Central Mindanao University v DARAB, 215 SCRA 86

Facts:

his case originated in a complaint filed by complainants calling themselves as the Bukidnon
Free Farmers and Agricultural Laborers Organization (BUFFALO for brevity) under the
leadership of Alvin Obrique and Luis Hermoso against the CMU, before the Department of
Agrarian Reform for Declaration of Status as Tenants, under the CARP.

From the records, the following facts are evident. The petitioner, the CMU, is an agricultural
educational institution owned and run by the state located in the town of Musuan, Bukidnon
province. It started as a farm school at Marilang, Bukidnon in early 1910, in response to the
public demand for an agricultural school in Mindanao. It expanded into the Bukidnon
National Agricultural High School and was transferred to its new site in Managok near
Malaybalay, the provincial capital of Bukidnon.

In the early 1960's, it was converted into a college with campus at Musuan, until it became
what is now known as the CMU, but still primarily an agricultural university. From its
beginning, the school was the answer to the crying need for training people in order to
develop the agricultural potential of the island of Mindanao. Those who planned and
established the school had a vision as to the future development of that part of the
Philippines. On January 16, 1958 the President of the Republic of the Philippines, the late
Carlos P. Garcia, "upon the recommendation of the Secretary of Agriculture and Natural
Resources, and pursuant to the provisions of Section 53, of Commonwealth Act No. 141, as
amended", issued Proclamation No. 476, withdrawing from sale or settlement and reserving
for the Mindanao Agricultural College, a site which would be the future campus of what is
now the CMU. A total land area comprising 3,080 hectares was surveyed and registered and
titled in the name of the petitioner under OCT Nos. 160, 161 and 162. 1

In the course of the cadastral hearing of the school's petition for registration of the
aforementioned grant of agricultural land, several tribes belonging to cultural communities,
opposed the petition claiming ownership of certain ancestral lands forming part of the tribal
reservations. Some of the claims were granted so that what was titled to the present
petitioner school was reduced from 3,401 hectares to 3,080 hectares.

In the early 1960's, the student population of the school was less than 3,000. By 1988, the
student population had expanded to some 13,000 students, so that the school community
has an academic population (student, faculty and non-academic staff) of almost 15,000. To
cope with the increase in its enrollment, it has expanded and improved its educational
facilities partly from government appropriation and partly by self-help measures.

True to the concept of a land grant college, the school embarked on self-help measures to
carry out its educational objectives, train its students, and maintain various activities which
the government appropriation could not adequately support or sustain. In 1984, the CMU
approved Resolution No. 160, adopting a livelihood program called "Kilusang Sariling Sikap
Program" under which the land resources of the University were leased to its faculty and
employees. This arrangement was covered by a written contract. Under this program the
faculty and staff combine themselves to groups of five members each, and the CMU
provided technical know-how, practical training and all kinds of assistance, to enable each
group to cultivate 4 to 5 hectares of land for the lowland rice project. Each group pays the
CMU a service fee and also a land use participant's fee. The contract prohibits participants
and their hired workers to establish houses or live in the project area and to use the
cultivated land as a collateral for any kind of loan. It was expressly stipulated that no
landlord-tenant relationship existed between the CMU and the faculty and/or employees.

1
This particular program was conceived as a multi-disciplinary applied research extension
and productivity program to utilize available land, train people in modern agricultural
technology and at the same time give the faculty and staff opportunities within the confines
of the CMU reservation to earn additional income to augment their salaries. The location of
the CMU at Musuan, Bukidnon, which is quite a distance from the nearest town, was the
proper setting for the adoption of such a program. Among the participants in this program
were Alvin Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao, Danilo Vasquez, Aronio
Pelayo and other complainants. Obrique was a Physics Instructor at the CMU while the
others were employees in the lowland rice project. The other complainants who were not
members of the faculty or non-academic staff CMU, were hired workers or laborers of the
participants in this program. When petitioner Dr. Leonardo Chua became President of the
CMU in July 1986, he discontinued the agri-business project for the production of rice, corn
and sugar cane known as Agri-Business Management and Training Project, due to losses
incurred while carrying on the said project. Some CMU personnel, among whom were the
complainants, were laid-off when this project was discontinued. As Assistant Director of this
agri-business project, Obrique was found guilty of mishandling the CMU funds and was
separated from service by virtue of Executive Order No. 17, the re-organization law of the
CMU.

Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project
called CMU-Income Enhancement Program (CMU-IEP) to develop unutilized land resources,
mobilize and promote the spirit of self-reliance, provide socio-economic and technical
training in actual field project implementation and augment the income of the faculty and the
staff.

Under the terms of a 3-party Memorandum of Agreement 2 among the CMU, the CMU-
Integrated Development Foundation (CMU-IDF) and groups or "seldas" of 5 CMU
employees, the CMU would provide the use of 4 to 5 hectares of land to a selda for one (1)
calendar year. The CMU-IDF would provide researchers and specialists to assist in the
preparation of project proposals and to monitor and analyze project implementation. The
selda in turn would pay to the CMU P100 as service fee and P1,000 per hectare as
participant's land rental fee. In addition, 400 kilograms of the produce per year would be
turned over or donated to the CMU-IDF. The participants agreed not to allow their hired
laborers or member of their family to establish any house or live within vicinity of the project
area and not to use the allocated lot as collateral for a loan. It was expressly provided that
no tenant-landlord relationship would exist as a result of the Agreement.

Initially, participation in the CMU-IEP was extended only to workers and staff members who
were still employed with the CMU and was not made available to former workers or
employees. In the middle of 1987, to cushion the impact of the discontinuance of the rice,
corn and sugar cane project on the lives of its former workers, the CMU allowed them to
participate in the CMU-IEP as special participants.

Under the terms of a contract called Addendum To Existing Memorandum of Agreement

Concerning Participation To the CMU-Income Enhancement Program, 3 a former employee
would be grouped with an existing selda of his choice and provided one (1) hectare for a
lowland rice project for one (1) calendar year. He would pay the land rental participant's fee
of P1,000.00 per hectare but on a charge-to-crop basis. He would also be subject to the
same prohibitions as those imposed on the CMU employees. It was also expressly provided
that no tenant-landlord relationship would exist as a result of the Agreement.

2
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those
whose contracts were not renewed were served with notices to vacate.

The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane
project, the loss of jobs due to termination or separation from the service and the alleged
harassment by school authorities, all contributed to, and precipitated the filing of the
complaint.

On the basis of the above facts, the DARAB found that the private respondents were not
tenants and cannot therefore be beneficiaries under the CARP. At the same time, the
DARAB ordered the segregation of 400 hectares of suitable, compact and contiguous
portions of the CMU land and their inclusion in the CARP for distribution to qualified
beneficiaries.

Issue:

The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the
Court of Appeals, raised the following issues:

1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for
Declaration of Status of Tenants and coverage of land under the CARP.

2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse
of discretion amounting to lack of jurisdiction in dismissing the Petition for Review
on Certiorari and affirming the decision of DARAB.

Ruling:

The evidence on record establish without doubt that the complainants were originally
authorized or given permission to occupy certain areas of the CMU property for a definite
purpose — to carry out certain university projects as part of the CMU's program of activities
pursuant to its avowed purpose of giving training and instruction in agricultural and other
related technologies, using the land and other resources of the institution as a laboratory for
these projects. Their entry into the land of the CMU was with the permission and written
consent of the owner, the CMU, for a limited period and for a specific purpose. After the
expiration of their privilege to occupy and cultivate the land of the CMU, their continued stay
was unauthorized and their settlement on the CMU's land was without legal authority. A
person entering upon lands of another, not claiming in good faith the right to do so by virtue
of any title of his own, or by virtue of some agreement with the owner or with one whom he
believes holds title to the land, is a squatter. 4 Squatters cannot enter the land of another
surreptitiously or by stealth, and under the umbrella of the CARP, claim rights to said
property as landless peasants. Under Section 73 of R.A. 6657, persons guilty of committing
prohibited acts of forcible entry or illegal detainer do not qualify as beneficiaries and may not
avail themselves of the rights and benefits of agrarian reform. Any such person who
knowingly and wilfully violates the above provision of the Act shall be punished with
imprisonment or fine at the discretion of the Court.

