G.R. No.

165501             March 28, 2006

SPOUSES JESUS and EVANGELINE PASCO, Petitioners,

vs.
PISON-ARCEO AGRICULTURAL AND DEVELOPMENT CORPORATION, Respondent.

DECISION

CARPIO MORALES,J.:

From the Court of Appeals August 27, 20031 decision which denied their petition for review of the decision of the Bacolod City Regional
Trial Court (RTC) affirming with modification that of the June 30, 2000 of the Talisay City Municipal Trial Court in Cities (MTCC),
Spouses Jesus and Evangeline Pasco (petitioners) brought the case to this Court on a Petition for Review on Certiorari.

Respondent, Pison-Arceo Agricultural and Development Corporation, is the registered owner of a parcel of land containing more than
100 hectares covered by Transfer Certificate of Title (TCT) No. T-88078 of the Register of Deeds of Negros Occidental.

Constructed on respondent’s parcel of land are houses which are occupied by its workers.

Petitioners, among other workers, used to work for respondent until 1987. They having ceased to be employed by respondent,
petitioners were asked to vacate the house they were occupying but they refused, hence, respondent filed a complaint for unlawful
detainer against them before the MTCC in Talisay City.

In their Answer to the Complaint,2 petitioners claimed that, inter alia, they built the house occupied by them at their own expense and
their stay on the land was upon the tolerance of respondent.

In their Position Paper,3 petitioners claimed that respondent constructed houses for its workers but the house they were occupying was
destroyed by a typhoon, forcing them to build their house; respondent’s demand was merely for them to vacate the house, as they had
paid rentals thru salary/wage deductions; and their refusal to vacate the house is justified, they being the owners and actual possessors
thereof.

By Decision of June 30, 2000,4 the MTCC of Talisay rendered judgment in favor of respondent upon the following findings:

As adduced, it is explicitly clear that [respondent] provided housing facilities to every worker in its hacienda without a requiring payment
of rentals, however, with an implied promise that the same be vacated upon their cessation from work. . . .

On the issue that [petitioners] were responsible in building their own houses is devoid of merit. . . . However, [petitioners] made repairs
on their houses when [the] same were destroyed by typhoon sometime in 1975. These are repairs badly needed at that time there
being no however express authority from [respondent].

xxxx

As to the contention of [petitioners] in Civil Case No. 677, [respondent] is amenable to remove whatever improvements they have
introduced thereto including the trees they planted. . . .

x x x x (Underscoring supplied)5

Accordingly, the MTCC disposed as follows:

WHEREFORE, judgment is hereby rendered for [respondent] and herein [petitioners in Civil Case No. 677], spouses Jesus Pasco and
Evangeline Pasco . . .and those persons claiming under their names are hereby ordered:

1. To vacate the premises of [respondent’s] Lot 707, Talisay Cadastre covered by Transfer Certificate of Title No. T-88078 and
to remove whatever improvements they introduced thereon;

2. To pay [respondent] the sum of P50.00 a month as rental payment from the time of the filing of the herein complaint until
they have vacated the premises; and

3. To pay the sum of P5,000.00 as attorney’s fees.

SO ORDERED.6 (Underscoring supplied)
After the promulgation on June 30, 2000 of the MTCC decision or on August 23, 2000, the Municipal Agrarian Reform Office (MARO) of
Talisay City sent a Notice of Coverage and Field Investigation7 (Notice of Coverage) advising respondent that its parcel of land is now
covered under Republic Act 6657 otherwise known as the Comprehensive Agrarian Reform Law (CARL), and inviting the presence of a
representative to a field investigation to be conducted on September 12, 2000 during which it (respondent) may pinpoint its retained
area in accordance with Section 6 of the CARL.

In the meantime, as petitioners appealed the MTCC decision in the Unlawful Detainer Case to the RTC, they, on August 24, 2000, filed
a Memorandum of Appeal8 contending that the MTCC:

I. . . . . ERRED IN FINDING THE [PETITIONERS] TO BE BUILDERS, PLANTERS OR SOWERS IN BAD FAITH.

II. . . . . ERRED IN NOT FINDING [RESPONDENT] TO BE OWNERS IN BAD FAITH.

III. . . . . ERRED IN APPLYING ARTICLES 449 TO 451 OF THE CIVIL CODE.

IV. . . . . HAS NO JURISDICTION OVER THE COMPLAINT UNTIL [PETITIONERS] RIGHT OF RETENTION UNTIL ARTICLE
546 OF THE CIVIL CODE HAS EXPIRED.

x x x x9

In their Memorandum, petitioners argued that respondent’s hacienda is covered by the CARL and they are qualified beneficiaries
thereunder; whether they are qualified beneficiaries is material to the determination of whether they are planters or builders or sowers
in bad faith; "upon knowledge that the land subject of the unlawful detainer case is a[n] hacienda, it is within the sound discretion of the
judge to clarify from the parties whether or not the subject land is covered by [CARL] and whether or not the defendants are qualified
agrarian reform beneficiaries"; "it is mandatory on the part of the courts to take judicial notice of agrarian laws"; and the unlawful
detainer case, at all events, was prematurely filed as respondent’s right to eject them would arise only after they are reimbursed of

their expenses in repairing the house and, therefore, the MTCC has no jurisdiction yet to order their ejectment.

By Decision of December 5, 2000,10 the RTC of Bacolod City affirmed the June 30, 2000 decision of MTCC Talisay, with modification,
disposing as follows:

WHEREFORE, the decision rendered by the Municipal Trial Court in Cities, dated June 30, 2000 is hereby modified as follows:

"WHEREFORE, judgment is hereby rendered for [respondent] . . . . against spouses Jesus Pasco and Evangeline Pasco and the
persons claiming under their names are hereby ordered:

1. To vacate the premises of [respondent’s] Lot 707, Talisay Cadastre covered by Transfer Certificate of Title No. T-88078 and
to remove the house they constructed thereon;

2. To pay [respondent] the sum of P50.00 a month as rental payment from the time of the filing of the herein complaint until
they have vacated the premises; and

3. To pay the sum of P5,000.00 as attorney’s fees.

With costs against the [petitioners].11 (Underscoring supplied)

Petitioners moved to reconsider12 the RTC decision, they contending that the MTCC had no jurisdiction over the complaint for unlawful
detainer in view of the agrarian dispute between them and respondent; and by Order 13 of June 8, 2001, petitioners’ motion for
reconsideration was denied. Hence, they elevated the case to the Court of Appeals 14 before which they raised, in the main, the issues
of:

I. . . .

A. Whether or not the Notice of Coverage issued by DAR and which was ADMITTED by [respondent’s] sufficient
evidence to prove that [respondent’s] land is covered by CARP.

B. Whether or not [petitioners’] evidence to prove that they are potential agrarian reform beneficiaries has been
existing at the time of the filing of the complaint for ejectment against them.

II. WHETHER OR NOT THERE IS AN AGRARIAN DISPUTE BETWEEN THE PARTIES IN CIVIL CASE NO. 677 SO AS TO
NULLIFY THE PROCEEDINGS IN THE MUNICIPAL TRIAL COURT IN CITIES FOR LACK OF JURISDICTION.
 xxxx

AND

WHETHER OR NOT THE APPELLATE COURT ERRED IN NOT DISMISSING RESPONDENT’S COMPLAINT FOR
EJECTMENT, HAVING BEEN BROUGHT BY A PARTY WHO IS NOT THE REAL PARTY-IN-INTEREST. 15 (Underscoring
supplied)

To their petition before the appellate court, petitioners attached a copy of the Notice of Coverage and Field Investigation sent by the
MARO, Talisay City to respondent.

In the meantime, the MARO of Talisay City issued on August 24, 2004 a Certification 16 that herein petitioner Jesus Pasco is registered
as potential Comprehensive Agrarian Reform Program (CARP) beneficiary in the land owned by respondent.

By the assailed Decision of August 27, 2003,17 the appellate court denied petitioners’ petition, ratiocinating as follows:

Well settled is the rule that the only issue in ejectment cases is the physical possession of the premises, independent of any claim of
ownership by the parties, and this must be so because the issue of ownership cannot be definitely decided in an ejectment case.
Considering that the petitioners were in possession of the subject property by sheer tolerance of its owners, they knew that their
occupation of the premises may be terminated any time. Persons who occupy the land of another at the latter’s tolerance or permission,
without any contract between them is necessarily bound by an implied promise that they will vacate the same upon demand, failing in
which a summary action for ejectment is the proper remedy against them. In the instant case, the petitioners admitted in their Answer
almost all the allegations in the complaint. Since the petitioners occupy the subject land at the owner’s tolerance, they are bound to
vacate the same, failing which, an ejectment suit is the proper remedy against them.

