the subject lot established a tenancy relationship between the former and
the latter because the latter is doing the 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 hold water, considering
the fact that he (Minople Macaraeg) was not hired to work on just a branch of farming, but
performed work pertaining to all the branches thereof, on the basis of sharing the harvest not
on a fixed salary wage.38

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 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 contravened her own
undertaking in her April 7, 1996 "Application to Purchase Lot."

"2.that I vvill not 1 subdivide, sold (sic) or in any manner transfer or encumber said land
without the proper consent of the DAR subject further to the terms and conditions provided
for under Republic Act No. 6657 and other Operating laws not inconsistent thereon; 3.That I
shall not employ or use tenants whatever form in the 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)
131
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

Given all the laws in place together with the undisputed fact that Minople worked on the
subject landholding for more than half a century, the inescapable conclusion is that l'v1inople
as the actual tiller of the land 1s entitled to the land mandated by our Constitution and R.A.
No. 6657.

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.

JOSE CATRAL MENDOZA

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ*

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had b en reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

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

132
 8. Heirs of Arcadio Castro, Sr. v. Lozada, G.R. No. 163026, August 29, 2012, 679
SCRA 271

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
Decision2 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 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,
133
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

134
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 Order12 :

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.

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
135
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
136
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.

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
137
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 letter23 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
138
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.

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:
139
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
140
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 was undertaken by the State
through Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law (CARL), which was passed by Congress in 1988. It can thus be said that the 1987
Constitution has "a much more expanded treatment of the subject of land reform than was
contained in past Constitutions."29

Moreover, C.A. No. 539 being a social legislation, this Court has previously declared that"in
the construction of laws that find its origin in the social justice mandate of the Constitution,"
the constant policy is " to assure that its 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 allowing
accumulation of land holdings."31 In this sense, the law discourages absentee "tenants" or
lessees. So it 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 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.

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 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 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.

141
SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN

Associate Justice Associate Justice

BIENVENIDO L. REYES
Associate Justice

CERTIFICATION

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

142
 9. Samahan ng Magsasaka at Mangingisda ng Sitio Naswe, Inc. v. Tan, G.R. No.
196028, April 18, 2016, 789 SCRA 573

SECOND DIVISION

April 18, 2016

G.R. No. 196028

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

REPRESENTED BY ROGELIO A. COMMENDADOR, PRESIDENT, Petitioner,
vs.
TOMAS TAN, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 assailing the July 27, 2010
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,

143
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

In an Order13 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 denial on 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 real party-in-interest to

question the July 26, 2000 DAR Order; the
144
Constitutional right to form associations does
not make the petitioner a real party-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-beneficiaries, who are not approved awardees of
145
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
on 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.

146
B. 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 posted38 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.

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

In 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
147
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.

C. 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. — The decision of the agency shall become final and
executory fifteen (15) days after the receipt of a copy thereof by the party adversely affected
unless within that period an administrative appeal or judicial review, if proper, has been
perfected. One motion for reconsideration may be filed, which shall suspend the running of
the said period.1âwphi1

Without any motion for reconsideration or appeal filed from the assailed July 26, 2000 order,
the order lapsed to finality and can no longer be reviewed.

This Court has held that administrative decisions must end sometime, as fully as public
policy demands that finality be written on judicial controversies.42 In the absence of any
showing that the subject final order was rendered without jurisdiction or with grave abuse of
discretion, no court, not even this Court, has the power to revive, review, change, or alter a
final and executory judgment or decision.

WHEREFORE, we DENY the petitioner's petition for review on certiorari. The decision dated

July 27, 2010 and resolution dated February 10, 2011 of the Court of Appeals in CA-G.R. SP
No. 100926 are hereby AFFIRMED.

SO ORDERED.
148
ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

MARIANO C. DEL CASTILLO JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARVIC M.V.F. LEONEN

Associate Justice

ATTESTATION

I attest 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.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION

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

149
150
 10. LBP v. Lajom, G.R. No. 184982, August 20, 2014, 733 SCRA 511

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

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-707859 issued by the Registry of Deeds ofNueva Ecija (subject land).

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
151
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

Lajom rejected the DAR valuation and, instead, filed an amended Petition18 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
Order28 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

152
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 Resolution36 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 Petition38 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.