3
In view of the above, the private respondents, not being tenants nor proven to be landless
peasants, cannot qualify as beneficiaries under the CARP.

The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals,
segregating 400 hectares from the CMU land is primarily based on the alleged fact that the
land subject hereof is "not directly, actually and exclusively used for school sites, because
the same was leased to Philippine Packing Corporation (now Del Monte Philippines)".

In support of this view, the Board held that the "respondent University failed to show that it is
using actually, really, truly and in fact, the questioned area to the exclusion of others, nor did
it show that the same is directly used without any intervening agency or person", 5 and
"there is no definite and concrete showing that the use of said lands are essentially
indispensable for educational purposes". 6 The reliance by the respondents Board and
Appellate Tribunal on the technical or literal definition from Moreno's Philippine Law
Dictionary and Black's Law Dictionary, may give the ordinary reader a classroom meaning of
the phrase "is actually directly and exclusively", but in so doing they missed the true
meaning of Section 10, R.A. 6657, as to what lands are exempted or excluded from the
coverage of the CARP.

The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, are as follows:

Sec. 4. SCOPE. — The Comprehensive Agrarian Reform Law of 1988 shall

cover, regardless of tenurial arrangement and commodity produced, all public
and private agricultural lands as provided in Proclamation No. 131 and
Executive Order No. 229 including other lands of the public domain suitable
for agriculture.

More specifically, the following lands are covered by the Comprehensive

Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or
suitable for agriculture. No reclassification of forest of mineral lands to
agricultural lands shall be undertaken after the approval of this Act until
Congress, taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the public
domain;

(b) All lands of the public domain in excess of the specific limits ad
determined by Congress in the preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for
agriculture; and

(d) All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon.

Sec. 10 EXEMPTIONS AND EXCLUSIONS. — Lands actually, directly and

exclusively used and found to be necessary for parks, wildlife, forest
reserves, reforestration, fish sanctuaries and breeding grounds, watersheds
and mangroves, national defense, school sites and campuses including
experimental farm stations operated by public or private schools for
educational purposes, seeds and seedlings research and pilot production
centers, church sites and convents appurtenant thereto, mosque sites and

4
 Islamic centers appurtenant thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already developed shall
be exempt from the coverage of this Act. (Emphasis supplied).

The construction given by the DARAB to Section 10 restricts the land area of the CMU to its
present needs or to a land area presently, actively exploited and utilized by the university in
carrying out its present educational program with its present student population and
academic facility — overlooking the very significant factor of growth of the university in the
years to come. By the nature of the CMU, which is a school established to promote
agriculture and industry, the need for a vast tract of agricultural land and for future programs
of expansion is obvious. At the outset, the CMU was conceived in the same manner as land
grant colleges in America, a type of educational institution which blazed the trail for the
development of vast tracts of unexplored and undeveloped agricultural lands in the Mid-
West. What we now know as Michigan State University, Penn State University and Illinois
State University, started as small land grant colleges, with meager funding to support their
ever increasing educational programs. They were given extensive tracts of agricultural and
forest lands to be developed to support their numerous expanding activities in the fields of
agricultural technology and scientific research. Funds for the support of the educational
programs of land grant colleges came from government appropriation, tuition and other
student fees, private endowments and gifts, and earnings from miscellaneous sources. 7 It
was in this same spirit that President Garcia issued Proclamation No. 476, withdrawing from
sale or settlement and reserving for the Mindanao Agricultural College (forerunner of the
CMU) a land reservation of 3,080 hectares as its future campus. It was set up in Bukidnon,
in the hinterlands of Mindanao, in order that it can have enough resources and wide open
spaces to grow as an agricultural educational institution, to develop and train future farmers
of Mindanao and help attract settlers to that part of the country.

In line with its avowed purpose as an agricultural and technical school, the University
adopted a land utilization program to develop and exploit its 3080-hectare land reservation
as follows: 8

No. of Hectares Percentage

a. Livestock and Pasture 1,016.40 33

b. Upland Crops 616 20

c. Campus and Residential sites 462 15

d. Irrigated rice 400.40 13

e. Watershed and forest reservation 308 10

f. Fruit and Trees Crops 154 5

g. Agricultural
Experimental stations 123.20 4

3,080.00 100%

5
The first land use plan of the CARP was prepared in 1975 and since then it has undergone
several revisions in line with changing economic conditions, national economic policies and
financial limitations and availability of resources. The CMU, through Resolution No. 160 S.
1984, pursuant to its development plan, adopted a multi-disciplinary applied research
extension and productivity program called the "Kilusang Sariling Sikap Project" (CMU-
KSSP). The objectives 9 of this program were:

1. Provide researches who shall assist in (a) preparation of proposal; (b)

monitor project implementation; and (c) collect and analyze all data and
information relevant to the processes and results of project implementation;

2. Provide the use of land within the University reservation for the purpose of
establishing a lowland rice project for the party of the Second Part for a period
of one calendar year subject to discretionary renewal by the Party of the First
Part;

3. Provide practical training to the Party of the Second Part on the

management and operation of their lowland project upon request of Party of
the Second Part; and

4. Provide technical assistance in the form of relevant livelihood project

specialists who shall extend expertise on scientific methods of crop
production upon request by Party of the Second Part.

In return for the technical assistance extended by the CMU, the participants in a project pay
a nominal amount as service fee. The self-reliance program was adjunct to the CMU's
lowland rice project.

The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte
Phils., Inc.) was leased long before the CARP was passed. The agreement with the
Philippine Packing Corporation was not a lease but a Management and Development
Agreement, a joint undertaking where use by the Philippine Packing Corporation of the land
was part of the CMU research program, with the direct participation of faculty and students.
Said contracts with the Philippine Packing Corporation and others of a similar nature (like
MM-Agraplex) were made prior to the enactment of R.A. 6657 and were directly connected
to the purpose and objectives of the CMU as an educational institution. As soon as the
objectives of the agreement for the joint use of the CMU land were achieved as of June
1988, the CMU adopted a blue print for the exclusive use and utilization of said areas to
carry out its own research and agricultural experiments.

As to the determination of when and what lands are found to be necessary for use by the
CMU, the school is in the best position to resolve and answer the question and pass upon
the problem of its needs in relation to its avowed objectives for which the land was given to it
by the State. Neither the DARAB nor the Court of Appeals has the right to substitute its
judgment or discretion on this matter, unless the evidentiary facts are so manifest as to show
that the CMU has no real for the land.

6
It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the
Court of Appeals in its Decision dated August 20, 1990, is not covered by the CARP
because:

(1) It is not alienable and disposable land of the public domain;

(2) The CMU land reservation is not in excess of specific limits as determined
by Congress;

(3) It is private land registered and titled in the name of its lawful owner, the
CMU;

(4) It is exempt from coverage under Section 10 of R.A. 6657 because the
lands are actually, directly and exclusively used and found to be
necessary for school site and campus, including experimental farm stations
for educational purposes, and for establishing seed and seedling research
and pilot production centers. (Emphasis supplied).

Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the
DARAB is limited only to matters involving the implementation of the CARP. More
specifically, it is restricted to agrarian cases and controversies involving lands falling within
the coverage of the aforementioned program. It does not include those which are actually,
directly and exclusively used and found to be necessary for, among such purposes, school
sites and campuses for setting up experimental farm stations, research and pilot production
centers, etc.

Consequently, the DARAB has no power to try, hear and adjudicate the case pending before
it involving a portion of the CMU's titled school site, as the portion of the CMU land
reservation ordered segregated is actually, directly and exclusively used and found by the
school to be necessary for its purposes. The CMU has constantly raised the issue of the
DARAB's lack of jurisdiction and has questioned the respondent's authority to hear, try and
adjudicate the case at bar. Despite the law and the evidence on record tending to establish
that the fact that the DARAB had no jurisdiction, it made the adjudication now subject of
review.