We agree with the allegations of the respondent corporation that the petitioners’ defenses: (1) that the subject land is covered by
CARP; (2) that there is an agrarian dispute; and (3) that the case is not brought by a real party-in-interest are mere afterthoughts to
muddle the case and win at all costs. These issues were not raised before the trial court. The fact is that the petitioners had
admitted from the very start that the respondent is the owner of the lot in question. They are therefore in estoppel if they deny the fact
the complaint was brought by the real party-in-interest. In the same manner, the defense that the court has no jurisdiction over the
ejectment case because of an agrarian dispute or the land is covered by CARP is likewise untenable. Basic is the rule that the material
averments in the complaint, which in this case is for ejectment, determine the jurisdiction of the court. And, jurisprudence
dictates that the court does not lose its jurisdiction over an ejectment case by the simple expedient of a party raising as a
defense therein the alleged existence of a tenancy relationship between the parties. Moreover, it is a settled rule that no question
will be raised on appeal unless it has been raised in the court below.

Anent the allegation that the respondent is not the real party in interest, the same deserves scant consideration. Even granting that
there is indeed a co-ownership over a portion of the subject land, the law says that anyone of the co-owners may bring an action in
ejectment. Thus, the respondent (plaintiff) is unquestionable a real party in interest.18 (Emphasis and underscoring supplied)

Hence, the petition at bar19 assailing the appellate court’s decision upon the following issues:

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

2. Whether or not the foregoing issue involves an issue affecting the jurisdiction of the court over the nature of the action or it
involves primary jurisdiction.

3. Whether or not the matters involving jurisdiction of the court over the nature of the action could be raised for the first time on
appeal.20 (Underscoring supplied)

As reflected above, the theory of petitioner before the MTCC is different from that proffered before the RTC. Thus, before the MTCC,
they claimed that the house they are occupying was built at their own expense.

Before the RTC, they raised for the first time that, they being qualified beneficiaries of the CARP, the same should be considered in
determining whether they are builders, planters, or sowers in good faith. And, for the first time too, they assailed the MTCC’s lack of
jurisdiction over the action due to prematurity, they contending that respondent’s right to eject them would accrue only after they are
reimbursed of their expenses in the repair of the house.

In their motion for reconsideration of the RTC decision, petitioners this time argued that the MTCC had no jurisdiction over the case in
view of the agrarian dispute between them and respondent.
As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court will not be
permitted to change theory on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court need
not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage. Basic
considerations of due process underlie this rule.21

The aforecited rule is not without exception, however. As correctly argued by petitioners, though not raised below, the issue of lack of
jurisdiction over the subject matter may be considered by the reviewing court as it may be raised at any stage of the proceedings.22

The issuance during the pendency of the case of a Notice of Coverage to respondent does not, however, automatically make the
ejectment case an agrarian dispute over which the Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction. 23 The
issuance of a Notice of Coverage is merely a preliminary step for the State’s acquisition of the land for agrarian reform purposes and it
does not automatically vest title or transfer the ownership of the land to the government. The purpose of a Notice of Coverage is
explained by this Court, thus:

. . . 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. . . . The date of the field investigation shall also be sent by the DAR Municipal Office to representatives of the L[and] B[ank]
[of the] P[hilippines], 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. . . . 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. . . .

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.

x x x x24 (Underscoring supplied)

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

As for the registration of petitioners as potential CARP beneficiaries, the same does not help their cause. As "potential" CARP
beneficiaries, they are included in the list of those who may be awarded land under the CARP. Nothing in the records of the case
shows that the DAR has made an award in favor of petitioners, hence, no rights over the land they occupy can be considered to have
vested in their favor in accordance with Section 24 of the CARL which reads:

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

Moreover, to allow petitioners to continue to stay in respondent’s land on the ground that they are potential CARP beneficiaries would
give them preferential treatment over other potential CARP reform beneficiaries who are not occupying the premises and still awaiting
the award to be made by the DAR in their favor. Worse, to further tolerate petitioners’ occupancy of respondent’s land might give other
potential CARP beneficiaries the wrong signal that they too can occupy the land which may be awarded to them even before they are
chosen or before an award is made in their favor.

WHEREFORE, the petition is DENIED for lack of merit.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 112526            October 12, 2001

STA. ROSA REALTY DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF APPEALS, JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P. AYENDE, LETICIA P. BALAT,
FILOMENA B. BATINO, ANICETO A. BURGOS, JAIME A. BURGOS, FLORENCIA CANUBAS, LORETO A. CANUBAS, MAXIMO
A. CANUBAS, REYNALDO CARINGAL, QUIRINO C. CASALME, BENIGNO A. CRUZAT, ELINO A. CRUZAT, GREGORIO F.
CRUZAT, RUFINO C. CRUZAT, SERGIO CRUZAT, SEVERINO F. CRUZAT, VICTORIA DE SAGUN, SEVERINO DE SAGUN,
FELICISIMO A. GONZALES, FRANCISCO A. GONZALES, GREGORIO GONZALES, LEODEGARIO N. GONZALES, PASCUAL P.
GONZALES, ROLANDO A. GONZALES, FRANCISCO A. JUANGCO, GERVACIO A. JUANGCO, LOURDES U. LUNA, ANSELMO
M. MANDANAS, CRISANTO MANDANAS, EMILIO M. MANDANAS, GREGORIO A. MANDANAS, MARIO G. MANDANAS,
TEODORO MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO B. MARQUEZ, ARMANDO P. MATIENZO, DANIEL D.
MATIENZO, MAXIMINO MATIENZO, PACENCIA P. MATIENZO, DOROTEA L. PANGANIBAN, JUANITO T. PEREZ, MARIANITO T.
PEREZ, SEVERO M. PEREZ, INOCENCIA S. PASQUIZA, BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO PETATE,
PABLO A. PLATON, PRECILLO V. PLATON, AQUILINO B. SUBOL, CASIANO T. VILLA, DOMINGO VILLA, JUAN T. VILLA,
MARIO C. VILLA, NATIVIDAD A. VILLA, JACINTA S. ALVARADO, RODOLFO ANGELES, DOMINGO A. CANUBAS, EDGARDO L.
CASALME, QUIRINO DE LEON, LEONILO M. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R. LANGUE, QUINTILLANO
LANGUE, REYNALDO LANGUE, ROMEO S. LANGUE, BONIFACIO VILLA, ROGELIO AYENDE, ANTONIO B. FERNANDEZ,
ZACARIAS HERRERA, ZACARIAS HERRERA, REYNARIO U. LAZO, AGAPITO MATIENZO, DIONISIO F. PETATE, LITO G.
REYES, JOSE M. SUBOL, CELESTINO G. TOPI NO, ROSA C. AMANTE, SOTERA CASALME, REMIGIO M. SILVERIO, THE
SECRETARY OF AGRARIAN REFORM, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, LAND BANK OF THE
PHILIPPINES, REGISTER OF DEEDS OF LAGUNA, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
REGIONAL EXECUTIVE DIRECTOR FOR REGION IV, and REGIONAL AGRARIAN REFORM OFFICER FOR REGION
IV, respondents.

PARDO, J.:

The case before the Court is a petition for review on certiorari of the decision of the Court of Appeals 1 affirming the decision of the
Department of Agrarian Reform Adjudication Board2 (hereafter DARAB) ordering the compulsory acquisition of petitioner's property
under the Comprehensive Agrarian Reform Program (CARP).

Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the registered owner of two parcels of land, situated at
Barangay Casile, Cabuyao, Laguna covered by TCT Nos. 81949 and 84891, with a total area of 254.6 hectares. According to
petitioner, the parcels of land are watersheds, which provide clean potable water to the Canlubang community, and that ninety (90) light
industries are now located in the area.3

Petitioner alleged that respondents usurped its rights over the property, thereby destroying the ecosystem. Sometime in December
1985, respondents filed a civil case4 with the Regional Trial Court, Laguna, seeking an easement of a right of way to and from Barangay
Casile. By way of counterclaim, however, petitioner sought the ejectment of private respondents.

In October 1986 to August 1987, petitioner filed with the Municipal Trial Court, Cabuyao, Laguna separate complaints for forcible entry
against respondents.5

After the filing of the ejectment cases, respondents petitioned the Department of Agrarian Reform (DAR) for the compulsory acquisition
of the SRRDC property under the CARP.

On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao, Laguna issued a notice of coverage to petitioner and
invited its officials or representatives to a conference on August 18, 1989. 6 During the meeting, the following were present:
representatives of petitioner, the Land Bank of the Philippines, PARCCOM, PARO of Laguna, MARO of Laguna, the BARC Chairman
of Barangay Casile and some potential farmer beneficiaries, who are residents of Barangay Casile, Cabuyao, Laguna. It was the
consensus and recommendation of the assembly that the landholding of SRRDC be placed under compulsory acquisition.

