DAR v Pablo Berenguer etal., G.R. No.

154094, 9 March 2010

Facts:
The respondents were the registered owners of several residential and industrial lands with a
total area of 58.0649 hectares located in Barangay Bibincahan, Sorsogon, Sorsogon and
covered by the following certificates of title (TCTs), to wit:

In April 1998, the respondents received from the DAR notices of coverage of their said
landholdings by the Government’s Comprehensive Agrarian Reform Program (CARP) pursuant
to Republic Act No. 6657 (Comprehensive Agrarian Reform Law, or CARL). They protested the
notices of coverage, filing on October 5, 1998, in the office of DAR Regional Director Percival
Dalugdug (Regional Director Dalugdug) in Legaspi City, their application for exclusion of their
landholdings from CARP coverage, and praying for the lifting of the notices of coverage. 3

In October and November 1998, the DAR Secretary, without acting on the respondents’
application for exclusion, cancelled their titles and issued certificates of land ownership awards
(CLOAs), covering their landholdings, to the members of the Baribag Agrarian Reform
Beneficiaries Development Cooperative (Baribag), not to the respondents’ workers on the
landholdings, although Baribag was not impleaded in the respondents’ application for exclusion.

In an order dated February 15, 1999, Regional Director Dalugdug denied the respondents’
application for exclusion. Thus, they appealed the denial to the DAR Secretary. 4

On March 9, 1999, pending resolution of the respondents’ appeal to the DAR Secretary, Baribag
filed in the office of DAR Regional Agrarian Reform Adjudicator (RARAD) for Legaspi City Isabel
Florin (RARAD Florin) a petition seeking to implement the February 15, 1999 order of Regional
Director Dalugdug (denying the respondents’ application for exclusion), which was docketed as
DARAB Case No. V-RC-05-339-99.

The respondents filed a petition for certiorari before the Court of Appeals (CA), which treated the
petition as a petition for review. The respondents’ petition maintained that the DAR Secretary had
no jurisdiction over their landholdings, which were outside the coverage of the CARL due to their
being originally devoted to pasture and livestock raising, and later being already classified as
residential and industrial lands; that as early as 1981, the Housing and Land Use Regulatory
Board had classified their landholdings as residential and industrial lands; and that pursuant to
the decision in Luz Farms v. the Secretary of DAR, their landholdings were outside the coverage
of the CARL.

In support of their claim that their landholdings were already classified as residential and
industrial, the respondents submitted the following documents, namely:

1
 Issues

The DAR insists that the CA erred:10

a) When it ruled that the respondents’ landholdings were exempt from the coverage of
the CARP for not being agricultural, and were presumed due to their being part of the
poblacion to have been reclassified into residential/commercial or non-agricultural area
pursuant to Resolution No. 5, series of 1981, of the Sangguniang Bayan of Sorsogon,
Sorsogon;

b) When it ruled that there was error in the selection and designation of the farmer
beneficiaries of the landholdings;

Ruling:

Substantive Issue: Respondents’ landholdings, not subject to CARP

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.

Moreover, the policy objective of DAO No. 9 was to prevent landowners from taking steps to
convert their agricultural lands to lands devoted to the raising of livestock, poultry, and swine in
order to accord with Luz Farms.

Nonetheless, the CA also correctly clarified that the respondents’ landholdings, even if they were
not devoted to cattle raising, would still be excluded from the coverage of the CARL, because the
DAR failed to establish that the landholdings were agricultural.

Resolution No. 5, passed on March 12, 1981 by the Sangguniang Bayan of Sorsogon, Sorsogon,
showed that the limits of the poblacion area of the municipality included Barangay Bibincahan,
where the respondents’ landholdings were situated. The significance of this fact cannot be
overstated, for, thereby, the respondents’ landholdings were presumed to be industrial and
residential lands. Jurisprudence has been clear about the presumption

There is no dispute that as early as 1981, the respondents’ landholdings have been part of the
poblacion of Sorsogon, Sorsogon. Consistent with Hilario and Natalia, holding that the
respondents’ landholdings were non-agricultural, and, consequently, outside the coverage of the
CARL, was fully warranted. In fact, the excerpt from the Comprehensive Development Plan of
Sorsogon, Sorsogon showed that Barangay Bibincahan was within the Central Business District
of the municipality.

Likewise, the CA correctly concluded that the DAR erred in designating Baribag as the
beneficiary of the landholdings.

2
In designating Baribag, the DAR did not show how its choice of Baribag as beneficiary, to the
exclusion of the actual workers, could have accorded with Section 22 of the CARL, which
provides:

Section 22. Qualified Beneficiaries. — The lands covered by the CARP shall be distributed as
much as possible to landless residents of the same barangay, or in the absence thereof, landless
residents of the same municipality in the following order of priority:

(a) agricultural lessees and share tenants;

(b) regular farmworkers;

(c) seasonal farmworkers;

(d) other farmworkers;

(e) actual tillers or occupants of public lands;

(f) collectives or cooperatives of the above beneficiaries; and

(g) others directly working on the land.

Provided, however, that the children of landowners who are qualified under Section 6 of this Act
shall be given preference in the distribution of the land of their parents: and provided, further, that
actual tenant-tillers in the landholdings shall not be ejected or removed therefrom.

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

A basic qualification of a beneficiary shall be his willingness, aptitude, and ability to cultivate and
make the land as productive as possible. The DAR shall adopt a system of monitoring the record
or performance of each beneficiary, so that any beneficiary guilty of negligence or misuse of the
land or any support extended to him shall forfeit his right to continue as such beneficiary. The
DAR shall submit periodic reports on the performance of the beneficiaries to the PARC.

If, due to the landowner’s retention rights or to the number of tenants, lessees, or workers on the
land, there is not enough land to accommodate any or some of them, they may be granted
ownership of other lands available for distribution under this Act, at the option of the
beneficiaries.1avvphi1

Farmers already in place and those not accommodated in the distribution of privately-owned
lands will be given preferential rights in the distribution of lands from the public domain.

The only reason given by the DAR for not including the workers of the landholdings as farmer
beneficiaries was that "it could be that either they have manifested lack/loss of interest in the
property, as it has happened in many other areas placed under CARP coverage, because of their
loyalty to the original landowner, like respondents, or because of fear or, simply, they refused to
heed/answer the call of our field offices to submit to the screening process." 15 Such reason is
unacceptable. The CARL has set forth in mandatory terms in its Section 22, supra, who should
be the qualified beneficiaries, but the DAR did not strictly comply with the law. Instead, the DAR
excluded such workers based on its speculation and conjecture on why the actual workers on the
landholdings had not shown interest and had not responded to the call of the DAR field officers
during the screening process. As such, the DAR did not really determine who were the lawful
beneficiaries, failing even to present any documentary proof that showed that the respondents’

3
workers genuinely lacked interest to be considered beneficiaries of the landholdings, or refused
to subject themselves to the screening process.

There was also no evidence presented to justify that Baribag was a qualified beneficiary within
the context of Section 22 of the CARL, and be entitled to be awarded the landholdings.

The highly irregular actuations of the DAR did not end with the unwarranted awarding of the
landholdings to Baribag in violation of Section 22 of the CARL. The DAR also violated the
respondents’ right of retention under Section 6 of the CARL, which accorded to the respondents
as the landowners the right to retain five hectares of their landholdings, and the right to choose
the areas to be retained, which should be compact or contiguous. Thus, assuming that the
respondents’ landholdings were covered by the CARL, and that the DAR was correct in awarding
the landholdings to Baribag, the DAR’s cancellation of all of the respondents’ TCTs effectively
nullified the respondents’ right of retention, thereby depriving them of their property without due
process of law.

Lastly, RARAD Florin’s issuance of the writ of execution in favor of Baribag was highly irregular.
It must be noted, first of all, that because Baribag was not even a party in relation to the
respondents’ application for exclusion before Regional Director Dalugdug, RARAD Florin did not
acquire jurisdiction over Baribag. As such, the legal authority of RARAD Florin to implement the
award to Baribag by execution did not exist. Secondly, the denial of the respondents’ application
for exclusion was still pending review by the DAR Secretary when RARAD Florin issued the writ
of execution to implement Regional Director Dalugdug’s order to place Baribag in possession of
the respondents’ landholdings. Hence, the issuance of the writ of execution was premature and
bereft of legal basis.

In fine, the appeal of the DAR cannot prosper. The CA properly acted in reversing and undoing
the DAR’s several violations of the letter and spirit of the CARL. It is timely to stress that the
noble purpose of the CARL to emancipate the tenants from the bondage of the soil and to
transfer to them the ownership of the lands they till should not be the guise to trample upon the
landowners’ rights by including lands that are unquestionably outside the coverage of the CARL.
Neither should such noble intention be frustrated by designating beneficiaries who are neither
the tenants or tillers of the land, nor otherwise qualified under the law to be the beneficiaries of
land reform.

WHEREFORE, the petition for review on certiorari is denied. The decision dated December 26,
2000 and resolution dated June 26, 2002 of the Court of Appeals are affirmed.

The Secretary of the Department of Agrarian Reform is ordered to cancel the certificate of land
ownership awards issued to Baribag Agrarian Reform Beneficiaries Development Corporative; to
reinstate the respective transfer certificates of title of the respondents; and to immediately restore
to the respondents the possession of their respective landholdings.

4
DAR et al. v Carriedo, G.R. No. 176549,January 20,2016

Facts:

he land originally formed part of the agricultural land covered by Transfer Certificate of Title
(TCT) No. 17680,  which in turn, formed part of the total of 73.3157 hectares of agricultural land
5

owned by Roman De Jesus (Roman). 6

On May 23, 1972, petitioner Pablo Mendoza (Mendoza) became the tenant of the land by virtue
of a Contrato King Pamamuisan  executed between him and Roman. Pursuant to the Contrato,
7

Mendoza has been paying twenty-five (25) piculs of sugar every crop year as lease rental to
Roman. It was later changed to Two Thousand Pesos (P2, 000.00) per crop year, the land being
no longer devoted to sugarcane. 8

On November 7, 1979, Roman died leaving the entire 73.3157 hectares to his surviving wife
Alberta Constales (Alberta), and their two sons Mario De Jesus (Mario) and Antonio De Jesus
(Antonio).  On August 23, 1984, Antonio executed a Deed of Extrajudicial Succession with
9

Waiver of Right  which made Alberta and Mario co-owners in equal proportion of the agricultural
10

land left by Roman. 11

On June 26, 1986, Mario sold  approximately 70.4788 hectares to respondent Romeo C.
12

Carriedo (Carriedo), covered by the following titles and tax declarations, to wit:

The area sold to Carriedo included the land tenanted by Mendoza (forming part of the area
covered by TCT No. 17680). Mendoza alleged that the sale took place without his knowledge
and consent.

In June of 1990, Carriedo sold all of these landholdings to the Peoples’ Livelihood Foundation,
Inc. (PLFI) represented by its president, Bernabe Buscayno.  All the lands, except that covered
13

by TCT No. 17680, were subjected to Voluntary Land Transfer/Direct Payment Scheme and
were awarded to agrarian reform beneficiaries in 1997. 14

The parties to this case were involved in three cases concerning the land, to wit

The Ejectment Case (DARAB Case No. 163-T-90 | CAG.R. SP No. 44521 | G.R. No. 143416)
In a Decision dated June 4, 1992,  the PARAD ruled that Mendoza had knowledge of the sale,
16

hence, he could not deny the fact nor assail the validity of the conveyance. Mendoza violated
Section 2 of Presidential Decree (PD) No. 816,  Section 50 of RA No. 1199  and Section 36 of
17 18

RA No. 3844,  and thus, the PARAD declared the leasehold contract terminated, and ordered
19

Mendoza to vacate the premises.

The Redemption Case (DARAB III-T-1476-97 | CA-G.R. SP No. 88936)

Mendoza appealed to the DARAB which reversed the PARAD Order in a Decision dated
November 12, 2003.  The DARAB granted Mendoza redemption rights over the land. It ruled that
36

at the time Carriedo filed his complaint for ejectment on October 1, 1990, he was no longer the
owner of the land, having sold the land to PLFI in June of 1990. Hence, the cause of action
pertains to PLFI and not to him.  It also ruled that Mendoza was not notified of the sale of the
37

land to Carriedo and of the latter’s subsequent sale of it to PLFI. The absence of the mandatory
requirement of notice did not stop the running of the 180 day-period within which Mendoza could
exercise his right of redemption.  Carriedo’s Motion for Reconsideration was subsequently
38

denied.

5
The Coverage Case (ADM Case No. A-9999-03-CV-008-03 | CA-G.R. SP No. 88935)

On February 26, 2002, Mendoza, his daughter Corazon Mendoza (Corazon) and Orlando Gomez
(Orlando) filed a Petition for Coverage  of the land under RA No. 6657. They claimed that they
42

had been in physical and material possession of the land as tenants since 1956, and made the
land productive.  They prayed (1) that an order be issued placing the land under Comprehensive
43

Agrarian Reform Program (CARP); and (2) that the DAR, the Provincial Agrarian Reform Officer
(PARO) and the Municipal Agrarian Reform Officer (MARO) of Tarlac City be ordered to proceed
with the acquisition and distribution of the land in their favor.  The petition was granted by the
44

Regional Director (RD) in an Order dated October 2, 2002,  the dispositive portion of which
45

reads:

Issue:

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

Ruling:

We rule in the affirmative. Carriedo did not waive his right of retention over the land. 1âwphi1

The 1987 Constitution expressly recognizes landowner retention rights under Article XIII, Section
4, to wit:

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

RA No. 6657 implements this directive, thus:

Section 6. Retention Limits. — Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-size farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares.

xxx

The right to choose the area to be retained, which shall be compact or contiguous, shall pertain
to the landowner: Provided, however, That in case the area selected for retention by the
landowner is tenanted, the tenant shall have the option to choose whether to remain therein or
be a beneficiary in the same or another agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area, he shall be considered a leaseholder
and shall lose his right to be a beneficiary under this Act. In case the tenant chooses to be a
beneficiary in another agricultural land, he loses his right as a leaseholder to the land retained by
the landowner. The tenant must exercise this option within a period of one (1) year from the time
the landowner manifests his choice of the area for retention. In all cases, the security of tenure of

6
the farmers or farmworkers on the land prior to the approval of this Act shall be respected. xxx
(Emphasis supplied.)

In Danan v. Court of Appeals,  we explained the rationale for the grant of the right of retention
65

under agrarian reform laws such as RA No. 6657 and its predecessor PD No. 27, to wit:

The right of retention is a constitutionally guaranteed right, which is subject to qualification by the
legislature. It serves to mitigate the effects of compulsory land acquisition by balancing the rights
of the landowner and the tenant and by implementing the doctrine that social justice was not
meant to perpetrate an injustice against the landowner. A retained area, as its name denotes, is
land which is not supposed to anymore leave the landowner's dominion, thus sparing the
government from the inconvenience of taking land only to return it to the landowner afterwards,
which would be a pointless process. For as long as the area to be retained is compact or
contiguous and does not exceed the retention ceiling of five (5) hectares, a landowner's choice of
the area to be retained must prevail. xxx 66

To interpret Section 6 of RA No. 6657, DAR issued Administrative Order No. 02, Series of 2003
(DAR AO 02-03). Section 6 of DAR AO 02-03 provides for the instances when a landowner is
deemed to have waived his right of retention, to wit:

Section 6. Waiver of the Right of Retention. – The landowner waives his right to retain by
committing any of the following act or omission:

6.1 Failure to manifest an intention to exercise his right to retain within sixty (60) calendar
days from receipt of notice of CARP coverage.

6.2 Failure to state such intention upon offer to sell or application under the [Voluntary
Land Transfer (VLT)]/[Direct Payment Scheme (DPS)] scheme.

6.3 Execution of any document stating that he expressly waives his right to retain. The
MARO and/or PARO and/or Regional Director shall attest to the due execution of such
document.

6.4 Execution of a Landowner Tenant Production Agreement and Farmer’s

Undertaking (LTPA-FU) or Application to Purchase and Farmer’s Undertaking (APFU)
covering subject property.

6.5 Entering into a VLT/DPS or [Voluntary Offer to Sell (VOS)] but failing to manifest an
intention to exercise his right to retain upon filing of the application for VLT/DPS or VOS.

6.6 Execution and submission of any document indicating that he is consenting to the
CARP coverage of his entire landholding.

6.7 Performing any act constituting estoppel by laches which is the failure or neglect for
an unreasonable length of time to do that which he may have done earlier by exercising
due diligence, warranting a presumption that he abandoned his right or declined to assert
it.

Petitioners cannot rely on the RD’s Order dated October 2, 2002 which granted Mendoza’s
petition for coverage on the ground that Carriedo violated paragraph 4 Section 6  of RA No. 6657
67

for disposing of his agricultural land, consequently losing his right of retention. At the time when
the Order was rendered, up to the time when it was affirmed by the DAR-CO in its Order dated
February 22, 2005, the applicable law is Section 6 of DAR 02-03. Section 6 clearly shows that
the disposition of agricultural land is not an act constituting waiver of the right of retention.

7
Thus, as correctly held by the CA, Carriedo "[n]ever committed any of the acts or omissions
above-stated (DAR AO 02-03). Not even the sale made by the herein petitioner in favor of PLFI
can be considered as a waiver of his right of retention. Likewise, the Records of the present case
is bereft of any showing that the herein petitioner expressly waived (in writing) his right of
retention as required under sub-section 6.3, section 6, DAR Administrative Order No. 02-
S.2003." 68

Petitioners claim that Carriedo’s alleged failure to exercise his right of retention after a long
period of time constituted a waiver of his retention rights, as envisioned in Item 6.7 of DAR AO
02-03.