Whether the DARAB has the authority to order the segregation of a portion of a private
property titled in the name of its lawful owner, even if the claimant is not entitled as a
beneficiary, is an issue we feel we must resolve. The quasi-judicial powers of DARAB are
provided in Executive Order No. 129-A, quoted hereunder in so far as pertinent to the issue
at bar:

Sec. 13. –– AGRARIAN REFORM ADJUDICATION BOARD — There is

hereby created an Agrarian Reform Adjudication Board under the office of the
Secretary. . . . The Board shall assume the powers and functions with respect
to adjudication of agrarian reform cases under Executive Order 229 and this
Executive Order . . .

Sec. 17. –– QUASI JUDICIAL POWERS OF THE DAR. — The DAR is

hereby vested with quasi-judicial powers to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction over all matters
including implementation of Agrarian Reform.

Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:

7
 The DAR is hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have original jurisdiction over all
matters involving the implementation of agrarian reform. . . .

Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A.
6657. There is no doubt that the DARAB has jurisdiction to try and decide any
agrarian dispute in the implementation of the CARP. An agrarian dispute is defined
by the same law as any controversy relating to tenurial rights whether leasehold,
tenancy stewardship or otherwise over lands devoted to
agriculture. 10

In the case at bar, the DARAB found that the complainants are not share tenants or lease
holders of the CMU, yet it ordered the "segregation of a suitable compact and contiguous
area of Four Hundred hectares, more or less", from the CMU land reservation, and directed
the DAR Regional Director to implement its order of segregation. Having found that the
complainants in this agrarian dispute for Declaration of Tenancy Status are not entitled to
claim as beneficiaries of the CARP because they are not share tenants or leaseholders, its
order for the segregation of 400 hectares of the CMU land was without legal authority. w do
not believe that the quasi-judicial function of the DARAB carries with it greater authority than
ordinary courts to make an award beyond what was demanded by the
complainants/petitioners, even in an agrarian dispute. Where the quasi-judicial body finds
that the complainants/petitioners are not entitled to the rights they are demanding, it is an
erroneous interpretation of authority for that quasi-judicial body to order private property to
be awarded to future beneficiaries. The order segregation 400 hectares of the CMU land
was issued on a finding that the complainants are not entitled as beneficiaries, and on an
erroneous assumption that the CMU land which is excluded or exempted under the law is
subject to the coverage of the CARP. Going beyond what was asked by the complainants
who were not entitled to the relief prayed the complainants who were not entitled to the relief
prayed for, constitutes a grave abuse of discretion because it implies such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction.

The education of the youth and agrarian reform are admittedly among the highest priorities
in the government socio-economic programs. In this case, neither need give way to the
other. Certainly, there must still be vast tracts of agricultural land in Mindanao outside the
CMU land reservation which can be made available to landless peasants, assuming the
claimants here, or some of them, can qualify as CARP beneficiaries. To our mind, the taking
of the CMU land which had been segregated for educational purposes for distribution to yet
uncertain beneficiaries is a gross misinterpretation of the authority and jurisdiction granted
by law to the DARAB.

The decision in this case is of far-reaching significance as far as it concerns state colleges
and universities whose resources and research facilities may be gradually eroded by
misconstruing the exemptions from the CARP. These state colleges and universities are the
main vehicles for our scientific and technological advancement in the field of agriculture, so
vital to the existence, growth and development of this country.

In the light of the foregoing analysis and for the reasons indicated, that the evidence is
sufficient to sustain a finding of grave abuse of discretion by respondents Court of Appeals
and DAR Adjudication Board. We hereby declare the decision of the DARAB dated
September 4, 1989 and the decision of the Court of Appeals affirming the decision of the
quasi-judicial body, as null and void and hereby order that they be set aside, with costs
against the private respondents.

8
Hospicio De San Jose De Barili, Cebu City v DARAB, 470 SCRA 609

Facts:

At the core of this case is an obscure old special law. The issue is
whether a provision in the law prohibiting the sale of the
properties donated to the charitable organization that was
incorporated by the same law bars the implementation of
agrarian reform laws as regards said properties.

Petitioner Hospicio de San Jose de Barili ("Hospicio") is a

charitable organization created as a body corporate in 1925 by
Act No. 3239. The law was enacted in order to formally accept
the offer made by Pedro Cui and Benigna Cui to establish a home
for the care and support, free of charge, of indigent invalids and
incapacitated and helpless persons.1 The Hospicio was to be
maintained with the revenues of the personal and real properties
to be endowed by the Cuis and other donors.

Section 4 of Act No. 3239 provides that "[t]he personal and real
property donated to the [Hospicio] by its founders or by other
persons shall not be sold under any consideration."3

On 10 October 1987, the Department of Agrarian Reform

Regional Office (DARRO) Region VII issued an order ordaining
that two parcels of land owned by the Hospicio be placed under
Operation Land Transfer in favor of twenty-two (22) tillers thereof
as beneficiaries. Presidential Decree (P.D.) No. 27, a land reform
law, was cited as legal basis for the order. The Hospicio filed a
motion for the reconsideration of the order with the Department
of Agrarian Reform (DAR) Secretary, citing the aforementioned
Section 4 of Act No. 3239. It argued that Act No. 3239 is a
special law, which could not have been repealed by P.D. No. 27, a
general law, or by the latter's general repealing clause.

The DAR Secretary rejected the motion for reconsideration in

an Order dated 30 March 1997. Therein, the DAR Secretary held
that P.D. No. 27 was a special law, as it applied only to particular
individuals in the State, specifically the tenants of rice and corn
lands. Moreover, P.D. No. 27, which covered all rice and corn
lands, provides no exemptions based on the manner of
acquisition of the land by the landowner.

9
In a Decision5 dated 9 July 1999, the Court of Appeals Special
Eleventh Division affirmed the DAR Secretary's issuance. It
sustained the position of the Office of the Solicitor General (OSG)
position that Section 4 of Act No. 3239 was expressly repealed
not only by P.D. No. 27, but also by Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of
1988, both laws being explicit in mandating the distribution of
agricultural lands to qualified beneficiaries. The Court of Appeals
further noted that the subject lands did not fall among the
exemptions provided under Section 10 of Rep. Act No. 6657.
Finally, the appellate court brought into play the aims of land
reform, affirming as it did "the need to distribute and create an
economic equilibrium among the inhabitants of this land, most
especially those with less privilege in life, our peasant farmer."

Issue:

whether a provision in the law prohibiting the sale of the

properties donated to the charitable organization that was
incorporated by the same law bars the implementation of
agrarian reform laws as regards said properties.

Ruling:

We agree with the Court of Appeals that neither P.D. No. 27 nor
the CARL exempts the lands of the Hospicio or other charitable
institutions from the coverage of agrarian reform. Ultimately, the
result arrived at in the assailed issuances should be affirmed.
Nonetheless, both the DAR Secretary and the appellate court
failed to appreciate what to this Court is indeed the decisive
legal dimension of the case.

Section 4 of Act No. 3239 prohibits the sale "under any

consideration" of the lands donated to the Hospicio. But the land
transfers mandated under P.D. No. 27 cannot be considered a
conventional sale under our civil laws.

10
Generally, sale arises out of a contractual obligation. Thus, it
must meet the first essential requisite of every contract that is
the presence of consent.13 Consent implies an act of volition in
entering into the agreement.14 The absence or vitiation of consent
renders the sale either void or voidable.

In this case, the deprivation of the Hospicio's property did not

arise as a consequence of the Hospicio's consent to the transfer.
There was no meeting of minds between the Hospicio, on one
hand, and the DAR or the tenants, on the other, on the properties
and the cause which are to constitute the contract15 that is to
serve ultimately as the basis for the transfer of ownership of the
subject lands.16 Instead, the obligation to transfer arises by
compulsion of law, particularly P.D. No. 27.17

Agrarian reform is justified under the State's inherent power of

eminent domain that enables it to forcibly acquire private lands
intended for public use upon payment of just compensation to the
owner.18 It has even been characterized as beyond the traditional
exercise of eminent domain, but a revolutionary kind of
expropriation. As expounded in the landmark case of Association
of Small Landowners in the Philippines, Inc. v. Secretary of
Agrarian Reform, thus:

. . . . However, we do not deal here with the traditional  exercise

of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its
owner for a specific and perhaps local purpose. What we
deal with here is a revolutionary  kind of expropriation.