On August 17, 1989, petitioner filed with the Municipal Agrarian Reform Office (MARO), Cabuyao, Laguna a "Protest and Objection" to
the compulsory acquisition of the property on the ground that the area was not appropriate for agricultural purposes. The area was
rugged in terrain with slopes of 18% and above and that the occupants of the land were squatters, who were not entitled to any land as
beneficiaries.7

On August 29, 1989, the farmer beneficiaries together with the BARC chairman answered the protest and objection stating that the
slope of the land is not 18% but only 5-10% and that the land is suitable and economically viable for agricultural purposes, as
evidenced by the Certification of the Department of Agriculture, municipality of Cabuyao, Laguna.8

On September 8, 1989, MARO Belen dela Torre made a summary investigation report and forwarded the Compulsory Acquisition
Folder Indorsement (CAFI) to the Provincial Agrarian Reform Officer (hereafter, PARO).9
On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the compulsory acquisition to the Secretary of Agrarian
Reform.

On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land Acquisition and Development, DAR forwarded two
(2) Compulsory Acquisition Claim Folders covering the landholding of SRRDC, covered by TCT Nos. T-81949 and T-84891 to the
President, Land Bank of the Philippines for further review and evaluation.10

On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago sent two (2) notices of acquisition 11 to petitioner,
stating that petitioner's landholdings covered by TCT Nos. 81949 and 84891, containing an area of 188.2858 and 58.5800 hectares,
valued at P4,417,735.65 and P1,220,229.93, respectively, had been placed under the Comprehensive Agrarian Reform Program.

On February 6, 1990, petitioner SRRDC in two letters12 separately addressed to Secretary Florencio B. Abad and the Director, Bureau
of Land Acquisition and Distribution, sent its formal protest, protesting not only the amount of compensation offered by DAR for the
property but also the two (2) notices of acquisition.

On March 17, 1990, Secretary Abad referred the case to the DARAB for summary proceedings to determine just compensation under
R. A. No. 6657, Section 16.

On March 23, 1990, the LBP returned the two (2) claim folders previously referred for review and evaluation to the Director of BLAD
mentioning its inability to value the SRRDC landholding due to some deficiencies.

On March 28, 1990, Executive Director Emmanuel S. Galvez wrote Land Bank President Deogracias Vistan to forward the two (2) claim
folders involving the property of SRRDC to the DARAB for it to conduct summary proceedings to determine the just compensation for
the land.

On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines stating that its property under the aforesaid land titles were
exempt from CARP coverage because they had been classified as watershed area and were the subject of a pending petition for land
conversion.

On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2) claim folders (CACF's) to the Executive Director of the
DAR Adjudication Board for proper administrative valuation. Acting on the CACF's, on September 10, 1990, the Board promulgated a
resolution asking the office of the Secretary of Agrarian Reform (DAR) to first resolve two (2) issues before it proceeds with the
summary land valuation proceedings.13

The issues that need to be threshed out were as follows: (1) whether the subject parcels of land fall within the coverage of the
Compulsory Acquisition Program of the CARP; and (2) whether the petition for land conversion of the parcels of land may be granted.

On December 7, 1990, the Office of the Secretary, DAR, through the Undersecretary for Operations (Assistant Secretary for Luzon
Operations) and the Regional Director of Region IV, submitted a report answering the two issues raised. According to them, firstly, by
virtue of the issuance of the notice of coverage on August 11, 1989, and notice of acquisition on December 12, 1989, the property is
covered under compulsory acquisition. Secondly, Administrative Order No. 1, Series of 1990, Section IV D also supports the DAR
position on the coverage of the said property. During the consideration of the case by the Board, there was no pending petition for land
conversion specifically concerning the parcels of land in question.

On February 19, 1991, the Board sent a notice of hearing to all the parties interested, setting the hearing for the administrative
valuation of the subject parcels of land on March 6, 1991. However, on February 22, 1991, Atty. Ma. Elena P. Hernandez-Cueva,
counsel for SRRDC, wrote the Board requesting for its assistance in the reconstruction of the records of the case because the records
could not be found as her co-counsel, Atty. Ricardo Blancaflor, who originally handled the case for SRRDC and had possession of all
the records of the case was on indefinite leave and could not be contacted. The Board granted counsel's request and moved the
hearing to April 4, 1991.

On March 18, 1991, SRRDC submitted a petition to the Board for the latter to resolve SRRDC's petition for exemption from CARP
coverage before any administrative valuation of their landholding could be had by the Board.

On April 4, 1991, the initial DARAB hearing of the case was held and subsequently, different dates of hearing were set without objection
from counsel of SRRDC. During the April 15, 1991 hearing, the subdivision plan of subject property at Casile, Cabuyao, Laguna was
submitted and marked as Exhibit "5" for SRRDC. At the hearing on April 23, 1991, the Land Bank asked for a period of one month to
value the land in dispute.

At the hearing on April 23, 1991, certification from Deputy Zoning Administrator Generoso B. Opina was presented. The certification
issued on September 8, 1989, stated that the parcels of land subject of the case were classified as "industrial Park" per Sanguniang
Bayan Resolution No. 45-89 dated March 29, 1989.14
To avert any opportunity that the DARAB might distribute the lands to the farmer beneficiaries, on April 30, 1991, petitioner filed a
petition15 with DARAB to disqualify private respondents as beneficiaries. However, DARAB refused to address the issue of
beneficiaries.

In the meantime, on January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision, 16 finding that private
respondents illegally entered the SRRDC property, and ordered them evicted.

On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum directing the Land Bank of the Philippines to open a trust
account in favor of SRRDC, for P5,637,965.55, as valuation for the SRRDC property.

On December 19, 1991, DARAB promulgated a decision, the decretal portion of which reads:

"WHEREFORE, based on the foregoing premises, the Board hereby orders:

"1. The dismissal for lack of merit of the protest against the compulsory coverage of the landholdings of Sta. Rosa Realty
Development Corporation (Transfer Certificates of Title Nos. 81949 and 84891 with an area of 254.766 hectares) in Barangay
Casile, Municipality of Cabuyao, Province of Laguna under the Comprehensive Agrarian Reform Program is hereby affirmed;

"2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty Development Corporation the amount of Seven Million
Eight Hundred Forty-One Thousand, Nine Hundred Ninety Seven Pesos and Sixty-Four centavos (P7,841,997.64) for its
landholdings covered by the two (2) Transfer Certificates of Title mentioned above. Should there be a rejection of the payment
tendered, to open, if none has yet been made, a trust account for said amount in the name of Sta. Rosa Realty Development
Corporation;

"3. The Register of Deeds of the Province of Laguna to cancel with dispatch Transfer certificate of Title Nos. 84891 and 81949
and new one be issued in the name of the Republic of the Philippines, free from liens and encumbrances;

"4 The Department of Environment and Natural Resources either through its Provincial Office in Laguna or the Regional
Office, Region IV, to conduct a final segregation survey on the lands covered by Transfer certificate of Title Nos. 84891 and
81949 so the same can be transferred by the Register of Deeds to the name of the Republic of the Philippines;

"5. The Regional Office of the Department of Agrarian Reform through its Municipal and Provincial Agrarian Reform Office to
take immediate possession on the said landholding after Title shall have been transferred to the name of the Republic of the
Philippines, and distribute the same to the immediate issuance of Emancipation Patents to the farmer-beneficiaries as
determined by the Municipal Agrarian Reform Office of Cabuyao, Laguna."17

On January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision in Civil Case No. B-2333 18 ruling that
respondents were builders in bad faith.

On February 6, 1992, petitioner filed with the Court of Appeals a petition for review of the DARAB decision. 19 On November 5, 1993, the
Court of Appeals promulgated a decision affirming the decision of DARAB. The decretal portion of the Court of Appeals decision reads:

"WHEREFORE, premises considered, the DARAB decision dated September 19, 1991 is AFFIRMED, without prejudice to
petitioner Sta. Rosa Realty Development Corporation ventilating its case with the Special Agrarian Court on the issue of just
compensation."20Hence, this petition.21

On December 15, 1993, the Court issued a Resolution which reads:

"G. R. Nos. 112526 (Sta. Rosa Realty Development Corporation vs. Court of Appeals, et. al.) – Considering the compliance,
dated December 13, 1993, filed by counsel for petitioner, with the resolution of December 8, 1993 which required petitioner to
post a cash bond or surety bond in the amount of P1,500,000.00 Pesos before issuing a temporary restraining order prayed
for, manifesting that it has posted a CASH BOND in the same amount with the Cashier of the Court as evidenced by the
attached official receipt no. 315519, the Court resolved to ISSUE the Temporary Retraining Order prayed for.

"The Court therefore, resolved to restrain: (a) the Department of Agrarian Reform Adjudication Board from enforcing its
decision dated December 19, 1991 in DARAB Case No. JC-R-IV-LAG-0001, which was affirmed by the Court of Appeals in a
Decision dated November 5, 1993, and which ordered, among others, the Regional Office of the Department of Agrarian
Reform through its Municipal and Provincial Reform Office to take immediate possession of the landholding in dispute after
title shall have been transferred to the name of the Republic of the Philippines and to distribute the same through the
immediate issuance of Emancipation Patents to the farmer-beneficiaries as determined by the Municipal Agrarian Officer of
Cabuyao, Laguna, (b) The Department of Agrarian Reform and/or the Department of Agrarian Reform Adjudication Board, and
all persons acting for and in their behalf and under their authority from entering the properties involved in this case and from
introducing permanent infrastructures thereon; and (c) the private respondents from further clearing the said properties of their
green cover by the cutting or burning of trees and other vegetation, effective today until further orders from this Court."22
The main issue raised is whether the property in question is covered by CARP despite the fact that the entire property formed part of a
watershed area prior to the enactment of R. A. No. 6657.