We disagree.

Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to
do that which by exercising due diligence could or should have been done earlier; it is negligence
or omission to assert a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it.  Where a party sleeps on his
69

rights and allows laches to set in, the same is fatal to his case.

The foregoing rules give Carriedo any time before receipt of the notice of coverage to exercise
his right of retention, or if under compulsory acquisition (as in this case), within sixty (60) days
from receipt of the notice of coverage. The validity of the notice of coverage is the very subject of
the controversy before this court. Thus, the period within which Carriedo should exercise his right
of retention cannot commence until final resolution of this case.

Even assuming that the period within which Carriedo could exercise his right of retention has
commenced, Carriedo cannot be said to have neglected to assert his right of retention over the
land. The records show that per Legal Report dated December 13, 199971 prepared by Legal
Officer Ariel Reyes, Carriedo filed an application for retention which was even contested by
Pablo Mendoza’s son, Fernando.72 Though Carriedo subsequently withdrew his application, his
act of filing an application for retention belies the allegation that he abandoned his right of
retention or declined to assert it.

Citing this provision, petitioners argue that Carriedo lost his right of retention over the land
because he had already sold or disposed, after the effectivity of RA No. 6657, more than fifty (50)
hectares of land in favor of another.78

In his Memorandum,  Carriedo maintains that petitioners cannot invoke any administrative
79

regulation to defeat his right of retention. He argues that "administrative regulation must be in
harmony with the provisions of law otherwise the latter prevails." 80

We cannot sustain petitioners' argument. Their reliance on DAR AO 05-06 is misplaced. As will
be seen below, nowhere in the relevant provisions of RA No. 6657 does it indicate that a multiple
or series of transfers/sales of land would result in the loss of retention rights. Neither do they
provide that the multiple or series of transfers or sales amounts to the waiver of such right.

The relevant portion of Section 6 of RA No. 6657 referred to in Item no. 4 of DAR AO 05-06
provides:

Section 6. Retention Limits. – Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-size farm, such as the commodity produced,
terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. xxx

8
Upon the effectivity of this Act, any sale, disposition, lease, management, contract or
transfer of possession of private lands executed by the original landowner in violation of
the Act shall be null and void: Provided, however, That those executed prior to this Act shall be
valid only when registered with the Register of Deeds within a period of three (3) months after the
effectivity of this Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian
Reform (DAR) within thirty (30) days of any transaction involving agricultural lands in excess of
five (5) hectares. (Emphasis supplied.)

Section 70 of RA No. 6657, also referred to in Item no. 4 of DAR AO 05-06 partly provides:

The sale or disposition of agricultural lands retained by a landowner as a consequence of

Section 6 hereof shall be valid as long as the total landholdings that shall be owned by the
transferee thereof inclusive of the land to be acquired shall not exceed the landholding ceilings
provided for in this Act. Any sale or disposition of agricultural lands after the effectivity of
this Act found to be contrary to the provisions hereof shall be null and void. xxx (Emphasis
supplied.)

Finally, Section 73 (a) of RA No. 6657 as referred to in Item No. 4 of DAR AO 05-06 provides,

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

(a) The ownership or possession, for the purpose of circumventing the provisions of this Act, of
agricultural lands in excess of the total retention limits or award ceilings by any person, natural or
juridical, except those under collective ownership by farmer-beneficiaries; xxx

Sections 6 and 70 are clear in stating that any sale and disposition of agricultural lands in
violation of the RA No. 6657 shall be null and void. Under the facts of this case, the reasonable
reading of these three provisions in relation to the constitutional right of retention should be that
the consequence of nullity pertains to the area/s which were sold, or owned by the transferee, in
excess of the 5-hectare land ceiling. Thus, the CA was correct in declaring that the land is
Carriedo’s retained area. 81

Item no. 4 of DAR AO 05-06 attempts to defeat the above reading by providing that, under the
principle of estoppel, the sale of the first five hectares is valid. But, it hastens to add that the first
five hectares sold corresponds to the transferor/s’ retained area. Thus, since the sale of the first
five hectares is valid, therefore, the landowner loses the five hectares because it happens to be,
at the same time, the retained area limit. In reality, Item No. 4 of DAR AO 05-06 operates as a
forfeiture provision in the guise of estoppel. It punishes the landowner who sells in excess of five
hectares. Forfeitures, however, partake of a criminal penalty.

Sections 6, 70 and 73 (a) of RA No. 6657 clearly do not provide that a sale or disposition of land
in excess of 5 hectares results in a forfeiture of the five hectare retention area. Item no. 4 of DAR
AO 05-06 imposes a penalty where none was provided by law.

Administrative regulations must be in harmony with the provisions of the law for administrative
regulations cannot extend the law or amend a legislative enactment.  Administrative issuances
94

must not override, but must remain consistent with the law they seek to apply and implement.
They are intended to carry out, not to supplant or modify the law.  Administrative or executive
95

acts, orders and regulations shall be valid only when they are not contrary to the laws or the
Constitution.  Administrative regulations issued by a Department Head in conformity with law
96

have the force of law.  As he exercises the rule-making power by delegation of the lawmaking
97

body, it is a requisite that he should not transcend the bounds demarcated by the statute for the
exercise of that power; otherwise, he would be improperly exercising legislative power in his own
right and not as a surrogate of the lawmaking body. 98

9
If the implementing rules and regulations are issued in excess of the rule-making authority of the
administrative agency, they are without binding effect upon the courts. At best, the same may be
treated as administrative interpretations of the law and as such, they may be set aside by the
Supreme Court in the final determination of what the law means. 99

While this Court is mindful of the DAR’s commitment to the implementation of agrarian reform, it
must be conceded that departmental zeal may not be permitted to outrun the authority conferred
by statute.  Neither the high dignity of the office nor the righteousness of the motive then is an
100

acceptable substitute; otherwise the rule of law becomes a myth. 101

As a necessary consequence of the invalidity of Item no. 4 of DAR AO 05-06 for being ultra vires,
we hold that Carriedo did not waive his right to retain the land, nor can he be considered to be
in estoppel.

Finally, petitioners cannot argue that the CLOAs allegedly granted in favor of his co-petitioners
Corazon and Orlando cannot be set aside. They claim that CLOAs under RA No. 6657 are
enrolled in the Torrens system of registration which makes them indefeasible as certificates of
title issued in registration proceedings.  Even as these allegedly issued CLOAs are not in the
102

records, we hold that CLOAs are not equivalent to a Torrens certificate of title, and thus are not
indefeasible.

CLOAs and EPs are similar in nature to a Certificate of Land Transfer (CLT) in ordinary land
registration proceedings. CLTs, and in turn the CLOAs and EPs, are issued merely as
preparatory steps for the eventual issuance of a certificate of title. They do not possess the
indefeasibility of certificates of title. Justice Oswald D. Agcaoili, in Property Registration Decree
and Related Laws (Land Titles and Deeds),  notes, to wit:
103

Under PD No. 27, beneficiaries arc issued certificates of land transfers (ClTs) to entitle them to
possess lands. Thereafter, they are issued emancipation patents (EPs) after compliance with all
necessary conditions. Such EPs, upon their presentation to the Register of Deeds, shall be the
basis for the issuance of the corresponding transfer certificates of title (TCTs) in favor of the
corresponding beneficiaries.

Under RA No. 6657, the procedure has been simplified. Only certificates of land ownership
award (CLOAs) are issued, in lieu of EPs, after compliance with all prerequisites. Upon
presentation of the CLOAs to the Register of Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued.

The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from
retaining the area covered thereby. Under AO No. 2, series of 1994, an EP or CLOA may be
cancelled if the land covered is later found to be part of the landowner's retained area. (Citations
omitted; underscoring supplied.)

The issue, however, involving the issuance, recall or cancellation of EPs or CLOAs, is lodged
with the DAR,  which has the primary jurisdiction over the matter.
104 105

WHEREFORE, premises considered, the Petition is hereby DENIED for lack of merit. The

assailed Decision of the Court of Appeals dated October 5, 2006 is AFFIRMED. Item no. 4 of
DAR Administrative Order No. 05, Series of 2006 is hereby declared INVALID, VOID and OF NO
EFFECT for being ultra vires.

10
Republic v Court of Appeals, 236 SCRA 758
Is the immunity of the government from laches and estoppel absolute? May it still recover the
ownership of lots sold in good faith by a private developer to innocent purchaser for value,
notwithstanding its approval of the subdivision plan issuance of seperate individual certificates of
the title thereto?

Facts:

Defendant St. Jude's Enterprises, Inc. is the registered owner of a parcel of land known as Lot
865-B-1 of the subdivision plan (LRC) PSD-52368, being a portion of Lot 865-B located in
Caloocan City containing an area of 40,623 square meters. For Lot 865-B-1 defendant St. Jude's
Enterprises, Inc. was issued TCT No. 22660 on July 25, 1995.

Sometime in March 1966. defendant St. Jude's Enterprises, Inc. subdivided Lot No. 865-B-1
under subdivision plan (LRC) PSD-55643 and as a result thereof the Register of Deeds of
Caloocan City cancelled TCT No. 22660 and in lieu thereof issued Certificates of Title Nos.
23967 up to 24068 inclusive, all in the name of defendant St. Jude's Enterprises, Inc. The
subdivision of lot 865-B-1 [which was] covered [by] TCT No. 22660 was later found to have
expanded and enlarged from its original area of 40,523 square meters to 42,044 square meters
or an increase of 1,421 square meters. This expansion or increase in area was confirmed by the
Land Registration Commission [to have been made] on the northern portion of Lot 865-B-1.

Subsequently, defendant St. Jude's Enterprises, Inc. sold the lots covered by TCT Nos. 24013
and 24014 to defendant Sps. Catalino Santos and Thelma Barreto Santos[;] TCT No. 24019 to
defendant Sps. Domingo Calaguian and Felicidad de Jesus[;] TCT No. 24022 to defendant
Virginia dela Fuente[;] and TCT No. 2402[3] to defendant Lucy Madaya. Accordingly, these titles
were cancelled and said defendants were issued the following: TCT No. C-43319 issued in the
name of Sps. Santos containing an area of 344 square meters[;] TCT No. 55513 issued in the
name of defendants Sps. Calaguian containing an area of 344 square meters[;] TCT 13309
issued in the name of Sps. Santos[;] TCT No. 24069 issued in the name of Virginia dela Fuente
containing an area of 350 square meters[;] and TCT No. C-46648 issued in the name of
defendant Lucy Madaya with an area of 350 square meters.  5

[On January 29, 1985, then Solicitor General Estelito Mendoza filed] an action seeking . . . the
annulment and cancellation of Transfer Certificates of Title (TCT) Nos. 24015, 24017, 24018,
24020, 24021, 24024, 24025 and 24068 issued in the name of defendant St. Jude's Enterprises,
Inc.[;] Transfer Certificates of Title Nos. 13309 and C-43319 both registered in the name of Sps.
Catalino Santos and Thelma B. Santos[;] and TCT No. 55513 registered in the name of Sps.
Domingo Calaguian and Felicidad de Jesus[;] TCT No. 24069 registered in the name of Virginia
dela Fuente[;] and TCT No. C-46648 registered in the name of Lucy Madaya, principally on the
ground that said Certificates of Title were issued on the strength of [a] null and void subdivision
plan (LRC) PSD-55643 which expanded the original area of TCT No. 22660 in the name of St.
Jude's Enterprises, Inc. from 40,623 square meters to 42,044 square meters upon its
subdivision.

Defendants Virginia dela Fuente and Lucy Mandaya were declared in default for failure to file
their respective answer within the reglementary period.

Defendants Sps. Catalino Santos and Thelma Barreto Santos, St. Jude's Enterprises, Inc. and
Sps. Domingo Calaguian and Felicidad Calaguian filed separate answers to the complaint.
Defendants Sps. Domingo Calaguian and Sps. Catalino Santos interposed defenses, among
others, that they acquired the lots in question in good faith from their former owner, defendant St.
Jude's Enterprises, Inc. and for value and that the titles issued to the said defendants were
rendered incontrovertible, conclusive and indefeasible after one year from the date of the
issuance of the titles by the Register of Deeds of Caloocan City.

11
On the other hand, defendant St. Jude's Enterprises, Inc. interposed defenses, among others,
that the cause of action of plaintiff is barred by prior judgement; that the subdivision plan
submitted having been approved by the LRC, the government is now in estoppel to question the
approved subdivision plan; and the plaintiff's allegation that the area of the subdivision increased
by 1,421 square meters is without any basis in fact and in law. 6

Issues:

1. Whether or not the government is estopped from questioning the approved subdivision plan
which expanded the areas covered by the transfer certificates of title in question;

2. Whether or not the Court of Appeals erred when it did not consider the Torrens System as
merely a means of registering title to land;

3. Whether or not the Court of Appeals erred when it failed to consider that petitioner's complaint
before the lower court was filed to preserve the integrity of the Torrens System.

Ruling:

Second Issue:

The Torrens System

True, the Torrens system is not a means of acquiring titles to lands; it is merely a system of
registration of titles to lands.   Consequently, land erroneously included in a Torrens certificate of
30

title is not necessarily acquired by the holder of such certificate. 31

But in the interest of justice and equity, neither may the title holder be made to bear the
unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of
his complicity in a fraud or of manifest damage to third persons. First, the real purpose of the
Torrens system is to quiet title to land to put a stop forever to any question as to the legality of
the title, except claims that were noted in the certificate at the time of the registration or that may
arise subsequent thereto.  Second, as we discussed earlier, estoppel by laches now bars
32

petitioner from questioning private respondent's titles to the subdivision lots. Third, it was never
proven that Private Respondent St. Jude was a party to the fraud that led to the increase in the
area of the property after its subdivision. Finally, because petitioner even failed to give sufficient
proof of any error that might have been committed by its agent who had surveyed the property,
the presumption of regularity in the performance of their functions must be respected. Otherwise,
the integrity of the Torrens system, which petitioner purportedly aims to protect by filing this case,
shall forever be sullied by the ineptitude and inefficiency of land registration officials, who are
ordinarily presumed to have regularly performed their duties. 33

We cannot, therefore, adhere to petitioner's submission that, in filing this suit, it seeks to
preserve the integrity of the Torrens system. To the contrary, it is rather evident from our
foregoing discussion that petitioner's action derogates the very integrity of the system. Time and
again, we have said that a Torrens certificate is evidence of an indefeasible title to property in
favor of the person whose name appears thereon.

WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. 1âwphi1.nêt

SO ORDERED.

12
 First Issue:

Estoppel Against the Government

The general rule is that the State cannot be put in estoppel by the mistakes or errors of its
officials or agents.  However, like all general rules, this is also subject to exception, viz.:
13 14

Estoppels against the public are little favored. They should not be invoked except
in a rare and unusual circumstances, and may not be invoked where they would
operate to defeat the effective operation of a policy adopted to protect the public.
They must be applied with circumspection and should be applied only in those
special cases where the interests of justice clearly require it. Nevertheless, the
government must not be allowed to deal dishonorably or capriciously with its
citizens, and must not play an ignoble part or do a shabby thing; and subject to
limitations . . ., the doctrine of equitable estoppel may be invoked against public
authorities as well as against private individuals.

n the case at bar, for nearly twenty years (starting from the issuance of St. Jude's titles in 1996
up to the filing of the Complaint in 1985), petitioner failed to correct and recover the alleged
increase in the land area of St. Jude. Its prolonged inaction strongly militates against its cause,
as it is tantamount to laches, which means "the failure or neglect, for an unreasonable and
unexplained length of time, to do what which by exercising due diligence could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or declined to
assert it."
19

The Court notes private repondents' argument that, prior to the subdivision, the surveyors erred
in the original survey of the whole tract of land covered by TCT No. 22660, so that less than
the actual land area was indicated on the title. Otherwise, the adjoining owners would have
complained upon the partition of the land in accordance with the LRC-approved subdivision plan.
As it is, Florenci Quintos, the owner of the 9,146 square-meter Quintos Village adjoining the
northern potion of St. Jude's property (the portion allegedly "expanded"), even attested on
August 16, 1973 that "there [was] no everlapping of boundaries as per my approved plan (LRC)
PSD 147766 dated September 8, 1971."   None of the other neighboring owners ever
20

complained against St. Jude or the purchaser of its property. It is clear, therefore, that there was
no actual damage to third persons caused by the resurvey and the subdivision.

Significantly, the other private respondents — Spouses Santos, Spouses Calaguian, Dela Fuente
and Madaya — bought such "expanded" lots in good faith, relying on the clean certificates of St.
Jude, which had no notice of any flaw in them either. It is only fair and reasonable to apply the
equitable principle of estoppel by laches against the government to avoid an injustice   to the
21

innocent purchasers for value.

Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness
of the certificate of title, acquire rights over the property, courts cannot disregard such rights and
order the cancellation of the certificate. Such cancellation would impair public confidence in the
certificate of title, for everyone dealing with property registered under the Torrens system would
have to inquire in very instance whether the title has been regularly issued or not. This would be
contrary to the very purpose of the law, which is to stabilize land titles. Verily, all persons dealing
with registered land may safely rely on the correctness of the certificate of title issued therefor,
and the law or the courts do not oblige them to go behind the certificate in order to investigate
again the true condition of the property. They are only charged with notice of the liens and
encumbrances on the property that are noted on the certificate. 22

When private respondent-purchasers bought their lots from St. Jude, they did not have to go
behind the titles thereto to verify their contents or search for hidden defects or inchoate rights

13
that could defeat their rights to said lots. Although they were bound by liens and encumbrances
annonated on the titles, private respondents-purchasers could not have had notice of defects
that only an inquiry beyond the face of the titles could have satisfied.   The rationale for this
23

presumption has been stated thus: 24

The main purpose of the Torrens System is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens Certificate of the Title and to dispense with
the need of inquiring further, except when the party concerned had actual
knowledge of facts and circumtances that should impel a reasonably cautious
man to make such further inquiry (Pascua v. Capuyoc, 77 SCRA 78). Thus,
where innocent third persons relying on the correctness of the certificate thus
issued, acquire rights over the property, the court cannot disregard such rights
(Director of Land v. Abache, et al., 73 Phil. 606).