The expropriation before us affects all private agricultural

lands whenever found and of whatever kind as long as
they are in excess of the maximum retention limits allowed
their owners. This kind of expropriation is intended for the
benefit not only of a particular community or of a small segment
of the population but of the entire Filipino nation, from all levels
of our society, from the impoverished farmer to the land-glutted
owner. Its purpose does not cover only the whole territory of this
country but goes beyond in time to the foreseeable future, which
it hopes to secure and edify with the vision and the sacrifice of
the present generation of Filipinos. Generations yet to come are
as involved in this program as we are today, although hopefully
11
only as beneficiaries of a richer and more fulfilling life we will
guarantee to them tomorrow through our thoughtfulness today.
And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms,
calling for "a just distribution" among the farmers of lands that
have heretofore been the prison of their dreams but can now
become the key at least to their deliverance.19

This characterization is warranted whether the expropriation is

operative under the CARL or P.D. No. 27, as both laws are keyed
into the same governmental objective. Moreover, under both
laws, the landowner is entitled to just compensation for the
properties taken.

The twin process of expropriation of lands under agrarian reform

and the payment of just compensation is akin to a forced sale,
which has been aptly described in common law jurisdictions as
"sale made under the process of the court, and in the mode
prescribed by law," and "which is not the voluntary act of the
owner, such as to satisfy a debt, whether of a mortgage,
judgment, tax lien, etc."20 The term has not been precisely
defined in this jurisdiction, but reference to the phrase itself is
made in Articles 223, 232, 237 and 243 of the Civil Code, which
uniformly exempt the family home "from execution, forced sale,
or attachment."21 Yet a forced sale is clearly different from the
sales described under Book V of the Civil Code which are
conventional sales, as it does not arise from the consensual
agreement of the vendor and vendee, but by compulsion of law.
Still, since law is recognized as one of the sources of obligation,
there can be no dispute on the efficacy of a forced sale, so long
as it is authorized by law.

The crucial question now arises, whether the sale prohibited

under Section 4 of Act No. 3239 includes even a forced sale. Of
course an overly literal reading of the provision would justify such
inclusion, but appropriately a more sophisticated approach to
statutory construction is warranted.

No séance is required to discern the intent of Section 4. It

ensures that the properties received by the Hospicio are not
alienated for profit by the officers or administrators, in
contravention of the charitable purpose for which the Hospicio
was created. To an extent, it makes possible the perpetual
12
operation of the Hospicio, which was empowered by law to
operate for an indefinite period, by assuring the existence of the
property on which the Hospicio could operate. We also do not
doubt that whatever fruits of the forcibly retained property would
also serve a source of funding for the operations of the Hospicio.

The salutariness of these objectives is beyond doubt. The

interests they seek to protect are present whether the prohibition
encompasses only conventional sales, or even forced sales. Yet to
insist that Section 4 likewise prohibits sales or dispositions by
operation of law would necessarily imply that the Hospicio is also
beyond the reach of any form of judicial execution. The charitable
nature of the Hospicio does not shield it from susceptibility to civil
liability, and an absolute prohibition on sales, whether forced or
conventional, deprives whatever judgment creditors of the
Hospicio from any effective means of enforcing relief.

Was it the intent of the framers of Act No. 3239 to exempt the
Hospicio from all judicial processes, even those arising from civil
transactions? We do not think so. The contemporaneous
construction of Section 4 indicates that the prohibition intended
by the crafters of the law pertained only to conventional sales,
and not forced sales. The law was promulgated in 1925, or when
the Spanish Civil Code of 1889 was in effect. The provisions in the
Civil Code referring to "forced sales" were not derived from the
Spanish Civil Code. On the other hand, the consensual nature of
the contract of sale, and of contracts in general, is recognized
under the Spanish Civil Code. Under Article 1261 of the Spanish
Civil Code, there is no contract unless the consent of the
contracting parties exists.22

Evidently, the word "sale," as contemplated by the framers of the

law in 1925, pertains to its concept in civil law, with the requisite
of consent being present. It cannot refer to sales or dispositions
that arise by operation of law, such as through judicial execution,
or, as in this case, expropriation.

Thus, we can hardly characterize the acquisition of the subject

properties from the Hospicio for the benefit of the tenants as a
sale, within the contemplation of Section 4 of Act No. 3239. The
transfer arises from compulsion of law, and not the desire of any
parties. Even if the Hospicio had voluntarily offered to surrender
its properties to agrarian reform, the resulting transaction would
13
not be considered as a conventional sale, since the obligation is
created not out of the mandate of the parties, but the will of the
law.

The DARRO Order did note that Section 4 of Act No. 3239 is not

applicable in this case, since the transfer is compulsory on the
part of the landowner, unlike in
ordinary sale.23 Regrettably, the DAR Secretary and the Court of
Appeals failed to apply that sound principle, preferring to rely
instead on the conclusion that Section 4 was repealed by P.D. No.
27 and the CARL.

Nonetheless, even assuming for the nonce that Section 4

contemplates even forced sales such as those through
expropriation, we would agree with the DAR Secretary and the
Court of Appeals that Section 4 is deemed repealed by P.D. No.
27 and the CARL.

The scope of lands subjected to agrarian reform under these two

laws is overwhelming. P.D. No. 27 applies to all private
agricultural lands primarily devoted to rice and corn with tenant
farmers under a system of sharecrop or lease-tenancy,24 while
the CARL is even broader in scope, generally covering all public
and private agricultural lands regardless of tenurial arrangement
and commodity produced. Under Section 10 of the CARL, the only
exempted lands are:

Lands actually, directly and exclusively used and found to be

necessary for parks, wildlife, forest reserves, reforestation, fish
sanctuaries and breeding grounds, watersheds, and mangroves,
national defense, school sites and campuses including
experimental farm stations operated by public or private schools
for educational purposes, seeds and seedlings research and pilot
production centers, church sites and convents appurtenant
thereto, mosque sites and Islamic centers appurtenant thereto,
communal burial grounds and cemeteries, penal colonies and
penal farms actually worked by the inmates, government and
private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already
developed . . . .

14
Arguing against "too literal an interpretation" of Section 10, the
Hospicio claims that "a serious reading" of the provision is
revelatory of the spirit and intent of the exemptions. It argues
that there are three categories of exemption as: "(1) those
needed by the nation, such as parks, wildlife and forest reserves,
fishponds and for national defense, etc.; (2) those for educational
purposes such as school sites; and (3) for religious and charitable
purposes like church sites, etc."25 The Hospicio then claims it falls
under the third category of "religious and charitable purposes."26

To begin with, the terms "charitable purposes" and "charitable

organizations" do not appear in Section 10 of the CARL. For its
part, Hospicio unduly assumes that charity is integrally wedded to
religiosity, despite the fact that there are charitable institutions
that are avowedly secular in orientation. We disagree that there
is a clear intent or spirit to include properties held by charitable
institutions, even those directly utilized for charitable purposes, in
the list of exempted properties under the CARL. Section 10 does
not include properties which are generally used for charitable
purposes, such as orphanages, from the exemption. Not even all
properties owned by religious institutions are exempt, save for
those places of worship and the convents/Islamic centers
appurtenant thereto. Even assuming that the Hospicio were
actually owned and operated by the Catholic Church, it still would
not be exempted from the CARL.

It is axiomatic that where a general rule is established by a

statute with exceptions, the Court will not curtail nor add to the
latter by implication, and it is a rule that an express exception
excludes all others.27 We cannot simply impute into a statute an
exception which the Congress did not incorporate. Moreover,
general welfare legislation such as land reform laws is to be
construed in favor of the promotion of social justice to ensure the
well-being and economic security of the people.28 Since a broad
construction of the provision listing the properties exempted
under the CARL would tend to denigrate the aims of agrarian
reform, a strict application of these exceptions is in order.