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
153
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
154
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 different formulae created
by the DAR in arriving at just compensation, they are not strictly bound to adhere thereto if
the situations before them do not warrant it. x x x:

"x x x [T]he basic formula and itsalternatives – administratively determined (as it is not found
in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998) – although
referred to and even applied by the 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 beyond the intent and
spirit of the law.1âwphi1 The suggested interpretation is strained and would render the 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 regional trial court acting as a SAC, and not inadministrative
agencies. The SAC, therefore, must still be able to 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
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 court shall apply the formula after an evaluation of the three
factors, orit may proceed to make its own computation based on the extended list in Section
17 of Republic Act No. 6657, which includes other factors[.] x x x"

155
As a final word, the Court would like to emphasize that while the agrarian reform program
was undertakenprimarily for the benefit of our landless farmers, this undertaking should,
however, not result in the 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 undue expense of
landowners who are alsoentitled to protection under the Constitution and agrarian reform
laws.56

WHEREFORE, the petitions are GRANTED. The Decision dated February 26, 2008 and the
Resolution dated October 17, 2008 of the Court of Appeals in CA-G.R. SP No. 89545 which:
(a) upheld the valuation of the 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

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

PRESBITERO J. VELASCO, JR.* MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ATTESTATION

I attest 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.ANTONIO T.
CARPIO
Associate Justice
Chairperson, Second DivisionC E R T I F I C A T I O N

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
156
 11. LBP v. Estate of J. Amado Araneta, G.R. No. 161796, February 8, 2012, 665
SCRA 310

Republic of the Philippines

SUPREME COURT
Manila

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
157
VILLENA, ANTONIO ZAUSA, SALDITO ZONIO, ZACARIAS CORTEZ, LARRY
MASAGNAY represented by LEONEL MASAGNAY, ERLINDA MORISON, JUAN
CORTEZ, PRIMITIBO NICASIO, CARMELO CESAR, ANDRES ZONIO represented by
RUFINO ZONIO, JUANITO ZONIO, JERENCIO ZONIO, ALEX CORTEZ, PEPITO
VILLAREAL, Petitioners-Movants,
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, 20043 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
158
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:

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;

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[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

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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 moved10 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 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.

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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 letter16 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;

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 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, 200123 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.

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.
DAR24 and Paris v. Alfeche,25 among other landmark agrarian cases, thus:
163
 (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.

164
 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

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
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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.

166
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. 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
167
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.

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.
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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 Bank41 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
169
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

"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
170
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.)
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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 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."

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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
173
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.

The long inaction of Duran, et al. to assert their rights over the subject case should be
brought to bear against them. Thus, We held in Esmaquel v. Coprada:58

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 within a reasonable time, warranting the presumption
that the party entitled to assert it either has abandoned or 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 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.

There can be little quibble about Duran, et al. being guilty of laches. They failed and
neglected to keep track of their case with their lawyer for 14 long years. As discussed above,
Atty. Lara died even prior to the promulgation 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, among
those constituting the petitioning-intervenors, had the characteristic good sense of following
up the case with their legal counsel. Only now, 14 years after, did some think of fighting for
the right they slept on. Thus, as to them, the CA Decision is deemed final and executory
based on the principle of laches.

Agrarian reform finds context in social justice in tandem with the police power of the State.
But social 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

174
never be taken as a toll to justify let alone commit an injustice. To borrow from Justice
Isagani A. Cruz:

[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 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 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.59

At any rate, all is not lost on the part of Duran and the other petitioners-intervenors. In the
event that they belong 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 rights to the covered
lots should be recognized and respected.

To the 912 holders of EPs, this decision might be a big let down.1avvphi1 But then the facts
and applicable laws and jurisprudence call for this disposition.

WHEREFORE, the petitions are hereby partly DENIED. The CA Decision dated September
19, 2003, as effectively reiterated in its Resolution of January 22, 2004 and April 2, 2004, is
AFFIRMED with the modification that the 75 CLTs issued prior to the effectivity of
Presidential Proclamation No. 1283 on June 21, 1974 are declared legal and valid. The other
CLTs, EPs, CLOAs issued by DAR involving the subject property are hereby CANCELED
and NULLIFIED.

The Land Bank and DAR are hereby ordered to COMPUTE the just compensation of the
land subject of the 75 CLTs and PAY the just compensation to the Estate of J. Amado
Araneta.

No pronouncement as to cost.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD JOSE CATRAL MENDOZA

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice

ATTESTATION

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I attest 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.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

CERTIFICATION

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.

RENATO C. CORONA
Chief Justice

176
 12. LBP v. Nable, G.R. No. 176692, June 27, 2012, 675 SCRA 253

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:

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;

177
 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:

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
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 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:

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.

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.

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.

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.

179
 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 secured from any government financing institution on the land.

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:

180
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:

LV = MV x 2.

The RTC found that the entire landholding was prime coconut land located along the national
highway planted to 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 volume of the produce, and by
applying the formula under DAR AO No. 5, Series of 1998, viz:

xxx

Nonetheless, the said report (commissioners’ report) impliedly belied the classification made
by the defendants (DAR and LBP) by stating among others, that the land is fully cultivated
contrary to the allegation that portion of 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 inspection.

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 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 2,057.14 kilos without
181
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.

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 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:

FORMULA: LV = (CNI X 0.6) + (CS X 0.3) + (MV X 0.1)

WHERE: LV = Land Values

CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

Since the Comparable Sales factor is missing, the formula shall be as follows:

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

To compute the CNI, the following formula shall be used, to wit:

(AGP X SP) – CO
CNI =
0.12

The cost of operation could not be obtained or verified and since the landholdings subject in
the instant case are planted to coconut which are productive at the time of Field Investigation
(FI), it will continue to use the assumed NIR of 70%.