Under Republic Act No. 6657, there are two modes of acquisition of private land: compulsory and voluntary. In the case at bar, the
Department of Agrarian Reform sought the compulsory acquisition of subject property under R. A. No. 6657, Section 16, to wit:

"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 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 the 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 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 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 make immediate possession of the land and shall request the proper
Register of Deeds to issue Transfer Certificate of Titles (TCT) in the name of the Republic of the Philippines. The
DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.

f.) Any party who disagrees with the decision may bring the matter to the court 23 of proper jurisdiction for final
determination of just compensation.

In compulsory acquisition of private lands, the landholding, the landowners and 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 (30) 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 (30) 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 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 special agrarian courts (provisionally the
Supreme Court designated branches of the regional trial court as special agrarian courts) for final determination of just compensation.

The DAR has made compulsory acquisition the priority mode of land acquisition to hasten the implementation of the Comprehensive
Agrarian Reform Program (CARP). Under Sec. 16 of the CARL, the first step in compulsory acquisition is the identification of the land,
the landowners and the farmer beneficiaries. However, the law is silent on how the identification process shall be made. To fill this gap,
on July 26, 1989, the DAR issued Administrative Order No. 12, series of 1989, which set the operating procedure in the identification of
such lands. The procedure is as follows:
A. The Municipal Agrarian Reform Officer (MARO), 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 should
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 the Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding covered under Phase I
and II of the CARP except those for which the landowners have already filed applications to avail of other modes of land
acquisition. A case folder shall contain the following duly accomplished forms:

a) CARP CA Form 1—MARO investigation report

b) CARP CA Form No 2 – Summary investigation report 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 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 representatives, the Land Bank of the Philippines (LBP) representative, and the 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 ask 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 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.
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 P500,000 per estate.

4. Upon determination of the valuation, forward the case folder, together with the duly accomplished valuation forms and his
recommendations, to the Central Office.

The LBP representative and the MARO concerned shall be furnished a copy each of his report.

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

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

2. Prepare, for the signature of the Secretary or her duly authorized representative, a notice of acquisition (CARP Form 8) for
the subject property. Serve the notice to the landowner personally or through registered mail within three days from its
approval. The notice shall include among others, the area subject of compulsory acquisition, and the amount of just
compensation offered by DAR.
 3. Should the landowner accept the DAR's offered value, the BLAD shall prepare and submit to the Secretary for approval the
order of acquisition. However, in case of rejection or non-reply, the DAR Adjudication Board (DARAB) shall conduct a
summary administrative hearing to determine just compensation, in accordance with the procedures provided under
Administrative Order No. 13, series of 1989. Immediately upon receipt of the DARAB's decision on just compensation, the
BLAD shall prepare and submit to the Secretary for approval the required order of acquisition.

4. Upon the landowner's receipt of payment, in case of acceptance, or upon deposit of payment in the designated bank, in
case of rejection or non-response, the Secretary shall immediately direct the pertinent Register of Deeds to issue the
corresponding Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. Once the property is
transferred, the DAR, through the PARO, shall take possession of the land for redistribution to qualified beneficiaries."

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

The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall complete the valuation of the
land. Ocular inspection and verification of the property by the PARO shall be mandatory when the computed value of the estate
exceeds P500,000.00. Upon determination of the valuation, the PARO shall forward all papers together with his recommendation to the
Central Office of the DAR. The DAR Central Office, specifically, the Bureau of Land Acquisition and Distribution (BLAD) shall prepare,
on the signature of the Secretary or his duly authorized representative, a notice of acquisition of the subject property. From this point,
the provisions of R. A. No. 6657, Section 16 shall apply.

For a valid implementation of the CARP Program, two notices are required: (1) the notice of coverage and letter of invitation to a
preliminary conference sent to the landowner, the representative 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, that is, the notice of coverage and the letter of invitation to a 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.
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 mere limitation of the use of the land. What is
required is the surrender of the title to and physical possession of the excess and all beneficial rights accruing to the owner in favor of
the farmer beneficiary.

In the case at bar, DAR has executed the taking of the property in question. However, payment of just compensation was not in
accordance with the procedural requirement. The law required payment in cash or LBP bonds, not by trust account as was done by
DAR.

In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform, we held that "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."24

Consequently, petitioner questioned before the Court of Appeals DARAB's decision ordering the compulsory acquisition of petitioner's
property.25 Here, petitioner pressed the question of whether the property was a watershed, not covered by CARP.

Article 67 of the Water Code of the Philippines (P. D. No. 1067) provides:

"Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any ground water may be declared by
the Department of Natural resources as a protected area. Rules and Regulations may be promulgated by such Department to
prohibit or control such activities by the owners or occupants thereof within the protected area which may damage or cause
the deterioration of the surface water or ground water or interfere with the investigation, use, control, protection, management
or administration of such waters."

Watersheds may be defined as "an area drained by a river and its tributaries and enclosed by a boundary or divide which separates it
from adjacent watersheds." Watersheds generally are outside the commerce of man, so why was the Casile property titled in the name
of SRRDC? The answer is simple. At the time of the titling, the Department of Agriculture and Natural Resources had not declared the
property as watershed area. The parcels of land in Barangay Casile were declared as "PARK" by a Zoning Ordinance adopted by the
municipality of Cabuyao in 1979, as certified by the Housing and Land Use Regulatory Board. On January 5, 1994, the Sangguniang
Bayan of Cabuyao, Laguna issued a Resolution 26 voiding the zoning classification of the land at Barangay Casile as Park and declaring
that the land is now classified as agricultural land.

The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an exercise of its police power, not the power of
eminent domain. "A zoning ordinance is defined as a local city or municipal legislation which logically arranges, prescribes, defines and
apportions a given political subdivision into specific land uses as present and future projection of needs."27

In Natalia Realty, Inc. v. Department of Agrarian Reform 28 we held that lands classified as non-agricultural prior to the effectivity of the
CARL may not be compulsorily acquired for distribution to farmer beneficiaries.

However, more than the classification of the subject land as PARK is the fact that subsequent studies and survey showed that the
parcels of land in question form a vital part of a watershed area.29

Now, petitioner has offered to prove that the land in dispute is a "watershed or part of the protected area for watershed purposes."
Ecological balances and environmental disasters in our day and age seem to be interconnected. Property developers and tillers of the
land must be aware of this deadly combination. In the case at bar, DAR included the disputed parcels of land for compulsory acquisition
simply because the land was allegedly devoted to agriculture and was titled to SRRDC, hence, private and alienable land that may be
subject to CARP.

However, the scenario has changed, after an in-depth study, survey and reassessment. We cannot ignore the fact that the disputed
parcels of land form a vital part of an area that need to be protected for watershed purposes. In a report of the Ecosystems Research
and Development Bureau (ERDB), a research arm of the DENR, regarding the environmental assessment of the Casile and Kabanga-
an river watersheds, they concluded that:

"The Casile barangay covered by CLOA in question is situated in the heartland of both watersheds. Considering the
barangays proximity to the Matangtubig waterworks, the activities of the farmers which are in conflict with proper soil and
water conservation practices jeopardize and endanger the vital waterworks. Degradation of the land would have double edge
detrimental effects. On the Casile side this would mean direct siltation of the Mangumit river which drains to the water
impounding reservoir below. On the Kabanga-an side, this would mean destruction of forest covers which acts as recharged
areas of the Matang Tubig springs. Considering that the people have little if no direct interest in the protection of the Matang
Tubig structures they couldn't care less even if it would be destroyed.

The Casile and Kabanga-an watersheds can be considered a most vital life support system to thousands of inhabitants directly
and indirectly affected by it. From these watersheds come the natural God-given precious resource – water. x x x x x

Clearing and tilling of the lands are totally inconsistent with sound watershed management. More so, the introduction of earth
disturbing activities like road building and erection of permanent infrastructures. Unless the pernicious agricultural activities of
the Casile farmers are immediately stopped, it would not be long before these watersheds would cease to be of value. The
impact of watershed degredation threatens the livelihood of thousands of people dependent upon it. Toward this, we hope that
an acceptable comprehensive watershed development policy and program be immediately formulated and implemented
before the irreversible damage finally happens.

Hence, the following are recommended:

7.2 The Casile farmers should be relocated and given financial assistance.

7.3 Declaration of the two watersheds as critical and in need of immediate rehabilitation.

7.4 A comprehensive and detailed watershed management plan and program be formulated and implemented by the
Canlubang Estate in coordination with pertinent government agencies."30

The ERDB report was prepared by a composite team headed by Dr. Emilio Rosario, the ERDB Director, who holds a doctorate degree
in water resources from U.P. Los Banos in 1987; Dr. Medel Limsuan, who obtained his doctorate degree in watershed management
from Colorado University (US) in 1989; and Dr. Antonio M. Dano, who obtained his doctorate degree in Soil and Water management
Conservation from U.P. Los Banos in 1993.