15
The crafters of P.D. No. 27 and the CARL were presumably aware
of the radical scale of the intended legislation, and the massive
effects on property relations nationwide. Considering the
magnitude of the changes ordained in these laws, it would be
foolhardy to require or expect the legislature to denominate each
and every law that would be consequently or logically amended
or repealed by the new laws. Hence, the viability of general
repealing clauses, which are existent in both P.D. No. 2729 and
the CARL,30 as a means of repealing all previous enactments
inconsistent with revolutionary new laws. The presence of such
general repealing clause in a later statute clearly indicates the
legislative intent to repeal all prior inconsistent laws on the
subject matter, whether the prior law is a general law or a special
law, or as in this case, a special private law. Without such clause,
a later general law will ordinarily not repeal a prior special law on
the same subject. But with such clause contained in the
subsequent general law, the prior special law will be deemed
repealed, as the clause is a clear legislative intent to bring about
that result.31

Should we construe Section 4 of Act No. 3239 as barring forced

sales through expropriation of the properties of the Hospicio, such
prohibition would irreconcilably countermand both P.D. No. 27
and the CARL and their mandate to subject the properties to
agrarian reform. The general repealing clauses of the two later
laws would then sufficiently repeal Section 4 of Act No. 3239, to
the extent that it may prohibit expropriation of agricultural lands
for agrarian reform.

Still, in light of our earlier determinative pronouncement that

Section 4 of Act No. 3239 does not contemplate forced sales as
part of the prohibition therein, there ultimately is no need to
make an abject declaration that Section 4 has indeed been
repealed. Indeed, the Court considers the prohibition on Section 4
as still effectual, but only insofar as it relates to conventional
sales under the Civil Code.

16
The other arguments raised by the Hospicio are similarly bereft of
merit. It wants us to hold that P.D. No. 27 and the CARL, both
enacted to implement the urgently needed policy of agrarian
reform, violate the non-impairment of contracts clause under the
Bill of Rights. Yet the broad sweep of this argument ignores the
nuances adopted by this Court in interpreting Section 10 of Article
III. We have held that the State's exercise of police powers may
prevail over obligations imposed by private contracts.32 Especially
in point is Kabiling v. NHA,33 wherein a law authorizing the
expropriation of properties in favor of qualified squatter families
was challenged on the basis of the non-impairment clause. The
Court held:

The stated objective of the decree, namely, to resolve the land

tenure problem in the Agno-Leveriza area to allow the
implementation of the comprehensive development plans for this
depressed community, provides the justification for the exercise
of the police power of the State. The police power of the State
has been described as "the most essential, insistent and
illimitable of powers." It is a power inherent in the State, plenary,
"suitably vague and far from precisely defined, rooted in the
conception that man in organizing the state and imposing upon
the government limitations to safeguard constitutional rights did
not intend thereby to enable individual citizens or group of
citizens to obstruct unreasonably the enactment of such salutary
measure to ensure communal peace, safety, good order and
welfare.

The objection raised by petitioners that P.D. No. 1808 impairs the
obligations of contract is without merit. The constitutional
guaranty of non-impairment of obligations of contract is limited
by and subject to the exercise of the police power of the State in
the interest of public health, safety, morals and general welfare.34

More pertinently, what the Hospicio alleges would be impaired is

not actually a contract, but a legislative act, Act No. 3239. The
Hospicio admits just as much in its petition, "[Act No. 3239] is
not merely an ordinary contract but a contract enacted into
law . . . Act No. 3239 is thus a contract within the purview of the
impairment clause of the Constitution."35

17
The inanity of this argument is palpable. The non-impairment
clause reads: "No law impairing the obligation of contracts shall
be passed." If, as the Hospicio argues, the constitutional
provision applies as well to the impairment of obligations created
by law, then Section 10, Article III operates to bar the legislature
from amending or repealing its own enactments. This is of course
not the case, as the provision was intended to shield the
impairment of obligations created by private agreements, and not
by legislative fiat. Certainly, Congress can at any time expressly
amend or repeal any and all sections of Act No. 3239 without fear
of violating the non-impairment clause of the Constitution. In
fine, Section 1036 of Act 3239 provides that the privileges granted
by the Act to the Hospicio are subject to the conditions on the
grant of franchises as provided in the Jones Law. Section 28 of
the Jones Law in turn provides in part, thus:

No franchise or right shall be granted to any individual, firm, or

corporation except under the conditions that it shall be subject
to amendment, alteration, or repeal by the Congress of the
United States, and that lands or right of use and occupation of
lands thus granted shall revert to the government by which they
were respectively granted upon the termination of the franchises
and rights under which they were granted or upon their
revocation or repeal. (Emphasis supplied.)

Finally, the Hospicio alludes to its functions as a charitable

institution, which equally promote social justice and the
upliftment of lives of the less fortunate. It notes that these
purposes are no less noble than giving land to the landless, whom
they, with perhaps a touch of contempt, suggest are "perfectly
healthy to care for themselves."37

18
The rationale for holding that the properties of the Hospicio are
covered by P.D. No. 27 and Rep. Act No. 6657 is so well-
grounded in law that it obviates any resort to the sordid game of
choosing which of the two competing aspirations is nobler. The
body which would have unquestionable discretion in assigning
hierarchical values on the modalities by which social justice may
be implemented is the legislature. Land reform affords the
opportunity for the landless to break away from the vicious cycle
of having to perpetually rely on the kindness of others. By
refusing to exempt properties owned by charitable institutions or
maintained for charitable purposes from agrarian reform, the
legislature has indicated a policy choice which the Court is bound
to implement.

WHEREFORE, the Petition is DENIED. No pronouncement as to

costs.

19
Luz Farms v Secretary of the DAR, 192 SCRA 51

Facts:

On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which
includes the raising of livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and
Procedures Implementing Production and Profit Sharing as embodied in Sections 13 and
32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and
Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p.
81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry
business and together with others in the same business allegedly stands to be adversely
affected by the enforcement of Section 3(b), Section 11, Section 13, Section 16(d) and
17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive Agrarian Reform
Law and of the Guidelines and Procedures Implementing Production and Profit Sharing
under R.A. No. 6657 promulgated on January 2, 1989 and the Rules and Regulations
Implementing Section 11 thereof as promulgated by the DAR on January 9, 1989 (Rollo,
pp. 2-36).: rd

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

The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of
R.A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988), insofar as the said
law includes the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith.

Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In
fact, it acknowledges the correctness of the decision of this Court in the case of the
Association of Small Landowners in the Philippines, Inc. vs.  Secretary of Agrarian
Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the Comprehensive
Agrarian Reform Law. It, however, argued that Congress in enacting the said law has
transcended the mandate of the Constitution, in including land devoted to the raising of
livestock, poultry and swine in its coverage (Rollo, p. 131). Livestock or poultry raising is
not similar to crop or tree farming. Land is not the primary resource in this undertaking
and represents no more than five percent (5%) of the total investment of commercial
livestock and poultry raisers. Indeed, there are many owners of residential lands all over
the country who use available space in their residence for commercial livestock and
raising purposes, under "contract-growing arrangements," whereby processing
corporations and other commercial livestock and poultry raisers (Rollo, p. 10). Lands
support the buildings and other amenities attendant to the raising of animals and birds.
The use of land is incidental to but not the principal factor or consideration in
productivity in this industry. Including backyard raisers, about 80% of those in
commercial livestock and poultry production occupy five hectares or less. The remaining
20% are mostly corporate farms (Rollo, p. 11).