Thus, the computation, to wit:

CNI (AGP X SP (70%)

=
.12
(5,671.3 kls. X 5.93) 70%
=
.12
23,541.56
=
.12
CNI = 196,179.7
LV = (196,179.7 X 0.9) + (14,158 X 0.1)
= 176,561.73 + 1,415.8
LV = ₱ 22,662,466

Improvements:

Computation:
182
 xxx

Total - ₱ 3,860,714.00

Summary Computation of Total Just Compensation:

1) Land Value - ₱ 22,662,466.00

2) Improvements - ₱ 3,860,714.00

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.

xxx

Considering therefore the actual production in addition with the desirable land attributes as a
contiguous titled 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

The CA affirmed the RTC’s valuation upon finding that the evidence on record substantiated
the valuation, but saw the need to correct the amount from ₱ 26,523,180.00 to ₱
31,034,819.00 because of the RTC’s honest error in calculation. The CA’s following
explanation for its affirmance is worth noting:

To recapitulate, the Annual and Monthly Gross Production of copra on the subject property
are as follows:

Average Yearly Average Monthly

Production Production
Directly Processed Copra – 15,580 kilos 1,298.3 kilos
Whole Nuts Resecada - 209,908 kilos 4,373 kilos
(converted tibook)
5,671.3 kilos

We likewise observe that in the computation of the CNI OR Capitalized Net Income, both
DARAB and the court a quo used the following formula:

(AGP x SP) - CO
CNI =
.12

183
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
CNI =
.12
Wherein: AGP – 5,671.3 kilos (Average Gross Production)
SP - ₱ 5.93/kilo (Selling Price – from PCA data)
CO – 70% (assumed Cost of Operations, AO No. 11)
(5,671.53 kilos x 5.93) – 70%
=
.12
33.632.17 -.7
=
.12
33.631.472
=
.12
CNI = 280,262.26

To compute the Land Value (LV) per hectare, we use the formula as prescribed by
Administrative Order No. 11, as amended:

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

WHERE: LV = Land Values

CNI = Capitalized Net Income

CS = Comparable Sales

MV = Market Value per Tax Declaration

When CS is not present and CNI and MV are applicable, the formula shall be:

LV = (CNI x 0.9) + (MV x 0.1)

Wherein: CNI – 280,262.26

MV - ₱ 14,158.40 (Market Value per Tax Declaration of the subject property)

LV = (280,262.26 x 0.9) + (₱ 14,158.40 x 0.1)

= 252,236.03 + ₱ 1,415.84
LV = ₱ 253,651.87/hectare

Total Land Value = ₱ 253,651.87 hectare x 127.3365 hectares

184
 = ₱ 32,299,141.00

Summary of Valuation:

1) Total Land Value - ₱ 32,299,141.00

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

TOTAL - ₱ 36,159,855.00

Hence, the correct just compensation that must be paid to herein respondent is Thirty Six
Million One Hundred Fifty Nine Thousand Eight Hundred Fifty Five Pesos (₱
36,159,855.00).18

xxx

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 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 she was in before the
taking occurred as mandated by the Reyes doctrine.19 (Emphasis supplied)

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 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 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 well as the improvements and the capabilities of the landholding.21 Thus,
we sustain the computation.

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, such as any of the following:

1. When the factual findings of the CA and the RTC are contradictory;

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;

4. When there is grave abuse of discretion in the appreciation of facts;

5. When the CA, in making its findings, went beyond the issues of the case, and such
findings are contrary to the admissions of both appellant and appellee;

6. When the judgment of the CA is premised on a misapprehension of facts;

7. When the CA fails to notice certain relevant facts that, if properly considered, will
justify a different conclusion;
185
 8. When the findings of fact are themselves conflicting;

9. When the findings of fact are conclusions without citation of the specific evidence
on which they are based; and,

10. When the findings of fact of the CA are premised on the absence of evidence, but
such findings are contradicted by the evidence on record.22

Considering that LBP has not shown and established the attendance of any of the foregoing
compelling reasons 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.

Nonetheless, LBP urges that the CA should have relied on the rulings in Land Bank of the
Philippines v. Banal23 and Land Bank of the Philippines v. Celada24 in resolving the issue of
just compensation.

In Banal, the Court invalidated the land valuation by the RTC because the RTC did not
observe the basic rules of procedure and the fundamental requirements in determining just
compensation cases. In Celada, the Court 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 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 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.

LBP’s submission is grossly misleading. As the Court has already noted, the CA and the
RTC did not disregard 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 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
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 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 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 the respondent and the other landowners."27 Apparently, the RTC
had used only a single factor in determining 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 of Republic Act
No. 6657 and the applicable DAR AOs as well as the value of the improvements.

II.

Farming Experience and Rule of Thumb Method of Conversion are relevant to the statutory
factors
for determining just compensation

The RTC elucidated:

186
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 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 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.