Also, DENR Secretary Angel Alcala submitted a Memorandum for the President dated September 7, 1993 (Subject: PFVR HWI Ref.:
933103 Presidential Instructions on the Protection of Watersheds of the Canlubang Estates at Barrio Casile, Cabuyao, Laguna) which
reads:

"It is the opinion of this office that the area in question must be maintained for watershed purposes for ecological and
environmental considerations, among others. Although the 88 families who are the proposed CARP beneficiaries will be
affected, it is important that a larger view of the situation be taken as one should also consider the adverse effect on
thousands of residents downstream if the watershed will not be protected and maintained for watershed purposes.
 "The foregoing considered, it is recommended that if possible, an alternate area be allocated for the affected farmers, and that
the Canlubang Estates be mandated to protect and maintain the area in question as a permanent watershed reserved."31

The definition does not exactly depict the complexities of a watershed. The most important product of a watershed is water which is one
of the most important human necessity. The protection of watersheds ensures an adequate supply of water for future generations and
the control of flashfloods that not only damage property but cause loss of lives. Protection of watersheds is an "intergenerational
responsibility" that needs to be answered now.

Another factor that needs to be mentioned is the fact that during the DARAB hearing, petitioner presented proof that the Casile property
has slopes of 18% and over, which exempted the land from the coverage of CARL. R. A. No. 6657, Section 10, provides:

"Section 10. Exemptions and Exclusions. – Lands actually, directly and exclusively used and found to be necessary for parks,
wildlife, forest reserves, reforestration, fish sanctuaries and breeding grounds, watersheds and mangroves, national defense,
school sites and campuses including experimental farm stations operated by public or private schools for educational
purposes, seeds and seedlings research and pilot production centers, church sites and convents appurtenent thereto,
communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, government and
private research and quarantine centers, and all lands with eighteen percent (18%) slope and over, except those already
developed shall be exempt from coverage of this Act."

Hence, during the hearing at DARAB, there was proof showing that the disputed parcels of land may be excluded from the compulsory
acquisition coverage of CARP because of its very high slopes.

To resolve the issue as to the true nature of the parcels of land involved in the case at bar, the Court directs the DARAB to conduct a
re-evaluation of the issue.

IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of Appeals in CA-G. R. SP No. 27234.

In lieu thereof, the Court REMANDS the case to the DARAB for re-evaluation and determination of the nature of the parcels of land
involved to resolve the issue of its coverage by the Comprehensive Land Reform Program.

In the meantime, the effects of the CLOAs issued by the DAR to supposed farmer beneficiaries shall continue to be stayed by the
temporary restraining order issued on December 15, 1993, which shall remain in effect until final decision on the case.

No costs.

SO ORDERED.
G.R. No. 154112             September 23, 2004

DEPARTMENT OF AGRARIAN REFORM, petitioner,

vs.
ROBERTO J. CUENCA and Hon. ALFONSO B. COMBONG JR., in His Capacity as the Presiding Judge of the Regional Trial
Court, Branch 63, La Carlota City, respondents.

DECISION

PANGANIBAN, J.:

All controversies on the implementation of the Comprehensive Agrarian Reform Program (CARP) fall under the jurisdiction of the
Department of Agrarian Reform (DAR), even though they raise questions that are also legal or constitutional in nature. All doubts
should be resolved in favor of the DAR, since the law has granted it special and original authority to hear and adjudicate agrarian
matters.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the March 15, 2002 Decision2 and the June 18, 2002
Resolution3 of the Court of Appeals in CA-GR SP No. 58536. In the challenged Decision, the CA disposed as follows:

"As previously stated, the principal issue raised in the court below involves a pure question of law. Thus, it being clear that the
court a quo has jurisdiction over the nature and subject matter of the case below, it did not commit grave abuse of discretion
when it issued the assailed order denying petitioner’s motion to dismiss and granting private respondent’s application for the
issuance of a writ of preliminary injunction.

"WHEREFORE, premises considered, the petition is denied due course and is accordingly DISMISSED."4

The assailed Resolution, on the other hand, denied petitioner’s Motion for Reconsideration.

The Facts

The CA narrated the facts as follows:

"Private respondent Roberto J. Cuenca is the registered owner of a parcel of land designated as Lot No. 816-A and covered
by TCT No. 1084, containing an area of 81.6117 hectares, situated in Brgy. Haguimit, La Carlota City and devoted principally
to the planting of sugar cane.

"On 21 September 1999, Noe Fortunado, Municipal Agrarian Reform Officer (MARO) of La Carlota City issued and sent a
NOTICE OF COVERAGE to private respondent Cuenca placing the above-described landholding under the compulsory
coverage of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Program (CARP). The NOTICE OF
COVERAGE also stated that the Land Bank of the Philippines (LBP) will determine the value of the subject land pursuant to
Executive Order No. 405 dated 14 June 1990.

"On 29 September 1999, private respondent Cuenca filed with the Regional Trial Court, Branch 63, La Carlota City, a
complaint against Noe Fortunado and Land Bank of the Philippines for ‘Annulment of Notice of Coverage and Declaration of
Unconstitutionality of E.O. No. 405, Series of 1990, With Preliminary Injunction and Restraining Order.’ The case was
docketed as Civil Case No. 713.

"In his complaint, Cuenca alleged, inter alia, that the implementation of CARP in his landholding is no longer with authority of
law considering that, if at all, the implementation should have commenced and should have been completed between June
1988 to June 1992, as provided in the Comprehensive Agrarian Reform Law (CARL); that the placing of the subject
landholding under CARP is without the imprimatur of the Presidential Agrarian Reform Council (PARC) and the Provincial
Agrarian Reform Coordinating Committee (PARCOM) as required by R.A. 7905; that Executive Order No. 405 dated 14 June
1990 amends, modifies and/or repeals CARL and, therefore, it is unconstitutional considering that on 14 June 1990, then
President Corazon Aquino no longer had law-making powers; that the NOTICE OF COVERAGE is a gross violation of PD 399
dated 28 February 1974.

"Private respondent Cuenca prayed that the Notice of Coverage be declared null and void ab initio and Executive Order No.
405 dated 14 June 1990 be declared unconstitutional.

"On 05 October 1999, MARO Noe Fortunado filed a motion to dismiss the complaint on the ground that the court a quo has no
jurisdiction over the nature and subject matter of the action, pursuant to R.A. 6657.
 "On 12 January 2000, the respondent Judge issued a Temporary Restraining Order directing MARO and LBP to cease and
desist from implementing the Notice of Coverage. In the same order, the respondent Judge set the hearing on the application
for the issuance of a writ of preliminary injunction on January 17 and 18, 2000.

"On 14 January 2000, MARO Fortunado filed a Motion for Reconsideration of the order granting the TRO contending inter alia
that the DAR, through the MARO, in the course of implementing the Notice of Coverage under CARP cannot be enjoined
through a Temporary Restraining Order in the light of Sections 55 and 68 of R.A. 6657.

"In an order dated 16 February 2000, the respondent Judge denied MARO Noe Fortunado’s motion to dismiss and issued a
Writ of Preliminary Injunction directing Fortunado and all persons acting in his behalf to cease and desist from implementing
the Notice of Coverage, and the LBP from proceeding with the determination of the value of the subject land.

"The Department of Agrarian Reform (DAR) [thereafter filed before the CA] a petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure, assailing the writ of preliminary injunction issued by respondent Judge on the ground of grave abuse
of discretion amounting to lack of jurisdiction.

"It is the submission of the petitioner that the assailed order is ‘in direct defiance… of Republic Act 6657, particularly Section
55 and 68’ thereof, which read:

‘SECTION 55. NO RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS – No court in the Philippines shall
have jurisdiction to issue any restraining order or writ of preliminary injunction against the PARC or any of its duly
authorized or designated agencies in any case, dispute or controversy arising from, necessary to, or in connection
with the application, implementation, or enforcement or interpretation of this Act and other pertinent laws on agrarian
reform.’

‘SECTION 68 – IMMUNITY OF GOVERNMENT AGENCIES FROM COURT’S INTERFERENCE – No injunction,

Restraining Order, prohibition or mandamus shall be issued by the lower court against the Department of Agrarian
Reform (DAR), the Department of Agriculture (DA), the Department of Environment and Natural Resources (DENR),
and the Department of Justice (DOJ) in the implementation of their program.’

"Petitioner contends that by virtue of the above provisions, all lower courts, such as the court presided over by respondent
Judge, ‘are barred if not prohibited by law to issue orders of injunctions against the Department of Agrarian Reform in the full
implementation of the Notice of Coverage which is the initial step of acquiring lands under R.A. 6657.’

