AGRARIAN LAW

RECENT JURISPRUDENCE
 
LBP v. Hilado, September 23, 2020
The crux of the present controversy, therefore, lies in the binding character of the DAR  
formula, in relation to Section 17 of R.A. No. 6657, on the SACs in the exercise of their
judicial function to determine just compensation.
 
Respondent's property was taken when R.A. No. 6657 or the "Comprehensive Agrarian
Reform Law of 1988" was already in effect. The taking of property under R.A. No. 6657 is  
an exercise of the power of eminent domain by the State. The valuation of property or
determination of just compensation in eminent domain proceedings is essentially a judicial
function which is vested in the courts and not in administrative agencies. [30] Section 57 of  
R.A. No. 6657 expressly grants the RTCs, acting as SACs, original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners.
 
In determining just compensation of lands acquired by the government under CARP, Section
17 of R.A. No. 6657 prescribes the valuation factors to be considered. While Congress
passed R.A. No. 9700[31] on August 7, 2009, further amending certain provisions of R.A.  
6657, as amended, among them, Section 17, its implementing rules,  i.e., DAR A.O. No. 2,
series of 2009[32] clarified that the said law shall not apply to claims/cases where the claim
folders were received by the LBP prior to July 1, 2009, as in this case. In such a situation,  
just compensation shall be determined in accordance with Section 17 of R.A. No. 6657, as
amended, prior to its further amendment by R.A. No. 9700.[33]
 
Thus, Section 17 of R.A. No. 6657 provides:
 
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 fanners 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.
    CNI = Capitalized Net Income
x x x 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
    CS = Comparable Sales 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
    MV = Market Value per Tax Declaration 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
The above formula shall be used if all three factors are present, relevant and applicable. 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
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.[36] (Emphasis in the original)
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall Hence, it is mandatory for the SAC to consider the DAR formula in the determination of just
be: compensation for properties covered by the CARP. However, the SAC may depart from a
strict application of the formula, provided the deviation is sufficiently justified by the
    surrounding circumstances and clearly explained in the decision.
  LV = (CNI x 0.9) + (MV x 0.1) Applying the above principles to the case at bar, it becomes apparent, upon a reading of the
Decision dated August 17, 2010, that the SAC did not consider the valuation factors
enumerated under Section 17 of R.A. No. 6657 and did not adhere to the formula laid down
    in DAR A.O. No. 5, series of 1998, nor did it discuss the reasons for its non-observance:
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall After considering the entire records of this case and the evidence presented, the Court finds
be: the petition impressed with merit.
   
Justice and equity dictate that it be so.

Pursuant to the DAR's rule-making power to carry out the object and purposes of R.A. No.     LV = (CS x 0.9) + (MV x 0.1)
6657, as amended, DAR A.O. No. 5, series of 1998 precisely "filled in the details" of
Section 17, R.A. No. 6657 by providing a basic formula by which the factors mentioned
therein may be taken into account,[34] viz.:      
II. The following rules and regulations are hereby promulgated to govern the valuation
of lands subject of acquisition whether under voluntary offer to sell (VOS) or   A.3 When both the CS and CNI are not present and only MV is applicable, the formula
compulsory acquisition (CA). shall be:
  A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
    LV = MV x 2
     
     
    LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
    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
claimfolder. (Emphasis in the original)
    Where: LV = Land Value
In Alfonso v. Land Bank of the Philippines,[35] the Court harmonized the SAC's exercise of
judicial discretion, on the one hand, and the obligatory application of the compensation
valuation factors in Section 17 of R.A. 6657 and the DAR formula, on the other, ruling in
this wise:
R.A. 6657 of the Comprehensive Agrarian Reform Act was signed into law on June 15,1988.
The said law mandates that the Land Bank of the Philippines (LBP) shall compensate the
landowner in such amount as may be agreed upon by the landowner, the DAR and LBP or as
may be determined by the court as just compensation taking into consideration the costs [sic]
of acquisition of the land, the current value of like properties, its nature, actual use, income,
sworn valuation by the owner, tax declarations and the assessments by government
assessors.
In the case at bar, it appears that petitioner was compensated by respondents the amount of
P767,641.07 only for his 17.9302-hectare CARP-covered area, or at the average cost of only
around P43,000.00, more or less, per hectare. Applying the tax declaration dated January 1,
2000 (supra) with the market value of the said property in the total amount of P1,938,056.85,
the average value per hectare would be P62,000.00, more or less, and this average value per
hectare even includes the 13 hectares which were rejected by respondents because the same
constituted a slope.
Likewise, it appears that the eight (8)-hectare portion which was planted to corn has a land
valuation of only P33,272.76 per hectare. The evidence showed that this area was previously
planted by petitioner to sugarcane (Exhibit "G"). Petitioner claimed that the value of the land
adjacent to this portion was assessed by respondents a land valuation of P100,000.00 per
hectare.
In the case of LBP vs. Pacita Agricultural Multi-Purpose Coop., etc., G.R. No. 177607,
January 19, 2009, the Supreme Court held that it is more equitable for the Special Agrarian
Court (SAC) to determine just compensation of the property using the valuation at the time