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 production data submitted by the plaintiff supported by the
affidavit of Mrs. Wilma Rubi, to wit:

COPRA RESECADA:
Months No. of Kilos Sales
a.) November 1992 No copra -0-
b.) October 1992 1,416 ₱ 9,345.60
c.) September 1992 2,225 ₱ 14,540.65
d.) August 1992 No copra -0-
e.) July 1992 323.5 ₱ 2,523.30
f.) June 1992 1,867 ₱ 15,946.10
g.) May 1992 713 ₱ 5,940.60
h.) April 1992 746 ₱ 6,490.20
i.) March 1992 1,962.5 ₱ 16,485.00
j.) February 1992 2,652.5 ₱ 22,281.00
k.) January 1992 495.5 ₱ 4,558.00
3,178.5 ₱ 27,419.05
l.) December 1991
------------------- --------------------
15,580 ₱ 125,080.10

xxx

The defendant (LBP) did not bother to disprove the aforestated documentary evidence
submitted by the plaintiff (Nable). However, the selling price/kilo (SP/Kg.) used by the
defendants (DAR and LBP) in their computation is 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. xxx28

LBP protests the use by the RTC of the farming experience and the thumb method of
conversion as gauges of the justness of LBP and DARAB’s valuation of the affected
landholding.

The Court finds nothing objectionable or irregular in the use by the RTC of the assailed the
farming experience and the thumb method of conversion tests. Such tests are not
inconsistent or incompatible with the factors listed in Section 17 of Republic Act No. 6657, as
the aforequoted elucidation of the RTC shows.

Although Section 17 of Republic Act No. 6657 has not explicitly mentioned the farming
experience and the thumb method of conversion as methods in the determination of just
compensation, LBP cannot deny that such methods were directly relevant to the factors
187
listed in Section 17, particularly those on the nature, actual use and income of the
landholding.

III.

LBP was allowed the opportunity to refute the Commissioners’ Report and Rubi’s affidavit

LBP insists that the CA and the RTC both erred in relying on the Commissioners’ Report and
on caretaker Wilma Rubi’s affidavit because the RTC did not conduct a hearing on the
motion to approve the Commissioners’ Report; and because it (LBP) was deprived of the
opportunity to contest the Commissioners’ Report and Wilma Rubi’s affidavit.

LBP’s insistence is factually and legally unwarranted.

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 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 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 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 oppose or comment on the Commissioners’ Report.

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 LBP’s failure to timely object to
"respondent’s introduction of (the) affidavit" as an implied admission of the affidavit itself.35

The Court agrees with the CA’s rejection of LBP’s objection to the affidavit.

Any objection to evidence must be timely raised in the course of the proceedings in which the
evidence is first 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 time on appeal, both
because the party who has failed to timely object becomes estopped from raising the
objection afterwards; and because to assail the judgment of the lower court upon a cause as
to which the lower court had no opportunity to pass upon and rule is contrary to basic
fairness and procedural orderliness.37

IV.

Awarding of interest and commissioners’ fee, and deletion of attorney’s fee are proper

The CA correctly prescribed 12% interest per annum on the unpaid balance of ₱
31,034,819.00 reckoned from 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 rate of interest
rendered in Republic v. Reyes39 is now worthy of reiteration, viz:
188
The constitutional limitation of "just compensation" is considered to be the sum equivalent to
the market value of the property, broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and competition or the fair value of
the property as between one who receives, and one who desires to sell, it fixed at the time of
the actual taking by the government. Thus, if property is taken for public use before
compensation is deposited with the court having jurisdiction over the case, the final
compensation must include interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court.
In fine, between the taking of the property and the actual payment, legal interests accrue in
order to place the owner in a position as good as (but not better than) the position he was in
before the taking occurred.

The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal
value of the property to be computed from the time petitioner instituted condemnation
proceedings and "took" the property in September 1969. This allowance of interest on the
amount found to be the value of the property as of the time of the taking computed, being an
effective forbearance, at 12% per annum should help eliminate the issue of the constant
fluctuation and inflation of the value of the currency over time. Article 1250 of the Civil Code,
providing that, in case of extraordinary inflation or deflation, the value of the currency at the
time of the establishment of the obligation shall be the basis for the payment when no
agreement to the contrary is stipulated, has strict application only to contractual obligations.
In other words, a contractual agreement is needed for the effects of extraordinary inflation to
be taken into account to alter the value of the currency. (Emphasis supplied)

The charging of ₱ 25,000.00 as commissioners’ fees against LBP is likewise upheld. Section
16, Rule 141 of the Rules of Court, expressly recognizes such fees, to wit:

Section 16. Fees of commissioners in eminent domain proceedings. – The commissioners

appointed to appraise land sought to be condemned for public uses in accordance with the
rules shall each receive a compensation to be fixed by the court of not less than (₱ 300.00)
Pesos per day for the time actually and necessarily employed in 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.