20
Ruling:

The question raised is one of constitutional construction. The primary task in

constitutional construction is to ascertain and thereafter assure the realization of the
purpose of the framers in the adoption of the Constitution (J.M. Tuazon & Co. vs.  Land
Tenure Administration, 31 SCRA 413 [1970]). : rd

Ascertainment of the meaning of the provision of Constitution begins with the language
of the document itself. The words used in the Constitution are to be given their ordinary
meaning except where technical terms are employed in which case the significance thus
attached to them prevails (J.M. Tuazon & Co. vs.  Land Tenure Administration, 31 SCRA
413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or
of doubtful meaning, the courts may consider the debates in the constitutional
convention as throwing light on the intent of the framers of the Constitution. It is true
that the intent of the convention is not controlling by itself, but as its proceeding was
preliminary to the adoption by the people of the Constitution the understanding of the
convention as to what was meant by the terms of the constitutional provision which was
the subject of the deliberation, goes a long way toward explaining the understanding of
the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the
meaning of the word "agricultural," clearly show that it was never the intention of the
framers of the Constitution to include livestock and poultry industry in the coverage of
the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166
of R.A. 3844, as laud devoted to any growth, including but not limited to crop lands,
saltbeds, fishponds, idle and abandoned land (Record, CONCOM, August 7, 1986, Vol.
III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture."
Commissioner Jamir proposed to insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and residential
properties because all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because the Committee
contemplated that agricultural lands are limited to arable and suitable agricultural lands
and therefore, do not include commercial, industrial and residential lands (Record,
CONCOM, August 7, 1986, Vol. III, p. 30).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes
"private agricultural lands devoted to commercial livestock, poultry and swine raising" in
the definition of "commercial farms" is invalid, to the extent that the aforecited agro-
industrial activities are made to be covered by the agrarian reform program of the State.
There is simply no reason to include livestock and poultry lands in the coverage of
agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32
of R.A. 6657 directing "corporate farms" which include livestock and poultry raisers to
execute and implement "production-sharing plans" (pending final redistribution of their
landholdings) whereby they are called upon to distribute from three percent (3%) of
their gross sales and ten percent (10%) of their net profits to their workers as additional
compensation is unreasonable for being confiscatory, and therefore violative of due
process (Rollo, p. 21).
:-c

21
It has been established that this Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a judicial inquiry into such a
question are first satisfied. Thus, there must be an actual case or controversy involving a
conflict of legal rights susceptible of judicial determination, the constitutional question
must have been opportunely raised by the proper party, and the resolution of the
question is unavoidably necessary to the decision of the case itself (Association of Small
Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna
v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14
July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with
constitutional issues, it will not hesitate to declare a law or act invalid when it is
convinced that this must be done. In arriving at this conclusion, its only criterion will be
the Constitution and God as its conscience gives it in the light to probe its meaning and
discover its purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decisions. Blandishment is as ineffectual as intimidation, for all the
awesome power of the Congress and Executive, the Court will not hesitate "to make the
hammer fall heavily," where the acts of these departments, or of any official, betray the
people's will as expressed in the Constitution (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R.
79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional
powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do, as void. This is the essence of judicial power conferred
by the Constitution "(I)n one Supreme Court and in such lower courts as may be
established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of
the 1973 Constitution and which was adopted as part of the Freedom Constitution, and
Article VIII, Section 1 of the 1987 Constitution) and which power this Court has
exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13
and 32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules and Guidelines promulgated in
accordance therewith, are hereby DECLARED null and void for being unconstitutional and
the writ of preliminary injunction issued is hereby MADE permanent.

22
Natalia Realty, Inc. v DAR, 225 SCRA 278

Issue:

Are lands already classified for residential, commercial or industrial use, as approved by the
Housing and Land Use Regulatory Board and its precursor agencies  prior to 15 June
1

1988,  covered by R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
2

1988? This is the pivotal issue in this petition for certiorari assailing the Notice of Coverage  of
3

the Department of Agrarian Reform over parcels of land already reserved as townsite areas
before the enactment of the law.

Facts:

Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels
of land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and
2.7080 hectares, or a total of 125.0078 hectares, and embraced in Transfer Certificate of Title
No. 31527 of the Register of Deeds of the Province of Rizal.

On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located
in the Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the
population overspill in the metropolis which were designated as the Lungsod Silangan Townsite.
The NATALIA properties are situated within the areas proclaimed as townsite reservation.

Since private landowners were allowed to develop their properties into low-cost housing
subdivisions within the reservation, petitioner Estate Developers and Investors Corporation
(EDIC, for brevity), as developer of NATALIA properties, applied for and was granted preliminary
approval and locational clearances by the Human Settlements Regulatory Commission. The
necessary permit for Phase I of the subdivision project, which consisted of 13.2371 hectares,
was issued sometime in 1982;  for Phase II, with an area of 80,000 hectares, on 13 October
4

1983;  and for Phase III, which consisted of the remaining 31.7707 hectares, on 25 April
5

1986.  Petitioner were likewise issued development permits  after complying with the
6 7

requirements. Thus the NATALIA properties later became the Antipolo Hills Subdivision.

On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of
1988" (CARL, for brevity), went into effect. Conformably therewith, respondent Department of
Agrarian Reform (DAR, for brevity), through its Municipal Agrarian Reform Officer, issued on 22
November 1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills
Subdivision which consisted of roughly 90.3307 hectares. NATALIA immediately registered its
objection to the notice of Coverage.

EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and
twice wrote him requesting the cancellation of the Notice of Coverage.

On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc.

(SAMBA, for the brevity), filed a complaint against NATALIA and EDIC before the DAR Regional
Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA
members.  The Regional Adjudicator temporarily restrained petitioners from proceeding with the
8

development of the subdivision. Petitioners then moved to dismiss the complaint; it was denied.
Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction.

Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB);
however, on 16 December 1991 the DARAB merely remanded the case to the Regional
Adjudicator for further proceedings. 9

23
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to
set aside the Notice of Coverage. Neither respondent Secretary nor respondent Director took
action on the protest-letters, thus compelling petitioners to institute this proceeding more than a
year thereafter.

NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including
undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL. They
argue that NATALIA properties already ceased to be agricultural lands when they were included
in the areas reserved by presidential fiat for the townsite reservation.

Public respondents through the Office of the Solicitor General dispute this contention. They
maintain that the permits granted petitioners were not valid and binding because they did not
comply with the implementing Standards, Rules and Regulations of P.D. 957, otherwise known
as "The Subdivision and Condominium Buyers Protective Decree," in that no application for
conversion of the NATALIA lands from agricultural residential was ever filed with the DAR. In
other words, there was no valid conversion. Moreover, public respondents allege that the instant
petition was prematurely filed because the case instituted by SAMBA against petitioners before
the DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a
consequence, that petitioners failed to fully exhaust administrative remedies available to them
before coming to court.

Ruling:

The petition is impressed with merit. A cursory reading of the Preliminary Approval and
Locational Clearances as well as the Development Permits granted petitioners for Phases I, II
and III of the Antipolo Hills Subdivision reveals that contrary to the claim of public respondents,
petitioners NATALIA and EDIC did in fact comply with all the requirements of law.

Petitioners first secured favorable recommendations from the Lungsod Silangan Development
Corporation, the agency tasked to oversee the implementation of the development of the
townsite reservation, before applying for the necessary permits from the Human Settlements
Regulatory
Commission.   And, in all permits granted to petitioners, the Commission
10

stated invariably therein that the applications were in "conformance"   or "conformity"   or
11 12

"conforming"   with the implementing Standards, Rules and Regulations of P.D. 957. Hence, the
13

argument of public respondents that not all of the requirements were complied with cannot be
sustained.

As a matter of fact, there was even no need for petitioners to secure a clearance or prior
approval from DAR. The NATALIA properties were within the areas set aside for the Lungsod
Silangan Reservation. Since Presidential Proclamation No. 1637 created the townsite reservation
for the purpose of providing additional housing to the burgeoning population of Metro Manila, it in
effect converted for residential use what were erstwhile agricultural lands provided all requisites
were met. And, in the case at bar, there was compliance with all relevant rules and requirements.
Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the requirements
prescribed by P.D. 957.

The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only to
the Lungsod Silangan Reservation, which makes it a special law. It is a basic tenet in statutory
construction that between a general law and a special law, the latter prevails.  14

24
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the
Antipolo Hills Subdivision which have already been developed.   Of course, this is contrary to its
15

earlier position that there was no valid conversion. The applications for the developed and
undeveloped portions of subject subdivision were similarly situated. Consequently, both did not
need prior DAR approval.