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AGRARIAN LAW
RECENT JURISPRUDENCE
of its payment and considering the full and fair equivalent of the property taken from its
owner by the expropriator, equivalent being real, substantial, full and ample.
Verily, respondents' valuation of petitioner's landholding is enormously low, inadequate and
contrary to the sporting idea of fairness and equity. Petitioner has presented its case with
clear, compelling and substantive evidence.[37] (Underscoring in the original)
The SAC merely stated that LBP's valuation is "enormously low, inadequate and contrary to
the sporting idea of fairness," which approximates the statement made by the SAC
in Alfonso that the government's valuation is "unrealistically low." In arriving at the amount
of just compensation to be paid to respondent, the SAC solely based its conclusion on the
market value per tax declaration of respondent's property and the alleged assessment made
by LBP on the land adjacent thereto. This Court notes that the 17.9302-hectare property of
respondent comprises of several portions with varying land uses and the SAC did not even
bother to offer a detailed explanation as to how the land values for each of them came about,
as well as the evidence to support the same.
For these reasons, the valuation made by the SAC cannot be upheld and must be struck
down as illegal. Nevertheless, this Court cannot automatically adopt LBP's own calculation
as prayed for in the instant petition. The veracity of the facts and figures which it used in
arriving at the amount of just compensation under the circumstances involves the resolution
of questions of fact which is, as a rule, improper in a petition for review on  certiorari. We
have likewise consistently taken the position that this Court is not a trier of facts. [38]
In view of the foregoing, it is necessary to remand the case to the SAC for the determination
of just compensation due to the respondent based on Section 17 of R.A. No. 6657, DAR
A.O. No. 5, series of 1998, and in consonance with prevailing jurisprudence.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED.
Accordingly, the Resolutions dated March 30, 2011 and September 27, 2012 issued by the
Court of Appeals – Cebu City in CA-G.R. SP No. 05614 are ANNULLED and SET
ASIDE.
CAR Case No. 02-038 is REMANDED to the Regional Trial Court of Bacolod City, Negros
Occidental, Branch 46 for the recomputation of the final valuation of respondent Ludovico
Hilado's 17.9302-hectare property with deliberate dispatch.
Land Bank v. Heirs of Jaime de los Angeles, September 9, 2020
Original and Exclusive Jurisdiction of
the RTC-SAC
At the outset, the Court would like to resolve the issue as to the exclusive and original
jurisdiction of the SAC in just compensation cases.
LBP vigorously asserts that respondents' petition should have been dismissed for their
failure to exhaust administrative remedies before recourse to the regular courts. It claims that
while the RTC-SAC has the exclusive and original jurisdiction to judicially determine the
amount of just compensation pursuant to Section 57 of R.A. 6657, the DARAB's primary
jurisdiction to administratively determine just compensation precedes the judicial
determination by the SAC. LBP further contends that the preliminary detennination of just
compensation by the DARAB is a condition sine qua non before a case of this nature with
the SAC can be filed. [46]
The original and exclusive jurisdiction of the SAC in just compensation cases is not a novel
issue [47] and is in fact, well settled. [48] The valuation of property or determination of just
compensation is essentially a judicial function which is vested with the courts and not with
administrative agencies. [49] This matter has been extensively discussed Land Bank of the
Philippines v. Belista,  [50] where the Court explained:
Sections 50 and 57 of RA No. 6657 provide:
2
Section 50. Quasi-judicial Powers of the DAR.  - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR) xxx
Section 57. Special Jurisdiction. — The Special Agrarian Court shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners, and the prosecution of all criminal offenses under this Act. x x x
The Special Agrarian Courts shall decide all appropriate cases under their special
jurisdiction within thirty (30) days from submission of the case for decision.
Clearly, under Section 50, DAR has primary jurisdiction to determine and adjudicate
agrarian reform matters and exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of
the DA and the DENR. Further exception to the DAR's original and exclusive jurisdiction
are all petitions for the determination of just compensation to landowners and the
prosecution of all criminal offenses under RANo. 6657, which are within the jurisdiction of
the RTC sitting as a Special Agrarian Court. Thus, jurisdiction on just compensation cases
for the taking of lands under RA No. 6657 is vested in the courts. [51]
In the case of Land Bank of the Philippines v. Wycoco, [52] the Court upheld the RTCs
jurisdiction over Wycoco's petition for determination of just compensation even where no
summary administrative proceedings was held before the DARAB which has primary
jurisdiction over the determination of land valuation. The Court stressed therein that
although no summary administrative proceeding was held before the DARAB, LBP was able
to perform its legal mandate of initially determining the value of Wycoco's land pursuant to
E.O. 405, Series of 1990. [53]
It is clear from Section 57 that the RTC, sitting as a Special Agrarian Court, has "original
and exclusive jurisdiction over all petitions for the determination of just compensation to
landowners." This "original and excusive" jurisdiction of the RTC would be undermined if
the DAR would vest in administrative official original jurisdiction in compensation cases
and make the RTC an appellate court for the review of administrative decisions. Thus,
although the new rules speak of directly appealing the decision of adjudicators to the RTCs
sitting as Special Agrarian Courts, it is clear from Section 57 that the original and exclusive
jurisdiction to determine just compensation lies with the RTCs. Any effort to transfer such
jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into an
appellate jurisdiction would be contrary to Section 57 and therefore would be void. [54] Thus,
direct resort to the SAC by herein respondents is valid.
Application of  R.A.  6657  to Properties
Acquired under P.P. 27/E.O. 228
In a number of cases, such as Land Bank of the Philippines v. Hon. Natividad, [55] Lubrica v.
Land Bank of the Philippines, [56] Land Bank of the Philippines v. Gallego, Jr., [57] Land Bank
of the Philippines v. Heirs of Maximo and Gloria Puyat, [58] and Land Bank of the
Philippines v. Santiago, Jr., [59] the Court definitively ruled that when the agrarian reform
process is still incomplete as the just compensation due the landowner has yet to be settled,
just compensation should be determined, and the process concluded, under Section 17
of R.A. 6657, which contains the specific factors to be considered in ascertaining just
compensation, viz.:
Section 17. Determination of Just Compensation. - In determining just compensation, the
cost of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, 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.
In Land Bank of the Philippines v. Gallego, Jr.,  [60] We explained that:
The Court has already ruled on the applicability of agrarian laws, namely, P.D. No. 27/E.O.
No. 228 in relation to Republic Act (RA.) No. 6657, in prior cases concerning just
compensation.
In Paris v. Alfeche, the Court held that the provisions of R.A. No. 6657 are also applicable to
the agrarian reform process of lands placed under the coverage of P.D. No. 27/E.O. No. 228,
which has not been completed upon the effectivity of R.A. No. 6657. x x x  [61] (Citations
omitted)
With the passage of R.A. 9700 [62] which took effect on July 1, 2009, it becomes clear
that R.A. 6657 applies even to P.D. 27 acquired lands. R.A. 9700 applies to landholdings
that are yet to be acquired and distributed by the DAR. In addition, R.A. 9700 itself contains
the qualification that "previously acquired lands wherein valuation is subject to challenge,"
such as the property subject of this case, "shall be completed and resolved pursuant to
Section 17 of RA 6657, as amended."[63]
While LBP, at first, questioned the application of R.A. 6657 in the determination of just
compensation in this case and insisted on using the formula mandated under P.D. 27/E.O.
228, in its Manifestation and Motion[64]  it averred that said issue has been rendered moot by
the enactment of R.A. 9700. Petitioner LBP submits that Section 17 of  R.A. 6657 is the
applicable law to this case pursuant to Section 5 of R.A. 9700. However, LBP maintains that
the valuation of the property is not compliant with the valuation factors under R.A. 6657 and
the pertinent valuation guidelines of the DAR.
On Just Compensation
The core issue in this petition is the correctness of the valuation of the subject property as
determined by the RTC-SAC and affirmed by the CA.
In the determination of just compensation, the rule is that the RTC-SAC must consider the
guidelines set forth in Section 17 of R.A. 6657 and as translated into a formula embodied in
DAR AO No. 5, as abovementioned. However, it may deviate from these factors/formula if
the circumstances warrant or, "if the situations before it do not warrant its application." [65]
LBP insists that just compensation should be determined by its character and its price at the
time of taking which is on October 21, 1972 pursuant to P.D. 27 and E.O. 228. However, We
agree with the CA, which used a more recent data and not the old one, ratiocinating that to
use the old data "would be unjust and unfair to respondents who were deprived of the use
and fruits of the property for so long." [66] That just compensation - equivalent to its fair
market value — should be paid at the time of taking remains a hypothetical ideal. In reality,
We recognize that expropriation takes some time. [67]
In  Lubrica v. Land Bank of the Philippines,  [68] a case involving the acquisition of land
pursuant to P.D. 27, this Court held therein that expropriation of the landholding did not take
place on the effectivity of P.D. 27 on October 21, 1972 but seizure would take effect on the
payment of just compensation judicially determined, viz.:
In the case of Land Bank of the Philippines v. Natividad, [69] the Court ruled thus:
Land Bank's contention that the property was acquired for purposes of agrarian reform on
October 21, 1972, the time of the effectivity of PD 27, ergo just compensation should be
based on the value of the property as of that time and not at the time of possession in 1993, is
likewise erroneous. In Office of the President, Malacanang, Manila v. Court of Appeals, we
ruled that the seizure of the landholding did not take place on the date of effectivity of PD 27
but would take effect on the payment of just compensation.
The Natividad case reiterated the Court's ruling in Office of the  President v. Court of
Appeals [70] that the expropriation of the landholding did not take place on the effectivity of
PD. No. 27 on October 21, 1972 but seizure would take effect on the payment of just
compensation judicially determined.
Likewise, in the recent case of Heirs of Francisco R. Tantoco, Si: v. Court of Appeals, [71] we
held that expropriation of landholdings covered by R.A. No. 6657 take place, not on the
effectivity of the Act on June 15, 1988, but on the payment of just compensation. [72]
AGRARIAN LAW
RECENT JURISPRUDENCE
Respondents were deprived of their property in 1981 but have yet to receive the just
compensation therefor. Tenants had stopped paying rents. Emancipation patents had been
issued to farmer-beneficiaries. Respondents had been deprived of the use and fruits of the
property. Yet, respondents remain unpaid. Under the circumstances, it would be highly
inequitable to compute the just compensation using the values at the time of the taking in
1972 (according to LBP), or in 1981, considering that the government and the farmer-
beneficiaries have already benefited from the land. Respondents were deprived of their
properties without payment of just compensation which, under the law, is a prerequisite
before the property can be taken away from its owners. [73]
Land valuation is not an exact science, but an exercise fraught with inexact estimates
requiring integrity, conscientiousness and prudence on the part of those responsible for it.
What is important ultimately is that the land value approximates, as closely as possible, what
is broadly considered to be just[74]
In this case, the RTC-SAC, as affirmed by the CA, arrived at the just compensation with due
consideration of the factors provided in Section 17 of R.A.  6657. They took into account the
nature of the property, its actual use or the crops planted thereon, the volume of its produce,
and its value according to government assessors, among others. Specifically, the RTC-SAC
considered the following pieces of evidence which were used to determine the CNI
(capitalized net income), CS (comparable sales), and MV (market value), to wit:
Schedule of Market Values issued by Engr. Julius B. Dona, Municipal Assessor of Bautista,
Pangasinan, covering the period 1997-2000 and 2001 to October 5, 2004. [75]
Deeds of Absolute Sale (of adjacent properties) dated May 21, 2004 and July 5, 2004. [76]
The Affidavits of Arturo Agamao and Antonio G. Marcos, Sr. stating that: the property is
irrigated and has two (2) harvests a year; the property produces an average of 80 cavans of
rice and 80 cavans of corn per hectare per year; it is planted with tomatoes and onions and
mango trees; and the value of assignment of rights in the area amount to P100,000.00. [77]
The statement of Alejandro Arcenal, Proprietor of Golden Star Rice Mill in Carmen West
Rosales, Pangasinan stating that the prevailing buying price for palay in the area in 2003 is
PI0.00 per kilo for long grain and PI 1.00 per kilo for short grain. [78]
The Letter from Director Conrado DL. Ibanez of the National Food Authority (NFA)
certified on the existing NFA's prices for palay and rice as of October 10, 2003. [79]
The values stated in the above pieces of evidence which were used to determine the CNI
(capitalized net income), CS (comparable sales), and MV (market value) approximate, as
closely as possible, to the date when the payment of just compensation was judicially
determined. Be it noted that respondents filed a petition for the determination and payment
of just compensation on June 27, 2000.
This Court has held that if a strict application of the DAR formula is not warranted under the
specific circumstances of the case, courts may deviate or depart therefrom, provided that this
departure or deviation is supported by a reasoned explanation grounded on the evidence on
record. [80] In other words, courts of law possess the power to make a final determination of
just compensation. [81] As explained in  Land Bank of the Philippines v. Franco? [82]
Administrative Order No. 5 provides a comprehensive formula that considers several factors
present in determining just compensation.
However, as this Court held in  Apo Fruits Corporation and Hijo Plantation, Inc. v. The
Honorable Court of Appeals and Land Bank of the Philippines, and Export Processing Zone
Authority, it is not adequate to merely use the formula in an administrative order of the
Department of Agrarian Reform or rely on the determination of a land assessor to show a
final determination of the amount of just compensation. Courts are still tasked with
considering all factors present, which may be stated in formulas provided by administrative
agencies.
In Land Bank v. Yatco Agricultural Enterprises this Court held that when acting within the
3
bounds of the Comprehensive Agrarian Reform Law, special agrarian courts "are not strictly
bound to apply the [Department of Agrarian Reform] formula to its minute detail,
particularly when faced with situations that do not warrant the formula's strict application;
they may, in the exercise of their discretion, relax the formula's application to fit the factual
situations before them."
In Apo Fruits Corporation v. Land Bank, this Court held that Section 17 of the
Comprehensive Agrarian Reform Law merely provides for guideposts to ascertain the value
of properties. Courts are not precluded from considering other factors that may affect the
value of property.
xxxx
Thus, while the formula prescribed by the Department of Agrarian Reform requires due
consideration, the determination of just compensation shall still be subject to the final
decision of the special agrarian court. Most recently, in Alfonso v. Land Bank:
For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for
the DAR's expertise as the concerned implementing agency, courts should henceforth
consider the factors stated in Section 17 of RA 6657, as amended, as translated into the
applicable DAR formulas in their determination of just compensation for the properties
covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict
application of said formulas is not warranted under the specific circumstances of the case
before them, they may deviate or depart therefrom, provided that this departure or deviation
is supported by a reasoned explanation grounded on the evidence on record. In other words,
courts of law possess the power to make a final determination of just compensation.
(Citation omitted)
The special agrarian court sitting in a condemnation action may adopt the value computed
using the guidelines promulgated by the Department of Agrarian Reform. In its exercise of
original jurisdiction, the special agrarian court may deviate from the formulas if it can show
that the value is not equivalent to the fair market value at the time of the taking. However, an
allegation is not enough. The landowner must allege and prove why the formula provided by
the Department of Agrarian Reform does not suffice. [83] (citations omitted)
In any case, the RTC-SAC applied the prescribed formula stated in DAR AO No. 5 in
arriving at the amount of just compensation:
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
computed as follows:
LV = (CNIxO.6) + (CSxO.3) + (MVxO.l)
= (P333,333.00 x 0.6) + (P100,000 x 0.3) + (PI91,000 xO.l)
= (P199.999.99) + (P30,000) + (PI 9,100)
= (P249,099.99 per hectare)
In coming up with the CNI (Capitalized Net Income), [84] the RTC summed up the average
production per year of rice (i.e., P50,000.00) and the average production per year of
tomatoes and onions (i.e., P3,612.18.00), to come up with P53,612.18 which is the gross
agricultural production per year. Since there was no proof of the cost of operations, an
assumed rate of 20% shall be used pursuant to DAR AO No. 05, Series of 1998. The net
income per hectare is P42,889.75. After capitalizing this at 12%, the CM per hectare is
P333,333.33.
In getting the CS (comparable sales), the RTC-SAC took into account the value of
assignment of right of agricultural lands in the area which is P100,000.00.
For the MV (market value per tax declaration), the RTC-SAC averaged the valuations given
by the Municipal Assessor of Bautista, Pangasinan, stating that the market value is
P32,000.00 per hectare, and the zonal valuation for the property which is P150,000.00. The
MV is pegged at P91,000.00.
This Court observes that the RTC-SAC mistakenly used the figure P191.000.00 instead of
the P 91,000.00 as MV (market value), in computing the LV (land value) of the subject
property. Considering that this involves a simple mathematical computation, this Court will
just re-compute the LV (land value) using the correct amount of P91,000.00 as MV (market
value).
The LV (land value) of the property should be computed as follows:
LV =(CNIxO.6) + (CSxO.3) + (MVxO.1)
=(P333,333.00 x 0.6) + (f>100,000 x 0.3) + (P91,000x0.1)
= (P199,999.99) +(1*30,000.00) + (P9,100.00)
= (P239,099.99 per hectare)
Since the landholding subject of expropriation has an area of 216 hectares, the just
compensation due is P51,645.597.80.
Interest on the Payment of Just Compensation
Just compensation in expropriation cases has been held to contemplate just and timely