Furthermore, it should be stressed that the total area of forty thousand six hundred twenty-three
(40,623) square meters indicated on St. Jude's original title (TCT No, 22660) was not an exact
area. Such figure was followed by the phrase "more or less." This plainly means that the land
area indicated was not precise. Atty. Antonio H. Noblejas, who became the counsel of St. Jude
subsequent to his tenure as0 Land Registration Commissioner, offers a sensible explanation. In
his letter   to the LRC dated November 8, 1982, he gave the following information:
28

The discrepancy in the figures could have been caused by the inadvertence or the negligence of
the surveyors. There is no proof, though, that the land area indicated was intentionally and
fraudulently increased. The property originally registered was the same property that was
subdivided. It is well-settled that what defines a piece of titled property is not the numerical data
indicated as the area of the land, but the boundaries or "metes and bounds" of the property
specified in its technical description as enclosing it and showing its limits.
29

Petitioner miserably failed to prove any fraud, either on the part of Private Respondent St. Jude
or on the part of land registration officials who had approved the subdivision plan and issued the
questioned TCTs. Other than its peremptory statement in the Complaint that the "expansion" of
the area was "motivated by bad faith with intent to defraud, to the damage and prejudice of the
government and public interest," petitioner did not allege specifically how fraud was perpetrated
to cause an increase in the actual land size indicated. Nor was any evidence proffered to
substantiate the allegation. That the land registration authorities supposedly erred or committed
an irregularity was merely a conclusion drawn from the "table survey" showing that the aggregate
area of the subdivision lots exceeded the area indicated on the title of the property before its
subdivision. Fraud cannot be presumed, and the failure of petitioner to prove it defeats its own
cause.

14
Robustum Agricultural Corp. v DAR & LBP, G.R. 221484,November 19, 2018

Facts:

Petitioner Robustum Agricultural Corporation is the registered owner of a 50,000-

square meter parcel of agricultural land (subject land) in Silay City per Transfer
Certificate of Title (TCT) No. T-15256.4 The subject land was formerly a part of a
300,000-square meter agricultural estate (mother estate) owned5 by Puyas Agro,
Inc. (PAI), petitioner's predecessor-in-interest.

On December 5, 2013, the Department of Agrarian Reform (DAR),6 through

Provincial Agrarian Reform Officer (PARO) II Teresita R. Mabunay, prepared a letter,
denominated as "Transmittal of NOC to the Landowner-Transferee/s,"7 addressed to
petitioner. The letter sought to furnish petitioner with a copy of a notice of
coverage previously issued by the DAR which identifies the mother estate as subject
to the agrarian reform program.8 The letter also aims to inform petitioner that, as a
transferee of a portion of the mother estate, it will be included by the DAR as an
"alternative land owner and payee" for purposes of "documentation of the [claim
folder], the issuance of [a] memorandum of [v]aluation and the payment of
compensation proceeds for the [mother estate]."

Apparently, petitioner refused to receive the foregoing letter, as well as the notice of
coverage11 attached thereto.

On June 11, 2014, the DAR issued another notice of coverage 12 that identified the
mother estate and the subject land, as well as several other agricultural lands in
Negros Occidental, as subject to the government's agrarian reform program. This
notice was published the following day in an issue of the Philippine Star. 13

On August 14, 2014, petitioner filed before the RTC of Silay City a petition for
quieting of title and declaratory relief14 against the DAR and the Land Bank of the
Philippines (LBP).15 Therein, petitioner questioned the efficacy of the notice coverage
published by the DAR. Petitioner reckoned such notice as ineffective on two (2)
accounts:

First. The notice of coverage - for being merely published in a newspaper of general
circulation - was not properly served. 16 The publication of the said notice was not
preceded by any attempt on the part of the DAR to effect personal service of the
same. Such immediate resort to publication, in turn, violates Section 16 of DAR
Administrative Order (AO) No. 07-11 which prescribes personal service as the
"primary" means of serving notices of coverage.17

Second. Even assuming that the notice of coverage was properly served by
publication, the same still cannot be enforced as against the subject land. Such
notice remains infirm because it was never posted at a conspicuous place within the
subject land and on a bulletin board in the city or barangay hall, where the subject
land is located, for seven (7) days, as required under Section 19 of DAR AO No. 07-
11.18

15
Verily, petitioner prayed that the subject land be declared free from the coverage of
the agrarian reform program, and that the DAR and the LBP be restrained from
taking or performing any actions against the subject land pursuant to, or in
implementation of, the published notice of coverage.

Issue:

Petitioner postulates that Section 30 of RA No. 9700 limited the jurisdiction of the
DAR over agrarian law implementation cases. As worded, the provision only allows
the DAR to exercise its jurisdiction over such cases that are already pending as of
June 30, 2014.24 This, according to petitioner, means that the DAR no longer has
any authority, much less exclusive jurisdiction, to take cognizance of agrarian law
implementation cases that have been filed after the statutory cut-off date of June
30, 2014.25 It also means, petitioner adds, that jurisdiction over these cases are
now, as they should be, deemed vested with the regular courts.

Accordingly, petitioner submits that its present petition for quieting of title and
declaratory relief - given that it was only filed on August 14, 2015 - rightfully falls
under the jurisdiction of the RTC.

Ruling:

Section 30 of RA No. 9700 did not vest any kind of jurisdiction over any kind of case
unto the regular courts. By its language, the provision is simply an authorization for
the DAR to continue to process, bring to finality and execute "[a]ny case [or]
proceeding involving the implementation of the [agrarian reform law]" already
pending as of June 30, 2014 even beyond the said date. Nothing more.

One of the "proceeding[s] involving the implementation of the [agrarian reform

law]" contemplated under Section 30 of RA No. 9700 is that for compulsory land
acquisition and distribution pursuant to Section 16 of RA No. 6657, as amended. Per
established DAR regulations, a proceeding for compulsory land acquisition and
distribution is deemed commenced by the issuance of a notice of coverage.

Here, two (2) notices of coverage involving the subject land have already been
issued before June 30, 2014. The first is the original notice of coverage for the
mother estate referred to, and attached in, PARO II Mabunay's Transmittal of NOC
to the Landowner-Transferee/s dated December 5, 2013. Another is the published
notice of coverage dated June 11, 2014. The issuances of these notices indicate that
a proceeding for compulsory land acquisition and distribution against PAI and
petitioner, concerning the mother estate and the subject land, was already pending
before June 30, 2014. As such, the DAR maintains its authority to bring the said
proceeding into conclusion pursuant precisely to Section 30 of RA No. 9700.

Given this context, it becomes apparent why the petition a quo, notwithstanding the
date of its filing, must fail. The petition - as both parties readily concede - is a mere
challenge to the efficacy of the notice of coverage published by the DAR. This kind of
challenge, however, is undoubtedly a matter involving the implementation of
agrarian reform which is only part and parcel of a proceeding for compulsory land

16
acquisition and distribution.

Since the sole question raised in the petition is really only an agrarian reform
matter incidental to an on-going proceeding for compulsory land acquisition and
distribution, jurisdiction to resolve the same - as is the case for the main proceeding
itself - must rest too with the DAR. The authority given to the DAR under Section 30
of RA No. 9700 to conclude any agrarian reform proceeding pending as of June 30,
2014, by necessity, includes an authority for the same to continue exercising its
quasi-judicial powers under Section 50 of RA No. 6657 with respect to any agrarian
reform matter or controversy that may arise in such proceeding.

In these lights, we find that the RTC only acted correctly in refusing to take
cognizance of the petition a quo. The issue proffered by such petition belongs to the
exclusive jurisdiction of the DAR. We, accordingly, deny the appeal.

The crux of the controversy lies in the interpretation of Section 30 of RA No. 9700.
To fully grasp its import, however, the provision has to be viewed together with the
law of which it is a part of.

RA No. 9700 and the Import of Section 30 of the Law

RA No. 9700 is an amendatory act to RA No. 6657 - the country's agrarian reform
law. It was enacted in 2009 for the purpose of instituting reforms that aim to
strengthen and accelerate the implementation of the agrarian reform program as set
forth in RA No. 6657.26 One of the most significant amendments introduced by RA
No. 9700 in this regard is its extension and limitation of the period within which land
may be acquired and distributed under the said program.

Prior to RA No. 9700, the period for land acquisition and distribution under the
agrarian reform program was scheduled to culminate by the end of 2008, pursuant
to Section 1 of RA No. 8532.27 RA No. 9700, however, extended such period for
another five (5) years - from 2009 up to June 30, 2014. 28 This is apparent under
Section 5 of the law which amended Section 7 of RA No. 6657, to wit:

Under Section 30 of RA No. 9700, "[a]ny case [or] proceeding involving the
implementation of the [agrarian reform law]" is allowed to "proceed to its finality
and be executed" even beyond June 30, 2014, so long as such case or proceeding is
already pending as of that date. To our mind, the phrase "proceeding involving the
implementation of the [agrarian reform law]" is broad enough to include the entire
process of land acquisition and distribution under the agrarian reform program. The
plain text of the provision allows us to believe as much.

The term "proceeding," in its plain and generic sense, means "any act or step that is
part of a larger whole."29 Hence, when that term is used in conjunction with the
qualifying words "involving the implementation of the [agrarian reform law]," the
resulting phrase can only denote an act or step taken by the DAR pertaining to
the implementation of the agrarian reform law. The process of land acquisition
and distribution, to no controversy, is one such step - if not the core step - in the
implementation of the agrarian reform law.

Appreciated thusly, it can be said that Section 30 of RA No. 9700 essentially clarifies
the parameters of the extension of the period for land acquisition and distribution
granted in the law. RA No. 9700 did not intend to fix June 30, 2014 as an absolute

17
deadline for the completion and cessation of all land acquisition and distribution
proceedings; the law rather sets the said date as the final date when such
proceedings may be initiated by the DAR. This is the import of Section 30 of RA
No. 9700.

Proceedings for Compulsory Land Acquisition and Distribution Initiated by

the Issuance of a Notice of Coverage

Land acquisition and distribution under the agrarian reform law is either voluntary or
compulsory.30 The procedure for compulsory land acquisition and distribution, on the
other hand, is laid out in Section 16 of RA No. 6657, as amended. The full provision
reads:

Per the provision, a proceeding for compulsory land acquisition and distribution
starts with the identification of the land sought to be placed under the coverage of
the agrarian reform program, as well as of the land's owner and of the prospective
beneficiaries. It is notable, however, that neither RA No. 6657 nor any other law, for
that matter, makes any mention as to how this identification phase is to be carried
out.31 To till in this gap, the DAR formulated regulations that introduced the issuance
of notices of coverage.32 In Roxas & Co., Inc. v. Court of Appeals,33 we detailed the
genesis of these regulations:

As can be observed from the above regulations, the identification phase is actually
preceded by a preliminary identification and determination by the DAR of the land or
lands covered by the agrarian reform program. The exact manner by which the DAR
performs this preliminary step had, in turn, varied over the years. Since 2009,
however, the DAR primarily bases its preliminary identification from the Land
Acquisition and Distribution database which includes a "balance" list or a list of all
agricultural landholdings that are supposedly covered by the agrarian reform
program, but have not undergone land acquisition and distribution proceedings or
been made the subject of a voluntary offer.34

During the preliminary identification, a formal proceeding for compulsory land

acquisition and distribution cannot be considered to have been commenced as yet.
All that has been done at this point is merely preparatory and, by itself, will not
work any real prejudice to any third party. The real initiation of the identification
phase and, hence, of a proceeding for compulsory land acquisition and distribution
comes after.

After its preliminary identification of a land as subject to the agrarian reform

program, the DAR issues a notice of coverage for that land.

A notice of coverage is a document that aims to inform the landowner that his land
has been determined by the DAR, on the basis of the latter's preliminary
identification, to be under the coverage of the agrarian reform program. 35 Under
DAR AO No. 07-11, a notice of coverage also informs the landowner of: 36

1. his remedies against the notice - such as filing a protest on coverage or a

petition for exemption or exclusion -and the period within which he could
avail of them;

18
 2. his rights under the agrarian reform law - such as the right to retain and to
nominate preferred beneficiaries - including how and until when can they be
enforced; and

3. his concomitant obligations - such as the submission to the DAR of the list of
agricultural lessees, regular or seasonal farmers and/or tenants of the land, if
any, as well of other documentary requirements - and the period within which
they should be complied.

Under DAR AO No. 01-03 or the 2003 Rules Governing the Issuance of Notice of
Coverage and Acquisition of Agricultural Lands Under RA 6657, the issuance of a
notice of coverage was recognized as the starting point of a proceeding for
compulsory land acquisition and distribution under the agrarian reform program:

The significance thus given to a notice of coverage in compulsory land acquisition

and distribution is easy to understand. In a proceeding for compulsory land
acquisition and distribution, as opposed to a voluntary one, the initiative to place a
landholding within the coverage of agrarian reform comes from the DAR. And a
notice of coverage, as is evident from the regulations enacted by the DAR, is really
the first document that manifests the categorical intent of the DAR to pursue a
land as being subject to the agrarian reform program. The issuance of such
notice cements and formalizes this intent.

It bears stressing that the issuance of a notice of coverage only initiates a

proceeding for compulsory land acquisition and distribution. The date of issuance of
such notice is, thus, useful only in determining the date of commencement of
such proceeding - which is particularly relevant for purposes of applying Section
30 of RA No. 9700.

In order for the DAR to proceed further and acquire jurisdiction over the landholding
identified in a notice of coverage as well as the landowner, however, there must first
be proper service and posting of the notice of coverage in accordance with
Sections 16 to 20 of DAR AO No. 07-11.

II

By viewing Section 30 of RA No. 9700 in the proper light, the error in petitioner's
contention surfaces.

A Proceeding for Compulsory Land Acquisition Against Petitioner

Concerning the Subject Land Already Existed Before June 30, 2014

Going back to the facts of the case, we are able to ascertain that the DAR was
already able to issue two (2) notices of coverage involving the subject land before
June 30, 2014. They are:

First. The original notice of coverage pertaining to the mother estate that was
referred to, and attached in, PARO II Mabunay's Transmittal of NOC to the
Landowner-Transferee/s.37 This notice was necessarily issued prior to June 30, 2014
since the Transmittal of NOC to the Landowner-Transferee/s, which makes mention
of the same, was itself dated December 5, 2013.

19
Second. The notice of coverage was published in the June 12, 2014 issue of the
Philippine Star.38 This notice was dated June 11, 2014.39

The above circumstances indicate with no uncertainty that a proceeding for

compulsory land acquisition and distribution against PAI and petitioner,
concerning the mother estate and the subject land, has already been
initiated, at the latest, on June 11, 2014. As this particular proceeding was
already pending as of June 30, 2014, it follows that the DAR maintains the authority
to bring the said proceeding into conclusion pursuant precisely to Section 30 of RA
No. 9700.

The Continued Authority of the DAR Over the Proceeding for Land
Acquisition and Distribution is Fatal to the Petition A Quo

The existence of an on-going proceeding for land acquisition and distribution

involving the mother estate and the subject land is, in turn, fatal to petitioner's
petition for quieting of title and declaratory relief.

The grant of authority upon the DAR to conclude a "proceeding involving the
implementation of the [agrarian reform law]" pending as of June 30, 2014 under
Section 30 of RA No. 9700, like any statutory grant of authority, must be deemed to
include all such powers, even those not expressly stated, that are necessary to
effectuate the granted authority.40 This construction is justified by the doctrine of
necessary implication:

Accordingly, the authority of the DAR to bring to completion a proceeding for land
acquisition and distribution initiated prior to June 30, 2014 must be deemed
inclusive of a coordinate authority to continue exercising its quasi-judicial
powers under Section 50 of RA No. 6657 with respect to agrarian reform
controversies that may arise from such proceeding. It may be recalled that
Section 50 of RA No. 6657 had previously vested the DAR with broad quasi-judicial
powers over agrarian reform issues; being given "primary jurisdiction to
determine and adjudicate agrarian reform matters" as well as "exclusive
original jurisdiction over all matters involving the implementation of
agrarian reform [otherwise not solely cognizable by] the Department of
Agriculture (DA) and the Department of Environment and Natural Resources," to wit:

SECTION 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with
the 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 or the Department of Agriculture (DA) and the Department or
Environment and Natural Resources (DENR). (Emphasis supplied.)

A look at the petitioner's petition for quieting of title and declaratory relief, 42 on the
other hand, reveals that the sole issue raised therein pertains merely to the efficacy
of the notice of coverage dated June 11, 2014 which was published by the DAR. This
kind of issue, however, is undoubtedly a matter "involving the implementation of
agrarian reform."43 The case of Department of Agrarian Reform v. Cuenca44 was
certain of this.

20
A petition to lift the notice of coverage under the cited regulation is clearly the
proper remedial forum whereby an aggrieved landowner can raise issues contesting
the validity or efficacy of a notice of coverage. This, for all intents and purposes, is
the remedy that petitioner should have availed of.