Applying the rule, the Court finds the amount of ₱ 25,000.00 as fair and commensurate to the
work performed by the commissioners, which the CA summed up as follows:

We observe that in the Commissioners’ Report, the three (3) appointed Commissioners
actually inspected 127 hectares of the subject property. It took them five (5) days to complete
the ocular inspection and individually 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, 23 Durian trees,
139 Mango trees, 83 Avocado trees, 23 Lanzones trees, 84 Cacao, 18 Marang, and 13 trees
of Lawaan.

Hence, for the actual time spent and thoroughness of its Report, it is proper for the said
commissioners to be compensated in the amount of ₱ 25,000.00, which is only ₱ 1,666.66
per day.40

We sustain the CA’s deletion of the RTC’s award of 10% attorney’s fees. Under Article 2208,
Civil Code, an award of attorney’s fees requires factual, legal, and equitable justifications.
Clearly, the reason for the award must be explained and set forth by the trial court in the
189
body of its decision. The award that is mentioned only in the dispositive portion of the
decision should be disallowed.41

Considering that the reason for the award of attorney’s fees was not clearly explained and
set forth in the body 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.

WHEREFORE, the Court AFFIRMS the decision promulgated on August 17, 2006 by the
Court of Appeals; and ORDERS petitioner to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
Acting Chairperson, First Division

MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice

ATTESTATION

I attest 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.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
Acting Chairperson, First Division

CERTIFICATION

Pursuant to Section 13, Article VII of the Constitution and the Division Acting 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.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296, The Judiciary Act of 1948, as amended)

190
191
 13. Luz Farms v. Secretary of the DAR, G.R. No. 86889, December 4, 1990, 192
SCRA 51

EN BANC
[G.R. No. 86889 :  December 4, 1990.]
192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT
OF AGRARIAN REFORM, Respondent.
 
DECISION
 
PARAS, J.:
 
This is a petition for prohibition with prayer for restraining order and/or preliminary and
permanent injunction against the Honorable Secretary of the Department of Agrarian Reform
for acting without jurisdiction in enforcing the assailed provisions of R.A. No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988 and in promulgating the
Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No. 6657,
insofar as the same apply to herein petitioner, and further from performing an act in violation
of the constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes
the raising of livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and
Procedures Implementing Production and Profit Sharing as embodied in Sections 13 and 32
of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and
Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry
business and together with others in the same business allegedly stands to be adversely
affected by the enforcement of Section 3(b), Section 11, Section 13, Section 16(d) and 17
and Section 32 of R.A. No. 6657 otherwise known as Comprehensive Agrarian Reform Law
and of the Guidelines and Procedures Implementing Production and Profit Sharing under
R.A. No. 6657 promulgated on January 2, 1989 and the Rules and Regulations Implementing
Section 11 thereof as promulgated by the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines and rules be declared
unconstitutional. Meanwhile, it is also prayed that a writ of preliminary injunction or
restraining order be issued enjoining public respondents from enforcing the same, insofar as
they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms'
prayer for the issuance of a preliminary injunction in its Manifestation dated May 26, and 31,
1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said
Motion for Reconsideration regarding the injunctive relief, after the filing and approval by this