payment, and prompt payment is the payment in full of the just compensation as finally
determined by the courts. Thus, just compensation envisions a payment in full of the
expropriated property. Absent full payment, interest on the balance would necessarily be due
on the unpaid amount. [85] The reason is that just compensation would not be "just" if the
State does not pay the property owner interest on the just compensation from the date of the
taking of the property. Without prompt payment, the property owner suffers the immediate
deprivation of both his land and its fruits or income. The owner's loss, of course, is not only
his property but also its income-generating potential. [86]
As explained by this Court in the case of Apo Fruits Corporation v. Land Bank of the
Philippines[87] the rationale for imposing interest on just compensation is to compensate the
property owners for the income that they would have made if they had been properly
compensated - meaning if they had been paid the full amount of just compensation - at the
time of taking when they were deprived of their property.
In this case, respondents had been paid the partial amount of PI,628,931.32 in 1992. Up to
this date, they have not been fully paid. Thus, respondents are entitled to legal interest from
the time of the taking of the subject property until the actual payment in order to place them
in a position as good as, but not better than, the position that they were in before the taking
occurred. The imposition of such interest is to compensate respondents for the income they
would have made had they been properly compensated for the properties at the time of the
taking.
Legal interest on the unpaid balance shall be pegged at the rate of 12% per annum from the
date of taking until June 30, 2013. Thereafter, or beginning July 1, 2013, until fully paid, the
just compensation due the landowners shall earn interest at the new legal rate of 6% per
annum in line with the amendment introduced by Bangko Sentral ng Pilipinas-Monetary
Board Circular No. 799, Series of 2013.
Nominal Damages Deleted
The CA affirmed the award of nominal damages of P5,000,000.00 but deleted the award of
temperate damages.
Under Article 2221 of the Civil Code, nominal damages are adjudicated in order that the
right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by
him.
AGRARIAN LAW
RECENT JURISPRUDENCE
These are the damages recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind, or where
there has been a breach of contract and no substantial injury or actual damages whatever
have been or can be shown. [88] They are not for indemnification of loss but a vindication of a
right violated. [89]
This Court deletes the award of nominal damages for lack of basis. The government, through
the DAR, acquired the landholdings of respondents for distribution to qualified
farmers/beneficiaries. When respondents' property was placed under the Operation Land
Transfer pursuant to RD. 27, there was no violation or invasion of respondents' rights which
should be vindicated, since the acquisition was for a laudable purpose under the agrarian
reform program of the government. Be it noted that RD. 27 was enacted for the
emancipation of tenants, transferring to them the ownership of the land they till. Hence,
nominal damages cannot be awarded to respondents.
A final note.
The Comprehensive Agrarian Reform Program was undertaken primarily for the benefit of
our landless farmers. However, the undertaking should not result in the oppression of
landowners by pegging the cheapest value for their lands. Indeed, the taking of properties for
agrarian reform purposes is a revolutionary kind of expropriation, but not at the undue
expense of landowners who are also entitled to protection under the Constitution and
agrarian reform laws. [90] Verily, to pay respondents only the total amount of PI,628,931.32
as just compensation for their 216-hectare land today, after they were deprived of it since
1981, would be unjust and inequitable.
WHEREFORE, premises considered, the Decision dated February 27, 2009 and the
Resolution dated April 30, 2009 of the Court of Appeals in CA- G.R. SP No. 104904 are
hereby AFFIRMED with MODIFICATION. Petitioner Land Bank of the Philippines
is ORDERED to pay respondents:
a) The amount of P50,016,666.48 (i.e., P51,645.597.80 [Land Value] less the initial payment
of Pl,628,931.32) as just compensation for the 216-hectare expropriated property;
b) Said amount shall earn legal interest at the rate of twelve percent (12%) per annum from
the date of taking until June 30, 2013 and an interest at the rate of six percent (6%) per
annum from July 1, 2013 until fully paid;
c) The award of nominal damages is DELETED.
SO ORDERED."
Local Government of Sta. Cruz v. Provincial Office of DAR, October 16, 2019
Initially, it must be highlighted that the Notices of Coverage issued by the DAR basically
placed the Tan Kim Kee Estate under the coverage of the CARP. Said notices notify the
landowners that their respective properties shall be placed under the CARP; that they are
entitled to exercise their retention right; and that a public hearing shall be conducted where
they and the representatives of the concerned sectors of society may attend to discuss the
results of the field investigation, the land valuation and other pertinent matters. [14] Thus, at
this point, no acquisition was yet implemented.
The Court now resolves.
Petitioner directly resorted to this Court in applying for the issuance of an injunctive writ.
4
Preliminarily, the CARL provides that the remedy of certiorari is available to dispute any
decision of the DAR on any agrarian matter pertaining to the application, implementation,
enforcement or interpretation of the law:
SEC. 54. Certiorari. — Any decision, order, award or ruling of the DAR on any agrarian
dispute or on any matter pertaining to the application, implementation, enforcement, or
interpretation of this Act and other pertinent laws on agrarian reform may be brought to the
Court of Appeals by certiorari except as otherwise provided in this Act within fifteen (15)
days from the receipt of a copy thereof.
The findings of fact of the DAR shall be final and conclusive if based on substantial
evidence.
However, the CARL expressly states that the a petition for certiorari must be filed with the
Court of Appeals (CA), and not directly before this Court.
Nevertheless, whether injunction is available as a remedy in assailing the propriety of the
implementation of the CARL is likewise explicitly provided under Section 68 thereof, to wit:
SEC. 68. Immunity of Government Agencies from Undue Interference. — No injunction,
restraining order, prohibition or mandamus shall be issued by the  lower courts against the
Department of Agrarian Reform (DAR), the Department of Agriculture (DA), the
Department of Environment and Natural Resources (DENR), and the Department of Justice
(DOJ) in their implementation of the program. (Italics supplied)
With the exclusion of the lower courts, this Court and the CA has concurrent jurisdiction to
issue an injunctive writ as against the Department of Agriculture in the implementation of
the CARL. However, such concurrence does not give the petitioner unrestricted freedom of
choice of court forum consistent with the principle of hierarchy of courts. [15]
In the case of Gios-Samar, Inc. v. Department of Transportation and Communications,  the[16]
Court reminded that said doctrine is not a mere policy, but a constitutional filtering
mechanism designed to enable the Court to focus on more fundamental and essential tasks
assigned to it by the Constitution.
Said principle, however, is subject to exceptions:
(1) When there are genuine issues of constitutionality that must be addressed at the most
immediate time;
(2) When the issues involved are of transcendental importance;
(3) Cases of first impression;
(4) The constitutional issues raised are better decided by the Court;
(5) Exigency in certain situations;
(6) The filed petition reviews the act of a constitutional organ;
(7) When petitioners rightly claim that they had no other plain, speedy, and adequate remedy
in the ordinary course of law that could free them from the injurious effects of
respondents' acts in violation of their right to freedom of expression; and
(8) The petition includes questions that are "dictated by public welfare and the advancement
of public policy, or demanded by the broader interest of justice, or the orders complained
of were found to be patent nullities, or the appeal was considered as clearly an
inappropriate remedy."[17]
However, as clarified in the Gios-Samar case, the determinative factor in allowing the
application of one of the aforementioned exceptions is the nature of the question raised by
the parties in those "exceptions" that enabled the Court to allow such direct resort. [18]
In this case, petitioner merely speculates in its Petition that the benefits of classifying the
Tan Kim Kee Estate as an industrial zone far outweighs the benefits of the implementation
of the CARL because in previous experiences, the CARP beneficiaries were not able to
develop the agricultural lands awarded to them. However, such conjecture does not
constitute any of the aforementioned exceptions to the general rule. Thus, the supremacy of
the doctrine of hierarchy of courts prevails.
Note too that the Petition failed to state a cause of action considering the insufficiency of the
allegations in the pleading.[19] It must be highlighted that petitioner is not the registered
owner of the Tan Kim Kee Estate.
Section 2, Rule 3 of the Rules of Court is explicit in stating that every action must be
prosecuted or defended in the name of the real party-in-interest, a party who stands to be
benefited or injured by the judgment in the suit. On this note, real interest must be one which
is present and substantial, as distinguished from a mere expectancy, or a future, contingent,
subordinate or consequential interest.[20]
Petitioner's perceived and anticipated benefit from the development of the Tan Kim Kee
Estate constitutes a mere expectancy. As aforementioned, the same does not suffice to
consider it as a real party-in-interest.
The Court stresses that procedural rules are not to be belittled or dismissed simply because
their non-observance may have resulted in prejudice to a party's substantive rights. Like all
rules, they are required to be followed except only for the most persuasive of reasons. [21]
Considering the procedural infirmities plaguing the instant Petition, the Court has no choice
but to deny the same in the absence of any manifestation that the ends of substantive justice
would be subserved thereby.
WHEREFORE, premises considered, the Petition is DENIED.
LBP v. Prado Verde, July 30, 2019
RTCs, acting as Special Agrarian Courts, are mandated to apply Sec. 17 of R.A. No. 6657,
as amended, in determining just compensation
In Alfonso v. Land Bank of the Philippines, 33 the Court explicitly emphasized that:
The determination of just compensation is a judicial function. The "justness" of the
enumeration of valuation factors in Section 17, the "justness" of using a basic formula, and
the "justness" of the components (and their weights) that flow into the basic formula, are all
matters for the courts to decide. As stressed by Celada, however, until Section 17 or the
basic formulas are declared invalid in a proper case, they enjoy the presumption of
constitutionality. This is more so now, with Congress, through RA 9700, expressly providing
for the mandatory consideration of the DAR basic formula. In the meantime, Yatco, akin to a
legal safety net, has tempered the application of the basic formula by providing for
deviation, where supported by the facts and reasoned elaboration. 34
AGRARIAN LAW
RECENT JURISPRUDENCE
Undoubtedly, the courts are not at liberty to deviate from the DAR basic formula, unless
such deviations are amply supported by facts and reasoned justification.
In this case, both the SAC and the Land Bank properly relied on Sec. 17, R.A. No. 6657, as
amended by R.A. No. 9700, which states that:
Section 7. Section 17 of Republic Act No. 6657, as amended, is hereby further amended to
read as follows:
SECTION 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 nonpayment of taxes or loans secured from any
government financing institution on the said land shall be considered as additional factors to
determine its valuation.
The factors to be considered in fixing the amount of just compensation were translated into a
basic formula. A.O. No. 5, series of 1998, A.O. No. 2, series of 2009 and even the most
recent DAR A.O. No.7, series of 2011 all provide that the basic formula shall be:
LV= (CNI x 0.6) +(CS x 0.3) +(MY x 0.1)
Where: LV = Land Value
CNI35 = Capitalized Net Income (based on land use and productivity)
CS36 = Comparable Sales (based on fair market Value Equivalent to 70% of
BIR zonal value)
MV37 = Market Value per Tax Declaration (based on Government assessment)
1.1 If the three factors are present
When the CNI, CS and MV are present, the formula shall be:
LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
1.2 If two factors are present
1.2.1 When the CS factor is not present and CNI and MV are applicable, the formula shall
be:
LV = (CNI x 0.90) + (MV x 0.10)
5
1.2.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall
be:
LV (CS x 0.90) + (MV x 1.10)
1.3 If only one factor is present
When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MVx2
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, municipality or
province (in that order) approved by LBP within one (1) year from receipt of claimfolder.
The DAR also issued DAR A.O. No. 1, series of 2010, which the SAC and the Land Bank
relied upon in determining which applicable formula should be used. A.O. No. 1 series of
2010 specifically covers "Rules and Regulations on Valuation and Landowners
Compensation involving Tenanted Rice and Com Lands under Presidential
Decree (P.D.) No. 27 and Executive Order (E.O.) No. 228." It appears, then, that said
administrative order specially applies to tenanted rice and corn lands under P.D. No. 27 and
E.O. No. 228. In said order, the lands/claims covered are the following:
II. COVERAGE
A. Lands already distributed by the DAR to the farmer-beneficiaries where documentation
and/or valuation are/is not yet complete (Distributed But Not Yet Documented [DNYD]
claims).
B. PD 27/EO 228 claims with the Land Bank of the Philippines where:
1. The DAR valuation is rejected by the landowner OR
2. The DAR valuation is undergoing summary proceeding with
the DARAB or just compensation case with the Court OR
3. The landowner accepts the original valuation under protest or
without prejudice to the determination of just compensation OR
4. The landowner refuses or fails to submit or comply with the
pre-payment/documentary requirements under PD 27 /EO 228
formula despite receipt of notice of demand.
C. Rice and Com lands under PD 27 falling under Phase 1 of RA 9700.
Here, the subject properties are rice lands placed under the coverage of and acquired
pursuant to the Operation Land Transfer program under P.D. No. 27. 38 Thus, the SAC and
the Land Bank correctly relied on A.O. No. 1, series of 2010 in governing the valuation of
the subject 2.4975-hectare rice land.
There was, however, a disagreement as to which formula to use. A.O. No. 1 series of 2010
provided two formulas, each covering a different set of lands. Item IV. I thereof refers to
lands already distributed by the DAR to the farmer-beneficiaries where documentation
and/or valuation are/is not yet complete (DNYD) AND for claims with the Land Bank. The
formula shall be:
LV = (CNI x 0.90) + (MV x 0.10)
Where:
LV = Land Value
CNI = Capitalized Net Income which refers to the gross sales (AGP x SP) with assumed net
income rate of 20% capitalized at 0.12
Expressed in equation form:
(AGP x SP) x 0.20
CNI =
0.12
Where:
AGP = Annual Gross Production corresponding to the latest available 12 month's gross
production immediately preceding 30 June 2009. The AGP shall be secured from the
Department of Agriculture (DA) or Bureau of Agriculture Statistics (BAS). The AGP data
shall be gathered from the barangay or municipality where the property is located. In the
absence thereof, AGP may be secured within the province or region.
SP = The average of the latest available 12 months' selling prices prior to 30 June 2009 such
prices to be secured from the Department of Agriculture (DA) or Bureau of Agricultural
Statistics (BAS). If possible, SP data shall be gathered from the barangay or municipality
where the property is located. In the absence thereof, SP may be secured within the province
or region.
MV = Market Value per Tax Declaration which is the latest Tax Declaration and Schedule of
Unit of Market Value (SUMV) issued prior to 30 June 2009. MV shall be grossed-up up to
30 June 2009.
The reckoning date of the AGP and SP shall be June 30, 2009.39
On the other hand, item IV. 2 of A.O. No. 1 refers to lands falling under Phase 1 of R.A. No.
9700, where the basic formula shall be:
LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
Where:
LV = Land Value
AGRARIAN LAW
RECENT JURISPRUDENCE
CNI =Capitalized Net Income which refers to the gross sales (AGP x SP) with assumed net 2. Market Value per Tax Declaration (MVTD):
income rate of 20% capitalized at 0 .12.
0.12
Expressed in equation form: REGIONA
UNIT
= ₱88,500.00 ACTU PRODUCTIVIT L
MARKE LOACTI
AL Y CONSUM ADJUSTE
T ON ADJ.
LAND CLASSIFICATI ER PRICE D UMV
(AGP x SP) x 0.20 CS = ₱20.00 zonal value/square meter x 10,000 sq. m. VALUE FACTOR
USE   ON INDEX
(P)
CNI = (RCPI)
= ₱200,000.00
0.12
Rice- 43,750.0 ₱60,462.5
MV = ₱30, 100.00 x 100% x 1.60   100% 1.382
irrigated 0 0
Where: = ₱48,160.00
3. Unit Land Value (ULV)
Computation:
AGP = Annual Gross Production corresponding to the latest available 12 month's gross LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
production immediately preceding 01 July 2009. The AGP shall be secured from the ULV = (CNI x 0.90) + (MV x 0.10)
Department of Agriculture (DA) or Bureau of Agriculture Statistics (BAS). The AGP data = (88,500.00 x 0.60) + (200,000.00 x 0.30) + (48, 160.00 x 0.10)
shall be gathered from the barangay or municipality where the property is located. In the
absence thereof, AGP may be secured within the province or region. Area = 2.4975 has.
= 53,100.00 + 60,000.00 + 4,816.00
UL V = ₱88,500.00 (.090) + ₱60,462 (0.10)
CS = Comparable Sales (based on fair market value Equivalent to 70% of BIR Zonal Value). = ₱117,916.00 per hectare
= ₱79,650.00 + ₱6,046.25
Total = LV x area acquired
SP = The average of the latest available 12 months' selling prices prior to 01 July 2009 such
LV
prices to be secured from the Department of Agriculture (DA) or Bureau of Agricultural = ₱85,696.25/ha.
Statistics (BAS). If possible, SP data shall be gathered from the barangay or municipality
where the property is located. In the absence thereof, SP may be secured within the province = 117,916.00 x 2.4975 hectares
LV = ₱85,696.25/ha. X 2.4975
or region.
= ₱294.495.20
= ₱214,026.38
MV =Market Value per Tax Declaration which is the latest Tax Declaration and Schedule of
Unit of Market Value (SUMV) issued prior to 01 July 2009. MV shall be grossed-up up to
01 July 2009. The Land Bank opposed the computation, arguing that the subject properties fall under II. B
On the other hand, Prado likewise opposes the computation, insisting that Land Bank's
of DARA.O. No. 1, series of 2010-those P.D. No. 27 claims with the Land Bank where the
revaluation amounting to ₱214,026.38 is too iniquitous for the land. 42 Prado claims that the
DAR valuation is rejected or undergoing just compensation case in court. Hence, the
zonal valuation of its property is ₱2,500.00 per sq. m. 43 It asserts that Land Bank's
In case CS is not present, the formula shall be: formula that should be used is that provided in IV. 1 of the said administrative order, to wit:
computation was not in accordance with Sec. 17 of R.A. No. 6657 because it was based on
the outdated data gathered by the DAR. 44 Similarly, Prado claims that the SAC also failed to
LV = (CNI x 0.90) + (MV x 0.10) LV = (CNI x 0.90) + (MV x 0.10) follow its mandate to comply with Sec. 17, R.A. No. 6657 in determining the just
compensation for the subject properties.45