Since the sole question raised in the petition a quo is really only an agrarian reform
matter that arose from an on-going proceeding for compulsory land acquisition and
distribution, jurisdiction to resolve the same - as is the case for the main proceeding
itself - must rest too with the DAR. As already pointed out, the authority given to
the DAR under Section 30 of RA No. 9700 to conclude any agrarian reform
proceeding pending as of June 30, 2014, by necessity, includes an authority for the
same to continue exercising its quasi-judicial powers under Section 50 of RA No.
6657 with respect to any agrarian reform matter or controversy that may arise in
such proceeding.

In these lights, we find the RTC's dismissal of the petition a quo in order. The issue
proffered by such petition belongs to the exclusive jurisdiction of the DAR, pursuant
to Section 50 of RA No. 6657 and in relation to Section 30 of RA No. 9700.

WHEREFORE, premises considered, the instant appeal is DENIED. The Orders

dated June 11, 2015 and September 28, 2015 of the Regional Trial Court, Branch
69, of Silay City in Civil Case No. 2915-69, insofar as they effectively dismissed the
petition for quieting of title and declaratory relief filed by petitioner Robustum
Agricultural Corporation, are AFFIRMED.

21
Polo Plantation Agrarian Reform Multipurpose Cooperative v Rodolfo Inson, G.R. No.
189162, 30 January 2019

Facts:

Sometime in 2003, a 394.9020-hectare portion of the landholding 3 owned by Polo

Coconut Plantation, Inc. (Polo Coconut) in Polo, Tanjay, Negros Oriental was placed
under the coverage of the Comprehensive Agrarian Reform Program, pursuant to
Republic Act No. 6657 or the Comprehensive Agrarian Reform Law. 4 A Notice of
Coverage was sent on May 23, 2003 to Polo Coconut President Rene Espina
(Espina).5

On December 11, 2003, the Department of Agrarian Reform received from the Land
Bank of the Philippines a Memorandum of Valuation, indicating the amount of
P85,491,784.60 as just compensation for 393.1327 hectares 6 of Polo Coconut
property. A Notice of Land Valuation and Acquisition was then sent to Polo Coconut.
On January 16, 2004, a Certificate of Deposit was issued to Polo Coconut for the said
amount.7

After Polo Coconut failed to reply to the Notice of Land Valuation and Acquisition, the
Department of Agrarian Reform conducted summary administrative proceedings to
determine just compensation. In his March 31, 2004 Resolution, 8 Regional
Adjudicator Atty. Arnold C. Arrieta (Regional Adjudicator Arrieta) of the Department
of Agrarian Reform Adjudication Board (the Adjudication Board), Region VII, Cebu
City affirmed the valuation offered by Land Bank of the Philippines in the amount of
P85,491,784.60.9

Meanwhile, Polo Coconut's title was canceled in favor of the Republic of the
Philippines. On January 27, 2004, a collective Certificate of Land Ownership Award,
with CLOA No. 00114438, was issued. It was registered on January 30, 2004, under
Transfer Certificate of Title (TCT) No. T-802, 10 in favor of POPARMUCO members
whom the Department of Agrarian Reform identified as agrarian reform
beneficiaries.11

Subsequently, the Provincial Agrarian Reform Officer of Negros Oriental, Stephen

Leonidas, sent Espina a letter dated July 16, 2004, informing him of the Department
of Agrarian Reform's intention to proceed with the relocation survey of the
property.12 Polo Coconut moved for the suspension of the survey, but Regional
Adjudicator Arrieta denied the Motion for lack of jurisdiction. 13

Polo Coconut filed before the Court of Appeals a Petition for Certiorari questioning
the propriety of subjecting its property to the Comprehensive Agrarian Reform
Program. It contended that the City of Tanjay had already reclassified the area into
a mixed residential, commercial, and industrial land. It also assailed the eligibility of
the identified agrarian reform beneficiaries. 14

On February 16, 2005, the Court of Appeals ruled in favor of Polo Coconut. It found
that the Polo Coconut property was no longer an agricultural land when the
Department of Agrarian Reform placed it under the Comprehensive Agrarian Reform
Program. Further, it held that the identified beneficiaries were not qualified as
beneficiaries, as they were not tenants of Polo Coconut.

22
The September 3, 2008 Decision became final and executory on November 26,
2008.23

On June 30, 2009, 164 alleged regular farmworkers of Polo Coconut (Alcantara, et
al.) filed a Petition for Inclusion as qualified beneficiaries in TCT No. T-802/CLOA No.
00114438 and Exclusion of those named as beneficiaries therein (Petition for
Inclusion/Exclusion).24 They were allegedly not informed when the Department of
Agrarian Reform conducted the identification and screening process for potential
beneficiaries.25 They contend that the Certificate of Land Ownership Award holders
were not qualified beneficiaries under Section 22 of the Comprehensive Agrarian
Reform Law.26

On July 1, 2009, Alcantara, et al. also filed a Petition for Immediate Issuance of a
Cease and Desist Order and/or Injunction. 27 They averred that the Certificate of
Land Ownership Award holders had attempted to occupy the property even without
authority from the Department of Agrarian Reform. Moreover, the Municipal Agrarian
Reform Officer of Tanjay had allegedly scheduled the relocation and subdivision of
the property for the final installation of the qualified beneficiaries. Thus, they sought
a Cease and Desist Order to preserve their legal rights while the administrative
proceedings for the inclusion/exclusion of farmer beneficiaries were pending
resolution.

Ruling:

Section 16 outlines the procedure for compulsory land acquisition:

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

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

(a) After having identified the land, the landowners and the beneficiaries, the DAR shall
send its notice to acquire the land to the owners thereof, by personal delivery or
registered mail, and post the same in a conspicuous place in the municipal building and
barangay hall of the place where the property is located. Said notice shall contain the
offer of the DAR to pay a corresponding value in accordance with the valuation set
forth in Sections 17, 18, and other pertinent provisions hereof.
   
(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR
of his acceptance or rejection of the offer.
   
(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines (LBP)
shall pay the landowner the purchase price of the land within thirty (30) days after he
executes and delivers a deed of transfer in favor of the Government and surrenders the
Certificate of Title and other monuments of title.

23
   
(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land by requiring the landowner, the
LBP and other interested parties to submit evidence as to the just compensation for the
land, within fifteen (15) days from the receipt of the notice. After the expiration of the
above period, the matter is deemed submitted for decision. The DAR shall decide the
case within thirty (30) days after it is submitted for decision.
   
(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or
no response from the landowner, upon the deposit with an accessible bank designated
by the DAR of the compensation in cash or in LBP bonds in accordance with this Act,
the DAR shall take immediate possession of the land and shall request the proper
Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the
Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of
the land to the qualified beneficiaries.
   
(f) Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.

Section 16(a) requires that after identification of the land, landowners, and farmer
beneficiaries, the Department of Agrarian Reform will send a notice of acquisition to
the landowner, through 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.

While the law does not provide how the identification process must be made, the
details or guidelines can be found in pertinent administrative issuances of the
Department of Agrarian Reform or the Provincial Agrarian Reform Council, per their
rule-making power under Section 49.91

Under the Department of Agrarian Reform Administrative Order No. 01-03, or the
2003 Rules Governing Issuance of Notice of Coverage and Acquisition of Agricultural
Lands Under Republic Act No. 6657, compulsory acquisition is commenced through
two (2) ways.

The first is through a Notice of Coverage. After determining that the land is covered
by the Comprehensive Agrarian Reform Program and writing a pre-ocular inspection
report, the Municipal Agrarian Reform Officer sends a Notice to the landowner. The
Notice would be posted for at least seven (7) days in the bulletin boards of the
barangay hall and municipal/city hall where the property is located.

The other way is through a Petition for Coverage, filed by any party before the
Department of Agrarian Reform's Regional Office or Provincial Office of the region or
province where the property is located. Either of these offices transmits the case
folder to the Municipal Agrarian Reform Officer where the property is located. 92

Under Department of Agrarian Reform Administrative Order No. 01-03, the Municipal
Agrarian Reform Officer serves copies of the Notice of Coverage or Petition for
Coverage on the landowner. Through the Notice, the landowner is informed that his
or her landholding is subjected to the Comprehensive Agrarian Reform Program. He

24
or she is invited to a public hearing or field investigation on the date specified in the
Notice. Moreover, the landowner is informed of his or her rights and privileges (with
corresponding restrictions and conditions), as follows:

1. apply for an exemption clearance or for exclusion from the Comprehensive

Agrarian Reform Program's coverage;

2. retain an area not exceeding five (5) hectares pursuant to Section 6 of

Republic Act No. 6657;

3. nominate his/her child/ren who may qualify as beneficiary/ies to the subject

landholding; and/or

4. submit evidence for determining just compensation of the subject

landholding.

The landowner or any real party-in-interest may file before the Department of
Agrarian Reform Municipal Office a protest or petition to lift the coverage of the
Comprehensive Agrarian Reform Program within 60 calendar days from receipt of
the Notice.93 The protest will be resolved in accordance with the procedure set forth
in Department of Agrarian Reform Administrative Order No. 03-03, or the 2003
Rules for Agrarian Law Implementation Cases.

Meanwhile, the process of identifying and screening potential agrarian reform

beneficiaries is suspended until after the lapse of the 60-day period from the
landowner's receipt of the Notice, or upon the authorized agency's final
determination of the petition for retention, exclusion, and exemption, if any were
filed.94

Upon receipt of the Memorandum of Valuation from the Land Bank of the Philippines
and Claim Folder Profile and Valuation Summary, the Provincial Agrarian Reform
Officer sends a Notice of Land Valuation and Acquisition to the landowner in
accordance with the same service procedures in Department of Agrarian Reform
Administrative Order No. 01-03.

Section 16(e) mandates the Department to take immediate possession of the land
only after full payment or deposit of the compensation with the bank (in case of
rejection/non-response of landowner), and to request the Register of Deeds to
transfer title in the name of the Republic of the Philippines, and later on to the
intended beneficiaries.

I (B)

Upon land acquisition, the Department of Agrarian Reform immediately proceeds to

distribute the land to qualified beneficiaries.95

Sections 22 and 22-A96 of the Comprehensive Agrarian Reform Law provides the
order of priority in the distribution of lands covered by the Comprehensive Agrarian
Reform Program to landless farmers/farmworkers. The basic qualification for a
beneficiary is his or her "willingness, aptitude, and ability to cultivate and make the
land as productive as possible."

Department of Agrarian Reform Administrative Order No. 07-03 97 provides the

qualifications, disqualifications, and rights and obligations of agrarian reform

25
beneficiaries. It also provides the operating procedures for their: (1) identification,
screening, and selection; (2) resolution of protests in the selection; and (3)
certificate of land ownership award generation and registration.

The Municipal or Provincial Agrarian Reform Officer, together with the Barangay
Agrarian Reform Committee, screens and selects the possible agrarian beneficiaries,
under the criteria in Sections 4 and 5 of Department of Agrarian Reform
Administrative Order No. 07-03:

All qualified agrarian reform beneficiaries are then ranked in accordance with the
order of priority under Sections 22 and 22-A.98 Then, the master list of agrarian
reform beneficiaries is posted for 15 days in at least three (3) conspicuous places in
the barangay hall, municipal hall, and in the community where the property is
located.99

Written protests for the inclusion/exclusion from the master list must be filed before
the Department of Agrarian Reform's Regional or Provincial Office, as the case may
be, not later than 15 days from the last day of posting of the list. 100 The Regional
Director will resolve the protest through summary proceedings within 30 days from
receiving the Beneficiary Screening Committee's case records or the Provincial
Office's investigation report and recommendation. 101 The master list becomes final
and executory after the lapse of 15 days from receipt of the Regional Director's
decision on the protest, but such finality is only for the specific purpose of
generating the certificate of land ownership award.102

An appeal or motion for reconsideration from the Regional Director's decision or

order for inclusion/exclusion of potential agrarian reform beneficiaries in/from the
master list will be governed by Department of Agrarian Reform Administrative Order
No. 03-03.

After the issuance of certificates of land ownership award, a petition to reopen the
identification and selection of agrarian reform beneficiaries may be filed on grounds
of duress or threat by the landowner against the petitioner during the identification
phase. Section 14 of Department of Agrarian Reform Administrative Order No. 07-03
provides:

SECTION 14. Re-Opening of ARB Identification and Selection

14.1 Subsequent to the issuance of CLOAs but prior to the installation of ARBs, the
Regional Director may grant due course to a sworn petition to re-open the
identification, screening and selection process on the grounds of duress or threat by
the landowner against the petitioner during the identification phase. After
installation of the ARBs, only the Secretary may grant due course to such a petition.

14.2 Any petition to re-open the ARB identification, screening and selection process
subsequent to installation shall be directly filed with the Office of the Regional
Director where the property is located which shall have the exclusive jurisdiction to
act on the petition. The procedures shall be in accordance with A.O. No. 3, Series of
2003 titled, "2003 Rules for Agrarian Law Implementation Cases".

The re-opening of ARB identification, screening and selection shall, however,

subscribe to the provisions for qualification, disqualification, rights and obligations,
and procedures prescribed under pertinent sections of this Administrative Order.

26
As in protests for inclusion/exclusion of agrarian reform beneficiaries, petitions to
reopen the identification and selection process are governed by Department of
Agrarian Reform Administrative Order No. 03-03.103

I (C)

Under Department of Agrarian Reform Administrative Order No. 03-03, 104 the

Regional Director105 has primary jurisdiction over all agrarian law implementation
cases, while the Department of Agrarian Reform Secretary 106 has appellate
jurisdiction over them. Rule I, Section 2 provides:

Under the new law, Republic Act No. 9700, 113 all cases involving the cancellation of
certificates of land ownership award and other titles issued under any agrarian
reform program are within the exclusive and original jurisdiction of the Department
of Agrarian Reform Secretary. Section 9 provides:

SECTION 9. Section 24 of Republic Act No. 6657, as amended, is hereby further

amended to read as follows:

SEC. 24. . . .

....

All cases involving the cancellation of registered emancipation patents, certificates of

land ownership award, and other titles issued under any agrarian reform program
are within the exclusive and original jurisdiction of the Secretary of the DAR.

I (D)

In addition to identifying the qualified beneficiaries, Section 22 of the

Comprehensive Agrarian Reform Law mandates the Department of Agrarian Reform
to "adopt a system of monitoring the record or performance of each beneficiary, so
that any beneficiary guilty of negligence or misuse of the land or any support
extended to him shall forfeit his right to continue as such beneficiary." 114

The Department of Agrarian Reform, mandated to monitor the performance of

beneficiaries and ensure the integrity of its master list of agrarian reform
beneficiaries, integrated the Agrarian Reform Beneficiaries Carding and Identification
System115 in its land acquisition and distribution process.

Under the Agrarian Reform Beneficiaries Carding and Identification System, agrarian
reform beneficiaries with titles under the agrarian reform laws will be issued
identification cards as proof of their being bona fide beneficiaries. These
identification cards are validated yearly based on the Department of Agrarian
Reform Municipal Office's inspection of the beneficiaries' performance and
compliance with their duties under the laws. The Municipal Office checks if they still
own and cultivate the landholding awarded to them, or if they have committed any
offense. Beneficiaries found to have violated the laws will be removed from the
master list. Consequently, their identification cards and emancipation patents or
certificates of land ownership award will be canceled.

27
Section 24 of the Comprehensive Agrarian Reform Law states that the rights and
obligations of beneficiaries commence from the time the land is awarded to them.
The certificate of land ownership award contains the restrictions and conditions
provided in the law and other applicable statutes. Thus:

The restrictions and conditions refer to payment of annual amortizations,

transferability of the awarded land, and proper use of financial and support services,
which are found in the following provisions of the Comprehensive Agrarian Reform
Law:

Failure of beneficiaries to comply with the prescribed conditions may result in the
forfeiture of the land awarded to them. A certificate of land ownership award may be
corrected and canceled for violations of agrarian laws, rules, and regulations. 116

Department of Agrarian Reform Administrative Order No. 03-09 117 provides the rules
and procedures for canceling certificates of land ownership award and other titles
under the Comprehensive Agrarian Reform Program. 118 The causes of action in a
petition for cancellation of a certificate of land ownership award are:

SECTION 4. Causes of Action. — No petition for cancellation shall be filed unless it

has been determined and ruled with finality by the DAR Secretary or the Courts
that:

(a) The land subject matter of the CLOA, EP or other title under agrarian reform
program is found to be:

1. The retention area of the landowner;

2. Excluded from the coverage of CARP, PD No. 27 or other agrarian
reform program;
3. Exempted from the coverage of CARP, PD No. 27 or other agrarian
reform program;
4. Outside of the authority of the DAR to dispose and award, as the same
falls within the authority of the DENR to distribute;
5. Consist in the erroneous issuance of the said title resulting from the
defect or lacking in documentation (DNYP or DNYD generated titles but
not yet distributed).

(b) The CLOA or EP holder is found to have:

1. Misused or diverted the financial and support services;

2. Misused the land;
3. Materially misrepresented his basic qualifications as agrarian reform
beneficiary;
4. Illegally converted into other uses the awarded the land;
5. Sold, transferred, conveyed the awarded land to other person;
6. Defaulted in the payment of obligation for three (3) consecutive years
in the case of Voluntary Land Transfer/Direct Payment Scheme;
7. Failed to pay the amortization for at least three (3) annual
amortizations;
8. Neglected or abandoned the awarded land; and
9. Circumvented the laws related to the implementation of the agrarian
reform program.

28
Department of Agrarian Reform Administrative Order No. 03-09 further states that
the cancellation of registered certificates of land ownership award, emancipation
patents, and other titles "under any agrarian reform program shall be strictly
regulated and may be allowed only in the manner and conditions prescribed" 119 in
the Administrative Order.