"Petitioner also contends that the nature and subject matter of the case below is purely agrarian in character over which the
court a quo has no jurisdiction and that therefore, it had no authority to issue the assailed injunction order."5

Ruling of the Court of Appeals

Stressing that the issue was not simply the improper issuance of the Notice of Coverage, but was mainly the constitutionality of
Executive Order No. 405, the CA ruled that the Regional Trial Court (RTC) had jurisdiction over the case. Consonant with that authority,
the court a quo also had the power to issue writs and processes to enforce or protect the rights of the parties.

The appellate court likewise held that petitioner’s reliance on Sections 55 and 68 of RA 6657 had been misplaced, because the case
was not about a purely agrarian matter. It opined that the prohibition in certain statutes against such writs pertained only to injunctions
against administrative acts, to controversies involving facts, or to the exercise of discretion in technical cases. But on issues involving
pure questions of law, courts were not prevented from exercising their power to restrain or prohibit administrative acts.

Hence, this Petition.

Issues

In its Memorandum, petitioner raises the following issues:

"1. The Honorable Court of Appeals committed serious error by not taking into cognizance that the issues raised in the
complaint filed by the private respondent, which seeks to exclude his land from the coverage of the CARP, is an agrarian
reform matter and within the jurisdiction of the DAR, not with the trial court.

"2. The Honorable Court of Appeals, with due respect, gravely abused its discretion by sustaining the writ of injunction issued
by the trial court, which is a violation of Sections 55 and 68 of Republic Act No. 6657."7

The Court’s Ruling

The Petition has merit.
 First Issue:

Jurisdiction

In its bare essentials, petitioner’s argument is that private respondent, in his Complaint for Annulment of the Notice of Coverage, is
asking for the exclusion of his landholding from the coverage of the Comprehensive Agrarian Reform Program (CARP). According to
the DAR, the issue involves the implementation of agrarian reform, a matter over which the DAR has original and exclusive jurisdiction,
pursuant to Section 50 of the Comprehensive Agrarian Reform Law (RA 6657).

On the other hand, private respondent maintains that his Complaint assails mainly the constitutionality of EO 405. He contends that
since the Complaint raises a purely legal issue, it thus falls within the jurisdiction of the RTC. We do not agree.

Conflicts involving jurisdiction over agrarian disputes are as tortuous as the history of Philippine agrarian reform laws. The changing
jurisdictional landscape is matched only by the tumultuous struggle for, and resistance to, the breaking up and distribution of large
landholdings.

Two Basic Rules

Two basic rules have guided this Court in determining jurisdiction in these cases. First, jurisdiction is conferred by law. 8 And second, the
nature of the action and the issue of jurisdiction are shaped by the material averments of the complaint and the character of the relief
sought.9 The defenses resorted to in the answer or motion to dismiss are disregarded; otherwise, the question of jurisdiction would
depend entirely upon the whim of the defendant.10

Grant of Jurisdiction

Ever since agrarian reform legislations began, litigants have invariably sought the aid of the courts. Courts of Agrarian Relations (CARs)
were organized under RA 126711 "[f]or the enforcement of all laws and regulations governing the relation of capital and labor on all
agricultural lands under any system of cultivation." The jurisdiction of these courts was spelled out in Section 7 of the said law as
follows:

"Sec. 7. Jurisdiction of the Court. - The Court shall have original and exclusive jurisdiction over the entire Philippines, to
consider, investigate, decide, and settle all questions, matters, controversies or disputes involving all those relationships
established by law which determine the varying rights of persons in the cultivation and use of agricultural land where one of
the parties works the land, and shall have concurrent jurisdiction with the Court of First Instance over employer and farm
employee or labor under Republic Act Numbered six hundred two and over landlord and tenant involving violations of the
Usury Law (Act No. 2655, as amended) and of inflicting the penalties provided therefor."

All the powers and prerogatives inherent in or belonging to the then Courts of First Instance 12 (now the RTCs) were granted to the
CARs. The latter were further vested by the Agricultural Land Reform Code (RA 3844) with original and exclusive jurisdiction over the
following matters:

"(1) All cases or actions involving matters, controversies, disputes, or money claims arising from agrarian relations: x x x

"(2) All cases or actions involving violations of Chapters I and II of this Code and Republic Act Number eight hundred and nine;
and

"(3) Expropriations to be instituted by the Land Authority: x x x."13

Presidential Decree (PD) No. 946 thereafter reorganized the CARs, streamlined their operations, and expanded their jurisdiction as
follows:

"Sec. 12. Jurisdiction over Subject Matter. - The Courts of Agrarian Relations shall have original and exclusive jurisdiction
over:

a) Cases involving the rights and obligations of persons in the cultivation and use of agricultural land except those
cognizable by the National Labor Relations Commission; x x x ;

b) Questions involving rights granted and obligations imposed by laws, Presidential Decrees, Orders, Instructions,
Rules and Regulations issued and promulgated in relation to the agrarian reform program; Provided, however, That
matters involving the administrative implementation of the transfer of the land to the tenant-farmer under Presidential
Decree No. 27 and amendatory and related decrees, orders, instructions, rules and regulations, shall be exclusively
cognizable by the Secretary of Agrarian Reform, namely:
 (1) classification and identification of landholdings;

(2) x x x;

(3) parcellary mapping;

(4) x x x;

xxx     xxx     xxx

m) Cases involving expropriation of all kinds of land in furtherance of the agrarian reform program;

xxx     xxx     xxx

p) Ejectment proceedings instituted by the Department of Agrarian Reform and the Land Bank involving lands under their
administration and disposition, except urban properties belonging to the Land Bank;

q) Cases involving violations of the penal provisions of Republic Act Numbered eleven hundred and ninety-nine, as amended,
Republic Act Numbered thirty eight hundred and forty-four, as amended, Presidential Decrees and laws relating to agrarian
reform; Provided, however, That violations of the said penal provisions committed by any Judge shall be tried by the courts of
general jurisdiction; and

r) Violations of Presidential Decrees Nos. 815 and 816.

The CARs were abolished, however, pursuant to Section 44 14 of Batas Pambansa Blg. 12915 (approved August 14, 1981), which had
fully been implemented on February 14, 1983. Jurisdiction over cases theretofore given to the CAR’s was vested in the RTCs.16

Then came Executive Order No. 229.17 Under Section 17 thereof, the DAR shall exercise "quasi-judicial powers to determine and
adjudicate agrarian reform matters, and shall have exclusive jurisdiction over all matters involving implementation of agrarian reform,
except those falling under the exclusive original jurisdiction of the DENR and the Department of Agriculture [DA]." The DAR shall also
have the "powers to punish for contempt and to issue subpoena, subpoena duces tecum and writs to enforce its orders or decisions."

In Quismundo v. CA,18 this provision was deemed to have repealed Section 12 (a) and (b) of Presidential Decree No. 946, which vested
the then Courts of Agrarian Relations with "original exclusive jurisdiction over cases and questions involving rights granted and
obligations imposed by presidential issuances promulgated in relation to the agrarian reform program."

Under Section 4 of Executive Order No. 129-A, the DAR was also made "responsible for implementing the Comprehensive Agrarian
Reform Program." In accordance with Section 5 of the same EO, it possessed the following powers and functions:

"(b) Implement all agrarian laws, and for this purpose, punish for contempt and issue subpoena, subpoena duces tecum, writs
of execution of its decisions, and other legal processes to ensure successful and expeditious program implementation; the
decisions of the Department may in proper cases, be appealed to the Regional Trial Courts but shall be immediately executory
notwithstanding such appeal;

xxx     xxx     xxx

"(h) Provide free legal services to agrarian reform beneficiaries and resolve agrarian conflicts and land-tenure related
problems as may be provided for by law;

xxx     xxx     xxx

"(l) Have exclusive authority to approve or disapprove conversion of agricultural lands for residential, commercial, industrial,
and other land uses as may be provided x x x."

The above grant of jurisdiction to the DAR covers these areas:

(a) adjudication of all matters involving implementation of agrarian reform;

(b) resolution of agrarian conflicts and land tenure related problems; and
 (c) approval or disapproval of the conversion, restructuring or readjustment of agricultural lands into residential,
commercial, industrial, and other non-agricultural uses.

The foregoing provision was as broad as those "theretofore vested in the Regional Trial Court by Presidential Decree No. 946," as the
Court ruled in Vda. de Tangub v. CA,19 which we quote:

"x x x. The intention evidently was to transfer original jurisdiction to the Department of Agrarian Reform, a proposition stressed
by the rules formulated and promulgated by the Department for the implementation of the executive orders just quoted. The
rules included the creation of the Agrarian Reform Adjudication Board designed to exercise the adjudicatory functions of the
Department, and the allocation to it of —

‘x x x [O]riginal and exclusive jurisdiction over the subject matter vested upon it by law, and all cases, disputes,
controversies and matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program
under Executive Order No. 229, Executive Order No. 129-A, Republic Act No. 3844, as amended by Republic Act No.
6289, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations.’