192
Court of an injunction bond in the amount of P100,000.00. This Court also gave due course
to the petition and required the parties to file their respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his
Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply
to it:
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition
of "Agricultural, Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands devoted
to commercial, livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the
authority to summarily determine the just compensation to be paid for lands covered
by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13
—
". . . (W)hereby three percent (3%) of the gross sales from the production of such
lands are distributed within sixty (60) days of the end of the fiscal year as
compensation to regular and other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these individuals or entities
realize gross sales in excess of five million pesos per annum unless the DAR, upon
proper application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of the
net profit after tax shall be distributed to said regular and other farmworkers within
ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A.
No. 6657 (the Comprehensive Agrarian Reform Law of 1988), insofar as the said law
includes the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII
x  x  x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the rights of
small landowners. The State shall further provide incentives for voluntary land-
sharing.
x  x  x"
193
 Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety.
In fact, it acknowledges the correctness of the decision of this Court in the case of the
Association of Small Landowners in the Philippines, Inc. vs.  Secretary of Agrarian
Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the Constitution, in including land
devoted to the raising of livestock, poultry and swine in its coverage (Rollo, p. 131).
Livestock or poultry raising is not similar to crop or tree farming. Land is not the
primary resource in this undertaking and represents no more than five percent (5%) of
the total investment of commercial livestock and poultry raisers. Indeed, there are
many owners of residential lands all over the country who use available space in their
residence for commercial livestock and raising purposes, under "contract-growing
arrangements," whereby processing corporations and other commercial livestock and
poultry raisers (Rollo, p. 10). Lands support the buildings and other amenities
attendant to the raising of animals and birds. The use of land is incidental to but not
the principal factor or consideration in productivity in this industry. Including backyard
raisers, about 80% of those in commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is
embraced in the term "agriculture" and the inclusion of such enterprise under Section 3(b) of
R.A. 6657 is proper. He cited that Webster's International Dictionary, Second Edition (1954),
defines the following words:
"Agriculture — the art or science of cultivating the ground and raising and harvesting
crops, often, including also, feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock — domestic animals used or raised on a farm, especially for profit.
Farm — a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp.
82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in constitutional
construction is to ascertain and thereafter assure the realization of the purpose of the
framers in the adoption of the Constitution (J.M. Tuazon & Co. vs.  Land Tenure
Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution begins with the language of the
document itself. The words used in the Constitution are to be given their ordinary meaning
except where technical terms are employed in which case the significance thus attached to
them prevails (J.M. Tuazon & Co. vs.  Land Tenure Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of
doubtful meaning, the courts may consider the debates in the constitutional convention as
throwing light on the intent of the framers of the Constitution. It is true that the intent of the
convention is not controlling by itself, but as its proceeding was preliminary to the adoption
by the people of the Constitution the understanding of the convention as to what was meant
by the terms of the constitutional provision which was the subject of the deliberation, goes a
long way toward explaining the understanding of the people when they ratified it (Aquino, Jr.
v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning
of the word "agricultural," clearly show that it was never the intention of the framers of the
194
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
195
It has been established that this Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are
first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310;
Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with constitutional
issues, it will not hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution and God as its
conscience gives it in the light to probe its meaning and discover its purpose. Personal
motives and political considerations are irrelevancies that cannot influence its decisions.
Blandishment is as ineffectual as intimidation, for all the awesome power of the Congress
and Executive, the Court will not hesitate "to make the hammer fall heavily," where the acts
of these departments, or of any official, betray the people's will as expressed in the
Constitution (Association of Small Landowners of the Philippines, Inc. v. Secretary of
Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744;
Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional
powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do, as void. This is the essence of judicial power conferred by
the Constitution "(I)n one Supreme Court and in such lower courts as may be established by
law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973 Constitution
and which was adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the
1987 Constitution) and which power this Court has exercised in many instances (Demetria v.
Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13
and 32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock, poultry and swine
in its coverage as well as the Implementing Rules and Guidelines promulgated in accordance
therewith, are hereby DECLARED null and void for being unconstitutional and the writ of
preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
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
196
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.
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
197
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
 
Endnotes
SARMIENTO, J., concurring:
  1. In re Guarina, 24 Phil. 37; Yu Cong Eng v. Trinidad, 70 L. ed., p. 1059.
  2. Ichong v. Hernandez, 101 Phil. 1155.
  3. Rollo, 29-30.

198
199
 14. DAR v. Sutton, G.R. No. 162070, October 19, 2005, 473 SCRA 392

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.

200
On December 27, 1993, DAR issued A.O. No. 9, series of 1993,5 which provided that only
portions of private agricultural lands used for the raising of livestock, poultry and swine as of
June 15, 1988 shall be excluded from the coverage of the CARL. In determining the area of
land to be excluded, the A.O. fixed the following retention limits, viz: 1:1 animal-land ratio
(i.e., 1 hectare of land per 1 head of animal shall be retained by the landowner), and a ratio
of 1.7815 hectares for livestock infrastructure for every 21 heads of cattle shall likewise be
excluded from the operations of the CARL.

On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as
final and irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine, their
entire landholding is exempted from the CARL.6

On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order7 partially
granting the application of respondents for exemption from the coverage of CARL. Applying
the retention limits outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of
respondents’ land for grazing purposes, and a maximum of 102.5635 hectares for
infrastructure. Petitioner ordered the rest of respondents’ landholding to be segregated and
placed under Compulsory Acquisition.

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

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

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

WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is

hereby DECLARED null and void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian Reform’s ruling that
petitioners’ landholding is covered by the agrarian reform program of the government
is REVERSED and SET ASIDE.

SO ORDERED.11

Hence, this petition.

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

201
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it
issued DAR A.O. No. 9 to limit the area of livestock farm that may be retained by a
landowner pursuant to its mandate to place all public and private agricultural lands under the
coverage of agrarian reform. Petitioner also contends that the A.O. seeks to remedy reports
that some unscrupulous landowners have converted their agricultural farms to livestock
farms in order to evade their coverage in the agrarian reform program.

Petitioner’s arguments fail to impress.

Administrative agencies are endowed with powers legislative in nature, i.e., the power to

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

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

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

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

The subsequent case of Natalia Realty, Inc. v. DAR16 reiterated our ruling in the Luz
Farms case. In Natalia Realty, the Court held that industrial, commercial and residential
lands are not covered by the CARL.17 We stressed anew that while Section 4 of R.A. No.
6657 provides that the CARL shall cover all public and private agricultural lands, the
term "agricultural land" does not include lands classified as mineral, forest,
202
residential, commercial or industrial. Thus, in Natalia Realty, even portions of the
Antipolo Hills Subdivision, which are arable yet still undeveloped, could not be considered
as agricultural lands subject to agrarian reform as these lots were already classified as
residential lands.

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

Moreover, it is a fundamental rule of statutory construction that the reenactment of a statute

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

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

IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of

the Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively, are
AFFIRMED. No pronouncement as to costs.