II

Here, the collective Certificate of Land Ownership Award, with CLOA No. 00114438,
was issued in favor of petitioner's members 120 on January 27, 2004, and registered
on January 30, 2004 under TCT No. T-802.121

On July 16, 2004, the Provincial Agrarian Reform Officer informed Polo Coconut that
a resurvey of the land will be conducted. Polo Coconut filed a Motion to suspend the
survey before the Adjudication Board, but it was denied for lack of jurisdiction. Thus,
Polo Coconut filed a Petition for Certiorari.

Polo Coconut raised two (2) issues before the Court of Appeals: (1) the propriety of
land coverage under the Comprehensive Agrarian Reform Program and (2) the
qualification of the identified beneficiaries. 122 The Court of Appeals ruled in favor of
Polo Coconut and nullified CLOA No. 00114438/TCT No. T-802. It held that the
identified beneficiaries were not tenants of Polo Coconut, and thus, could not qualify
under the program.123

Both the Department of Agrarian Reform and petitioner's members moved for
reconsideration, but their Motions were denied. 124 Hence, the Department filed
before this Court a Petition for Review, docketed as G.R. No. 168787. Petitioner's
members filed a separate Petition for Review, entitled "Abarca, et al. v. Polo Coconut
Plantation Company, Inc., et al." docketed as G.R. No. 169271. They contended that
while they were neither farmers nor regular farmworkers of Polo Coconut, they were
either seasonal or other farmworkers eligible to receive land under the
Comprehensive Agrarian Reform Law.125 The two (2) Petitions were later
consolidated.

In its September 3, 2008 Decision, this Court reversed and set aside the Court of
Appeals Decision. It found that Polo Coconut did not exhaust its administrative
remedies because Polo Coconut did not file a protest or opposition before the
Department of Agrarian Reform Secretary. 126 Moreover, on the issue of qualification
of the identified beneficiaries, this Court found no grave abuse of discretion on the
part of the Department.127 It ruled that Section 22 of the Comprehensive Agrarian
Reform Law allows the designation of eligible beneficiaries other than the tenants of
the landowners.128 Hence, this Court declared CLOA No. 00114438/TCT No. T-802 as
valid.129 Its Decision attained finality on November 26, 2008.

Seven (7) months later, on June 30, 2009, Alcantara, et al. filed the Petition for
Inclusion/Exclusion. They questioned the inclusion of petitioner's members as
beneficiaries and recipients of Certificates of Land Ownership Award. They
contended that the existing certificate holders were "outsiders" and have no
connection with the Polo Coconut property. 130 Respondent took cognizance of the
Petition and granted the Cease and Desist Order.

29
By that time, however, the September 3, 2008 Decision 131 had already become final
and executory. Consequently, this Court affirmed the Department of Agrarian
Reform's previous identification and designation of qualified agrarian reform
beneficiaries, who were named in CLOA No. 00114438. The finality of this Decision
meant that:

[T]he decrees thereof could no longer be altered, modified, or reversed even by the
Court en banc. Nothing is more settled in law than that a judgment, once it attains
finality, becomes immutable and unalterable, and can no longer be modified in any
respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest court of the land.
This rule rests on the principle that all litigation must come to an end, however
unjust the result of error may appear; otherwise, litigation will become even more
intolerable than the wrong or injustice it is designed to correct. 132 (Citations omitted)

A certificate of title serves as evidence of an indefeasible title. The title becomes

incontrovertible after expiration of the one (1)-year period from the issuance of the
registration decree, upon which it was based. 133

Here, by the time the Petition for Inclusion/Exclusion was filed on June 30, 2009, the
September 3, 2008 Decision declaring the validity of CLOA No. 00114438 had
attained finality and TCT No. T-802 had already become incontrovertible. As
registered property owners, petitioner's members were entitled to the protection
given to every Torrens title holder. Their rights may only be forfeited in case of
violations of agrarian laws, as well as noncompliance with the restrictions and
conditions under the Comprehensive Agrarian Reform Law.

WHEREFORE, the Petition for Contempt is DISMISSED for lack of merit.

30
Association of Small Landowners in the Philippines, Inc. v Secretary of Agrarian Reform, 175 SCRA
343

Facts:

Ruling:

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

Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator.   It has been repeatedly stressed by this Court that the measure is not the
39

taker's gain but the owner's loss.   The word "just" is used to intensify the meaning of the word
40

"compensation" to convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 
41

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

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

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

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

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

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

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

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

31
The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the said
determination in the exercise of what is admittedly a judicial function.

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

It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in
the past solely in that medium. However, we do not deal here with the traditional excercise of the
power of eminent domain. This is not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its owner for a specific and perhaps
local purpose.

What we deal with here is a revolutionary kind of expropriation.

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

Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering
the vast areas of land subject to expropriation under the laws before us, we estimate that
hundreds of billions of pesos will be needed, far more indeed than the amount of P50 billion
initially appropriated, which is already staggering as it is by our present standards. Such amount
is in fact not even fully available at this time.

We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that
when they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to pay in cash and in full for
the lands they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP Law,
particularly the payment of the balance (if the owner cannot be paid fully with money), or indeed
of the entire amount of the just compensation, with other things of value. We may also suppose
that what they had in mind was a similar scheme of payment as that prescribed in P.D. No. 27,
which was the law in force at the time they deliberated on the new Charter and with which they
presumably agreed in principle.

The Court has not found in the records of the Constitutional Commission any categorical
agreement among the members regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform program being contemplated.
There was the suggestion to "fine tune" the requirement to suit the demands of the project even
as it was also felt that they should "leave it to Congress" to determine how payment should be
made to the landowner and reimbursement required from the farmer-beneficiaries. Such

32
innovations as "progressive compensation" and "State-subsidized compensation" were also
proposed. In the end, however, no special definition of the just compensation for the lands to be
expropriated was reached by the Commission.  50

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

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

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

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

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

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

The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to
the expropriator only upon full payment of the just compensation. Jurisprudence on this settled
principle is consistent both here and in other democratic jurisdictions. Thus:

33
Title to property which is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's
report under the Local Improvement Act, is filed. 51

... although the right to appropriate and use land taken for a canal is complete at the time of
entry, title to the property taken remains in the owner until payment is actually
made.   (Emphasis supplied.)
52

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21,
1972 and declared that he shall "be deemed the owner" of a portion of land consisting of a
family-sized farm except that "no title to the land owned by him was to be actually issued to him
unless and until he had become a full-fledged member of a duly recognized farmers'
cooperative." It was understood, however, that full payment of the just compensation also had to
be made first, conformably to the constitutional requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21,
1972 of the land they acquired by virtue of Presidential Decree No. 27.
(Emphasis supplied.)

it was obviously referring to lands already validly acquired under the said decree, after proof of
full-fledged membership in the farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide in its Section 2 that the "lease
rentals paid to the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer
of ownership after full payment of just compensation), shall be considered as advance payment
for the land."

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

34
Alfonso v Land Bank & DAR, November 29, 2016

Ruling:

B. Regulatory scheme to determine just compensation under RA 665 7

With an undertaking of such magnitude, the Congress set up a regulatory scheme for the
determination of just compensation founded on four major features.

First, under Section 17 of RA 6657, Congress identified factors to be considered in the

determination of just compensation in the expropriation of agricultural lands. This Section reads:

Sec. 17. Determination of Just Compensation. – In determining just compensation, the cost of

acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said land shall be considered as
additional factors to determine its valuation.

Second, under Section 49, Congress vested the DAR and the Presidential Agrarian Reform
Council (PARC)  with the power to issue rules and regulations, both substantive and procedural,
48

to carry out the objects and purposes of the law:

Sec. 49. Rules and Regulations. -The PARC and the DAR shall have the power to issue rules
and regulations, whether substantive or procedural, to carry out the objects and purposes of this
Act. Said rules shall take effect ten (10) days after publication in two (2) national newspapers of
general circulation.

It is on the basis of this section that the DAR would issue its basic formulas.

Third, under Section 16(d) and (f), Congress gave the DAR primary jurisdiction to conduct
summary administrative proceedings to determine and decide the compensation for the land, in
case of disagreement between the DAR/LBP and the landowners:

Sec. 16. Procedure for Acquisition of Private Lands. - For purposes of acquisition of private
lands, the following procedures shall be followed:

xxx

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

xxx

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

Fourth, to implement Section 16(f), Congress provided for the judicial review of the DAR
preliminary determination of just compensation. Under Sections 56 and 57, it vested upon

35
designated Special Agrarian Courts the special original and exclusive jurisdiction over all
petitions for the determination of just compensation to landowners:

Sec. 56. Special Agrarian Court. - The Supreme Court shall designate at least one (1) branch of
the Regional Trial Court (RTC) within each province to act as a Special Agrarian Court. The
Supreme Court may designate more branches to constitute such additional . Special Agrarian
Courts as may be necessary to cope with the number of agrarian cases in each province. In the
designation, the Supreme Court shall give preference to the Regional Trial Courts which have
been assigned to handle agrarian cases or whose presiding judges were former judges of the
defunct Court of Agrarian Relations. The Regional Trial Court (RTC) judges assigned to said
courts shall exercise said special jurisdiction in addition to the regular jurisdiction of their
respective courts. The Special Agrarian Courts shall have the powers and prerogatives inherent
in or belonging to the Regional Trial Courts.

Sec. 57. Special Jurisdiction. - The Special Agrarian Courts shall have original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners, and the
prosecution of all 1 criminal offenses under this Act. The Rules of Court shall apply to all
proceedings before the Special Agrarian Courts, unless modified by this Act. The Special
Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30)
days from submission of the case for decision.

We shall later on show how this regulatory scheme provided by Congress (and implemented by
the DAR) is a reasonable policy choice given the grand scale of the government's agrarian
reform program.

C. Development of the DAR basic formula

On March 8, 1989, the DAR issued Administrative Order No. 6  (DAR AO No. 6 [1989]), its first
49

attempt to translate the factors laid down by Congress in Section 17 into a formula.

Making use of "the multi-variable approach which subsumes the ten factors mentioned under
Section 17," the DAR set out a formula to estimate "a composite value based on land market
price, assessor's market value and landowner's declared value."  Reduced to equation form, the
50

formulation is as follows:

Total Land = MV + AMV + DV

Value

where:

Market Value (MV) = Refers to the latest and comparable transactions

within the municipality/province/region, depending
on availability of data. Mortgages which take into
account bank exposures shall also be considered in
computing for this value.

Assessor’s Market Value = Refers to the assessment made by government

(AMV) assessors.

Declared Value (DV) = Refers to the landowner’s declaration under EO 229

36
 or RA 6657. 51

Between June 1988 to December 1989, the University of the Philippines Institute of Agrarian
Studies (UP-IAS) conducted an agrarian reform study, which analyzed, among others, the land
valuation scheme of the government under DAR AO No. 6 (1989). 52

The UP-IAS study, which Justice Leonen cites in his dissenting opinion, criticized DAR AO No. 6
(1989) for averaging the values based on the land market price, assessor's market value and
landowner's declared value. The UP-IAS study said:

If agricultural lands are to be distributed to landless farmers and farmworkers for agricultural
purposes, then landowners should be compensated for their lands based on its agricultural
potential. The appropriate formula, therefore, is to value land based only on
production/productivity. The land valuation on PD 27, which stipulates that the value is
equivalent to 2.5 x average production of tl:1ree preceding normal croppings is a classic
illustration of simplicity and productivity-based land valuation.  (Emphasis supplied.)
53

According to the study, the AMV component had no cut-off date, while the MV factor had no
guidelines for determining comparable sales, which makes the DAR formula prone to
manipulation.  It thus suggested control measures to prevent manipulation of the existing
54

formula, including the setting of cut-off dates for AMV and guidelines for comparable sales.  It
55

went on to suggest that "x x x major components could be assigned weights with more emphasis
attached to the production-based value. Should the declared value be unavailable, then the
value should be based only on the components that are available, rather than employ the
maximum limit, that is, assuming DV to be equivalent to the sum of the other components. x x x" 56

Within the same year, DAR Administrative Order No. 17  (DAR AO No. 17 [1989]) was issued
59

revising the land valuation formula under DAR AO No. 6 (1989). This revision appears to be a
reaction to the recent developments, with the new formula reflecting lessons learned from the
Garchitorena estate scandal and the UP-IAS study's comments and suggested improvements.

Under DAR AO No. 17 (1989), the DAR laid down guidelines for the determination of the
Comparable Sales (CS) component,  provided a cut-off date for Market Value per Tax
60

Declaration (MV),  and placed greater weight to productivity through the Capitalized Net Income
61

(CNI) factor, among others. Thus:

Land Value= (CS x 0.3) + (CNI x 0.4) + (MV x 0.3)

Where:

CS = Comparable Sales

CNI = Capitalized Net Income

MV = Market Value per Tax Declaration 62

In case of unavailability of figures for the three main factors, the DAR, in keeping with the UP-IAS
study, also came up with alternate formulas using the available components, always with more
weight given to CNI, the production-based value.

On April 25, 1991, the capitalization rate (relevant for the CNI factor) was lowered from 20% to
16%.  This decrease was presumably made for the benefit of the landowners, considering a
63

lower capitalization rate results to a higher CNI valuation.

37
The next major change in the basic formula came with the issuance of DAR Administrative Order
No. 6  (DAR AO No. 6 [1992]) on October 30, 1992, which, among others, gave even more
64

weight to the CNI factor, and further lowering the capitalization rate to 12%. 65

This basic formula  was retained under DAR AO No. 5 (1998), issued on April 15, 1998.
66

Parenthetically, DAR AO No. 5 (1998) gave landowners the opportunity to take part in the
valuation process, including participation in the DAR's field investigations  and submission of
67

statements as to the income claimed to , be derived from the property (whether from the crop
harvest/lease of the property).  It is only when the landowner fails to submit the statement, or the
68

claimed value cannot be validated from the actual inspection of the property, that the DAR and
the LBP are allowed to "adopt any applicable industry data or, in the absence thereof, conduct an
industry study on the specific crop which will be used in determining the production, cost and net
income of the subject landholding." 69

Recognizing that not all agricultural properties are always similarly circumstanced, the DAR also
introduced alternative CNI formulas which can be applied depending on a property’s peculiar
situation. There were CNI formulas for when a land is devoted to intercropping, or the practice of
planting seasonal or other permanent crop/s between or under existing permanent or seasonal
crops  and to account for lease contracts.  There are existing valuation guidelines which also
70 71

take into account the types of crops found in the property sought to be covered, i.e., Cavendish
bananas,  sugarcane,  rubber,  and standing commercial trees,  among others.
72 73 74 75

D. First extension of life of CARP

Ten (10) years after RA 6657, the CARP’s Land Acquisition and Distribution component was still
far from finished. Thus, in 1998, Congress enacted Republic Act No. 8532  (RA 8532), extending
76

the CARP implementation for another ten (10) years and providing funds augmentation of ₱50
billion.  This additional allocation of funds expired in June 2008. In Joint Resolution No. 1
77

approved by both Houses of Congress in January 2009, Congress temporarily extended CARP
to until June 2009. 78

E. Republic Act No. 9700 and the amendment

of Section 17 of RA 6657

By the end of June 2009, there was still a substantial balance (about 1.6 million hectares for
distribution) from the projected target.  So, on August 7, 2009, Congress passed Republic Act
79

No. 9700  (RA 9700), extending the program to June 30, 2014. It also amended Section 17 to
80

read:

Sec. 17. Determination of Just Compensation. – In determining just compensation, the cost of

acquisition of the land, the value of the standing crop, the current value of like properties, its
nature, actual use and income, the sworn valuation by the owner, the tax declarations, the
assessment made by government assessors, and seventy percent (70%) of the zonal valuation
of the Bureau of Internal Revenue (BIR),  translated into a basic formula by the DAR shall be
considered, subject to the final decision of the proper court. The social and economic
benefits contributed by the farmers and the farmworkers and by the Government to the property
as well as the non-payment of taxes or loans secured from any government financing institution
on the said land shall be considered as additional factors to determine its valuation. (Italics,
emphasis and underscoring supplied.)

To implement the amendments to Section 17, the DAR issued, among others, DAR
Administrative Order No. 1  (DAR AO No. 1 [2010]) and Administrative Order No. 7  (DAR AO
81 82

No. 7 [2011]). Despite retaining the basic formula for valuation, these administrative orders
introduced a change in the reckoning date of average gross product (AGP) and selling price
(SP), both of which are relevant to the CNI factor, to June 30, 2009.  The MV factor was also
83

amended and adjusted to the fair market value equivalent to seventy percent (70%) of the

38
Bureau of Internal Revenue (BIR) zonal valuation.  The basic formula under DAR AO No. 7
84

(2011) appears to be the prevailing land formula to date.

F. Constitutional challenge to RA 665 7

Shortly after the enactment of RA 6657, its constitutionality was challenged in a series of cases
filed with the Court. Among other objections, landowners argued that entrusting to the DAR the
manner of fixing just compensation violated judicial prerogatives. This claim was unanimously
rejected in our landmark holding in Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform (Association):

G.Controlling doctrines after Association

Since this landmark ruling in Association, the Court has, over the years, set forth a finely wrought
body of jurisprudence governing the determination of just compensation under RA 6657. This
body of precedents is built upon three strands of related doctrines.