The reckoning date of the AGP and SP shall be July 01, 2009.40
The SAC, which the CA affirmed, held that, as per report of the commissioner, all three (3)
relevant factors mentioned in either A.O. No. 2, series of 2009 and/or A.O. No. 1, series of
2010 are present. Thus, the threefactor formula prescribed in A.O. No. 1, series of 2010 is
applicable.41 The SAC then arrived at the following computation:
Thus, Land Bank arrived at the recomputed value of the subject properties, taking into
consideration the relevant factors, as follows:
A. Land Use I Production - twelve (12) months prior to date of field investigation
1. Capitalized Net Income (CNI):
Consequently, Prado prays that the Court order the farmer-beneficiaries to turn over
possession and ownership of the landholding if the reasonable just compensation it prayed
for is impossible. Prado avers that it shall, in turn, award the farmer-beneficiaries with
reasonable homelots as, and by way of, disturbance compensation allowed under the law. 46
The Court, however, agrees with the Land Bank.

CNI = (AGP x SP) While we acknowledge the SAC's effort to abide by and conform to the prevailing law and
x 0.20 ANNUAL SELLIN regulations on land valuation, we cannot fully subscribe to its finding and in ultimately
CROPS fixing the amount of just compensation because of its failure to apply the correct formula.
GROSS G CAPITALIZATI
PLANTE NIR CNI
PRODUCTIO PRICE ON RATE
D 
0.12 N (AGP) (P)
In its decision, the SAC declared item IV. D. 2. of A.O. No. 2, series of 2009, 47 as void and
inapplicable insofar as it distinguishes the applicability of Sec. 17 of R.A. No. 6657, as
= (5,900 x Rice- ₱88,500.0
5,900 kg. 9.00/kg. 20% .12 amended by R.A. No. 9700. It ruled that:
₱9.00) x 0.20 irrigated 0

6
AGRARIAN LAW
RECENT JURISPRUDENCE
The Court thus finds and so holds that the provision of AO No. 2, series of 2009, insofar as it d. Depending on the presence of applicable sub-factors, the following formulae shall be CS = STA
distinguishes the applicability of Sec. 17 of RA [No.] 6657, as amended by RA No. 9700, is used:
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 d.4. If AC and/or MVM are/is present and no ST is available:
contrary to the holding in LBP v. Dumlao, et al., supra, which upholds the harmonization of d.1 If there are two or more STs and MVM and/or AC are
the formulae for the computation of just compensation both under PD No. 27 and RA No. present:
6657; it is violative of the "equal protection clause" of the Constitution; and it is AC + MVM
unreasonable even as it unduly impinges on the prerogative of the special agrarian court to
determine the amount of just compensation.48 d.4.1 CS = OR
STA + MVM + AC
2
d.1.1 CS = OR
Perusal of A.O. No. 2, series of 2009, would show that the "distinction" made was merely to
3 d.4.2 CS = AC OR
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 STA + MVM d.4.3 CS = MVM
keeping with the harmonization of the formulas in the computation of just compensation. d.1.2 CS = OR
2
That being said, as the subject properties are undisputedly lands acquired under P.D. No. 27, xxxx49
they should be valued following the guidelines set forth in DAR A.O. No. 1. STA + AC
d.1.3 CS = In this case, the SAC did not take into consideration any comparable sale transactions
As previously discussed, there were two (2) formulas provided for in DAR A.O. No. 1. We because records did not show any. The reported ₱20.00/sq. m. zonal value of the land was
2
agree with Land Bank that since the subject land has already been distributed by the DAR to simply multiplied by 10,000 sq. m. to arrive at the amount of ₱200,000.00 as the CS, a
the farmer-beneficiaries and the DAR valuation is rejected by the landowner and is formula that is not one of those abovementioned. The SAC should not have forced using the
undergoing a just compensation case in court, the first formula - LV = (CNI x 0.90) + (MV 3-factor formula considering that no Comparable Sales was reported. Instead, it should have
x 0.10)- should be used in determining just compensation of the 2.4975 hectares of land WHERE: opted using an alternative formula provided by the rules which the data gathered permits.
subject of this case. Records would show that Land Bank has clearly presented the relevant The 2-factor formula of LV = (CNI x 0.90) + (MV x 0.10) would have been the better
factors it considered in fixing the amount of just compensation. These factors were also alternative. Clearly, the SAC failed to abide by the implementing rules of the agrarian law
sufficiently substantiated. STA is the average of available STs or as expressed in equation and deviated therefrom without any justification.
form:

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, 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.
d.2 If there is only one ST and AC and/or MVM are/is available:
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:
As regards the contentions of Prado, the same are without merit.
ST1 +____+ STN
STA = 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
No. of STs 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.
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
ST + MVM + AC properties is utterly baseless. It is to be emphasized that the subject properties were
d.2.1 CS = OR expropriated by the state for which the payment of just compensation is proper.

3
a. As a general rule, there shall be at least three (3) Sales Transactions. Payment of just compensation with interest is proper
ST + MVM

At least one comparable sales transaction must involve land d.2.1 CS = OR In Land Bank of the Philippines v. Phil-Agro Industrial Corp., 50 the Court ruled that:
whose area is at least ten percent (10%) of the area being offered 2
or acquired but in no case less than one hectare. The other
transaction/s should involve land whose area is/are at least one It is doctrinal that to be considered as just, the compensation mustbe fair and equitable, and
ST + AC the landowners must have received it without any delay. The requirement of the law is not
hectare each.
d.2.2 CS = satisfied by the mere deposit with any accessible bank of the provisional compensation
determined by it or by the DAR, and its subsequent release to the landowner after
b. If there are more than three (3) STs available in the same barangay, all of them shall be 2 compliance with the legal requirements set forth by R.A. No. 6657.
considered.
The amount allegedly deposited by the petitioner was only a partial payment that amounted
d.3 If three or more STs are present and AC and MVM are not
c. If there are less than three (3) STs available, the use of STs may be allowed only if AC to almost 18% of the actual value of the subject landholdings. It could be the basis for the
available:
and/or MVM are/is present. immediate taking of the subject landholdings but by no stretch of the imagination can said
nominal amount be considered substantial enough to satisfy the full requirement of just