"The implementing rules also declare that ‘(s)pecifically, such jurisdiction shall extend over but not be limited to x x x (that
theretofore vested in the Regional Trial Courts, i.e.) (c)ases involving the rights and obligations of persons engaged in the
cultivation and use of agricultural land covered by the Comprehensive Agrarian Reform Program (CARP) and other agrarian
laws x x x."20

In the same case, the Court also held that the jurisdictional competence of the DAR had further been clarified by RA 6657 thus:

"x x x. The Act [RA 6657] makes references to and explicitly recognizes the effectivity and applicability of Presidential Decree
No. 229. More particularly, the Act echoes the provisions of Section 17 of Presidential Decree No. 229, supra, investing the
Department of Agrarian Reform with original jurisdiction, generally, over all cases involving agrarian laws, although, as shall
shortly be pointed out, it restores to the Regional Trial Court, limited jurisdiction over two groups of cases. Section 50 reads as
follows:

‘SEC. 50. Quasi-Judicial Powers of the DAR. — The DAR is hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture [DA] and the Department of Environment and Natural Resources [DENR].

xxx     xxx     xxx

‘It shall have the power to summon witnesses, administer oaths, take testimony, require submission of reports,
compel the production of books and documents and answers to interrogatories and issue subpoena and subpoena
duces tecum and to enforce its writs through sheriffs or other duly deputized officers. It shall likewise have the power
to punish direct and indirect contempt in the same manner and subject to the same penalties as provided in the Rules
of Court.’"21

Nonetheless, we have held that the RTCs have not been completely divested of jurisdiction over agrarian reform matters. Section 56 of
RA 6657 confers special jurisdiction on "Special Agrarian Courts," which are actually RTCs designated as such by the Supreme
Court.22 Under Section 57 of the same law, these Special Agrarian Courts have original and exclusive jurisdiction over the following
matters:
"1) ‘all petitions for the determination of just compensation to land-owners,’ and
"2) ‘the prosecution of all criminal offenses under x x x [the] Act.’"

The above delineation of jurisdiction remains in place to this date. Administrative Circular No. 29-2002 23 of this Court stresses the
distinction between the quasi-judicial powers of the DAR under Sections 50 and 55 of RA 6657 and the jurisdiction of the Special
Agrarian Courts referred to by Sections 56 and 57 of the same law.

Allegations of the Complaint

A careful perusal of respondent’s Complaint24 shows that the principal averments and reliefs prayed for refer -- not to the "pure question
of law" spawned by the alleged unconstitutionality of EO 405 -- but to the annulment of the DAR’s Notice of Coverage. Clearly, the main
thrust of the allegations is the propriety of the Notice of Coverage, as may be gleaned from the following averments, among others:

"6. This implementation of CARP in the landholding of the [respondent] is contrary to law and, therefore, violates
[respondent’s] constitutional right not to be deprived of his property without due process of law. The coverage of [respondent’s]
landholding under CARP is NO longer with authority of law. If at all, the implementation of CARP in the landholding of
[respondent] should have commenced and [been] completed between June 1988 to June 1992 as provided for in CARL, to
wit: x x x;
 "7. Moreover, the placing of [respondent’s] landholding under CARP as of 21 September 1999 is without the imprimatur of the
Presidential Agrarian Reform Council (PARC) and the Provincial Agrarian Reform Coordinating Committee (PARCOM) as
mandated and required by law pursuant to R.A. 7905 x x x;

xxx     xxx     xxx

"9. Under the provisions of CARL, it is the PARC and/or the DAR, and not x x x Land Bank, which is authorized to preliminarily
determine the value of the lands as compensation therefor, thus – x x x;

xxx     xxx     xxx

"12. That the aforementioned NOTICE OF COVERAGE with intendment and purpose of acquiring [respondent’s]
aforementioned land is a gross violation of law (PD 399 dated 28 February 1974 which is still effective up to now) inasmuch as
[respondent’s] land is traversed by and a road frontage as admitted by the DAR’s technician and defendant FORTUNADO
(MARO) x x x;"

"13. That as reflected in said Pre-Ocular Inspection Report, copy of which is hereto attached as annex ‘D’ forming part hereof,
[respondent’s] land is above eighteen percent (18%) slope and therefore, automatically exempted and excluded from the
operation of Rep. Act 6657, x x x.25 (Italics supplied)

In contrast, the 14-page Complaint touches on the alleged unconstitutionality of EO 405 by merely making these two allegations:

"10. Executive Order No. 405 dated 14 June 1990 (issued by the then President Corazon Aquino) is unconstitutional for it
plainly amends, modifies and/or repeals CARL. On 14 June 1990, then President Corazon Aquino had no longer law-making
powers as the Philippine Congress was by then already organized, existing and operational pursuant to the 1987 Constitution.
A copy of the said Executive Order is hereto attached as Annex ‘B’ forming part hereof.

"11. Our constitutional system of separation of powers renders the said Executive Order No. 405 unconstitutional and all
valuations made, and to be made, by the defendant Land Bank pursuant thereto are null and void and without force and effect.
Indispensably and ineludibly, all related rules, regulations, orders and other issuances issued or promulgated pursuant to said
Executive Order No. 405 are also null and void ab initio and without force and effect."26

We stress that the main subject matter raised by private respondent before the trial court was not the issue of compensation (the
subject matter of EO 40527). Note that no amount had yet been determined nor proposed by the DAR. Hence, there was no occasion to
invoke the court’s function of determining just compensation.28

To be sure, the issuance of the Notice of Coverage 29 constitutes the first necessary step towards the acquisition of private land under
the CARP. Plainly then, the propriety of the Notice relates to the implementation of the CARP, which is under the quasi-judicial
jurisdiction of the DAR. Thus, the DAR could not be ousted from its authority by the simple expediency of appending an allegedly
constitutional or legal dimension to an issue that is clearly agrarian.

In view of the foregoing, there is no need to address the other points pleaded by respondent in relation to the jurisdictional issue. We
need only to point that in case of doubt, the jurisprudential trend is for courts to refrain from resolving a controversy involving matters
that demand the special competence of administrative agencies, "even if the question[s] involved [are] also judicial in character," 30 as in
this case.
Second Issue:
Preliminary Injunction

Having declared the RTCs to be without jurisdiction over the instant case, it follows that the RTC of La Carlota City (Branch 63) was
devoid of authority to issue the assailed Writ of Preliminary Injunction. That Writ must perforce be stricken down as a nullity. Such nullity
is particularly true in the light of the express prohibitory provisions of the CARP and this Court’s Administrative Circular Nos. 29-2002
and 38-2002. These Circulars enjoin all trial judges to strictly observe Section 68 of RA 6657, which reads:

"Section 68. Immunity of Government Agencies from Undue Interference. – No injunction, restraining order, prohibition or
mandamus shall be issued by the lower courts against the Department of Agrarian Reform (DAR), the Department of
Agriculture (DA), the Department of Environment and Natural Resources (DENR) and the Department of Justice (DOJ) in their
implementation of the program."

WHEREFORE, the Petition is hereby GRANTED, and the challenged Decision and Resolution REVERSED AND SET ASIDE.
Accordingly, the February 16, 2000 Order of the Regional Trial Court of La Carlota City (Branch 63) is ANNULLED and a new one
entered, DISMISSING the Complaint in Civil Case 713. The Writ of Preliminary Injunction issued therein is also expressly VOIDED. No
costs.

SO ORDERED.
G.R. No. 143275            March 20, 2003

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
ARLENE DE LEON and BERNARDO DE LEON, respondents.

RESOLUTION

CORONA, J.:

Before us are the motion for reconsideration dated October 16, 2002 and supplement to the motion for reconsideration dated
November 11, 2002 filed by movant-petitioner Land Bank of the Philippines (LBP, for brevity) seeking a reversal of this Court’s
Decision1 dated September 10, 2002 which denied LBP’s petition for review.

Herein respondent spouses Arlene and Bernardo de Leon filed a petition to fix the just compensation of a parcel of land 2 before the
Regional Trial Court of Tarlac, Branch 63, acting as a Special Agrarian Court. On December 19, 1997, the agrarian court rendered
summary judgment fixing the compensation of the subject property as follows: (1) P1,260,000 for the 16.69 hectares of riceland and (2)
P2,957,250 for the 30.4160 hectares of sugarland.

The Department of Agrarian Reform (DAR, for brevity) and LBP both filed separate appeals using different modes. DAR filed a petition
for review while LBP interposed an ordinary appeal by filing a notice of appeal. DAR’s petition for review 3 was assigned to the Special
Third Division of the Court of Appeals while LBP’s ordinary appeal4 was assigned to the Fourth Division of the same court.