We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall "cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands." As to what constitutes "agricultural land," it is
referred to as "land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land."   The deliberations of the
16

Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands which
are "arable and suitable agricultural lands" and "do not include commercial, industrial and
residential lands." 
17

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision
cannot in any language be considered as "agricultural lands." These lots were intended for
residential use. They ceased to be agricultural lands upon approval of their inclusion in the
Lungsod Silangan Reservation. Even today, the areas in question continued to be developed as
a low-cost housing subdivision, albeit at a snail's pace. This can readily be gleaned from the fact
that SAMBA members even instituted an action to restrain petitioners from continuing with such
development. The enormity of the resources needed for developing a subdivision may have
delayed its completion but this does not detract from the fact that these lands are still residential
lands and outside the ambit of the CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses,   DAR itself
18

defined "agricultural land" thus —

. . . Agricultural lands refers to those devoted to agricultural activity as defined in

R.A. 6657 and not classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its predecessor agencies,
and not classified in town plans and zoning ordinances as approved by the
Housing and Land Use Regulatory Board (HLURB) and its preceding competent
authorities prior to 15 June 1988 for residential, commercial or industrial use.

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by
such conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills
Subdivision within the coverage of CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian
Reform, noted in an Opinion   that lands covered by Presidential Proclamation No. 1637, inter
19

alia, of which the NATALIA lands are part, having been reserved for townsite purposes "to be
developed as human settlements by the proper land and housing agency," are "not deemed
'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No. 6657. " Not being
deemed "agricultural lands," they are outside the coverage of CARL.

Anent the argument that there was failure to exhaust administrative remedies in the instant
petition, suffice it to say that the issues raised in the case filed by SAMBA members differ from
those of petitioners. The former involve possession; the latter, the propriety of including under the
operation of CARL lands already converted for residential use prior to its effectivity.

25
Besides, petitioners were not supposed to wait until public respondents acted on their letter-
protests, this after sitting it out for almost a year. Given the official indifference, which under the
circumstances could have continued forever, petitioners had to act to assert and protect their
interests. 
20

In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in
issuing the assailed Notice of Coverage of 22 November 1990 by of lands over which they no
longer have jurisdiction.

WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November

1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision were placed under
CARL coverage is hereby SET ASIDE.

26
Dellena v Alcaraz et al. , G.R. No.204045, December 14, 2017

Facts:

Magdalena C. Dillena8 x x x, represented by Enrico C. Dillena, filed a Petition with

Very Urgent Motion for the Immediate Issuance of Writ of Preliminary Injunction or
Status Quo Order dated June 30, 2004 with the Office of the Provincial Agrarian
Reform Adjudicator (PARAD), Malolos, Bulacan against Mariano Alcaraz, Bernardo
Alcaraz, Joselito Alcaraz and Amor Alcaraz Sta. Ana 9 x x x alleging that Salud Crespo
was the original owner of the subject landholding, a fishpond with an area of more
than ten (10) hectares located in Barangay Nagbalon, Marilao, Bulacan; sometime in
1950, Salud Crespo instituted Catalino Dillena as tenant of the subject landholding;
when Ana Alcaraz purchased the subject landholding sometime in 1960, she
recognized Catalino Dillena's tenancy over the same; and when Catalino Dillena
died, [petitioner's] husband, Narciso, succeeded to the former's tenancy rights.

[Petitioner] further alleged that on April 21, 1995, Ana Alcaraz died and was
survived by [respondents] who inherited the subject landholding and who also
recognized Narciso's tenancy rights therein; that Narciso continued to pay the
annual lease rental of P120,000.00 and introduced improvements thereon worth
P200,000.00 upon the assurance of (respondents] that they would maintain Narciso
in peaceful possession of the landholding; that sometime in May 2004 or about a
month after Narciso died, (respondents) informed [petitioner] about their intention
to increase the annual lease rental from P120,000.00 to P240,000.00 which
[petitioner] believed was unconscionable and was merely meant to dispossess her of
the subject landholding; and that [respondents] gave [petitioner] 30 days or until
June 30, 2004 to vacate the subject landholding, which prompted her to file the
petition with the PARAD praying that she be declared as a de jure tenant and be
maintained in peaceful possession of the subject property.

[Respondents] filed a Motion to Dismiss assailing the PARAD's jurisdiction over the

subject matter of the petition. [Respondents] alleged, inter alia, that [petitioner] is a
civil law lessee and that the Kasunduan sa Upahan ng Palaisdaan expired in May
2004. As a civil law lessee, any dispute that may arise from this relationship of the
parties is cognizable by the regular courts.

[Respondents] further alleged that assuming that there is an agrarian dispute, the
case should have been brought first to the Barangay Agrarian Reform Committee
(BARC) for mediation or conciliation, and that absent a BARC Certification attesting
that efforts for mediation or conciliation failed, the PARAD cannot assume
jurisdiction over the dispute pursuant to Section 1, Rule 3 of the DARAB New Rules
of Procedure.

27
Issues:

THE HON. PUBLIC RESPONDENT ERRONEOUSLY RULED THAT THE DARAB HAS
OBVIOUS LACK OF JURISDICTION OVER THE INSTANT CASE, IN VIEW OF R.A. NO.
7881 THAT FISHPONDS ARE NO LONGER AGRICULTURAL LANDS WITHOUT
CONSIDERING THAT THIS CASE BELONGS TO THE EXCEPTION THAT TENURIAL
RELATION IS ALREADY A VESTED RIGHT AND THEREFORE IT REMAINS AN
AGRARIAN DISPUTE.

Ruling:

The Court denies the Petition.

Under Section 2 of RA 7881, which took effect on February 20, 1995,

b) Private lands actually, directly and exclusively used for prawn farms and
fishponds shall be exempt from the coverage of this Act: Provided, That said prawn
farms and fishponds have not been distributed and Certificate of Land Ownership
Award (CLOA) issued to agrarian reform beneficiaries under the Comprehensive
Agrarian Reform Program.

When petitioner filed DCN R 03-02-0837'04 with the Bulacan PARAD in 2004, RA
7881 was already in effect; therefore, the subject landholding — which remained
undistributed under and was not subjected to the CARP — ceased to be covered by
the CARL. Consequently, the Bulacan PARAD, as well as the DARAB, had no
authority to take cognizance of her case, since their jurisdiction is limited to agrarian
disputes.

The above pronouncement also nullifies petitioner's claim that a tenurial

arrangement, which is governed by RA 3844, exists between her and the
respondents. In short, and to repeat, RA 7881 supersedes RA 3844, with regard to
fishponds and prawn farms. This is understandable; to subscribe to petitioner's view
would precisely render the exemption and exclusion of fishponds and prawn farms
from CARP granted under the amendatory law practically useless; it would be as if
no exemption was granted.

The case of Sanchez, Jr. v. Marin,21 cited by petitioner, the PARAD, and DARAB
cannot be made to apply in the present case either. In that case, the petition for the
fixing of the farmer-complainant's lease rental was instituted in 1991, when RA 7881
was not yet in effect and fishponds and prawn farms were not as yet
exempted/excluded from CARL coverage. Thus, the Court held that there was an
agrarian dispute existing between the parties cognizable by the PARAD at the time it
rendered its Decision on March 2, 1993. Thus, considering that prior to the
enactment of RA 7881, the case was already pending appeal before the DARAB, the
amendatory law cannot be made to apply as to divest the DARAB of its jurisdiction
over the case. In the present case, however, petitioner filed her petition to be
declared a de jure tenant before the PARAD in 2004, when the subject landholding
already ceased to be covered by the CARP by virtue of the amendments under RA
7881, which took effect as early as 1995.