7
AGRARIAN LAW
RECENT JURISPRUDENCE
compensation, taking into account its income potential and the foregone income lost because
of the immediate taking.
Notwithstanding the fact that the petitioner had immediately deposited the initial
valuation of the subject landholdings after its taking, the fact remains that up to this
date, the respondent has not yet been fully paid. Thus, the respondent is entitled to
legal interest from the time of the taking of the subject landholdings until the actual
payment in order to place it in a position as good as, but not better than, the position
that it was in before the taking occurred. The imposition of such interest is to
compensate the respondent for the income it would have made had it been properly
compensated for the properties at the time of the taking. 51 (emphasis supplied)
Here, records showed that the state did not only immediately take the subject properties
without paying just compensation,52 but it also subsequently distributed such landholdings to
the farmer-beneficiaries as evidenced by the TCTs 53 issued in their favor. Prado, as
landowner, has been 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.1avvphi1 As such,
it is necessarily entitled to earn interest.55 The rationale for imposing the interest is to
compensate the 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.58 Thereafter, the total amount of just compensation
shall earn interest 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, 60 where
we 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
8
deviation from prevailing formulas on land valuation would be allowed for as long as such
deviation is rational and amply substantiated.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R.
SP No. 125525 dated January 31, 2013 and July 8, 2013, respectively, and the Resolution in
CA-G.R. SP No. 125471 dated December 4, 2013, are SET ASIDE. Accordingly, these
cases are REMANDED to the Special Agrarian Court for the determination of just
compensation m accordance with this ruling, as follows:
1. The 2-factor formula LV = (CNI x 0.90 x 0.10) as provided for under DAR A.O. No. 1,
series of 2010, pursuant to Section 17 of R.A. No. 6657, as amended by R.A. No. 9700, shall
be applied.
2. The relevant sub-factors necessary for the application of the 2- factor formula shall be
taken into consideration, following the guidelines set forth under Section 1 7 of R.A. No.
6657, as amended.
3. 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
legal interest of 6% per annum from finality of this decision until fully paid, 62 in line with
prevailing jurisprudence.
Farmer-beneficiaries v. Heirs of Juliana Maronilla, July 29, 2019
A. JURISDICTION OF THE DAR SECRETARY OVER APPLICATIONS FOR
EXEMPTION PURSUANT TO DOJ OPINION NO. 44, SERIES OF 1990.
It is settled that jurisdiction over the subject matter is conferred by law. The determination of
the land's classification as agricultural or non-agricultural (e.g., industrial, residential,
commercial, etc.) and, in turn, whether or not the land falls under agrarian reform
exemption, must be preliminarily threshed out before the DAR, [53] particularly, the DAR
Secretary,[54] pursuant to DAR AO No. 6, Series of 1994. [55] Verily, issues of exclusion or
exemption partake the nature of Agrarian Law Implementation (ALI) cases which are well
within the competence and jurisdiction of the DAR Secretary. Towards this end, the latter is
ordained t6 exercise his legal mandate of excluding or exempting a property from CARP
coverage based on the factual circumstances of each case and in accordance with the law and
applicable jurisprudence. Thus, considering too his technical expertise on the matter, courts
cannot simply brush aside his pronouncements regarding the status of the land in
dispute,  i.e., as to whether or not it falls under CARP coverage.[56]
DAR AO No. 6, Series of 1994 vests in the DAR Secretary the authority to grant or deny the
issuance of exemption clearances on the basis of Section 3 (c) of RA 6657, as amended, and
DOJ Opinion No. 44, Series of 1990.
Section 3 (c) of RA 6657, as amended defines agricultural land, thus:
(c) Agricultural Land refers to land devoted to agricultural activity as defined in this Act
and not classified as mineral, forest, residential, commercial or industrial land.
(Underscoring supplied)
On the other hand, DOJ Opinion No. 44, Series of 1990 provides that all lands that have
already been classified as commercial, industrial or residential before June 15, 1988 no
longer need any conversion clearance from the DAR in order to be exempt from CARP
coverage.[57] However, an exemption clearance from the DAR, pursuant to DAR AO No. 6,
Series of 1994, is still necessary to confirm or declare their exempt status.[58]
B. JURISDICTION OVER CASES INVOLVING THE CANCELLATION OF EPS,
CLOAS, AND OTHER AGRARIAN TITLES.
Petitioners argue that the pertinent DARAB Rules of Procedure in force at the time of the
filing of the exemption case provide that registered EPs and CLOAs may only be corrected
or cancelled by order of the (Provincial or Regional) Adjudicator of the DARAB; [59] hence,
the DAR Secretary has no jurisdiction to cancel their respective EP and CLOA titles.
The argument is untenable.
The fact that respondents sought the cancellation of petitioners' EPs and CLOAs does not
necessarily mean that the application for CARP exemption falls under the jurisdiction of the
DARAB. Verily, for the DARAB Adjudicator to acquire jurisdiction, the controversy must
relate to an agrarian dispute between the landowners and tenants in whose favor the EPs and
CLOAs have been issued by the DAR Secretary,[60] which is not extant here, An agrarian
dispute, as defined by Section 3 (d) of RA 6657, as amended, 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." [61]
In this case, the consequent cancellation of the affected tenants' EP and CLOA titles does not
arise from a controversy relating to any tenurial arrangement between petitioners and
respondents in negotiating, fixing, maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangement, but from the fact that the lands involved are not
covered by the CARP in the first place, rendering the issuance of said titles unwarranted.
Thus, there exists no agrarian dispute nor any agrarian reform matter so as to situate the
jurisdiction with the DARAB Adjudicator. Indisputably, the controversy between the parties
herein is not agrarian in nature but merely involves the administrative implementation of the
agrarian reform program which is cognizable by the DAR Secretary. [62]
Notably, while the DAR Secretary has the competence and jurisdiction over respondents'
application for CARP exemption as expressed in DOJ Opinion No. 44, Series of 1990, it
must be pointed out that a separate case should nonetheless still be filed by respondents
(also before the DAR)[63] for the purpose of cancelling the EP and CLOA titles of the
affected tenants. This is because "[a]grarian reform beneficiaries or identified beneficiaries,
or their heirs in case of death, and/or their associations are indispensable parties in petitions
for cancellation"[64] of the EPs/CLOAs, or other title issued to them under any agrarian
reform program. Here, the DAR Secretary, in taking cognizance of respondents' application
for CARP exemption, made neither a determination of the FBs' individual rights nor any
declaration that specific TCTs were thereby cancelled. His resolution, which was affirmed
by the CA, was limited to the determination of whether or not the subject portions are
excluded from the coverage of the agrarian laws. As such, this case must only be confined to
such matter, and that a separate proceeding must still be initiated impleading individual FBs
to establish that the lands awarded to them fall within the excluded areas, warranting the
cancellation of their respective EP or CLOA titles.
C. LANDS ALREADY CLASSIFIED FOR RESIDENTIAL, COMMERCIAL OR
INDUSTRIAL USE IN TOWN PLANS AND ZONING ORDINANCES AS
APPROVED
BY THE HLURB AND ITS PRECURSOR AGENCIES PRIOR TO JUNE 15, 1988
ARE OUTSIDE THE COVERAGE OF THE AGRARIAN LAWS.
PD 27 covers private agricultural lands primarily devoted to rice and corn under a system of
sharecrop or lease-tenancy, whether classified as landed estate or not, while RA 6657 covers
all public and private agricultural lands as provided in Proclamation No. 131 and Executive
Order No. (EO) 229,[65] including other lands of the public domain suitable for agriculture,
regardless of tenurial arrangement and commodity produced. Conversely, lands not devoted
to agricultural activity, including lands previously converted/reclassified to non-agricultural
uses prior to the effectivity of RA 6657 by government agencies other than the DAR are
outside the coverage of the agrarian laws, [66] subject to the qualification that such conversion/
reclassification shall not operate to divest FBs of their rights over lands covered by PD 27
that have vested prior to June 15, 1988.[67]
AGRARIAN LAW
RECENT JURISPRUDENCE
DOJ Opinion No. 44, Series of 1990 recognized the authority of the HLURB, and its
precursor, the HSRC, to approve and/or promulgate zoning and other land use control
standards and guidelines which shall govern, among others, land use plans and zoning
ordinances of local government units. Thus, lands already classified as commercial,
industrial or residential before June 15, 1988 no longer need any conversion clearance
from the DAR in order to be exempt from CARP coverage.
D. AUTHORITY TO CLASSIFY LANDS.
Preliminarily, it must be pointed out that the classification of land as agricultural constitutes
a primary classification. Section 3,[68] Article XII of the Constitution provides for
the primary classification of lands of the public domain into agricultural, forest or timber,
mineral lands, and national parks. Under the Public Land Act, the responsibility
over primary classification of lands of the public domain is vested in the President who
exercises such power upon the recommendation of the Department of Environment and
Natural Resources[69] (DENR). By virtue of PD 705, [70] otherwise known as the "Revised
Forestry Code of the Philippines," the President delegated to the DENR Secretary, among
others, the power to classify unclassified lands of the public domain that are needed for
forest purposes as permanent forest to form part of the forest reserves. [71]
The same provision of the Constitution also provides that agricultural lands of the public
domain may be further classified according to the uses to which they may be devoted. This
further classification of agricultural lands is referred to as secondary classification.[72]
The authority to reclassify agricultural lands into residential, commercial or industrial is
lodged, among others, in cities and municipalities [73] (hereinafter, LGUs). Prior to the
passage of the present Local Government Code of 1991, LGUs already have the power to
reclassify agricultural into non-agricultural lands pursuant to Section 3 [74] of RA 2264,
[75]
 otherwise known as the "Local Autonomy Act of 1959," which empowered municipal
and/or city councils to adopt zoning and subdivision ordinances or regulations in
consultation with the National Planning Commission. When city/municipal councils approve
an ordinance delineating an area or district in their cities/municipalities as residential,
commercial, or industrial zone pursuant to the power granted to them under the aforesaid
provision, they are, at the same time, reclassifying any agricultural lands within the zone for
non-agricultural use; hence, ensuring the implementation of and compliance with their
zoning ordinances.[76] Pursuant to Letter of Instructions No. 729 dated August 9, 1978, LGUs
were further required to submit their existing land use plans, zoning ordinances, and
enforcement systems and procedures to the Ministry of Human Settlements for review,
evaluation and approval, which functions were eventually devolved upon the HSRC. [77]
E. APPLICATION TO THE CASE AT BAR.
In this case, the DAR Secretary excluded portions of the lands covered by TCT Nos. 164410
to 164415 (inclusive), 164417, and (164430) 422059[78] from CARP coverage on the basis of
their reclassification as forest conservation zones pursuant to HSRC Resolution No. 36,
Series of 1981, approving the LUP of Jalajala. On the other hand, the rest of the areas
applied for exemption were excluded from the CARP on the basis of their HSRC-approved
reclassification to agro-industrial, residential and institutional [79] under the LUP of Jalajala,
save for the 29.0981-ha. riceland portions of TCT Nos. 164417,[80] (164430) M-10897,[81] and
(164432) M-13551[82] that were found to be ricelands already covered by EPs.[83]
To recall, the CARP covers all public and private agricultural lands, as provided in
Proclamation No. 131 and EO 229, including other lands of the public domain suitable for
agriculture, regardless of tenurial arrangement and commodity produced. Section 3 (c) of
RA 6657, as amended defines agricultural land as referring to "land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest, residential commercial or
industrial land."[84] DAR AO No. 1, Series of 1990 [85] clarified this definition [86] of
"agricultural land" as follows:
Agricultural land refers to those devoted to agricultural activity as defined in RA 6657
and not classified as mineral or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies and not classified in town plans and
zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB)
9
and its preceding competent authorities prior to 15 June 1988 for residential, commercial
or industrial use.[87] (Emphases supplied)
It is discernible from the foregoing definition that in order to be not considered agricultural
land, and hence, not covered under the CARP, the land must not have been classified: (a) as
mineral or forest by the DENR and its predecessor agencies; and (b) for residential,
commercial or industrial use in town plans and zoning ordinances as approved by the
HLURB and its preceding competent authorities prior to June 15, 1988. Therefore, the forest
land referred to in Section 3 (c) of RA 6657, as amended is to be understood as referring to
forest land declared to be such by the DENR,  i.e., primary classification as forest,
and not its secondary classification by the LGUs. Consequently, reclassification by LGUs
of agricultural lands into "forest conservation zones," which is in the nature of a
secondary classification, does not have the effect of converting such lands into forest
lands as to be exempt from CARP coverage.[88]
In this case, the portions of the lands covered by TCT Nos. 164410 to 164415 (inclusive),
164417, and (164430) 422059 had been reclassified as forest conservation zones under the
HSRC-approved LUP of the Municipality of Jalajala. Thus, being covered by a secondary,
and not a primary, classification as above-discussed, these lands cannot be deemed as forest
lands for purposes of CARP exemption under Section 3 (c) of RA 6657, as amended.
Nonetheless, the Court cannot discount the possibility that the said lands classified as forest
conservation zones may fall within the exemptions and exclusions provided under Section
10 (a) of RA 6657 if they are actually, directly and exclusively used for parks, forest
reserves,[89] reforestation[90] or watersheds.[91] The said provision reads:
Section 10. Exemptions and Exclusions. —
(a) Lands actually, directly and exclusively used for parks, wildlife, forest
reserves, reforestation, fish sanctuaries and breeding
grounds, watersheds and mangroves shall be exempt from the coverage
of this Act. (Emphasis supplied)
Notably, DAR AO No. 13-90[92] provides for the rules and procedures governing exemption
of lands from CARP Coverage under Section 10 of RA 6657, as amended, and pertinently
states the guidelines to be observed in the application of the aforecited provision of law,
thus:
C. Lands which have been classified or proclaimed, and/or actually, directly and
exclusively used and found to be necessary for parks, wildlife, forest reserves, fish
sanctuaries and breeding grounds, and watersheds and mangroves shall be exempted from
the coverage of CARP until Congress, taking into account ecological, developmental and
equity considerations, shall have determined by law, the specific limits of public domain, as
provided for under Sec. 4 (a) of R.A. 6657, and a reclassification of the said areas or
portions thereof as alienable and disposable has been approved.
D. Lands which have been actually, directly and exclusively used and found to be necessary
for reforestation are likewise excluded and exempted from the coverage of the CARP,
provided that the areas or portions thereof occupied by qualified forest occupants shall
be included in the Integrated Social Forestry (ISF) program of DENR, if suitable.
(Emphases supplied)
Given that the status of the above-mentioned lands was not examined under the context of
Section 10 (a) of RA 6657, as amended, the Court finds that there is a need to  refer[93] the
matter to the Office of the DAR Secretary [94] for the purpose of determining whether or not
the same are actually, directly and exclusively used for parks, forest reserves, reforestation,
or watersheds as to be exempt from CARP coverage in accordance with Section 10 (a) of
RA 6657, as amended, pursuant to the guidelines set by DAR AO No. 13-90.
With respect to the lands covered by TCT Nos. 164414, 164415, 164416, 164417, and
(164430) 422059[95] which have been secondarily reclassified as agro-industrial, the Court
finds the DAR Secretary to have erred in excluding the same from the CARP pursuant to
Section 3 (c) of RA 6657, as amended. DOJ Opinion No. 67, Series of 2006[96] dated
September 25, 2006 provides that agro-industrial lands are within the ambit or coverage
of the definition of agricultural land under Section 3 (c) of RA 6657, as amended,
considering that: (a) they are neither included in the enumeration of exclusion provided in
the said definition nor mentioned under Section 10 [97] of the same law to be exempt from
CARP coverage; and (b) the legislative intent to include agro-industrial land within the
coverage of the agrarian reform program was specifically documented in the records of the
Philippine Senate.[98]
Moreover, Section 4 (d) of RA 6657, as amended provides that the law covers "[a]ll private
lands devoted to or suitable for agriculture regardless of the agricultural products raised or
that can be raised thereon." In Pasong Bayabas Farmers Association, Inc. v. CA,[99] it was
clarified that agricultural lands are only those lands which are arable or suitable lands
that do not include commercial, industrial, and residential lands. Thus, unless the agro-
industrial land is shown to be not arable, or is devoted to exempt activities such as
commercial livestock, poultry and swine raising, [100] fishpond and prawn farming,[101] cattle-
raising,[102] or other activities which do not involve the growing of crops and accordingly
reclassified therefor, the said land shall be within the coverage of the CARP.
Accordingly, only the exclusion of the portions of the lands covered by TCT Nos. 164416,
164417, 164418, 164419, 164420, and (164432) M-13551 which have been reclassified
as residential or institutional per the HSRC-approved LUP of Jalajala should be upheld since
lands reclassified as non-agricultural prior to the effectivity of RA 6657 by government
agencies other than the DAR are outside CARP coverage.[103]
However, it bears to stress that while DAR AO No. 6, Series of 1994 declares that the
reclassification of lands to non-agricultural uses shall not operate to divest FBs of their rights
over lands covered by PD 27, such rights must have vested prior to June 15, 1988.
[104]
 Notably, the reclassification of the subject lands in 1981 came prior to the issuance and
registration of EPs[105] and CLOAs[106] in favor of the FBs between October 24, 1988 and
October 27, 1995, and way before the issuance of the January 14, 1986 memorandum of the
President directing the issuance of EPs to the FBs of the OLT program pursuant to which
EPs were issued to individual FBs. Since the rights and responsibilities of beneficiaries shall
only commence from their receipt of duly registered EPs [107] or CLOAs,[108] undeniably, no
vested rights had accrued in favor of the concerned FBs prior to the reclassification of the
subject lands. Hence, the affected FBs cannot invoke the issuance of EP and CLOA titles in
their favor as a bar to the exemption case.
In sum, the Court finds that the CA committed reversible error in upholding the DAR
Secretary's ruling excluding: (a) portions of the lands covered by TCT Nos. 164410 to
164415 (inclusive), 164417 and (164430) 422059 on the basis of their HSRC-approved
reclassification as forest conservation zone since only forest lands primarily classified by the
DENR are exempt from CARP coverage pursuant to Section 3 (c) of RA 6657, as amended;
and (b) portions of the lands covered by TCT Nos. 164414, 164415, 164416, 164417, and
(164430) 422059 on the basis of their secondary  reclassification as agro-industrial since
agro-industrial lands are within the ambit or coverage of the definition of agricultural land,
and as such, covered by the CARP. However, anent the lands in item (a), they may
nonetheless be exempt from CARP coverage if they are actually, directly and exclusively
used for parks, forest reserves, reforestation, or watersheds under Section 10 (a) of RA 6657,
as amended upon determination of the Office of the DAR Secretary.
On the other hand, the Court finds the CA to have correctly affirmed the exclusion of the
portions of the lands covered by TCT Nos. 164416, 164417, 164418, 164419, 164420, and
(164432) M-13551 which have been reclassified as residential or institutional.
Nonetheless, before the application for exemption may be completely granted, payment
of disturbance compensation to any affected tenants of the properly excluded
portions — herein limited to the residential or institutional lands covered by TCT Nos.
164416, 164417, 164418, 164419, 164420, and (164432) M-13551 per the HSRC-approved
LUP of Jalajala — must first be made.[109] This is because once a leasehold relationship is
established, the agricultural lessee is entitled to security of tenure and acquires the right to
continue working on the landholding until such leasehold relation is extinguished, [110] and
he/she is validly dispossessed thereof for cause, among others, the reclassification of the land
into residential, commercial, industrial or some other urban purposes is upheld in a final and
executory Court judgment, thereby entitling him to disturbance compensation. [111] In
addition, the usufructuary rights of the affected FBs over their awarded lands shall not be
AGRARIAN LAW
RECENT JURISPRUDENCE
diminished[112] pending the cancellation of their EP and CLOA titles in the proper
proceedings.
Finally, contrary to petitioners' claim, the fact that Juliana had previously voluntarily offered
to sell the subject lands to the DAR is inconsequential and is not a bar to the exemption case.
It is settled that lands previously converted to non-agricultural uses/reclassified as non-
agricultural prior to the effectivity of RA 6657 by government agencies other than the DAR
are outside CARP coverage. [113].The basis for the exemption is not the withdrawal of the
voluntary offer for sale (VOS) but the reclassification of the lands prior to June 15, 1988.
[114]
 This being the case, Juliana's previous VOS was ineffective because the subject lands
cannot be the subject of the same, they being clearly beyond CARP coverage.[115] While
the DAR subsequently issued DAR AO No. 09-90 [116] (now DAR AO No. 07-11 [117]),
providing that "[a] 11 lands which are voluntarily offered for sale to the government, except
lands within the retention limits, may no longer be withdrawn and shall immediately fall
under Phase I, as provided for in Section 7 of RA 6657," [118] the same was not yet in effect at
the time the VOS was made on March 13, 1989.[119]
WHEREFORE, the petition is DENIED. The Decision dated February 20, 2017 of the
Court of Appeals in CA-G.R. SP No. 108543 is hereby MODIFIED, thereby PARTIALLY
APPROVING the Application for Exemption Clearance from CARP Coverage only with
respect to the portions of the parcels of land covered by Transfer Certificates of Title (TCT)
Nos. 164416, 164417, 164418, 164419, 164420, and (164432) M-13551 in the name of
Juliana Maronilla, located in Bagumbong, Jalajala, Rizal, which have been reclassified as
residential and institutional. The issuance of the Exemption Clearance from CARP Coverage
for the aforementioned lands is subject to the payment of disturbance compensation set by
the Secretary of the Department of Agrarian Reform (DAR) in accordance with existing
DAR administrative rules. Accordingly, the records of this case are hereby REMANDED to
the Office of the DAR Secretary for proper disposition in accordance with this Decision.
Meanwhile, the matter of determining whether or not the portions of the lands covered by
TCT Nos. 164410 to 164415 (inclusive), 164417, and (164430) 422059 are actually, directly
and exclusively used for parks, forest reserves, reforestation, or watersheds as to be
exempt/excluded from CARP coverage under Section 10 (a) of Republic Act No. 6657, as
amended, is REFERRED to the Office of the DAR Secretary for proper disposition in
accordance with DAR Administrative Order No. 13-90.
SO ORDERED.
Secretary of DAR v. Heirs of Redemptor and Elisa Abucay, March 12, 2019
The Petitions are granted.
I [certificate of land ownership award] already registered with the Land Registration
[58]
It is settled that the Regional Trial Courts, sitting as special agrarian courts,  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
10
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 protection[65] and social justice provisions of the Constitution.[66]
II
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
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.
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 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.
WHEREFORE, the Petitions for Review on Certiorari are GRANTED. The September 26,
2008 Decision of the Court of Appeals in CA-G.R. CEB-SP No. 02637, the May 10, 2006
Decision and February 27, 2007 Resolution of the Department of Agrarian Reform
Adjudication Board in DARAB Case No. 13978, and the June 16, 2005 Decision of the
Regional Agrarian Reform Adjudicator in DARAB Case No. R-0800-0015-04 are all SET
ASIDE. The Complaint for cancellation of original certificates of title and emancipation
patents dated April 26, 2004 is REFERRED to the Office of the Provincial Agrarian
Reform Adjudicator of Leyte for case buildup and decision by the Department of Agrarian
Reform Secretary.
SO ORDERED.
AGRARIAN LAW
RECENT JURISPRUDENCE
Land Bank v. Franco, March 12, 2019
Agrarian Reform, as subsumed under social justice in this jurisdiction, is enshrined in the
Constitution:
AGRARIAN AND NATURAL RESOURCES REFORM
SECTION 4. The State shall, by law, undertake an agrarian reform program founded on the
right of farmers and regular farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity considerations,
and subject to the payment of just compensation. In determining retention limits, the State
shall respect the right of small landowners. The State shall further provide incentives for
voluntary land-sharing.[40] (Emphasis supplied)
Several laws were enacted to ensure that the State's policy toward agrarian reform is
properly carried out. These laws are outlined in Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform:[41]
R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been
enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by P.D. No. 27, which
was promulgated on October 21, 1972, along with martial law, to provide for the
compulsory acquisition of private lands for distribution among tenant-farmers and to specify
maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the thrust
for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No.
228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing
for the valuation of still unvalued lands covered by the decree as well as the manner of their
payment. This was followed on July 22, 1987 by Presidential Proclamation No. 131,
instituting a comprehensive agrarian reform program (CARP), and E.O. No. 229, providing
the mechanics for its implementation.[42]
In 1988, the Congress enacted the Comprehensive Agrarian Reform Law, which further
strengthened the State's policy toward agrarian reform. [43] The law provided an exact
definition of the phrase "agrarian reform," thus:
Agrarian Reform means the redistribution of lands, regardless of crops or fruits produced to
farmers and regular farmworkers who are landless, irrespective of tenurial arrangement, to
include the totality of factors and support services designed to lift the economic status of the
beneficiaries and all other arrangements alternative to the physical redistribution of lands,
such as production or profit-sharing, labor administration, and the distribution of shares of
stocks, which will allow beneficiaries to receive a just share of the fruits of the lands they
work.[44]
In light of these developments, Batas Pambansa Blg. 129, or the Judiciary Reorganization
Act of 1980, vested in regional trial courts exclusive and original jurisdiction of civil actions
and special proceedings under the exclusive and original jurisdiction of the courts of
agrarian relations.[45] Section 56,[46] in relation to Section 57[47] of the Comprehensive
Agrarian Reform Law, confers "special jurisdiction" on special agrarian courts.
Regional trial courts, sitting as special agrarian courts, have original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners, as
well as the prosecution of all criminal offenses under the Comprehensive Agrarian Reform
Law.[48] In contrast to the special agrarian courts, the Department of Agrarian Reform
Adjudication Board only has preliminary administrative determination of just compensation.
[49]
11
Just compensation is "the full and fair equivalent of the property taken from its owner by the
expropriator."[50] The measure of the taking "is not the taker's gain but the owner's
loss."[51] The term "just" intensifies the term "compensation" to obtain a real, substantial, full,
and ample equivalent for the property taken. [52] The jurisdiction of the trial courts, sitting as
special agrarian courts, is "not any less 'original' and 'exclusive'" [53] because the Department
of Agrarian Reform passes upon the question of just compensation first. [54] "[judicial
proceedings are not a continuation of the administrative determination ... the law may
provide that the decision of the [Department of Agrarian Reform] is final and unappealable.
Nevertheless, resort to the courts cannot be foreclosed on the theory that courts are the
guarantors of the legality of administrative action." [55]
This Court has long held that settlement of the value of just compensation is judicial in
nature.
In Export Processing Zone Authority v. Dulay,[56] this Court categorically held that the
determination of just compensation is a judicial function:
The determination of "just compensation" in eminent domain cases is a judicial function.
The executive department or the legislature may make the initial determinations but when a
party claims a violation of the guarantee in the Bill of Rights that private property may not
be taken for public use without just compensation, no statute, decree, or executive order can
mandate that its own determination shall prevail over the court's findings. Much less can the
courts be precluded from looking into the "just-ness" of the decreed compensation. [57]
In Heirs of Lorenzo and Carmen Vidad,[58] this Court reaffirmed the judicial determination of
just compensation:
LBP's valuation of lands covered by the CARP Law is considered only as an initial
determination, which is not conclusive, as it is the RTC, sitting as a SAC, that could make
the final determination of just compensation, taking into consideration the factors
enumerated in Section 17 of RA 6657 and the applicable DAR regulations. LBP's valuation
has to be substantiated during an appropriate hearing before it could be considered sufficient
in accordance with Section 17 of RA 6657 and the DAR regulations.[59] (Citation omitted)
Moreover, in Land Bank of the Philippines v. Montalvan,[60] this Court ruled on the finality
of the Special Agrarian Court's jurisdiction as provided for under Section 57 of Republic Act
No. 6657:
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners." This "original and exclusive" jurisdiction of the RTC would be undermined if
the DAR would vest in administrative officials (sic) original jurisdiction in compensation
cases and make the RTC an appellate court for the review of administrative decisions. Thus,
although the new rules speak of directly appealing the decision of adjudicators to the RTCs
sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive
jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to
the adjudicators and to convert the original jurisdiction of the RTCs into appellate
jurisdiction would be contrary to Sec. 57 and therefore would be void.[61] (Emphasis omitted)
A statute's provisions should be read in its entirety. [62] Section 57 of the Comprehensive
Agrarian Reform Law, on the exclusive and original jurisdiction of special agrarian courts,
must be read with Section 16(f), which provides that:
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.
(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. (Emphasis supplied)
The use of the word "final" makes the intent of the law clear. Special agrarian courts are not
merely given appellate jurisdiction over the findings of administrative agencies. The law has
explicitly vested them with jurisdiction to make a final and binding determination of just
compensation.[63]
The previous Section 17[64] of Republic Act No. 6657 identifies the factors to be considered
for the determination of just compensation:
SECTION 17. Determination of Just Compensation. — In determining just compensation,
the cost of acquisition of the land, the current value of like properties, its nature, actual use
and income, the sworn valuation by the owner, the tax declarations, and the assessment
made by government assessors shall be considered. The social and economic benefits
contributed by the farmers and the farmworkers and by the Government to the property as
well as the 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.
(Emphasis supplied)
To implement Section 17, Administrative Order No. 5[65] provided the following formula:
There shall be one basic formula for the valuation of lands covered by VOS [66] or CA:[67]
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
AGRARIAN LAW
RECENT JURISPRUDENCE
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 the three factors are present, relevant, and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV = MV x 2
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 claimfolder.
A.4 When the land planted to permanent crops is not yet productive or not yet fruit-bearing
at the time of Field Investigation (FI), the land value shall be equivalent to the value of the
land plus the cumulative development cost (CDC) of the crop from land preparation up to
the time of FI. In equation form:
LV = (MV x 2) + CDC
where:
1. MV to be used shall be the applicable UMV classification of idle land.
2. CDC shall be grossed-up from the date of FI up to the date of LBP Claim Folder (CF)
receipt for processing but in no case shall the grossed-up CDC exceed the current CDC data
based on industry.
In case the CDC data provided by the landowner could not be verified, DAR and LBP shall
secure the said data from concerned agency/ies or, in the absence thereof, shall establish the
same.
In no case, however, shall the resulting land value exceed the value of productive land
similar in terms of crop and plant density within the estate under consideration or within the
12
same barangay or municipality (in that order) approved by LBP within one (1) year from A.9 The basic formula in the grossing-up of valuation inputs such as LO's Offer, Sales
receipt of CF. Transaction (ST), Acquisition Cost (AC), Market Value Based on Mortgage (MVM) and
Market Value per Tax Declaration (MV) shall be:
In case where CS is relevant or applicable, the land value shall be computed in accordance Grossed-up Valuation Input = Valuation Input x Regional Consumer Price Index (RCPI)
with Item II.A.2 where MV shall be based on the lowest productivity classification of the Adjustment Factor
land.
The RCPI Adjustment Factor shall refer to the ratio of the most recent available RCPI for the
A.5 When the land is planted to permanent crops introduced by the farmer-beneficiaries month issued by the National Statistics Office as of the date when the CF was received by
(FBs) which are not yet productive or not yet fruit-bearing, the land value shall be computed LBP from DAR for processing and the RCPI for the month as of the
by using the applicable UMV classification of idle land. In equation form: date/effectivity/registration of the valuation input. Expressed in equation form:
LV = MV x 2 Most Recent RCPI for the Month
as of the
Date of Receipt of CF by LBP
In no case, however, shall the resulting land value exceed the value of productive land from DAR
similar in terms of crop and plant density within the estate under consideration or within the RCPI
____________________________
same barangay or municipality (in that order) approved by LBP within one (1) year from Adjustmen
____
receipt of CF. t Factor =
In case where CS is relevant or applicable, the land value shall be computed in accordance RCPI for the Month Issued as of
with Item II.A.2 where MV shall be based on the applicable classification of idle land. the
  Date/Effectivity/Registration of
the
A. 6 The value of lands planted to permanent crops which are no longer productive or ready Valuation Input
for cutting shall be determined by using the applicable UMV classification of idle land plus
the salvage value of the standing trees at the time of the FI. In equation form:
B. Capitalized Net Income (CNI) — This shall refer to the difference between the gross sales
LV = (MV x 2) + Salvage Value (AGP x SP) and total cost of operations (CO) capitalized at 12%.
In no case, however, shall the resulting land value exceed the value of productive land Expressed in equation form:
similar in terms of crop and plant density within the estate under consideration or within the
same barangay or municipality (in that order) approved by LBP within one (1) year from
receipt of CF.
  (AGP x SP) - CO
CNI
In case where CS is relevant or applicable, the land value shall be computed in accordance ______________
=
with Item II.A.2 where MV shall be based on the lowest productivity classification of the
land.
  0.12
A. 7 In all of the above, the computed value using the applicable formula shall in no case Where:
exceed the LO's offer in case of VOS.
CNI Capitalized Net Income
The LO's offer shall be grossed up from the date of the offer up to the date of receipt of CF =
by LBP from DAR for processing.
   