First, in determining just compensation, courts are obligated to apply both the compensation
valuation factors enumerated by the Congress under Section 17 of RA 6657,  and the basic
87

formula laid down by the DAR.  This was the holding of the Court on July 20, 2004 when it
88

decided the case of Landbank of the Philippines v. Banal  (Banal) which involved the application
89

of the DAR-issued formulas. There, we declared:

While the determination of just compensation involves the exercise of judicial discretion,
however, such discretion must be discharged within the bounds of the law. Here, the RTC
wantonly disregarded R.A. 6657, as amended, and its implementing rules and regulations (DAR
Administrative Order No. 6, as amended by DAR Administrative Order No. 11).

x x x In determining the valuation of the subject property, the trial court shall consider the
factors provided under Section 17 of R.A. 6657, as amended, mentioned earlier. The
formula prescribed by the DAR in Administrative Order No. 6, Series of 1992, as amended
by DAR Administrative Order No. 11, Series of 1994, shall be used in the valuation of the
land. Furthermore, upon its own initiative, or at the instance of any of the parties, the trial court
may, appoint one or more commissioners to examine, investigate and ascertain facts relevant to
the dispute.  (Emphasis and underscoring supplied.)
90

Banal would thereafter be considered the landmark case on binding character of the DAR
formulas. It would be cited in the greatest number of subsequent cases involving the issue of
application of the DAR-issued formulas in the determination of just compensation. 91

Second,the formula, being an administrative regulation issued by the DAR pursuant to its rule-
making and subordinate legislation power under RA 6657, has the force and effect of law. Unless
declared invalid in a case where its validity is directly put in issue, courts must consider their use
and application.  In Land Bank of the Philippines v. Celada  (Celada), we held:
92 93

As can be gleaned from above ruling, the SAC based its valuation solely on the observation that
there was a "patent disparity" between the price given to respondent and the other landowners.
We note that it did not apply the DAR valuation formula since according to the SAC, it is Section
17 of RA No. 6657 that "should be the principal basis of computation as it is the law governing
the matter." The SAC further held that said Section 17 "cannot be superseded by any
administrative order of a government agency," thereby implying that the valuation formula under
DAR Administrative Order No. 5, Series of 1998 (DAR AO No. 5,s. of 1998), is invalid and of no
effect.

39
While SAC is required to consider the acquisition cost of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner, the tax
declaration and the assessments made by the government assessors to determine just
compensation, it is equally true that these factors have been translated into a basic formula by
the DAR pursuant to its rule-making power under Section 49 of RA No. 6657. As the government
agency principally tasked to implement the agrarian reform program, it is the DAR’s duty to issue
rules and regulations to carry out the object of the law. DAR AO No. 5, s. of 1998 precisely "filled
in the details" of Section 17, RA No. 6657 by providing a basic formula by which the factors
mentioned therein may be taken into account. The SAC was at no liberty to disregard the
formula which was devised to implement the said provision.

It is elementary that rules and regulations issued by administrative bodies to interpret the law
which they are entrusted to enforce, have the force of law, and are entitled to great respect.
Administrative issuances partake of the nature of a statute and have in their favor a presumption
of legality. As such, court cannot ignore administrative issuances especially when, as in
this case, its validity was not put in issue. Unless an administrative order is declared
invalid, court have no option but to apply the same.  (Emphasis and underscoring supplied.)
94

Third, courts, in the exercise of their judicial discretion, may relax the application of the formula
to fit the peculiar circumstances of a case. They must, however, clearly explain the reason for
any deviation; otherwise, they will be considered in grave abuse of discretion.  This rule, set forth
95

in Land Bank of the Philippines v. Yatco Agricultural Enterprises  (Yatco), was a qualification of
96

the application of Celada, to wit:

Prescinding from Association, the cases of Banal, Celada and Yatco combined provide the three

strands of controlling and unifying doctrines governing the determination of just compensation in
agrarian reform expropriation.

For clarity, we restate the body of rules as follows: The factors listed under Section 17 of RA
6657 and its resulting formulas provide a uniform framework or structure for the
computation of just compensation which ensures that the amounts to be paid to affected
landowners are not arbitrary, absurd or even contradictory to the objectives of agrarian
reform. Until and unless declared invalid in a proper case, the DAR formulas partake of
the nature of statutes, which under the 2009 amendment became law itself, and thus have
in their favor the presumption of legality, such that courts shall consider, and not
disregard, these formulas in the determination of just compensation for properties
covered by the CARP. When faced with situations which do not warrant the formula's
strict application, courts may, in the exercise of their judicial discretion, relax the
formula's application to fit the factual situations before them, subject only to the condition
that they clearly explain in their Decision their reasons (as borne by the evidence on
record) for the deviation undertaken. It is thus entirely allowable for a court to allow a
landowner's claim for an amount higher than what would otherwise have been offered
(based on an application of the formula) for as long as there is evidence on record
sufficient to support the award.

In Part II, we shall evaluate the challenged rulings of the Court of Appeals based on the
foregoing guidelines.

II. The SAC deviated, without reason or explanation, from Sect. 17 and

the DAR-issued formula when it adopted the Cuervo Report

Petitioner Alfonso challenges the Decision of the Court of Appeals which reversed the SAC's
findings for failing to observe the procedure and guidelines provided under the relevant DAR
rule.
98

40
Applying DAR AO No. 5 (1998), the LBP and the DAR considered the following in its valuation of
Alfonso’s properties: (1) data from the Field Investigation Reports conducted on the
properties;  (2) data from the Philippine Coconut Authority (PCA) as to municipal selling price for
99

coconut in the Sorsogon Province;  and (3) the Schedule of Unit Market Value (SUMV).
100 101

Due to the absence of relevant comparable sales transactions in the area,  the DAR and the
102

LBP used the following formula:

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

It valued the San Juan and Bibincahan properties at ₱39,974.22  and 103

₱792,869.06,  respectively.
104

The SAC, in its Decision dated May 13, 2005, rejected this valuation for being "unrealistically
low"  and instead adopted Commissioner Chua's Cuervo Report, which valued the San Juan
105

and Bibincahan properties at the "more realistic" amounts of ₱442,830.00 and ₱5,650,680.00,
respectively. 106

That the SAC's adoption of the Cuervo Report valuation constitutes deviation from Section 17
and the prescribed formula is fairly evident.

Commissioner Chua employed a different formula, other than that set forth in DAR AO No. 5
(1998), to compute the valuation. While the DAR-issued formula generally uses the three (3)
traditional approaches to value, each with assigned weights, Commissioner Chua chose to apply
only two approaches, namely, the Market Data Approach (MDA) and the Capitalized Income
Approach (CIA)  and averaged the indications resulting from the two approaches. He thereafter
107

concluded that the result "reasonably represented the just compensation (fair market value) of
the land with productive coconut trees." 108

In addition, in his computation of the CNI factor, Commissioner Chua used, without any
explanation, a capitalization rate of eight percent (8% ),  instead of the twelve percent (12%)
109

rate provided under DAR AO No. 5 (1998).

As earlier explained, deviation from the strict application of the DAR formula is not absolutely
proscribed. For this reason, we find that the Court of Appeals erred in setting aside the SAC's
Decision on the mere fact of deviation from the prescribed legislative standards and basic
formula. Yatco teaches us that courts may, in the exercise of its judicial discretion, relax the
application of the DAR formula, subject only to the condition that the reasons for said deviation
be clearly explained.

In this case, the SAC, in adopting the Cuervo Report valuation, merely said:

Considering all these factors, the valuation made by the Commissioner and the potentials of the
property, the Court considers that the valuation of the Commissioner as the more realistic
appraisal which could be the basis for the full and fair equivalent of the property taken
from the owner while the Court finds that the valuation of the [LBP] as well as the
Provincial Adjudicator of Sorsogon in this (sic) particular parcels of land for acquisition
are unrealistically low.  (Emphasis and underscoring supplied.)
110

The statement that the government's valuation is "unrealistically low," without more, is

insufficient to justify its deviation from Section 17 and the implementing DAR
formula.  There is nothing in the SAC's Decision to show why it found Commissioner Chua's
111

method more appropriate for purposes of appraising the subject properties, apart from the fact
that his method yields a much higher (thus, in its view, "more realistic") result.

41
The Cuervo Report itself does not serve to enlighten this Court as to the reasons behind the non-
application of the legislative factors and the DAR-prescribed formula.

For example, the Cuervo Report cited a number of "comparable sales" for purposes of its market
data analysis.  Aside from lack of proof of fact of said sales, the Report likewise failed to explain
112

how these purported "comparable" sales met the guidelines provided under DAR AO No. 5
(1998). The relevant portion of DAR AO No. 5 (1998) reads:

II. C.2 The criteria in the selection of the comparable sales transaction (ST) shall be as follows:

a. When the required number of STs is not available at the barangay level, additional STs may
be secured from the municipality where the land being offered/covered is situated to complete
the required three comparable STs. In case there are more STs available than what is required
at the municipal level, the most recent transactions shall be considered. The same rule shall
apply at the provincial level when no STs are available at the municipal level. In all cases, the
combination of STs sourced from the barangay, municipality and province shall not exceed three
transactions.

b. The land subject of acquisition as well as those subject of comparable sales transactions
should be similar in topography, land use, i.e., planted to the same crop. Furthermore, in case of
permanent crops, the subject properties should be more or less comparable in terms of their
stages of productivity and plant density.

c. The comparable sales transactions should have been executed within the
period January 1, 1985 to June 15, 1988, and registered within the period January l, 1985,
to September 13, 1988.

d. STs shall be grossed up from the date of registration up to the date of receipt of CF by LBP
from DAR for processing, in accordance with Item II.A.9. (Emphasis and underscoring supplied.)

To this Court's mind, a reasoned explanation from the SAC to justify its deviation from the
foregoing guidelines is especially important considering that both the DAR and the LBP were
unable to find sales of comparable nature.

Worse, further examination of the cited sales would show that the same far from complies with
the guidelines as to the cut-off dates provided under the DAR AO No. 5 (1998). The purported
sales were dated between November 28, 1989 (at the earliest) to March 12, 2002 (at the
latest),  whereas DAR AO No. 5 (1998) had already and previously set the cut-off between June
113

to September of 1988. We also note that these purported sales involve much smaller parcels of
land (the smallest involving only 100 square meters). We can hardly see how these sales can be
considered "comparable" for purposes of determining just compensation for the subject land.

Neither was there any explanation as to the glaring discrepancies between the government and
Commissioner Chua's factual findings. Where, for example, the DAR and the LBP claim an
average yield of 666.67kg/ha.  and 952kgs./ha.,  the Cuervo Report asserts 1,656 kgs./ha. and
114 115

1,566 kgs./ha.,  for the San Juan and Bibincahan properties, respectively. Where the
116

government alleges an average selling price of ₱5.58 for coconuts,  the Cuervo Report claims
117

₱l2.50.  The Cuervo Report, however, is completely bereft of evidentiary support by which the
118

SAC could have confirmed or validated the statements made therein. In contrast, the valuations
submitted by the DAR and the LBP were amply supported by the relevant PCA data, SFMV and
Field Investigation Reports.

Considering the foregoing, we cannot but conclude that the SAC committed the very thing
cautioned about in Yatco, that is, "utter and blatant disregard of the factors spelled out by the law
and by the implementing rules."  In this sense, we AFFIRM the Court of Appeals' finding of
119

42
grave abuse of discretion and order the REMAND of the case to the SAC for computation of just
compensation in accordance with this Court's ruling in Yatco.

Land Bank v Miguel Omengan, G.R. No. 196412, July 19 2017

Facts:

Respondent Miguel Omengan was the registered owner of a parcel of land located at
Ileb, Nambaran, Tabuk City, Kalinga with an area of 10.001 hectares and covered by
Transfer Certificate of Title (TCT) No. T-10172. 6

On March 20, 2000, respondent received a notice of coverage from the Department
of Agrarian Reform (DAR) placing the subject property under the Comprehensive
Agrarian Reform Program (CARP).7 Field investigation was then conducted and the
property was initially valued by petitioner at Php 219,524.98, computed as
follows: chanRoblesvirtualLawlibrary

For Unirrigated Riceland

    Area = 6.001 has.

    CNI  = P36,020.83/ha.
    MV   = P22,086.63/ha.

    ULV/ha. = (CNI X .90) + (MV X .10)

                = (P36,020.83 X .90) + (P22,076.63 X .10)
                = P32,418.74 + P2,208.66
                = P34,627.40

    LV = ULV/ha x area

        = P34,627.40 x 6.0001 has.
        = P207,767.86

For Idle Land

    Area = 4.000 has.

      MV = P1,469.64/ha.

    ULV/ha. = MV x 2
                = P1,469.64 X 2
                = P2,969.28

    LV = ULV/ha. x area

        = P2,939.28 x 4.000 has.
        = P11,757.12

                    Total: P207,767.86

                                  11,757.12
                              P219,524.988
The Claim Folder and Processing Form were prepared and on October 18, 2000,
payment for the property was approved and DAR accordingly made an offer to
respondent.9

43
Respondent rejected the offer. DAR requested petitioner to deposit in the
respondent's name the amount of the initial valuation. Thus, on December 12, 2000,
petitioner deposited the sum of Php 219,524.98 in cash and agrarian reform
bonds.10

On March 10, 2005, DAR, through its Provincial Agrarian Reform Officer (PARO),
requested the Office of Provincial Agrarian Reform Adjudicator (PARAD) for Kalinga
for preliminary determination of just compensation.11

In a Decision12 dated July 14, 2005, the PARAD noted that since the property was
taken in 2000, the unit market value (UMV) for the year 2000 which is Php
18,940/ha as certified by the Municipal Assessor of Tabuk, Kalinga should have been
applied instead of the 1994 Schedule of Base UMV of Php 15,780/ha used by
petitioner.13 The PARAD further noted that the selling price of palay per kilo in 2000
as certified by the National Food Authority (NFA) in the amount of Php 10 should
have been used in the computation of the Capitalized Net Income (CNI) and not
petitioner's baseless valuation of Php 6.50/k.14 Finally, the PARAD sustained
petitioner's valuation of the idle portion of four has, the same not having been
contested by respondent.15

In disposal, the PARAD held: chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the valuation of the subject property by the LBP
is hereby MODIFIED. Subject landholding's valuation should be increased to
Php326,918.20 plus legal interests.

The Ruling of the CA

The CA adopted the RTC-SAC's award of just compensation. 32 The CA held that the
formula prescribed in DAR A.O. No. 6 33 is mandatory and found that the RTC-SAC
utilized "each and every"34 factor prescribed in said formula in arriving at the just
compensation. Nevertheless, the CA modified the interest rate from twelve percent
(12%) to six percent (6%) per annum in accordance with DAR A.O. No. 13, Series of
1994.

Issue:

Hence, for resolution are: (1) whether the formula for determining just
compensation prescribed under DAR A.O. No. 5-98 was complied with; and (2)
whether the CA correctly imposed a six percent (6%) interest on the amount of just
compensation pursuant to DAR A.O. No. 13-94.

44
Ruling:

There is merit in the petition.

Determination of Just Compensation is Essentially a Judicial Function to be

Exercised within the Purview of R.A. 6657 and DAR A.O. No. 5-98; Deviation
from the Prescribed Formula is Allowed Provided the Reason for such
Deviation is Clearly Explained

Petitioner anchors its position that the RTC-SAC should have strictly complied with
DAR A.O. No. 5-98 on the premise that just compensation in agrarian reform cases
is different from ordinary expropriation proceedings.

On the contrary, We find no reason to treat differently the determination of just

compensation for expropriation proceedings undertaken for purposes of agrarian
reform. This must be so considering that the taking of property under R.A. No. 6657
has been consistently characterized as the State's exercise of the power of eminent
domain.

Found in the various provisions of the fundamental law 40 is the uniform treatment of
the payment of just compensation as a limitation to the State's exercise of eminent
domain. The concept of just compensation likewise bears the consistent and settled
meaning as the full and fair equivalent of the property taken from its owner by the
expropriator, the measure is not the taker's gain, but the owner's loss. The word
"just" is used to qualify the meaning of the word "compensation" and to convey
thereby the idea that the amount to be tendered for the property to be taken shall
be real, substantial, full and ample. 41

There is therefore no cause to treat differently the manner and the method by which
just compensation is determined only because it is to be paid in implementation of
the agrarian reform law.

It is likewise jurisprudentially-settled that the valuation of property or determination

of just compensation in eminent domain proceedings is essentially a judicial function
which is vested with the courts and not with administrative agencies. 42 By law,43 the
RTC-SAC enjoys original and exclusive jurisdiction in determining just compensation
for lands acquired for purposes of agrarian reform.

Nevertheless, in the exercise of its judicial function to determine just compensation,

the RTC-SAC takes into consideration the factors enumerated under Section 17 of
R.A. No. 6657. DAR, on the other hand, is empowered under R.A. No. 6657 to
promulgate rules for its implementation. Hence, pursuant to its rule-making power,
DAR issued A.O. No. 5-98 which translated the factors listed under R.A. No. 6657
into a basic and alternative formulae. 44

This brings Us to petitioner's postulate that the RTC-SAC ought to strictly abide by
the provisions of DAR A.O. No. 5-98, describing the latter as mandatory.

We emphasize that in determining just compensation, the RTC-SAC necessarily

works within the parameters set by law and as such, should take into account the

45
formulae provided by DAR.45 Be that as it may, when acting within the parameters
set by the law itself, the RTC-SACs, are not strictly bound to apply the DAR formulae
to its minute detail46 when the situation does not warrant the formula's strict
application. The RTC, in the exercise of its judicial function of determining just
compensation, cannot be restrained or delimited in the performance of its judicial
function of determining just compensation as to do so would amount to a derogation
of its judicial prerogative.