SO ORDERED.

REYNATO S. PUNO

Associate Justice

WE CONCUR:

203
 HILARIO G. DAVIDE, JR.

Chief Justice

ARTEMIO V. PANGANIBAN, LEONARDO A. QUISUMBING

Associate Justice Associate Justice

CONSUELO YNARES-SANTIAGO, ANGELINA SANDOVAL-GUTIERREZ

Associate Justice Associate Justice

ANTONIO T. CARPIO, MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice Associate Justice

RENATO C. CORONA, CONCHITA CARPIO MORALES

Associate Justice Associate Justice

ROMEO J. CALLEJO, SR. ADOLFO S. AZCUNA

Associate Justice Associate Justice

DANTE O. TINGA, MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

CANCIO C. GARCIA

Associate Justice

CERTIFICATIONM

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court.

HILARIO G. DAVIDE, JR.

Chief Justice

204
205
 15. Estrella v. Francisco, G.R. No. 209384, June 27, 2016, 794 SCRA 590

SECOND DIVISION

June 27, 2016

G.R. No. 209384

URBANO F. ESTRELLA, Petitioner,
vs.
PRISCILLA P. FRANCISCO, Respondent.

DECISION

BRION, J.:

This petition for review on certiorari seeks to reverse and set aside the November 28, 2012
resolution 1 of the 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 decision 3 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 (₱500,000.00),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.6

On February 12, 2001, Estrella filed a complaint7 against Cristobal and Francisco for legal
redemption, recovery, and maintenance of peaceful possession before the Office of the

206
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).8He 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 ₱500,000.00 with the PARAD as the
redemption price.9

Cristobal did not file an answer while Francisco denied all the allegations in the complaint
except for the fact of the sale.10 Francisco claimed that she was an innocent purchaser in
good faith because she only bought the property after: (1) Cristobal assured her that there
would be no problems regarding the transfer of the property; and (2) Cristobal personally
undertook to compensate Estrella. Therefore, Estrella had no cause of action against her.

On June 23, 2002, the PARAD rendered its decision recognizing Estrella’s right of
redemption.11 The PARAD found that neither Cristobal nor Francisco notified Estrella in
writing of the sale. In the absence of such notice, an agricultural lessee has a right to redeem
the landholding from the buyer pursuant to Section 12 of the Code.12

Francisco appealed the PARAD’s decision to the DARAB where it was docketed as DARAB
Case No. 13185.

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.

Estrella moved for reconsideration but the DARAB denied the motion.

On September 30, 2011, Estrella filed a motion before the CA to declare himself as a pauper
litigant and manifested his intention to file a petition for review of the DARAB’s decision.14 He
alleged that he was living below the poverty line and did not have sufficient money or
property for food, shelter, and other basic necessities.

On October 17, 2011, Estrella filed a petition for review15 of the DARAB’s decision before the
CA. The petition was docketed as CA-G.R. SP No. 121519.

Estrella emphasized that the purpose of the State in enacting the agrarian reform laws is to
protect the welfare of landless farmers and to promote social justice towards establishing
ownership over the agricultural land by the tenant-lessees.16 He insisted that the DARAB
erred in denying him the right of redemption based on a technicality and that the redemption
period in Sec. 12 of the Code does not apply in his case because neither the lessor nor the
vendee notified him in writing of the sale.17

On November 28, 2012, the CA dismissed 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, 2013.19
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On April 11, 2013, Estrella filed a motion for a twenty-day extension of time (or until April 31,
2013) to file his motion for reconsideration of the November 28, 2012 resolution.20

On April 30, 2013, Estrella requested another ten-day extension of time (or until May 9,
2013) to file his motion for reconsideration.21

On May 9, 2013, Estrella filed his Motion for Reconsideration arguing that his right of
redemption had not yet prescribed because he was not given written notice of the sale to
Francisco.22

On May 30, 2013, the CA denied Estrella’s motions for extension of time, citing the rule that
the reglementary period to file a motion for reconsideration is non-extendible. 23 The CA
likewise denied Estrella’s Motion for Reconsideration.

Hence, the present recourse to this Court.

On August 23, 2013, Estrella filed a motion for extension of time to file his petition for review
and a motion to be declared as a pauper litigant.24 We granted both motions on October 13,
2013.

THE PARTIES’ ARGUMENTS

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 the other hand, Francisco counters that Estrella failed to make a formal tender of or to
consign with the PARAD the redemption price as required in Quiño v. Court of
Appeals.  25 She also questioned the genuineness of Estrella’s claim to be a pauper litigant.
Francisco points out that a person who claims to be willing to pay the redemption price of
₱500,000.00 is not, by any stretch of the imagination, a pauper.26

OUR RULING

We find no merit in the petition.