A. 8 For purposes of this Administrative Order, the date of receipt of CF by LBP from DAR
shall mean the date when the CF is determined by the LBP-LVLCO to be complete with all AGP Annual Gross Production corresponding to the latest available 12-months' gross
the required documents and valuation inputs duly verified and validated, and ready for final = production immediately preceding the date of FI.
computation/processing.
   
Should LBP need any of the documents listed under Paragraph C, Annex B of DAR
Administrative Order No. 1, Series of 1993, as amended by DAR Administrative Order No. SP = The average of the latest available 12-months' selling prices prior to the date of receipt
2, Series of 1996, to facilitate processing under Paragraph IV, Step 14 to 17, of the same of the CF by LBP for processing, such prices to be secured from the Department of
Order, the DAR shall assist the LBP in securing the same. Agriculture (DA) and other appropriate regulatory bodies or, in their absence, from the
AGRARIAN LAW
RECENT JURISPRUDENCE
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 Rate[68] (Emphasis supplied)
= be removed from the realities that confront the entire government bureaucracy and, in so
Administrative Order No. 5 provides a comprehensive formula that considers several factors
present in determining just compensation.
However, as this Court held in Apo Fruits Corporation and Hijo Plantation, Inc. v. The
Honorable Court of Appeals and Land Bank of the Philippines,[69] and Export Processing
Zone Authority,[70] it is not adequate to merely use the formula in an administrative order of
the Department of Agrarian Reform or rely on the determination of a land assessor to show a
final determination of the amount of just compensation. Courts are still tasked with
considering all factors present, which may be stated in formulas provided by administrative
agencies.
In Land Bank v. Yatco Agricultural Enterprises[71] this Court held that when acting within the
bounds of the Comprehensive Agrarian Reform Law, special agrarian courts "are not strictly
bound to apply the [Department of Agrarian Reform] formula to its minute detail,
particularly when faced with situations that do not warrant the formula's strict application;
they may, in the exercise of their discretion, relax the formula's application to fit the factual
situations before them."[72]
In Apo Fruits Corporation v. Land Bank,  this Court held that Section 17 of the
[73]
Comprehensive Agrarian Reform Law merely provides for guideposts to ascertain the value
of properties. Courts are not precluded from considering other factors that may affect the
value of property.[74]
While administrative issuances are entitled to great respect, their application must always be
in harmony with the law they seek to interpret. In Land Bank v. Obias:[75]
[A]dministrative issuances or orders, though they enjoy the presumption of legalities, are
still subject to the interpretation by the Supreme Court pursuant to its power to interpret the
law. While rules and regulation[s] issued by the administrative bodies have the force and
effect of law and are entitled to great respect, courts interpret administrative regulations in
harmony with the law that authorized them and avoid as much as possible any construction
that would annul them as invalid exercise of legislative power.[76] (Emphasis supplied,
citation omitted)
Thus, while the formula prescribed by the Department of Agrarian Reform requires due
consideration, the determination of just compensation shall still be subject to the final
decision of the special agrarian court. Most recently, in Alfonso v. Land Bank:[77]
For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for
the DAR's expertise as the concerned implementing agency, courts should henceforth
consider the factors stated in Section 17 of RA 6657, as amended, as translated into the
13
applicable DAR formulas in their determination of just compensation for the properties
covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict
application of said formulas is not warranted under the specific circumstances of the case
before them, they may deviate or depart therefrom, provided that this departure or deviation
is supported by a reasoned explanation grounded on the evidence on record. In other words,
courts of law possess the power to make a final determination of just compensation.
[78]
 (Citation omitted)
The special agrarian court sitting in a condemnation action may adopt the value computed
using the guidelines promulgated by the Department of Agrarian Reform. In its exercise of
original jurisdiction, the special agrarian court may deviate from the formulas if it can show
that the value is not equivalent to the fair market value at the time of the taking. However, an
allegation is not enough. The landowner must allege and prove why the formula provided by
the Department of Agrarian Reform does not suffice.
Nonetheless, having original and exclusive jurisdiction does not mean that our courts should
doing, become impervious to the guidelines issued by our administrative agencies.
In  Land Bank v. Palmares,[79] this Court affirmed the validity of the basic formula developed
by the Department of Agrarian Reform. There, the respondents voluntarily offered their
19.98-hectare agricultural land for sale to the government under the agrarian reform
program. The Department of Agrarian Reform offered P440,355.92 as just compensation,
which the respondents rejected. Thus, the Department of Agrarian Reform Adjudication
Board commenced summary proceedings to determine just compensation. It resolved to
adopt the Land Bank's valuation, which prompted the respondents to file a petition to
determine just compensation before the Regional Trial Court of Iloilo City, sitting as the
Special Agrarian Court.
After the trial court had ordered a re-computation, Land Bank arrived at the amount of
P503,148.97. With the respondents still rejecting the amount, the trial court made its own
computation of just compensation by averaging the price of the land per hectare, as
computed based on the Department of Agrarian Reform guidelines and the market value of
the land per hectare as shown in the 1997 tax declaration covering the property. It arrived at
the amount of P669,962.53, which would later be upheld by the Court of Appeals.
However, this Court reversed the judgments, finding that the trial court's computation was
against the mandate of the law. It first discussed Section 17 of the Comprehensive Agrarian
Reform Law, which enumerated the factors for determining just compensation. [80] It then
declared that the Department of Agrarian Reform, in accordance with its rule-making power,
translated these factors into a basic formula:
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[81]
Still in  Palmares, this Court found that the Land Bank had already factored in the property's
market value as appearing in the 1995 tax declaration in computing the value of just
compensation. By averaging the price of the land, as computed based on the Department
guidelines, and the land's market value as appearing in the 1997 tax declaration, the special
agrarian court did a "double take up" of the market value per tax declaration of the property.
Such double take up, this Court held, destroyed the affordability of the land to the farmer-
beneficiaries. In the end, the case was ordered remanded to the trial court for a re-
computation of the just compensation, per Section 17 and the Department of Agrarian
Reform's applicable administrative orders.
The validity of the Department of Agrarian Reform's basic formula in determining just
compensation was affirmed in Land Bank v. Hababag, Sr.[82] There, this Court affirmed the
Court of Appeals' computation for adhering to the basic formula. It set aside the special
agrarian court's computation for having been arrived at using the income productivity
approach, which it found to be "off-tangent with the governmental purpose behind the
acquisition of agricultural lands."[83] This Court explained:
[C]ase law states that agricultural lands are not acquired for investment purposes but for
redistribution to landless farmers in order to lift their economic status by enabling them to
own directly or collectively the lands they till or to receive a just share of the fruits thereof.
In this regard, farmer-beneficiaries are not given those lands so they can live there but so that
they can till them. Since they generally live on a hand-to-mouth existence, their source of
repaying the just compensation is but derived out of their income from their cultivation of
the land. Hence, in order to be just, the compensation for the land must be what the farmer-
beneficiaries can reasonably afford to pay based on what the land can produce. It would
therefore be highly inequitable that in the 30-year allowable period to pay the annual
amortizations for the lands, farmer-beneficiaries would be required to pay for the same
income they expect to earn therefrom on top of the computed market value of the
landholdings. Such could not have been the intent of the State's agrarian reform program. In
fine, the Court cannot sustain the RTC's application of the Income Productivity Approach
used as one of its bases in arriving at its decreed valuation. Not only is the same aversive to
the jurisprudential concept of "market value," but it also deviates from the factors laid down
in Section 17 of RA 6657 and thus, remains legally baseless and unfounded. [84] (Citations
omitted)
Here, the Special Agrarian Court found that a slight deviation was in order. It held that there
were other factors present that must also be taken into account, deeming petitioner's
valuation to be "unrealistically low":
[T]he Court finds the total valuation by the LBP and the DAR in the amount of P739,461.43
to be unrealistically low and therefore is not the just compensation of the subject lot. On the
other hand, the valuation of the petitioners is likewise cumbersomely high for the
government and the farmer-beneficiaries considering that the valuation of P300,000.00 per
hectare they initially asked in 1998 were based only on assumptions of facts unsupported by
credible evidence. This offer of P300,000.00 was reiterated by Mr. Gustilo during the
hearing and clearly, this offer is based on his own declarations but this was not adequately
substantiated and therefore inconclusive. Thus, the Court in the exercise of its judicial
prerogatives, must consider the needs of both parties and should be guided by several factors
in order to arrive at a just compensation which is fair, reasonable and acceptable to the
parties.[85]
The Special Agrarian Court proceeded to compute just compensation according to the
factors in Administrative Order No. 5 and the market value of the property as shown in the
tax declarations:
Thus, in determining just compensation, the Court will take into consideration the factors,
like the price set by the plaintiffs when they first offered the subject land for voluntary
acquisition (P300,000.00 per hectare; Date of Offer - January 30, 1995) and those provided
under Section 17 of R.A. 6657, to wit: a) the cost of acquisition of the land; b) the current
value of like properties; c) the sworn valuation by the owner; d) the tax declarations and
assessments; e) the assessments made by government assessors; f) the social and economic
benefits contributed by the farmers and the farm workers and by the government to the
property; and g) the non-payment of taxes or loans secure from any government financing
institution on the said land.
AGRARIAN LAW
RECENT JURISPRUDENCE
The petitioners herein presented the four (4) Tax Declarations for 1996 of the subject lots
wherein the assessor fixed the market value per hectare of the bamboo land at P45,200.00
(total area - 0.5000 Has.); for rice land irrigated at P60,830.00 (total area- 1.5716 hectares);
for coconut land at P45,000.00 (total area - 0.2000 hectares); and for sugar land at
P122,000.00 (total area - 8.2318 hectares) or a total market value of P1,131,479.60.
Although the market value appearing in the tax declaration is usually lower than the actual
value of the property, the court will consider the said amount since no evidence was
presented by the plaintiffs to prove a higher amount.
In evaluating the subject lot in the case at bar, the Court will take into account the amount of
P31,789.80 per hectare of bamboo land consisting of 0.4855 hectares; P59,871.97 per
hectare of rice unirrigated consisting of 8.9920 hectare[s]; and P59,502.19 per hectare of rice
unirrigated consisting of 3.1202 hectares, which was arrived at using the mathematical
formula provided under DAR Administrative Order No. 5, Series of 1998 and the market
value of the property as shown in the tax declarations which are as follows: for bamboo land
consisting of 0.5000 hectares, the market value is P22,600.00; for coconut land consisting of
0.2000 hectares, the market value is P9,000.00; for rice irrigated consisting of 1.5716
hectares, the market value is P95,600.00 per hectare; and for sugar land consisting of 8.2318
hectares, the market value is P1,004,279.60 or a total market value of P1,131,479.60. The
average of these amounts will be considered the just compensation of the subject lot. Such
method of valuation is intended to take into account all the factors previously
discussed. Therefore, the average of these two figures will result in the following valuation
per hectare:
Area Actually
  Per Hectare Value
Taken
       
Bambooland P38,494.50 0.4855 Has. P18,689.08
 
Rice unirrigated P90,935.96 8.9920 Has. 817,696.15
 
Rice unirrigated P60,166.10 3.1202 Has. 187,730.26
    [12.5977] has. P1,024,118.49
From the foregoing computations, this Court finds and so hold (sic) that the just
compensation or land value of the subject lot located at Brgy. Maquina, Dumangas, Iloilo
covered by TCT Nos. T-62209, T-622010, T-62212 and T-51376 and registered in the name
of Lucy Grace Franco married to Jose Mandoriao, Jr. and Elma Gloria Franco is
P1,024,115.40 for the 12.5977 hectares actually taken by the government and transferred in
favor of the qualified farmer-beneficiaries.[86] (Emphasis supplied)
As this Court held in Alfonso v. Land Bank, any deviation to the basic formula made in the
exercise of judicial discretion must be "supported by a reasoned explanation grounded on the
evidence on record."[87] A computation by a court made in "utter and blatant disregard of the
factors spelled out by law and by the implementing rules" [88] amounts to grave abuse of
discretion. It must be struck down.
14
Here, the Special Agrarian Court's computation of just compensation resulted in a "double
take up" of the market value per tax declaration of the property. This method of valuation
has already been considered in Palmares as a departure from the mandate of law and basic
administrative guidelines.
II
The five percent (5%) cash incentive under Section 19, in relation to Section 18 of the
Comprehensive Agrarian Reform Law, is not in addition to the amount of just compensation
awarded by the courts. The incentive only applies to the cash payment to be awarded.
Section 19 provides:
SECTION 19. Incentives for Voluntary Offers for Sale. — Landowners, other than banks
and other financial institutions, who voluntarily offer their lands for sale shall be entitled to
an additional five percent (5%) cash payment. (Emphasis supplied)
It is elementary that a statutory provision must be construed in relation to other parts of the
statute.[89] Thus, Section 19 should be read in connection with Section 18, which provides:
SECTION 18. Valuation and Mode of Compensation. — The LBP shall compensate the
landowner in such amounts as may be agreed upon by the landowner and the DAR and the
LBP, in accordance with the criteria provided for in Sections 16 and 17 and other pertinent
provisions hereof, or as may be finally determined by the court, as the just compensation for
the land.
The compensation shall be paid in one of the following modes, at the option of the
landowner:
(1) Cash payment, under the
following terms and conditions;
a) For lands above fifty —  Twenty-five percent fifty (50) hectares, insofar (25%)
(50) hectares, insofar as cash, the balance to be paid in government financial
the excess hectarage is instruments negotiable at any time.
concerned.
(a) For lands above— Thirty percent (30%) cash, the balance to be paid in
twenty-four (24) government financial instruments negotiable at any time.
hectares and up to fifty
(50) hectares.
(c) For lands twenty- — Thirty-five percent (35%) cash, the balance to be paid in
four (24) hectares and government financial instruments negotiable at any time.
below.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares,
physical assets or other qualified investments in accordance with guidelines set by the
PARC;
   
(3) Tax credits which can be used against any tax liability;
   
(4) LBP bonds, which shall have the following features:
  (a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the
face value of the bonds shall mature every year from the date of issuance until the
tenth (10th) year: Provided, That should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid correspondingly in LBP bonds;
     
  (b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his
successors in interest or his assigns, up to the amount of their face value, for any of
the following:
 