It is therefore inaccurate to argue that the RTC-SAC is mandated to strictly follow

the formula, when the RTC-SAC, in the exercise of an essentially judicial function
and discretion, can deviate therefrom subject to the jurisprudential limitation that
the factual situation calls for it and that the RTC-SAC clearly explains the reason for
such deviation.

Having settled that the determination of just compensation is a judicial function that
must nevertheless be exercised within the parameters of DAR A.O. No. 5-98 as the
guide administrative formula, the point of query is whether the RTC-SAC, in so
computing the amount of just compensation, indeed considered the prescribed
computation. And, in case of deviation, the further question to be asked is whether
such deviation was clearly explained to be permissible.

The factors which the RTC-SAC should consider in determining just compensation is
spelled under Section 17 of R.A. No. 6657 as follows: chanRoblesvirtualLawlibrary

Sec. 17. Determination of Just Compensation. - In determining just

compensation, the cost of acquisition of the land, the current value of the like
properties, its nature, actual use and income, the sworn valuation by the owner, the
tax declarations, and the assessment made by government assessors shall be
considered. The social and economic benefits contributed by the farmers and the
farmworkers and by the Government to the property as well as the non-payment of
taxes or loans secured from any government financing institution on the said land
shall be considered as additional factors to determine its valuation.
As translated into formula, the pertinent provisions of DAR A.O. No. 5-98
provides: chanRoblesvirtualLawlibrary

A. There shall be one basic formula for the valuation of lands covered by VOS or CA:

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

Where:

LV= Land Value

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

The above formula shall be used if all three factors are present, relevant, and
applicable.

A1. When the CS factor is not present and CNI and MV are applicable, the
formula shall be:

46
LV = (CNI X 0.9) + (MV X 0.1)

A2. When the CNI factor is not present, and CS and MV are applicable, the formula
shall be:

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

A3. When both the CS and CNI are not present and only MV is applicable, the
formula shall be:

LV = MV x 2

In no case shall the value of idle land using the formula MV x 2 exceed the lowest
value of land within the same estate under consideration or within the same
barangay or municipality (in that order) approved by LBP within one (1) year from
receipt of claim folder. (Emphasis supplied)
Considering that no Comparable Sales (CS) was reported, 56 the RTC-SAC ostensibly
used the basic formula prescribed in paragraph A1 of DAR A.O. No. 5-98, i.e., LV =
(CNI x 0.9) + (MV x 0.1).

The Capitalized Net Income (CNI) factor in the above formula is the difference
between the gross sales and total cost of operations capitalized at 12%. 57 The CNI is
expressed in equation form as CNI = (AGP x SP) - CO/capitalization
rate.58 Where: chanRoblesvirtualLawlibrary

AGP = Average Gross Production corresponding to the latest available 12 months'

gross production immediately preceding the date of FI (field investigation)

SP = Selling Price (the average of the latest available 12 months selling prices prior
to the date of receipt of the CF (claim folder) by LBP for processing, such prices to
be secured from the Department of Agriculture (DA) and other appropriate
regulatory bodies or, in their absence, from the Bureau of Agricultural Statistics. If
possible, SP data shall be gathered for the barangay or municipality where the
property is located. In the absence thereof, SP may be secured within the province
or region.

CO = Cost of Operations

Whenever the cost of operations could not be obtained or verified, an assumed net
income rate (NIR) of 20% shall be used. Landholdings planted to coconut which are
productive at the time of FI shall continue to use the assumed NIR of 70 %. DAR
and LBP shall continue to conduct joint industry studies to establish the applicable
NIR for each crop covered under CARP.

0.12 = Capitalization rate59

Petitioner argues that the RTC-SAC erred in computing the CNI as the Average
Gross Production (AGP) was not based on the latest available 12 months' gross
production immediately preceding the date of field investigation. Per petitioner's
computation, the AGP of the six has of unirrigated riceland is 3,325 k only or 66.5
cavans.60 However, the basis of such figure was not shown by petitioner and was
even disproved by respondent's testimony that the property produces 80 to 100
cavans per ha. The RTC-SAC's determination of the AGP to be 90 cavans or 4,500 k
per year is thus reasonable.

47
The selling price (SP) was, in turn, based by the RTC-SAC on the certification issued
by the NFA that the buying price of palay per k in the year 2000 is Php 10 during
summer and Php 9 during wet season. Taking the average, the RTC-SAC arrived at
Php 9.50 perk as SP. As between the certification issued by the NFA and the
unfounded SP of Php 6.50 used by petitioner, we lend more credence to the former
and as such, affirm the SP of Php 9.50 fixed by the RTC-SAC.

However, to arrive at the value of the CNI, the RTC-SAC simply multiplied the AGP
by the SP and then further multiplied the product thereof to six has, without
considering the 20% Net Income Rate (NIR) and the 12% capitalization rate. The
RTC-SAC's application of the basic formula is therefore incomplete and its disregard
of the NIR and the capitalization rate factors was not clearly explained.

Instead, if the 20% NIR and the 12% capitalization rate were taken into account,
the CNI per ha of the unirrigated riceland should be Php 71,250. 61

Further, the MV factor is understood to be the MV per tax declaration material to the
time of taking. Petitioner pegged the UMV at Php 15,780 per ha for the unirrigated
riceland. However, as observed by the PARAD, petitioner used the 1994 Schedule of
Base UMV, instead of the market value as of 2000. Hence, the RTC-SAC correctly
used the BIR zonal valuation of real property located at Nambaran, Tabuk, Kalinga
for the years 1999 to 2000 which is Php 6 per sq m or Php 60,000 per ha for
riceland without irrigation and Php1 per sq m or Php 10,000 per ha for cogon land. 62

Applying the above values to the basic formula, the unit land value

(ULV) per ha of the unirrigated riceland should be:

ULV = [Php71,250 (.90)] + [Php60,000 (.10)]

       = Php64,125 + Php6,000
       = Php70,125

LV = Php70,125(6.001)
     = Php420,820.125
With respect to the remaining four has, the parties agree that the same is cogonal.
While respondent testified that it is also planted with fruitbearing trees, bananas,
cassava, and camote, he failed to establish the aggregate value of the crops
produced. Thus, we cannot adopt the RTCSAC's valuation of the cogon land as Php
10,000 per ha for obvious lack of factual support. Moreover, the RTC-SAC could not
have arrived at the CNI of the idle land (which it computed at Php 40,000)
considering that the AGP and SP factors are not present.

There being no CNI and CS, and only the MV is available, the RTCSAC should have
applied the formula prescribed under paragraph A3 of DAR A.O. No. 5-98, i.e., LV=
MV x 2.

Thus, the ULV of the four has idle land should be: chanRoblesvirtualLawlibrary

ULV = Php10,000 x 2
       = Php20,000

48
             LV = Php20,000(4.000)
                  = Php80,000

We also note that, in addition to the foregoing, the RTC-SAC granted an MV of Php
40,000 per ha for the entire area or an additional Php 400,000 to be paid as just
compensation because it took into consideration the property's potential to be an
area ideal for urban expansion. Such additional valuation cannot be sustained as the
measure of the value of the property should be at the time when the loss
resulted, i.e., as of the time of taking in March 2000. What is more, such additional
valuation cannot be considered "just" for lack of reliable and actual data to support
the same. Trial courts are reminded, time and again, to be circumspect in its
evaluation of just compensation due the property owner, considering that eminent
domain cases involve the expenditure of public funds. 63

For prompt resolution of the instance case and considering that the relevant factors
have already been judicially determined, the final just compensation, by
mathematical computation, should be Php 500,820.125 for the 10.001 has.

In the instant case, the interest is to be imposed only on the balance of the final just
compensation, i.e., the final just compensation (Php 500,820.125) less the amount
of the initial valuation (Php 219,524.98) or Php 281,295.145. Since petitioner's
initial valuation had been contested, and it has been subsequently determined that
the expropriated property had been undervalued, an interest on the balance or the
difference between the amount already paid and the final just compensation is
proper.

While the debt incurred by the government on account of the taking of the property
subject of an expropriation constitutes a forbearance, nevertheless, in line with the
recent circular of the Monetary Board of the Bangko Sentral ng Pilipinas No. 799,
Series of 2013, effective July 1, 2013,66 the prevailing rate of interest for loans or
forbearance of money is six percent (6%) per annum, in the absence of an express
contract as to such rate of interest. Accordingly, the interest rate of twelve percent
(12%)67per annum should be imposed on the balance due from the date of the
taking, or on March 20, 200068 until June 30, 2013 and the interest rate of six
percent (6%) per annum is imposed from July 1, 2013 until fully paid.

49
LBP v Prado Verde Corporation, G.R. No. 208004, 30 July 2019

Facts:

Prado was the owner of an agricultural land known as Lot 5834-A, covered by Transfer
Certificate of Title (TCT) No. 4141 issued in the name of Legazpi Oil Company, Inc. (Legazpi
Oil), from which Prado bought said property in 1979. The property remained registered in the
name of Legazpi Oil and the sale was not annotated on the TCT. However, on July 9, 1980, the
deed of absolute sale in favor of United Plaza Properties, Inc. was presented for registration and
was duly registered before the Registry of Deeds of Legazpi. The said property was placed within
the coverage of the Agrarian Reform Program under Presidential Decree (P.D.) No. 27 and a
portion thereof, with an area of 2.4975 hectares, was placed within the coverage of Operation
Land Transfer on December 4, 1995. As of August 2010, the landowner of the agricultural
property had not yet been compensated. Prado received the claims folder from the Department
of Agrarian Reform (DAR) on January 24, 1996.

Meanwhile, on April 21, 1988 and pursuant to Emancipation Patent issued by DAR, the Registry
of Deeds entered in its registry TCT Nos. 58 and 59 over portions of Lot 5834-A, which portions
were then known as Lot No. 5834-A-1, issued in the name of farmer-beneficiary Salustiano
Arcinue and Lot No. 5834-2 issued in the name of farmer-beneficiary Agapito Azupardo,
respectively. Thus, TCT No. 4141 was partially cancelled with regard to the 2.4975 hectare
portion, which portion was previously classified as riceland, of Lot No. 5834-A.

On January 1996, Land Bank initially valued the acquired property in the amount of ₱38,885.04
pursuant to P.D. No. 27. Then, a revaluation was made and the compensation was pegged in the
amount of ₱59,457.05 which amount, for unknown reason, was not received by the landowner.
Thus, Prado filed an agrarian suit before the RTC.

During the pendency of the case, Land Bank further revalued the property using the reckoning
dates of production data and values pursuant to Administrative Order (A.O.) No. 1, series of
2010, which the DAR issued under Republic Act (R.A.) No. 9700, and the two-factor formula
prescribed therein [(L V = (CNI x 0.90) + (MV x 0.10)], thus arriving at the amount of
₱214,026.38. However, Prado rejected the revalued compensation.

On March 21, 2012, the RTC, acting as a Special Agrarian Court (SAC), rendered a

Decision  fixing the amount of just compensation at ₱294,495.20. The trial court held that just
6

compensation of the subject properties should be computed pursuant to A.O. No. 5, Series of
1998, as amended by A.O. No. 2, Series of 2009 and A.O. No. 1, Series of 2010, which reckoned
the determination of just compensation based on the condition of the property prevailing within
the 12-month period preceding June 30, 2009, the presumptive date of taking.  The computation
7

was as follows:

LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)

Where: L V = Land Value

50
 CNI = Capitalized Net Income which refers to the gross sales
(AGP x SP) with assumed net income rate of 20%
Capitalized at 0.12

CS = Comparable Sales (based on fair market value

equivalent to 70% of BIR Zonal Value)

MV = Market Value per Tax Declaration

CNI = (AGP x SP) x 0.20

1âwphi1

0.12

= (5,900 x ₱9.00) x 0.20

0.12

= ₱88,500.00

CS = ₱20.00 zonal value/square meter x 10,000 sq. m.

= ₱200,000.00

MV = ₱30,100.00 x 100% x 1.60

= ₱48,160.00

LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)

= (88,500.00 x 0.60) + (200,000.00 x 0.30) + (48,160.00 x 0.10)

= 53,100.00 + 60,000.00 + 4,816.00

= ₱117,916.00 per hectare

Total LV = LV x area acquired

= 117,916.00 x 2.4975 hectares

= ₱294.495.20

Unsatisfied, both parties moved for reconsideration. Prado claimed that the valuation of the
property should be based on the zonal value of the residential lots within the vicinity where the
property is located, while Land Bank argued that its revaluation should be upheld.

The parties' motions for reconsideration were denied. Thus, Prado and Land Bank filed their
respective petitions for review before the CA.

51
 I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE SAC'S

DETERMINATION OF JUST COMPENSATION.

Ruling:

The Court, however, agrees with the Land Bank.

While we acknowledge the SAC's effort to abide by and conform to the prevailing law and
regulations on land valuation, we cannot fully subscribe to its finding and in ultimately fixing the
amount of just compensation because of its failure to apply the correct formula.

In its decision, the SAC declared item IV. D. 2. of A.O. No. 2, series of 2009,  as void and
47

inapplicable insofar as it distinguishes the applicability of Sec. 17 of R.A. No. 6657, as amended
by R.A. No. 9700. It ruled that:

The Court thus finds and so holds that the provision of AO No. 2, series of 2009, insofar as it
distinguishes the applicability of Sec. 17 of RA [No.] 6657, as amended by RA No. 9700, is void
and inapplicable in the determination of just compensation because it is contrary to the spirit of
RA No. 9700 which never made a distinction on the applicability of Sec. 17; it is contrary to the
holding in LBP v. Dumlao, et al., supra, which upholds the harmonization of the formulae for the
computation of just compensation both under PD No. 27 and RA No. 6657; it is violative of the
"equal protection clause" of the Constitution; and it is unreasonable even as it unduly impinges
on the prerogative of the special agrarian court to determine the amount of just compensation. 48

Perusal of A.O. No. 2, series of 2009, would show that the "distinction" made was merely to
emphasize that those lands would have to be resolved and finally valued under Sec. 17, R.A. No.
6657, as amended, instead of under P.D. No. 27 and E.O. No. 228. The same provisos were
reiterated in DAR A.O. No. 01, series of 2010. It was, certainly, in keeping with the harmonization
of the formulas in the computation of just compensation.

That being said, as the subject properties are undisputedly lands acquired under P.D. No. 27,
they should be valued following the guidelines set forth in DAR A.O. No. 1.

As previously discussed, there were two (2) formulas provided for in DAR A.O. No. 1. We agree
with Land Bank that since the subject land has already been distributed by the DAR to the
farmer-beneficiaries and the DAR valuation is rejected by the landowner and is undergoing a just
compensation case in court, the first formula - LV = (CNI x 0.90) + (MV x 0.10)- should be
used in determining just compensation of the 2.4975 hectares of land subject of this
case. Records would show that Land Bank has clearly presented the relevant factors it
considered in fixing the amount of just compensation. These factors were also sufficiently
substantiated.

On the contrary, even with its effort to apply the DAR basic formula of LV = (CNI x 0.60) +(CS x
0.30) + (MV x 0.10), which is the second formula under DAR A.O. No. 1, series of 2010, the SAC
still erred in using the same. It is observed that, in arriving at the comparable sales (CS) factor,

52
the SAC merely adopted the commissioner's report that the subject land had a zonal value of
P20.00 per square meter or a total amount of ₱200,000.00 per hectare. The SAC immediately
considered such data as the CS, which is one of the three (3) factors needed in the DAR basic
formula.

There are, however, guidelines set forth in determining the CS factor. DAR A.O. No. 05-98
categorically enumerates them as follows:

C.1 The following rules shall be observed in the computation of CS:

a. As a general rule, there shall be at least three (3) Sales Transactions.

At least one comparable sales transaction must involve land whose area is at least ten
percent (10%) of the area being offered or acquired but in no case less than one hectare.
The other transaction/s should involve land whose area is/are at least one hectare each.

b. If there are more than three (3) STs available in the same barangay, all of them shall be
considered.

c. If there are less than three (3) STs available, the use of STs may be allowed only if AC and/or
MVM are/is present.

d. Depending on the presence of applicable sub-factors, the following formulae shall be used:

d.1 If there are two or more STs and MVM and/or AC are present:

STA + MVM + AC

d.1.1 CS = OR

STA + MVM

d.1.2 CS = OR

STA + AC

d.1.3 CS =

WHERE:

STA is the average of available STs or as expressed in equation form:

ST1 +____+ STN

STA =

No. of STs

53
 d.2 If there is only one ST and AC and/or MVM are/is available:

ST + MVM + AC

d.2.1 CS = OR

ST + MVM

d.2.1 CS = OR

ST + AC

d.2.2 CS =

d.3 If three or more STs are present and AC and MVM are not available:

CS = STA

d.4. If AC and/or MVM are/is present and no ST is available:

AC + MVM

d.4.1 CS = OR

d.4.2 CS = AC OR

d.4.3 CS = MVM

xxxx 49

In this case, the SAC did not take into consideration any comparable sale transactions because
records did not show any. The reported ₱20.00/sq. m. zonal value of the land was simply
multiplied by 10,000 sq. m. to arrive at the amount of ₱200,000.00 as the CS, a formula that is
not one of those abovementioned. The SAC should not have forced using the 3-factor formula
considering that no Comparable Sales was reported. Instead, it should have opted using an
alternative formula provided by the rules which the data gathered permits. The 2-factor formula of
LV = (CNI x 0.90) + (MV x 0.10) would have been the better alternative. Clearly, the SAC failed
to abide by the implementing rules of the agrarian law and deviated therefrom without any
justification.

As regards the contentions of Prado, the same are without merit.