28
Petitioner and her husband Narciso, who was then still alive, were not exactly
without remedies, as they were given, pursuant to DAR Administrative Order No. 3,
Series of 1995, 22 the option to remain as workers or become beneficiaries in other
agricultural lands. If they had chosen to remain in the exempt area, they should be
entitled to such rights, benefits and privileges granted to farmworkers under existing
laws, decrees, and executive orders — but not under the agrarian laws, for the
specific and precise reason that the subject landholding ceased to be covered by the
CARP and RA 3844. Evidently, petitioner and Narciso did not apply to become
beneficiaries in other landholdings, and chose instead to remain in the subject
fishponds; for this, they could not claim protection specifically under the CARL and
other agrarian laws, as the landholding ceased to be covered under said laws.

WHEREFORE, the Petition is DENIED. The February 28, 2012 Decision and October
11, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 110423
are AFFIRMED in toto.

29
GSIS v Romerico Datoy, G.R.No. 232863, 24 July 2019

Lands foreclosed by the Government Service Insurance System, a government

financial institution, are subject to agrarian reform and are not among the
Comprehensive Agrarian Reform Law's exclusive list of exemptions and exclusions.

Facts:

In February 1996, the Metro Davao Agri-Hotel Corporation obtained a P20 million
commercial loan from the Government Service Insurance System. This loan was
secured by a mortgage over two (2) parcels of land. The first parcel was covered by
Transfer Certificate of Title No. T- 234689, while the second, an agricultural land,
was covered by Transfer Certificate of Title No. T-54074. 10

As the Metro Davao Agri-Hotel Corporation was unable to pay its loan obligations,
the Government Service Insurance System foreclosed both properties. After the
lapse of the redemption period, ownership of the two (2) properties was
consolidated in the Government Service Insurance System.11

On August 10, 2004, Municipal Agrarian Reform Officer Romerico Datoy issued a
Notice of Coverage concerning the agricultural land covered by Transfer Certificate
of Title No. T-54074. Subsequently, the Department of Agrarian Reform offered to
pay the Government Service Insurance System P2,343,370.24 for the property. The
latter, in turn, sent a letter to the Provincial Agrarian Reform Office protesting the
coverage.12

On May 12, 2006, the Government Service Insurance System filed before the
Department of Agrarian Reform Regional Director a Petition asking that the property
be excluded from compulsory agrarian reform coverage. 13

In his October 16, 2006 Order,14 Regional Director Inson denied the Government
Service Insurance System's Petition. He further denied its Motion for Reconsideration
in his December 21, 2006 Order.15

The Government Service Insurance System appealed the Order, but its appeal was
denied by Agrarian Reform Secretary Pangandaman in his November 17, 2008
Order.16 It filed a Motion for Reconsideration, which was similarly denied in a June
16, 2009 Resolution.17

The Government Service Insurance System elevated the case to the Office of the
President, but its appeal was denied in a September 27, 2013 Decision. 18 Its
subsequent Motion for Reconsideration was denied in a March 18, 2014 Resolution. 19

The Government Service Insurance System then filed before the Court of Appeals a
Petition for Review. In its October 13, 2016 Decision, 20 however, the Court of
Appeals sustained the rulings of the Office of the President, the Agrarian Reform
Secretary, and Regional Director Inson. In its July 19, 2017 Resolution, 21 the Court
of Appeals denied the subsequent Motion for Reconsideration.

30
Thus, the Government Service Insurance System filed this Petition, 22 assailing the
Court of Appeals Decision.

Issue:

whether or not the property covered by Transfer Certificate of Title No. T-54074 may
be excluded from compulsory agrarian reform coverage.

Ruling:

Petitioner insists that under Section 39 of Republic Act No. 8291, or The Government
Service Insurance System Act of 1997, its properties cannot be utilized for agrarian
reform purposes.23 It adds that the same provision exempts its properties from
agrarian reform coverage

Petitioner's insistence on Republic Act No. 8291's supposed exemption is plain error.

Roman Catholic Archbishop of Caceres v. Secretary of Agrarian Reform 25 has settled

that the exemptions from agrarian reform coverage are contained in
"an exclusive list"26 which are enumerated under Section 10 of Republic Act No.
6657, otherwise known as the Comprehensive Agrarian Reform Law: cralawred

Section 4 of RA 6657 states, "The Comprehensive Agrarian Reform Law of 1988 shall
cover, regardless of tenurial arrangement and commodity produced, all public and
private agricultural lands as provided in Proclamation No. 131 and Executive Order
No. 229, including other lands of the public domain suitable for agriculture," The
lands in Archbishop's name are agricultural lands that fall within the scope of the
law, and do not fall under the exemptions.

The exemptions under RA 6657 form an exclusive list, as follows: cralawred

SEC. 10. Exemptions and Exclusions. —

(a) Lands actually, directly and exclusively used for parks, wildlife, forest reserves,
reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves shall be
exempt from the coverage of this Act.
   
(b) Private lands actually, directly and exclusively used for prawn farms and fishponds
shall be exempt from the coverage of this Act: Provided, That said prawn farms and
fishponds have not been distributed and Certificate of Land Ownership Award (CLOA)
issued under the Agrarian Reform Program.
   
In cases where the fishponds or prawn farms have been subjected to the Comprehensive
Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or
notices of compulsory acquisition, a simple and absolute majority of the actual regular
workers or tenants must consent to the exemption within one (1) year from the

31
 effectivity of this Act. When the workers or tenants do not agree to this exemption, the
fishponds or prawn farms shall be distributed collectively to the worker-beneficiaries or
tenants who shall form cooperative or association to manage the same.
   
In cases where the fishponds or prawn farms have not been subjected to the
Comprehensive Agrarian Reform Law, the consent of the farmworkers shall no longer
be necessary; however, the provision of Section 32-A hereof on incentives shall apply.
(c) Lands actually, directly and exclusively used and found to be necessary for national
defense, school sites and campuses, including experimental farm stations operated by
public or private schools for educational purposes, seeds and seedlings research and
pilot production center, church sites and convents appurtenant thereto, mosque sites and
Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal
colonies and penal farms actually worked by the inmates, government and private
research and quarantine centers and all lands with eighteen percent (18%) slope and
over, except those already developed, shall be exempt from the coverage of this Act.
(As amended by R.A. 7881)

Petitioner's suggestion that an exception exists outside Section 10's exclusive list
runs afoul of this Court's pronouncements in Roman Catholic Archbishop of Caceres
and Hospicio de San Jose de Barili, Cebu City.

Section 7 of the Comprehensive Agrarian Reform Law is even more specific. It

explicitly states that "lands foreclosed by government financial institutions" are
subject to agrarian reform: cralawred

SECTION 7. Priorities. — The Department of Agrarian Reform (DAR) in coordination

with the Presidential Agrarian Reform Council (PARC) shall plan and program the
acquisition and distribution of all agricultural lands through a period often (10) years
from the effectivity of this Act. Lands shall be acquired and distributed as follows: cralawred

Phase One: Rice and corn lands under Presidential Decree No. 27; all idle or
abandoned lands; all private lands voluntarily offered by the owners for agrarian
reform; all lands foreclosed by government financial institutions; all lands acquired
by the Presidential Commission on Good Government (PCGG); and all other lands
owned by the government devoted to or suitable for agriculture, which shall be
acquired and distributed immediately upon the effectivity of this Act, with the
implementation to be completed within a period of not more than four (4) years[.]
(Emphasis supplied)

Section 3(m) of Republic Act No. 10149, or the GOCC 30 Governance Act of 2011,
defines government financial institutions: cralawred

SECTION 3. Definition of Terms. —

....

(m) Government Financial Institutions (GFIs) refer to financial institutions or

corporations in which the government directly or indirectly owns majority of the
capital stock and which are either: (1) registered with or directly supervised by the
Bangko Sentral ng Pilipinas; or (2) collecting or transacting funds or contributions
from the public and places them in financial instruments or assets such as deposits,

32
loans, bonds and equity including, but not limited to,  the Government Service
Insurance System and the Social Security System. (Emphasis supplied)

Petitioner does not only meet Section 3(m)'s definition; it is even cited as the
exemplar of a government financial institution. This, vis-à-vis Section 7 of the
Comprehensive Agrarian Reform Law, negates any doubt on its being covered by the
Comprehensive Agrarian Reform Law.

33