  (i) Acquisition of land or other real properties of the government, including assets
under the Asset Privatization Program and other assets foreclosed by government
financial institutions in the same province or region where the lands for which the
bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or controlled corporations or
shares of stocks owned by the government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused
persons, or performance bonds;
(iv) Security for loans with any government financial institution, provided the
proceeds of the loans shall be invested in an economic enterprise, preferably in a
small- and medium-scale industry, in the same province or region as the land for
which the bonds are paid;
(v) Payment for various taxes and fees to government; Provided, That the use of
these bonds for these purposes will be limited to a certain percentage of the
outstanding balance of the financial instruments: Provided, further, That the PARC
shall determine the percentage mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder in
government universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in
government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
In case of extraordinary inflation, the PARC shall take appropriate measures to protect the
economy. (Emphasis supplied)
Meanwhile, Article XIII, Section 8 of the Constitution provides:
AGRARIAN LAW
RECENT JURISPRUDENCE
SECTION 8. The State shall provide incentives to landowners to invest the proceeds of the
agrarian reform program to promote industrialization, employment creation, and
privatization of public sector enterprises. Financial instruments used as payment for their
lands shall be honored as equity in enterprises of their choice.
Aside from cash payment, the Comprehensive Agrarian Reform Law provides for three (3)
more modes of payment. Section 19 must be interpreted to mean that while the additional
five percent (5%) cash payment is an incentive to owners-sellers to expedite the agrarian
reform program, the incentive given to these land owners should not be to the detriment of
the government.
If, as respondents have argued, the additional five percent (5%) is indeed to be paid on top of
the awarded just compensation for the property, then the law would not have put "cash"
before "payment" in Section 19, in turn modifying the kind of payment to be given to the
owners-sellers.
The landowner shall receive 35% of the just compensation in cash, while the remaining 65%
shall be paid in bonds if the aggregate area acquired by the Department of Agrarian Reform
is below 24 hectares. However, if the landowner voluntarily offers their land to the
Department of Agrarian Reform, as in this case, the landowner shall be entitled to an
additional five percent (5%) only on the cash portion. Therefore, instead of receiving only
35% in cash, the landowner shall now receive 40% in cash and 60% in bonds.
WHEREFORE, the Petition is GRANTED. The Court of Appeals January 20, 2011
Decision and August 8, 2012 Resolution in CA-G.R. SP. No. 03225, which affirmed with
modification the September 18, 2007 Decision of the Regional Trial Court, Branch 34, Iloilo
City, sitting as Special Agrarian Court in Civil Case No. 00-26367, are REVERSED AND
SET ASIDE.
The just compensation to be paid to respondents Lucy Grace Franco and Elma Gloria Franco
is Seven Hundred Thirty-Nine Thousand Four Hundred Sixty-One Pesos and Forty-Three
Centavos (P739,461.43), as computed by petitioner Land Bank of the Philippines and the
Department of Agrarian Reform with legal interest of twelve percent (12%) from the time of
taking until June 30, 2013, and legal interest of six percent (6%) from July 1, 2013 until its
full satisfaction.[90]
SO ORDERED.
Padillo v. Villanueva, October 3, 2018
The issue for this Court's resolution is whether or not the Department of Agrarian Reform
may cancel the registered Certificates of Land Ownership Award or Transfer Certificates of
Title four (4) years after their issuance.
The Petition is denied.
A certificate of land ownership award is evidence of the award of a public land by the
Department of Agrarian Reform to the beneficiary under Republic Act No. 6657. [50] Upon its
registration, the subject land is placed under the operation of the Torrens system. [51]
Well-settled is the rule that certificates of title emanating from the grant of public land in an
administrative proceeding enjoy the same protection as those issued in registration
proceedings. This Court affirms the Court of Appeals in ruling that "a certificate of land
ownership award becomes indefeasible and incontrovertible upon the expiration of one year
from the date of registration with the Office of the Registry of Deeds." [52]
In Lahora, et al. v. Dayanghirang, Jr., et. al.,  this Court held:
[53]
15
The rule in this jurisdiction, regarding public land patents and the character of the certificate
of title that may be issued by virtue thereof, is that where land is granted by the government
to a private individual, the corresponding patent therefor is recorded, and the certificate of
title is issued to the grantee; thereafter, the land is automatically brought within the operation
of the Land Registration Act, the title issued to the grantee becoming entitled to all the
safeguards provided in Section 38 of the said Act. In other words, upon expiration of one
year from its issuance, the certificate of title shall become irrevocable and indefeasible like a
certificate issued in a registration proceeding. [54]
This was reiterated in Estribillo v. Department of Agrarian Reform,[55] where this Court
declared that the emancipation patents or certificates of land ownership award under
Republic Act No. 6657 are "in themselves, entitled to be as indefeasible as certificates of
title issued in registration proceedings."[56]
However, the Court of Appeals erred in its Decision to reinstate the March 15, 2007
Decision of the Provincial Agrarian Reform Adjudicator. Regional Director Arsenal acted
without jurisdiction in rendering his September 30, 2003 Order. Thus, all subsequent
proceedings are void for lack of jurisdiction.
Similar to a certificate of title issued in registration proceedings, the registration of a
certificate of land ownership award places the subject land under the operation of the
Torrens system.[57] Once under the Torrens system, a certificate of land ownership award or
certificate of title issued may only be attacked through a direct proceeding before the court.
Under Section 48 of Presidential Decree No. 1529, or the Property Registration Decree:
SECTION 48. Certificate Not Subject to Collateral Attack. - A certificate of title shall not be
subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct
proceeding in accordance with law.
An attack is collateral when "it incidentally questions the validity of the transfer certificate
of title in an action seeking a different relief." [58] A direct attack is an action that annuls the
title itself.[59]
In De Pedro v. Romasan Development Corporation,[60] this Court explained:
An action for annulment of certificate of title is a direct attack on the title because it
challenges the judgment decree of title.
In Goco v. Court of Appeals, this court said that "[a]n action for annulment of certificates of
title to property [goes] into the issue of ownership of the land covered by a Torrens title and
the relief generally prayed for by the plaintiff is to be declared as the land's true
owner."[61] (Citations omitted)
Thus, under Section 48 of Presidential Decree No. 1529, a registered certificate of land
ownership award may be altered, modified, or canceled only through an action for
annulment of the certificate itself.
Under Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980, an action for
annulment of a registered certificate of land ownership award, like the annulment of a
certificate of title, involves title to or possession of real property or any interest therein. This
falls under the exclusive original jurisdiction of either the Regional Trial Court [62] or the
Municipal Trial Court,[63] depending on the assessed value.
In this case, the lots were already covered by Certificates of Land Ownership Award
registered with the Registry of Deeds, with Transfer Certificates of Title issued four (4)
years before petitioner filed his Petition for Inclusion as farmer-beneficiary. This Petition
was a collateral attack on respondents' title. It incidentally questioned the validity of the
Transfer Certificates of Title issued in respondents' favor in an action seeking a different
relief—purportedly for petitioner to be included as farmer-beneficiary in the subject lots.
Regional Director Arsenal's inclusion of petitioner as farmer beneficiary over the lots needed
the modification of the Transfer Certificates of Title and Certificates of Land Ownership
Award registered in respondents' names. In his February 24, 2004 Order, Regional Director
Arsenal directed the filing of the appropriate action before the Department of Agrarian
Reform Adjudication Board "to effect the implementation" [64] of his Order.[65] This led to
petitioner filing a Petition for Cancellation of respondents' Certificates of Land Ownership
Award before the Provincial Adjudicator. He is now before this Court after the Court of
Appeals annulled the Decision of the Department of Agrarian Reform Adjudication Board
granting the cancellation of respondents' Certificates of Title, albeit on the ground of
indefeasibility of title. Petitioner himself stated that the final decision in his favor shall be
insignificant without the cancellation of respondents' title.
Clearly, the Petition for Inclusion as farmer-beneficiary was a collateral attack on
respondents' title to the property. This is prohibited by law.
Moreover, Regional Director Arsenal has no jurisdiction in a Petition for Inclusion as
farmer-beneficiary over lots covered by the Certificates of Title or registered Certificates of
Land Ownership Award. Thus, all subsequent proceedings are void for lack of jurisdiction.
Section 9 of Republic Act No. 9700, which amends Section 24 of Republic Act No. 6657,
states that "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 [Department of Agrarian Reform]." [66] This
covers only certificates under the Department of Agrarian Reform's jurisdiction. The
cancellation of a registered certificate of land ownership award or a certificate of title does
not fall under it.
Finally, petitioner must be reminded that certificates of title do not vest ownership, but
merely evidence title or ownership of the property. [67] "Courts may, therefore, cancel or
declare a certificate of title null and void when it finds that it was issued
irregularly."[68] Petitioner provided evidence of being an actual tiller of the lots before the
Department of Agrarian Reform. He may file the action to annul respondents' title before the
competent court, taking into consideration the principle of indefeasibility of title to property.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals
September 30, 2013 Decision in CA-G.R. SP No. 05797, the June 23, 2010 Decision and
February 10, 2011 Resolution of the Department of Agrarian Reform Adjudication Board in
DARAB Case No. 15114, the March 15, 2007 Decision of the Provincial Agrarian Reform
Adjudicator, and the September 30, 2003, February 24, 2004, and May 31, 2005 Orders of
Regional Director Alexis M. Arsenal in Adm. Case No. A- 0604-0811-02 are all SET
ASIDE. The Petition for Cancellation of Certificate of Land Ownership Award in DARAB
Case No. VI-3603-IL-06 is hereby DISMISSED without prejudice to the filing by Aurelio
P. Padillo of an action before the proper court.
SO ORDERED.
LBP v. Herederos de Ciriaco Chunaco Disteleria, June 11, 2018
The Court finds the petition meritorious.
The petition for judicial determination of just compensation was timely filed
The valuation of property in eminent domain is essentially a judicial function which cannot
be vested in administrative agencies. The executive department or the legislature may make
the initial determination, but when a party claims a violation of the guarantee in the Bill of
Rights that private property may not be taken for public use without just compensation, no
statute, decree, or executive order can mandate that its own determination shall prevail over
the court's findings. Much less can the courts be precluded from looking into the "just-ness"
of the decreed compensation.[18]
Accordingly, R.A. No. 6657 vests Special Agrarian Courts original and exclusive
jurisdiction in the determination of just compensation under the said law, to wit:
AGRARIAN LAW
RECENT JURISPRUDENCE
SECTION 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.
SECTION 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 criminal offenses under this Act. The Rules of Court
shall apply to all proceedings before the Special Agrarian Courts, unless modified by this
Act (emphasis supplied)
Fittingly, as the taking of property under R.A. No. 6657 is an exercise of the power of
eminent domain by the State, 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. [19] Consequently, the SAC can
properly take cognizance of any petition for determination of just compensation.
Nevertheless, the DARAB Rules restrict the period wherein a party may avail of the judicial
determination of just compensation before the RTC-SAC. Section 11 of the DARAB Rules
states the remedy and the period to assail the preliminary determination of just compensation
by PARAD, to wit:
SECTION 11. Land Valuation and Preliminary Determination and Payment of Just
Compensation. - The decision of the Adjudicator on land valuation and preliminary
detem1ination and payment of just compensation shall not be appealable to the Board
but shall be brought directly to the Regional Trial Courts designated as Special
Agrarian Courts within fifteen (15) days from receipt of the notice thereof . Any party
shall be entitled to only one motion for reconsideration. (emphasis supplied)
The conflict between R.A. No. 6657 and the DARAB Rules, however, is not of first
impression.
In the recent case of Land Bank of the Philippines v. Dalauta [20] (Dalauta), the 15-day
prescriptive period under Section 11 of the DARAB Rules was struck down because it
undermined and unnecessarily impeded the original and exclusive jurisdiction of the RTC-
SAC to determine just compensation under Section 57 of R.A. No. 6656. Further, it finally
settled once and for all the period within which to file a petition for judicial determination of
just compensation before the RTC-SAC.
In Dalauta, the preliminary determination of just compensation was referred to the PARAD.
In its resolution dated December 4, 1995, the PARAD affirmed the valuation of the
petitioner therein. On February 28, 2000, or four (4) years and three (3) months later, the
respondent filed a petition for judicial determination of just compensation before the RTC-
SAC. One of the issues that had to be resolved by the Court was whether a petition for
judicial determination of just compensation in the RTC-SAC proscribes if not filed within
the 15-day period under the DARAB Rules. The Court ruled:
Since the determination of just compensation is a judicial function, the Court must
abandon its ruling in Veterans Bank, Martinez and Soriano that a petition for determination
of just compensation before the SAC shall be proscribed and adjudged dismissible if not
filed within the 15-day period prescribed under the DARAB Rules.
To maintain the rulings would be incompatible and inconsistent with the legislative intent to
16
vest the original and exclusive jurisdiction in the determination of just compensation with
the SAC. Indeed, such rulings judicially reduced the SAC to merely an appellate court to
review the administrative decisions of the DAR. This was never the intention of the
Congress.
As earlier cited, in Section 57 of R.A. No. 6657, Congress expressly granted the RTC,
acting as SAC, the original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners. Only the legislature can recall that
power. The DAR has no authority to qualify or undo that. The Court's pronouncement
in Veterans Bank, Martinez, Soriano, and Limkaichong, reconciling the power of the DAR
and the SAC essentially barring any petition to the SAC for having been filed beyond the 15-
day period provided in Section 11, Rule XIII of the DARAB Rules of Procedure, cannot be
sustained. The DAR regulation simply has no statutory basis.
x x x x
While R.A. No. 6657 itself does not provide for a period within which a landowner can file a
petition for the determination of just compensation before the SAC, it cannot be
imprescriptible because the parties cannot be placed in limbo indefinitely. The Civil Code
settles such conundrum. Considering that the payment of just compensation is an
obligation created by law, it should only be ten (10) years from the time the landowner
received the notice of coverage. The Constitution itself provides for the payment of just
compensation in eminent domain cases. Under Article 1144, such actions must be brought
within ten (10) years from the time the right of action accrues. Article 1144 reads:
Art. 1144. The following actions must be brought within ten years from the time the right of
action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
Nevertheless, any interruption or delay caused by the government like proceedings in the
DAR should toll the running of the prescriptive period. The statute of limitations has been
devised to operate against those who slept on their rights, but not against those desirous to
act but cannot do so for causes beyond their control.
In this case, Dalauta received the Notice of Coverage on February 7, 1994. He then filed a
petition for determination of just compensation on February 28, 2000. Clearly, the filing date
was well within the ten-year prescriptive period under Article 1141. [21] (emphases supplied)
Indeed, Section 57 of R.A. No. 6657 clearly vests on the RTC-SAC the original and
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners. Any effort to transfer such jurisdiction to the adjudicators and to convert the
original jurisdiction of the RTCs into appellate jurisdiction would be contrary to Section 57
and therefore would be void. [22] The DAR has no authority to qualify or undo the RTC-
SAC's jurisdiction over the determination of just compensation under R.A. No. 6657. Thus,
the 15-day reglementary period under Section 11, Rule XIII of the DARAB Rules cannot be
sustained. The RTC-SAC cannot simply be reduced to an appellate court which reviews
administrative decisions of the DAR within a short period to appeal.
It was also determined in Dalauta that the proper prescriptive period to file a petition for
judicial determination of just compensation under R.A. No. 6657 is ten (10) years pursuant
to Article 1144 (2) of the Civil Code. Considering that payment of just compensation is an
obligation created by law, it is only proper that the ten (10)-year period start from the time
the landowner receives the notice of coverage under the CARP. In addition, any interruption
or delay caused by the government, like proceedings in the DAR, should toll the running of
the prescriptive period. The statute of limitations has been devised to operate against those
who slept on their rights, but not against those desirous to act but cannot do so for causes
beyond their control.[23]
In this case, respondent voluntarily offered for sale its twelve (12) parcels of land in
November 2001. Accordingly, the 10-year prescriptive period began at that moment because
respondent knew that its lands would be covered by the CARP. Thus, the petition for judicial
determination of just compensation filed on April 12, 2004 before the RTC-SAC, which was
even tolled by the proceedings before the PARAD, was squarely and timely filed within the
10-year prescriptive period.
Consequently, as the fifteen (15)-day reglementary period under Section 11, Rule XIII of the
DARAB Rules had been set aside, it is now immaterial to determine whether a fresh fifteen
(15)-day period should be given to a party when the PARAD denies its motion for
reconsideration to file a petition for judicial determination of just compensation. To
recapitulate, the correct period to file a petition for judicial determination of just
compensation under R.A. No. 6657 before the RTC-SAC is ten (10) years pursuant to
Article 1144 (2) of the Civil Code.
When the petition was filed before the RTC-SAC, the proceedings before the PARAD had
been completed
It was also stated in Dalauta that a landowner should withdraw his case with the DAR
before filing his petition before the RTC-SAC and manifest the fact of withdrawal by
alleging it in the petition itself. Failure to do so would be a ground for a motion to suspend