Although Prado reiterates the mandate of the SAC to comply with agrarian law, which mandate
the trial court failed to follow, it did not present or offer any sufficient data relevant in the proper
computation of just compensation. Prado only had bare and unsubstantiated claims relating to
the value of the subject properties which, in its opinion, the SAC should have used.

54
Further, Prado's offer of reasonable home lots and disturbance compensation in favor of the
farmer-beneficiaries in exchange for its alternative prayer of repossession of the subject
properties is utterly baseless. It is to be emphasized that the subject properties were
expropriated by the state for which the payment of just compensation is proper.

Here, records showed that the state did not only immediately take the subject properties without
paying just compensation,  but it also subsequently distributed such landholdings to the farmer-
52

beneficiaries as evidenced by the TCTs  issued in their favor. Prado, as landowner, has been
53

deprived of its properties. The imposition of such interest was to compensate the landowners for
the income they would have made had they been properly compensated for their properties at
the time of the taking.  54

The delay in the payment of just compensation is a forbearance of money.  As such, it is
1avvphi1

necessarily entitled to earn interest.  The rationale for imposing the interest is to compensate the
55

landowner for the income it would have made had it been properly compensated for its properties
at the time of the taking. The need for prompt payment and the necessity of the payment of
interest is to compensate for any delay in the payment of compensation for property already
taken. 56

The concept of just compensation embraces not only the correct determination of the amount to
be paid to the owners of the land, but also payment within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered "just" inasmuch as the property
owner is made to suffer the consequences of being immediately deprived of his landwhile being
made to wait for a decade or more before actually receiving the amount necessary to cope with
his loss. 57

Consequently, the just compensation as adjudged by the court shall earn an interest rate of
12% per annum from the time of taking until June 30, 2013, and 6% per annum from July 1,2013
until finality of this decision.  Thereafter, the total amount of just compensation shall earn interest
58

rate of 6% per annum from finality of this decision until fully paid, in line with prevailing
jurisprudence. 59

On a final note

The Court reiterates its pronouncement in Alfonso v. Land Bank of the Philippines,   where we
60

declare that:

While concededly far from perfect, the enumeration under Section 17 and the use of a basic
formula have been the principal mechanisms to implement the just compensation provisions of
the Constitution and the CARP for many years. Until a direct challenge is successfully mounted
against Section 17 and the basic formulas, they and the collective doctrines in Banal,
Celada and Yatco should be applied to all pending litigation involving just compensation in
agrarian reform.  61

In fixing the just compensation in agrarian cases, courts are duty-bound to apply and consider
the factors provided for in Sec. 17 of R.A. No. 6657, as amended, which are translated into the
applicable DAR formulas. Although the courts have the power to make a final determination of
just compensation as a result of its exercise of judicial discretion, a deviation from prevailing
formulas on land valuation would be allowed for as long as such deviation is rational and amply
substantiated.

55
Secretary of DAR etal. v Heirs of Redemptor & Elisa Abucay, G.R. 186432 & 186964, 12
March 2019

The jurisdiction over the administrative implementation of agrarian laws exclusively

belongs to the Department of Agrarian Reform Secretary. This is true even if the
dispute involves the cancellation of registered emancipation patents and certificates
of title, which, before Republic Act No. 9700 amended Republic Act No. 6657 or the
Comprehensive Agrarian Reform Law, was cognizable by the Department of Agrarian
Reform Adjudication Board.

Facts:

On October 14, 1983, the Spouses Redemptor and Elisa Abucay (Spouses Abucay)
purchased8 a 182-hectare parcel of land from Guadalupe Cabahug (Cabahug). The
property is located in Leyte and is covered by Transfer Certificate of Title No. T-
9814.9 The Deed of Absolute Sale provided that the property "consists of various
classifications, and is untenanted except for 39.459 hectares, and per certification of
the Agrarian Reform Team No. 08-28-231 appears to be within the coverage of
Operation Land Transfer as to the tenanted area of over 39 hectares." 10

Sometime in 1986, 22.8409 hectares of the lot were declared covered under the
Operation Land Transfer Program pursuant to Presidential Decree No.
27.11 Emancipation patents were then issued to the farmer-beneficiaries.12 Later, the
Register of Deeds issued original certificates of title in their names. 13

On June 28, 2002, Rena B. Abucay, Rhea B. Abucay-Beduya, Ris B. Abucay-Buante,

Elver B. Abucay, Redelisa Abucay-Agustin, and Rhota B. Abucay (collectively, the
Heirs of Spouses Abucay) filed before the Regional Agrarian Reform Adjudicator a
Complaint14 for the proper determination of just compensation.

The Heirs of Spouses Abucay alleged that they inherited the 182-hectare property
upon their parents' death and enjoyed its ownership and possession. They claimed
that they did not receive any just compensation for the 22 hectares of the property
that was placed under the Operation Land Transfer Program. The Certificate of
Deposit worth P103,046.47-issued in 2001 by the Land Bank of the Philippines as
compensation-was not only inadequate, but was also issued to Cabahug, the
property's previous owner.15 Thus, they prayed, among others, that they be paid
P2,000,000.00 as just compensation.16

In his March 8, 2004 Decision,17 Regional Agrarian Reform Adjudicator Felixberto M.

Diloy (Regional Adjudicator Diloy) held that there was no proper valuation of the
property to determine just compensation. He found that the Final Notification Letter
was not sent to the property's then registered owner, Cabahug, but to her father,
the deceased Sotero Cabahug. Thus, administrative due process was not followed,

56
which nullified the coverage of the 22-hectare property under the Operation Land
Transfer program.18 Regional Adjudicator Diloy declared the emancipation patents
issued to the farmer-beneficiaries void.

Issue:

First, whether or not Regional Agrarian Reform Adjudicator Felixberto Diloy and the
Department of Agrarian Reform Adjudication Board have jurisdiction over the
Complaint for cancellation of original certificates of title and emancipation patents
filed by respondents, the Heirs of Redemptor and Elisa Abucay;

Ruling:

It is settled that the Regional Trial Courts, sitting as special agrarian courts, 58 have
original and exclusive jurisdiction over the determination of the value of just
compensation. Nonetheless, the Department of Agrarian Reform still exercises
primary jurisdiction to preliminarily determine this value. 59 This is different from
determining the validity of property transfer to the farmer-beneficiaries and,
consequently, the validity of the certificates of title issued to them. When the issue
in a case hinges on whether a beneficiary has made insufficient or no payments for
the land awarded to him or her, primary administrative jurisdiction is under the
Department of Agrarian Reform.

Indeed, per the rules it has promulgated, the Department of Agrarian Reform has
taken cognizance of cases involving either the issuance or cancellation of certificates
of land ownership award and emancipation patents. Cases involving registered
certificates of land ownership awards, emancipation patents, and titles emanating
from them are agrarian reform disputes, of which the Department of Agrarian
Reform Adjudication Board takes cognizance.60 Meanwhile, cases involving
unregistered ones are agrarian law implementation cases, put under the jurisdiction
of the Regional Directors and the Secretary of the Department of Agrarian Reform. 61

In 2009, however, Congress amended the Comprehensive Agrarian Reform Law

through Republic Act No. 9700.62 Under the new Section 24, all cases involving the
cancellation of registered emancipation patents, certificates of land ownership
awards, and other titles issued under any agrarian reform program are now within
the exclusive original jurisdiction of the Department of Agrarian Reform
Secretary.63 He or she takes jurisdiction over cases involving the cancellation of
titles issued under any agrarian reform program, whether registered with the Land
Registration Authority or not.

Here, the doctrine should be read amid the ambient facts and without prejudice to a
future case that will deal with transfer certificates of title, considering the relevant
statutes,64 as well as the equal protection65 and social justice provisions of the
Constitution.66

II

57
At the time of the Complaint's filing on April 26, 2004, the 2003 Department of
Agrarian Reform Adjudication Board Rules of Procedure governed the jurisdiction of
the Department of Agrarian Reform Adjudication Board. Rule II provided that
adjudicators have exclusive original jurisdiction over registered certificates of land
ownership award and emancipation patents, while the Department of Agrarian
Reform Adjudication Board has appellate jurisdiction:

RULE II
Jurisdiction of the Board and its Adjudicators

SECTION 1. Primary and Exclusive Original Jurisdiction. -The Adjudicator shall have
primary and exclusive original jurisdiction to determine and adjudicate the following
cases:

. . . .

1.6 Those involving the correction, partition, cancellation, secondary and subsequent
issuances of Certificates of Land Ownership Award (CLOAs) and Emancipation
Patents (EPs) which are registered with the Land Registration Authority[;]

. . . .

SECTION 2. Appellate Jurisdiction of the Board. - The Board shall have exclusive
appellate jurisdiction to review, reverse, modify, alter, or affirm resolutions, orders,
and decisions of its Adjudicators.

No order of the Adjudicators on any issue, question, matter, or incident raised

before them shall be elevated to the Board until the hearing shall have been
terminated and the case decided on the merits.
However, it is "not sufficient that the controversy [simply] involves the cancellation
of a [certificate of land ownership award] already registered with the Land
Registration Authority. What is of primordial consideration is the existence of an
agrarian dispute between the parties."67 Section 3(d) of the Comprehensive Agrarian
Reform Law defines agrarian dispute as those relating to tenurial arrangements,
including leasehold and tenancy. Thus:

SECTION 3. Definitions. - For the purpose of this Act, unless the context indicates
otherwise:

. . . .

(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements,

whether leasehold, tenancy, stewardship or otherwise, over lands devoted to
agriculture, including disputes concerning farmworkers' associations or
representation of persons in negotiating, fixing, maintaining, changing, or seeking to
arrange terms or conditions of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under this Act
and other terms and conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform beneficiaries, whether the
disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee.

58
Indeed, the emancipation patents involved here have already been registered with
the Land Registration Authority, and the grant of the Complaint filed by respondents
will result in the cancellation of these registered emancipation patents. Nonetheless,
respondents primarily assailed in their Complaint the land coverage under the
Operation Land Transfer Program because the original owner, Cabahug, had not
been properly notified of it. Specifically, they contended that the notices were
erroneously sent to Cabahug's father, Sotero Cabahug. The Complaint, therefore, is
essentially an Operation Land Transfer protest, which is an agrarian law
implementation case belonging to the Department of Agrarian Reform Secretary's
jurisdiction.68

Tenancy is a real right that is attached to the land and survives the sale. 69 As such,
when Spouses Abucay purchased the land from Cabahug, they were subrogated to
the rights and obligations of Cabahug as an agricultural landowner. Respondents,
being the land buyers' heirs, were likewise subrogated to these rights and
obligations. A tenancy relationship exists between respondents and the farmer-
beneficiaries.

Still, the controversy must relate to the tenurial arrangement between the parties
for the Department of Agrarian Reform Adjudication Board to properly take
cognizance of the case. Here, the controversy does not involve negotiating, fixing,
maintaining, changing, or seeking to arrange the tenurial arrangement's terms or
conditions. Respondents alleged that emancipation patents should not have been
issued to begin with since no notice of coverage was sent to Cabahug. In other
words, they contend that the property was not properly acquired through the
Operation Land Transfer Program. The controversy involves the administrative
implementation of the agrarian reform program, which, as mentioned, is under the
Department of Agrarian Reform Secretary's jurisdiction.

Since the Complaint filed by respondents involves an agrarian law implementation

case, Regional Adjudicator Diloy had no jurisdiction to take cognizance of it. At that
time, he should have referred the case to the proper office of the Department of
Agrarian Reform for appropriate action as provided in Rule I, Section 6 of the
Department of Agrarian Reform Administrative Order 03-03. 70

However, with the enactment of Republic Act No. 9700, the exclusive and original
jurisdiction over cases for cancellation of registered emancipation patents now
belongs to the Department of Agrarian Reform Secretary. 71

In line with this, the Department of Agrarian Reform has issued Administrative Order
No. 07-14, which outlines in Article III the procedure for the cancellation of
registered emancipation patents, certificates of land ownership awards, and other
agrarian titles. The petition for cancellation shall be filed before the Office of the
Provincial Agrarian Reform Adjudicator, which would then undertake the case
buildup before forwarding it to the Department of Agrarian Reform Secretary for
decision.

Thus, under Administrative Order No. 07-14, the Complaint for cancellation of
original certificates of title and emancipation patents filed by respondents should be
referred to the Office of the Provincial Agrarian Reform Adjudicator of Leyte for case
buildup. Then, the case shall be decided by the Department of Agrarian Reform
Secretary.

This Court makes no determination of whether the area can still be covered by

59
agrarian reform. The character of the land as agricultural is not affected. We leave
the issue of the propriety of the coverage to the executive branch for its own
determination.

LBP v Heirs of Bartolome Sanchez, G.R. No. 214902, 22 January 2020

Facts:

The Department of Agrarian Reform (DAR) placed a parcel of land consisting of 42.046 hectares,
owned by respondents Heirs of Bartolome J. Sanchez (Heirs of Sanchez) under the coverage of
Republic Act No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law." The
properly was valued at P623,725.35, which the Heirs of Sanchez found unreasonable.3 Hence,
in 2002, the Heirs of Sanchez filed a complaint for the determination of just compensation in the
Regional Trial Court (RTC) sitting as a Special Agrarian Court (SAC).

During pre-trial the parties agreed to appoint commissioners for the valuation of the
property.4 Thereafter, the appointed commissioners manifested their request for the full payment
of their fees in the amount of P120,000.00.5

Ruling of the Special Agrarian Court

On December 15, 2009, the SAC issued its Order,6 the dispositive portion of which reads:

IN VIEW THEREOF, the foregoing manifestation is hereby noted. The defendants in the above-
captioned case are hereby directed to deposit with the office or the Clerk of Court-RTC, Butuan
City the following amount, to wit:

1. Chairman - Board of Commissioners P 40,000.00

-
2. Member -do- P 30,000.00
3. Member -do- P 30,000.00
4. Technical Assistant -do- P 10,000.00
5. Secretary-Encoder -do- P 10,000.00

Thereafter, the above-mentioned amount may be withdrawn only by the persons concerned upon
order of this Court.

SO ORDERED.7 (Emphasis in the original)

LBP filed a Motion for Reconsideration,8 which was denied in a Resolution9 dated September 9,

2010.10 LBP filed a petition for certiorari in the CA.

Tn directing the SAC to compute the commissioners' fees based on the time actually and
necessarily employed by each commissioner, the CA explained that this is best resolved by the
SAC after reception of evidence on the matter.16

In the present petition, LBP maintains that it is exempt from paying legal fees, including
commissioners' fees, in connection with a suit relating to its governmental
functions.17 Furthermore, granting that LBP is liable to pay commissioners' fees, LBP claims that
the imposition of P120,000.00 as commissioners' fees has no factual and legal
justification.18 LBP alleges that there has been no actual and necessary performance of
commissioners' duties to justify the payment as the case is still in the trial stage, and there has
been no determination of just compensation of the property yet.19

60
Issues

Whether LBP, in the exercise of its governmental functions as a financial intermediary of the
agrarian reform program of the government, is exempt from paying commissioners' fees; 

Ruling:

Petitioner LBP is exempt from paying commissioners' fees.

The role of LBP in agrarian refom1 is more than just the ministerial duty of keeping and
disbursing the Agrarian Reform Funds. LBP is also primarily responsible for the valuation and
determination of just compensation.23 In the case of Land Bank of the Philippines v.
Gonzales24 and Land Bank of the Philippines v. Ibarra,25 We ruled that LBP is exempt from
paying the costs of the suit pursuant to Section 1, Rule 142 of the Rules, since it is an
instrumentality performing a governmental function in agrarian reform proceedings charged with
the disbursement of public funds. Recently, in the case of Land Bank of the Philippines v.
Baldoza,26 We reiterated that since LBP is performing a governmental function in an agrarian
rcfonn proceeding, it is exempt from payment of costs of suit, including commissioners' fees, as it
is considered part of costs of suit.27

Section 12, Rule 67 of the Rules states:

Sec. 12. Costs, by whom paid. - The fees of the commissioners shall be taxed as a part of the
costs of the proceedings. All costs, except those of rival claimants litigating their claims, shall be
paid by the plaintiff, unless an appeal is taken by the owner of the property and the judgment is
affirmed, in which event the costs of the appeal shall be paid by the owner.

It must also be pointed out that the conclusion of the CA that the "plaintiff" referred to in Section
12 of Rule 67 of the Rules is the DAR, through LBP, is erroneous.

In the case of Land Bank of the Philippines v. Baldoza,28 the Court explained that it is the
Republic of the Philippines (Republic), which is referred to as the "plaintiff" for it initiates
complaints for eminent domain. The complaint is filed by the Republic to determine the propriety
of the exercise of the power of eminent domain in the context of the facts involved in the suit.
After determining the right of the Republic to exercise the power, determination of just
compensation shall proceed.29 However, the Court pointed out that:

x x x [I]n agrarian expropriation cases, the owner of the property may voluntarily offer to sell his
land as sanctioned in DAR A.O. No. 03, series of 1989. Appropriately, the initial case filed with
the RTC-SAC is not for the determination of the propriety of the exercise of the power of eminent
domain, but for the resolution of the proper valuation of the property if the landowner disagrees
with the findings of the DAR[.]30 (Emphasis supplied.)

In this case, the "plaintiff," who initiated the complaint for the determination of just compensation,
is not the Republic, but the Heirs of Sanchez, who found the valuation of the property made by
DAR unacceptable. Therefore, even applying Section 12, Rule 67 of the Rules to the agrarian
reform proceeding, the conclusion remains the same. LBP is not liable to pay commissioners'
fees.

61
62