The use and ownership of property bears a social function, and all economic agents are
expected to contribute to the common good.27 To this end, property ownership and economic
activity are always subject to the duty of the State to promote distributive justice and
intervene when the common good requires.28

As early as 1973, the Philippines has already declared our goal of emancipating agricultural
tenants from the bondage of the soil.29 The State adopts a policy of promoting social justice,
establishing owner cultivatorship of economic-size farms as the basis of Philippine
agriculture, and providing a vigorous and systematic land resettlement and redistribution
program.30

In pursuit of land reform, the State enacted the Agricultural Land Reform Code in 1963. The
Code established an agricultural leasehold system that replaced all existing agricultural
share tenancy systems at that point.

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The existence of an agricultural tenancy relationship between the lessor and the lessee gives
the latter rights that attach to the landholding, regardless of whoever may subsequently
become its owner.31 This strengthens the security of tenure of the tenants and protects them
from being dispossessed of the landholding or ejected from their leasehold by the death of
either the lessor or of the tenant, the expiration of a term/period in the leasehold contract, or
the alienation of the landholding by the lessor.32 If either party dies, the leasehold continues
to bind the lessor (or his heirs) in favor of the tenant (or his surviving spouse/descendants).
In case the lessor alienates the land, the transferee is subrogated to the rights and
substituted to the obligations of the lessor-transferor. The 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.34

Originally, the lessee had a redemption period of two years from registration of the sale:

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.35

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.37

In 1971, R.A. 6389 amended Section 12 of the Code and shortened the redemption period:

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.

209
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.1âwphi1

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.  41

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.43

As the vendee, respondent Francisco had the express duty to serve written notice on
Estrella, the agricultural lessee, and on the DAR. Her failure to discharge this legal duty
prevented the commencement of the 180-day redemption period. Francisco only gave written
notice of the sale in her answer44 before the PARAD wherein she admitted the fact of the
sale.45 Thus, Estrella timely exercised his right of redemption. To hold otherwise would allow
Francisco to profit from her own neglect to perform a legally mandated duty.

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

x x x the right of legal redemption must be exercised within specified time limits: and the
statutory periods would be rendered meaningless and of easy evasion unless the
redemptioner is required to make an actual tender in good faith of what he believed to be the
reasonable price of the land sought to be redeemed. The existence of the right of redemption
operates to depress the market value of the land until the period expires, and to render that
period indefinite by permitting the tenant to file a suit for redemption, with either party unable
to foresee when final judgment will terminate the action, would render nugatory the period of
two years [now 180 days] fixed by the statute for making the redemption and virtually
paralyze any efforts of the landowner to realize the value of his land. No buyer can be
expected to acquire it without any certainty as to the amount for which it may be redeemed,
so that he can recover at least his investment in case of redemption. In the meantime, the
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.47

210
After the amendment of Section 12 of the Code, a certification from the Land Bank that it will
finance the redemption will also suffice in lieu of tender of payment or consignation.48

In the present case, Estrella manifested his willingness to pay the redemption price but failed
to tender payment or consign it with the PARAD when he filed his complaint. To be sure, a
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.49

Ordinarily, the 180-day redemption period begins to run from the date that the vendee
furnishes written notice of the sale to the lessee. The filing of a petition or request for
redemption with the DAR (through the PARAD) suspends the running of the redemption
period.

However, as the cases of Basbas and Almeda v. Court of Appeals50 – as well the

amendment to Section 12 of the Code – evidently show, Congress did not intend the
redemption period to be indefinite. This 180-day period resumes running if the petition is not
resolved within sixty days.51

Because Francisco failed to serve Estrella written notice of the sale, 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:

x x x Only by such means can the buyer become certain that the offer to redeem is one
made seriously and in good faith. A buyer cannot be expected to entertain an offer of
redemption without attendant evidence that the redemptioner can, and is willing to
accomplish the repurchase immediately. A different rule would leave the buyer open
to harassment by speculators or crackpots as well as to unnecessary prolongation of
the redemption period, contrary to the policy of the law. While consignation of the
tendered price is not always necessary because legal redemption is not made to discharge a
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
211
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.

ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

(On Leave)
JOSE CATRAL MENDOZA
MARIANO C. DEL CASTILLO*
Associate Justice
Associate Justice

MARVIC M.V.F. LEONEN

Associate Justice

ATTESTATION

I attest 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.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION

Pursuant to the 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

212
213
 16. Heirs of Ramon Arce, Sr. v. DAR, G.R. No. 228503, July 25, 2018, 874 SCRA 295

G.R. No. 228503, July 25, 2018 - HEIRS OF RAMON ARCE, SR., Petitioners, v.
DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY SECRETARY VIRGILIO
DELOS REYES, Respondent.

FIRST DIVISION

G.R. No. 228503, July 25, 2018

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

214
fodder for their livestock which were maintained both in the subject lands and in the
Novaliches property.8

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 letter10 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 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
215
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

216
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.

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 Decision36 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
217
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.

The subject lands are devoted to livestock

raising; thus, they remain to be exempted
from the coverage of the CARP –

218
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.
219
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.

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
220
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

221
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

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.

222
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:

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 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.

223
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.

224