On November 6, 1998, the appellate court’s Special Third Division rendered a decision in the petition for review filed by DAR, the
dispositive portion of which reads:

WHEREFORE, premises considered, the petition for review is GIVEN DUE COURSE. The decision dated February 9, 1998 is
partially reconsidered. The trial court is ordered to recompute the compensation based on the selling price of palay at 213.00
per cavan. Petitioner is ordered to pay legal interest at 6% of the compensation so fixed from 1990 until full payment is made
by the government.5

Meanwhile, on February 15, 2000, the appellate court’s Fourth Division dismissed LBP’s ordinary appeal primarily holding that LBP
availed of the wrong mode of appeal.6 LBP filed a motion for reconsideration but the same was denied.

On July 14, 2000, LBP filed before this Court a petition for review of the decision of the Court of Appeals. On September 10, 2002, this
Court rendered a Decision, the dispositive portion of which reads:

WHEREFORE, the appealed RESOLUTIONS, dated February 15, 2000 and May 22, 2000, respectively, of the Court of
Appeals are hereby AFFIRMED. No costs.

SO ORDERED.7

In affirming the dismissal by the appellate court of LBP’s ordinary appeal, this Court held that Section 60 8 of RA 6657 (The
Comprehensive Agrarian Reform Law) is clear in providing petition for review as the appropriate mode of appeal from decisions of
Special Agrarian Courts. Section 619 (the provision on which LBP bases its argument that ordinary appeal is the correct mode of appeal
from decisions of Special Agrarian Courts) merely makes a general reference to the Rules of Court and does not categorically prescribe
ordinary appeal as the correct way of questioning decisions of Special Agrarian Courts. Thus, we interpreted Section 61 to mean that
the specific rules for petitions for review in the Rules of Court and other relevant procedures of appeals shall be followed in appealed
decisions of Special Agrarian Courts.

We likewise held that Section 60 of RA 6657 is constitutional and does not violate this Court’s power to "promulgate rules concerning
the protection and enforcement of constitutional rights, pleadings, practice and procedure in all courts, the admission to the practice of
law, the Integrated Bar and legal assistance to the underprivileged." 10 We ruled that the Rules of Court does not categorically prescribe
ordinary appeal as the exclusive mode of appeal from decisions of Special Agrarian Courts. The reference by Section 61 to the Rules of
Court in fact even supports the mode of a petition for review as the appropriate way to appeal decisions of the Special Agrarian Courts.
Furthermore, the same Section 5(5), Article VIII of the 1987 Philippine Constitution quoted by LBP states that "rules of procedure of
special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court." Since Section 60 is a special
procedure and this Court has not yet provided for a particular process for appeals from decisions of agrarian courts, the said section
does not encroach on our rule-making power.

Hence, LBP filed the instant motion for reconsideration and supplement to the motion for reconsideration reiterating its claim in the
petition for review that Section 60 of RA 6657 is unconstitutional. LBP still maintains that a legislative act like Section 60 infringes on the
exclusive rule-making power of this Court in violation of the 1987 Philippine Constitution.
In the event that said argument is again rejected, LBP pleads that the subject Decision should at least be given prospective application
considering that more than 60 similar agrarian cases filed by LBP via ordinary appeal before the Court of Appeals are in danger of
being dismissed outright on technical grounds on account of our ruling herein. This, according to LBP, will wreak financial havoc not
only on LBP as the financial intermediary of the Comprehensive Agrarian Reform Program but also on the national treasury and the
already depressed economic condition of our country.11 Thus, in the interest of fair play, equity and justice, LBP stresses the need for
the rules to be relaxed so as to give substantial consideration to the appealed cases.

On the first ground, we find it needless to re-discuss the reasons already propounded in our September 10, 2002 Decision explaining
why Section 60 of RA 6657 does not encroach on our constitutional rule-making power.

Be that as it may, we deem it necessary to clarify our Decision’s application to and effect on LBP’s pending cases filed as ordinary
appeals before the Court of Appeals. It must first be stressed that the instant case poses a novel issue; our Decision herein will be a
landmark ruling on the proper way to appeal decisions of Special Agrarian Courts. Before this case reached us, LBP had no
authoritative guideline on how to appeal decisions of Special Agrarian Courts considering the seemingly conflicting provisions of
Section 60 and 61 of RA 6657.

More importantly, the Court of Appeals has rendered conflicting decisions on this precise issue. On the strength of Land Bank of the
Philippines vs. Hon. Feliciano Buenaventura, penned by Associate Justice Salvador Valdez, Jr. of the Court of Appeals, certain
decisions12 of the appellate court held that an ordinary appeal is the proper mode. On the other hand, a decision 13 of the same court,
penned by Associate Justice Romeo Brawner and subject of the instant review, held that the proper mode of appeal is a petition for
review. In another case,14 the Court of Appeals also entertained an appeal by the DAR filed as a petition for review.

On account of the absence of jurisprudence interpreting Sections 60 and 61 of RA 6657 regarding the proper way to appeal decisions
of Special Agrarian Courts as well as the conflicting decisions of the Court of Appeals thereon, LBP cannot be blamed for availing of the
wrong mode. Based on its own interpretation and reliance on the Buenaventura ruling, LBP acted on the mistaken belief that an
ordinary appeal is the appropriate manner to question decisions of Special Agrarian Courts.

Hence, in the light of the aforementioned circumstances, we find it proper to emphasize the prospective application of our Decision
dated September 10, 2002. A prospective application of our Decision is not only grounded on equity and fair play but also based on the
constitutional tenet that rules of procedure shall not impair substantive rights.

In accordance with our constitutional power to review rules of procedure of special courts, 15 our Decision in the instant case actually
lays down a rule of procedure, specifically, a rule on the proper mode of appeal from decisions of Special Agrarian Courts. Under
Section 5 (5), Article VIII of the 1987 Philippine Constitution, rules of procedure shall not diminish, increase or modify substantive rights.
In determining whether a rule of procedure affects substantive rights, the test is laid down in Fabian vs. Desierto,16 which provides that:

[I]n determining whether a rule prescribed by the Supreme Court, for the practice and procedure of the lower courts, abridges,
enlarges, or modifies any substantive right, the test is whether the rule really regulates procedure, that is, the judicial process
for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for a disregard
or infraction of them. If the rule takes away a vested right, it is not procedural. If the rule creates a right such as the right to
appeal, it may be classified as a substantive matter; but if it operates as a means of implementing an existing right then the
rule deals merely with procedure. (italics supplied)

We hold that our Decision, declaring a petition for review as the proper mode of appeal from judgments of Special Agrarian Courts, is a
rule of procedure which affects substantive rights. If our ruling is given retroactive application, it will prejudice LBP’s right to appeal
because pending appeals in the Court of Appeals will be dismissed outright on mere technicality thereby sacrificing the substantial
merits thereof. It would be unjust to apply a new doctrine to a pending case involving a party who already invoked a contrary view and
who acted in good faith thereon prior to the issuance of said doctrine.

In the 1992 case of Spouses Benzonan vs. Court of Appeals,17 respondent Pe, whose land was foreclosed by Development Bank of the
Philippines in 1977 and subsequently sold to petitioners Benzonan in 1979, tried to invoke a 1988 Supreme Court ruling counting the
five-year period to repurchase from the expiration (in 1978) of the one-year period to redeem the foreclosed property. Said 1988 ruling
reversed the 1957 and 1984 doctrines which counted the five-year period to repurchase from the date of conveyance of foreclosure
sale (in 1977). Using the 1988 ruling, respondent Pe claimed that his action to repurchase in 1983 had not yet prescribed.

However, this Court refused to apply the 1988 ruling and instead held that the 1957 and 1984 doctrines (the prevailing ruling when Pe
filed the case in 1983) should govern. The 1988 ruling should not retroact to and benefit Pe’s 1983 case to repurchase. Thus, the action
had indeed prescribed. This Court justified the prospective application of the 1988 ruling as follows:

We sustain the petitioners' position. It is undisputed that the subject lot was mortgaged to DBP on February 24, 1970. It was
acquired by DBP as the highest bidder at a foreclosure sale on June 18, 1977, and then sold to the petitioners on September
29, 1979.

At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that enunciated
in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP are bound by these decisions for
 pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the laws or the Constitution shall form a part
of the legal system of the Philippines." But while our decisions form part of the law of the land, they are also subject to Article 4
of the Civil Code which provides that "laws shall have no retroactive effect unless the contrary is provided." This is expressed
in the familiar legal maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against retroactivity is
easy to perceive. The retroactive application of a law usually divests rights that have already become vested or
impairs the obligations of contract and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]).

The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines.

xxx           xxx           xxx

The buyers in good faith from DBP had a right to rely on our rulings in Monge and Tupas when they purchased the property
from DBP in 1979 or thirteen (13) years ago. Under the rulings in these two cases, the period to repurchase the disputed lot
given to respondent Pe expired on June 18, 1982. He failed to exercise his right. His lost right cannot be revived by relying on
the 1988 case of Belisario. The right of petitioners over the subject lot had already become vested as of that time and cannot
be impaired by the retroactive application of the Belisario ruling.18 (emphasis supplied)

WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated
November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our
ruling therein that a petition for review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases
appealed after the finality of this Resolution.

SO ORDERED.