judicial proceedings until the administrative proceedings are terminated.
Here, when the PARAD denied its motion for reconsideration on the preliminary
determination of just compensation, petitioner did not anymore appeal before the DARAB.
Instead, it timely filed a petition for judicial determination of just compensation before the
RTC-SAC. Thus, the administrative proceedings on the determination of just compensation
were terminated.
It was only when the PARAD ordered the execution of its decision and issued the writ of
execution, even though there was a timely petition for judicial determination of just
compensation before the RTC-SAC, that petitioner sought refuge from the DARAB.
Evidently, petitioner's cause of action is essentially to stop the enforcement of the decision
of the PARAD because of a pending petition before the RTC-SAC.
In fine, the PARAD cannot enforce its February 17, 2004 decision because there is still a
pending judicial determination of just compensation before the courts. It is only when the
said judicial determination attains finality that the award of just compensation may be
executed.
WHEREFORE, the petition is GRANTED. The April 26, 2013 Decision of the Court of
Appeals in CA-G.R. SP No. 98113 is hereby REVERSED and SET ASIDE. The Provincial
Agrarian Reform Adjudicator of Albay, Branch 1 shall not enforce its February 17, 2004
Decision until after the finality of the judicial determination of just compensation.
SO ORDERED.
Land Bank v. Alcantara, February 28, 2018
There is merit in the petition. It is partially granted.
The points the parties raise are nothing new, having been previously passed upon by the
Court. We conduct the present review in the light of Alfonso v. LBP,55 by which this Court,
sitting En Banc, reaffirmed an established jurisprudential rule, viz, that until and unless
declared invalid in a proper case, the basic formulas contained in DAR administrative orders
partake of the nature of statutes; hence, courts have the positive legal duty to consider, and
not disregard, their use and application in the determination of just compensation for
agricultural lands covered by R.A. No. 6657. The Court proceeded to elaborate upon this
rule by likewise reaffirming the following guidelines:
AGRARIAN LAW
RECENT JURISPRUDENCE
First, in determining just compensation, courts are obligated to apply both the compensation
valuation factors enumerated by the Congress under Section 17 of R.A. No. 6657 and the
basic formula laid down by the DAR. xx x [.]
xx xx
Second, the formula, being an administrative regulation issued by the DAR pursuant to its
rule-making and subordinate legislation power under R.A. No. 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. x x x [.]
xx xx
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.xx x
[.]
xx xx
When acting within the parameters set by the law itself, the RTCSACs, however, are not
strictly bound to apply the DAR formula to its minute detail, particularly when faced with
situations that do not warrant the formula's strict application; they may, in the exercise of
their discretion, relax the formula's application to fit the factual situations before them. They
must, however, clearly explain the reason for any deviation from the factors and formula that
the law and the rules have provided.
The situation where a deviation is made in the exercise of judicial discretion should at all
times be distinguished from a situation where there is utter and blatant disregard of the
factors spelled out by law and by the implementing rules. For in [the latter case], the RTC-
SAC's action already amounts to grave abuse of discretion for having been taken outside of
the contemplation of the law.56
As its decision and order make plain, 57 the SAC deviated from, nay rejected, the formula set
by the DAR in the subject administrative orders. The CA joined the SAC in the rejection, as
may be seen from the following passage in the decision presently assailed:
The RTC's computation being different from the [LBP's] does not make the same erroneous.
It is explicit in DAR AO No. 6 that land valuation is not an exact science but an exercise
fraught with inexact estimates requiring integrity, conscientious and prudence on the part of
those responsible for it. The determination of just compensation cannot simply be arrived at
by strict reliance on the formula laid down in the administrative orders. The formula used by
[LBP] as basis for the computation serves only as a guideline and that the ultimate
determination of just compensation must be made by the courts. Otherwise, to adhere to the
formula mechanically would be to abdicate a duty placed in the courts of determining the
question of just compensation. To insist that the formula must be applied with utmost
rigidity whereby the valuation is drawn following a strict mathematical computation, goes
beyond the intent and spirit of the law.58 x x x
Following the guidelines reaffirmed in Alfonso, the next point of inquiry therefore is whether
the courts a quo, principally the SAC, presented a clear explanation for its deviation from
the DAR formula.
17
Parenthetically, we note at this juncture that per LBP's averments, the formula it had used to
come up with its valuation was the formula in DAR A.O. No. 6, series of 1992, as amended.
However, the SAC, particularly in its Order dated 4 July 2007, stated that LBP had used the
formula in DAR A.O. No. 5, series of 1998. This is puzzling. LBP is consistent in averring
that it had used the formula in DAR A.O. No. 6, series of 1992, as amended. We see this in
its answer before the SAC and in the present petition. The DARAB seconds this
averment.59 We consider also that LBP's valuation, namely Pl ,210,252.96, is the figure that
demonstrably results from the detailed mathematical computation it pleads before this Court,
which follows the formula in DAR A.O. No. 6, series of 1992, as amended. In any case, this
conflict between the SAC and LBP as to the formula the latter had used is, of course, of no
moment in this review. Following Alfonso, what is material is that the courts a quo had
deviated from the DAR formula, and are therefore charged, more than the usual, with
presenting an acceptable explanation for the deviation-or, following the words of the recent
case of LBP v. Heirs of Tanada and Ebarle,60 a well-reasoned justification for the deviation·
as supported by the evidence on record.
In the main, the SAC presents two explanations for the deviation: first, that respondents' land
is "no longer productive, as the trees are over 100 years old and are more productive if
utilized as coconut lumber,"61 and, second, that the land has already been converted into a
subdivision, increasing its value "three hundredfold." 62 These circumstances, the SAC
reasoned out, render the use of the DAR formulas in the valuation of respondents' land
anomalous as well as disadvantageous to landowners.63
We are unable to accept these explanations. They are neither well-reasoned nor supported by
the evidence on record.
We are at a loss as to how the SAC came to conclude that respondents' land is no longer
productive. In its decision, it gave a summary of the testimonial evidence it had received at
trial. But as may be seen from the same summary, none of the witnesses testified that the
land was no longer productive. The testimonial refrain was that "many" of the trees on the
land were old; the SAC may have found such testimony to indicate that the land is no longer
productive. But "many" does not mean "all." Neither should old mean infertile. At any rate,
the testimony of one of respondents' own witnesses, the Coconut Conservation Officer,
militates against the SAC's conclusion. The PCA officer testified as to two significant
points: first, that tenants had planted new coconut trees on the land, with seedlings obtained
from the PCA nursery; and second, that these newly planted trees outnumbered the old. With
reason, it may be believed that tenants had planted new trees with a mind towards the subject
landholding's continuing fertility. Indeed, among the documentary evidence presented at trial
was LBP's Field Investigation Report, which the SAC had likewise summarized in the
decision. This report contains data on the land's average annual production and net income
per hectare, which were generated by its palay, coconut, and banana output. Do these
uncontroverted data not contradict the rather sweeping view that the subject property is no
longer agriculturally productive?
We go now to the second explanation, viz, that the subject land had been "converted" from
agricultural to residential. To arrive here, the SAC appears to have relied solely on the
testimony of the municipal assessor who, in turn, said quite simply that she had visited the
property and saw that it had already been converted into a subdivision with electricity and
cemented roads. Despite what said witness may have in fact seen, however, the available
records do not indicate that the DAR Secretary had authorized the alleged conversion. 64 The
same records also do not indicate the existence of a zoning ordinance reclassifying said land
as to lawfully allow the establishment of a residential subdivision thereon. 65 Neither were
these decisive facts pleaded before this court. The subject land's alleged conversion to a
residential subdivision, therefore, is poorly supported. Why the SAC relied solely on the
verbal say-so of the municipal assessor is puzzling.
On this note, it should also be said, if only in passing, that if it were true that the  land use of
the subject agricultural land - the acquisition of which for purposes of the state's agrarian
reform program was fait accompli - was converted to residential pending the determination
of its just compensation, then what we have here is a gravely anomalous situation. Such
conversion would be antithetical to the agrarian reform program, to say the very least.
At any rate, its alleged conversion should not have any bearing in the determination of the
subject property's just compensation. The government cannot be compelled to pay for a
CARP land the price that it would have fetched in the competitive residential real estate
market. It goes without saying, there is nothing in R.A. No. 6657 or in the pertinent DAR
administrative issuances that authorizes that the just compensation for a CARP land should
be based exclusively on its market value.
Which brings us to another point. In its determination of just compensation in this case, the
SAC made no use of any calculation or formula. The special court relied, quite simply, on
respondents' valuation, which in turn was based on a 1998 issuance of the Barangay Council
of Brgy. Tamisian. In the said issuance, the council members agreed that the selling price for
the coconut lands in their barangay would be ₱100,000.00 per hectare. 66 The SAC did not
discuss how the council came up with this figure, other than vaguely stating that said figure
was "culled" from the landowners and the barangay captains of the area who ostensibly had
firsthand knowledge "of the situation in their barangays." 67
In fine, the SAC failed to present a well-reasoned justification, as supported by the evidence
on record, for why it deviated from the DAR formula. Hence, it ruled in blatant disregard of
the factors spelled out in Section 17 of R.A. No. 6657. The SAC's valuation in this case must
be struck down as illegal and set aside.
However, the Court cannot readily adopt LBP's valuation as the just compensation in this
case.1awp++i1
We are aware that in coming up with its valuation, LBP followed the formula in
DAR A.O. No. 6, Series of 1992, as amended. We are also aware that the DARAB had
concurred with and sustained this valuation. In the Heirs of Lorenzo and Carmen Vidad v.
LBP,68 however, we decreed that LBP's valuation must be substantiated before it could be
considered as sufficiently in accord with Section 17 of R.A. No. 6657 and the DAR
administrative orders. It is also settled that the valuation of the property should be pegged at
the time of its taking, not of the filing of the complaint, pendency of the proceedings, or
rendition of judgment.69
In this case, the court is unable to confirm from the available records that the data LBP had
used for its valuation are timely data, i.e., data reasonably obtaining at the time of the taking
of the property. There is no declaration in the present petition that such data were gathered in
1998 or within a proximate data-gathering period prior thereto. More to the point, most of
the data contained in the documents LBP included in its Formal Offer of Documentary
Evidence in Civil Case No. 99-134 are undated. To illustrate, we quote from the
subject Formal Offer:[70]
Exhibits Description Purpose
xxxx    
Average Coconut Production Offered for the purpose of
"3"
(wholenut) showing that PCA data on
production and farmgate prices
Average Coconut Production were used in the valuation of
"4'"
(copra terms ) LOs property.
"5" Farmgate Prices of wholenuts; all 3 are
AGRARIAN LAW
RECENT JURISPRUDENCE
certified by the Acting Provincial The petition is meritorious.
Coconut Development Manager
Certification signed by Municipal Offered for the purpose of It is a basic rule in procedure that the jurisdiction of the Court over the subject matter as well
"6" Agriculturist Pedro R. Gayeta on showing that Dept. of as the concomitant nature of an action is determined by law and the allegations of the
monthly production of different crops. Agriculture data were used in complaint, and is unaffected by the pleas or theories raised by the defendant in his answer or
the valuation of other motion to dismiss.[35]
Certification of same official on improvements found on LOs
"7" monthly ave. farmgate price for property. The jurisdiction of the DAR is laid down in Section 50 of R.A. No. 6657, otherwise known
different crops. as the CARL, which provides:
General Revision 1997 data from the Offered to prove that assessors
Provincial Assessor of Quezon signed data were used in the valuation Section 50. Quasi-Judicial Powers of the DAR. — The DAR is hereby vested with the
"8'"
by Assistant Provincial Assessor Isagani of plaintiff LOs property and primary jurisdiction to determine and adjudicate agrarian reform matters and shall have
C. Atienza. improvements. exclusive original jurisdiction over all matters involving the implementation of agrarian
reform except those falling under the exclusive jurisdiction of the Department of Agriculture
Schedule of Market Values classified Offered to prove that Land Bank (DA) and the Department of Environment and Natural Resources (DENR). x x x.
into different crops, productivity and used data from concerned
"9" location adjustment from the Provincial government agencies as called By virtue of Executive Order No. 129-A, the DAR Adjudication Board (DARAB) was
Assessor's Office. for under RA 6657, in land designated to assume the powers and functions of the DAR with respect to the adjudication
valuation. of agrarian reform cases, and matters relating to the implementation of the CARP and other
agrarian laws.[36]
xxxx    
The exclusive jurisdiction of the DAR over agrarian cases was further amplified by the
amendment introduced by Section 19 of R.A. 9700 to Section 50. The provision reads:
A question thus arises on whether the data LBP had utilized in order to come up with the
values necessary for its computation of just compensation were reasonably obtaining during
the time of the taking of the subject agricultural land. In which case, LBP's valuation has not Section 19. Section 50 of Republic Act No. 6657, as amended, is hereby further amended by
been sufficiently substantiated. A remand of this case to the SAC is thus necessary, so that adding Section 50-A to read as follows:
the special court may determine just compensation that is in full accordance with the basic
formula in DAR A.O. No. 6, series of 1992, as amended. SEC. 50-A. Exclusive Jurisdiction on Agrarian Dispute. - No court or prosecutor's office
shall take cognizance of cases pertaining to the implementation of the CARP except those
provided under Section 57 of Republic Act No. 6657, as amended. If there is an allegation
We go now to the issue regarding interest. Interest may be awarded as warranted by the from any of the parties that the case is agrarian in nature and one of the parties is a farmer,
circumstances of the case and based on prevailing jurisprudence. In previous cases, the farmworker, or tenant, the case shall be automatically referred by the judge or the prosecutor
Court allowed the grant of legal interest in expropriation cases where there was delay in the to the DAR which shall determine and certify within fifteen (15) days from referral whether
payment since the just compensation due to the landowners was deemed to be an effective an agrarian dispute exists: Provided, that from the determination of the DAR, an aggrieved
forbearance on the part of the State. 71 In this case, there was no delay in the payment. To party shall have judicial recourse. In cases referred by the municipal trial court and the
recall, the Notice of Land Valuation and Acquisition was issued over the subject property on prosecutor's office, the appeal shall be with the proper regional trial court, and in cases
9 February 199872 On 24 March 1998, LBP deposited the said amount in respondents' referred by the regional trial court, the appeal shall be to the Court of Appeals.
name.73 Hence, the order for LBP to pay interest is not warranted and must be annulled and
set aside. In cases where regular courts or quasi-judicial bodies have competent jurisdiction, agrarian
reform beneficiaries or identified beneficiaries and/or their associations shall have legal
standing and interest to intervene concerning their individual or collective rights and/or
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The interests under the CARP.
Decision dated 31 October 2008 and the Resolution dated 8 April 2009 of the Court of
Appeals in CA-G.R. SP No. 99852 are REVERSED and SET ASIDE. The case
is REMANDED to the Regional Trial Court of Lucena City, sitting as Special Agrarian The fact of non-registration of such associations with the Securities and Exchange
Court, to determine the just compensation in Civil Case No. 99-134 strictly in accordance Commission, or Cooperative Development Authority, or any concerned government agency
with Section 17 of Republic Act No. 6657 and Department of Agrarian Reform shall not be used against them to deny the existence of their legal standing and interest in a
Administrative Order No. 6, series of 1992, as amended by Department of Agrarian Reform case filed before such courts and quasi-judicial bodies.
Administrative Order No. 11, series of 1994, and in consonance with prevailing
jurisprudence. Specifically, and towards this purpose, the Special Agrarian Court is directed
to conduct summary proceedings to ascertain if the data presented by petitioner Land Bank In this regard, it must be said that there is no merit in the contention of petitioner that the
of the Philippines for the determination of just compensation were data gathered in 1998 or amendment introduced by R.A. No. 9700 cannot be applied retroactively in the case at bar.
within a proximate data-gathering period prior thereto. Primarily, a cursory reading of the provision readily reveals that Section 19 of R.A. No.
9700 merely highlighted the exclusive jurisdiction of the DAR to rule on agrarian cases by
adding a clause which mandates the automatic referral of cases upon the existence of the
SO ORDERED. requisites therein stated. Simply, R.A. No. 9700 does not deviate but merely reinforced the
jurisdiction of the DAR set forth under Section 50 of R.A. No. 6657. Moreover, in the
absence of any stipulation to the contrary, as the amendment is essentially procedural in
nature it is deemed to apply to all actions pending and undetermined at the time of its
Chailese Development Company v. Dizon, et al., February 14, 2018 passage.[37]
18
Thence, having settled that Section 19 of R.A. No. 9700 is applicable in this controversy, the
Court now proceeds with the examination of such amendment. Based on the said provision,
the judge or prosecutor is obligated to automatically refer the cases pending before it to the
DAR when the following requisites are present:
a. There is an allegation from any one or both of the parties that the case is agrarian in
nature; and
b. One of the parties is a farmer, farmworker, or tenant.
In this case, the presence of the first requisite is satisfied by the allegations made by the
respondents in their Answer with Counterclaim. [38]
The allegations in petitioner's complaint make a case for recovery of possession, over which
the regular courts have jurisdiction. However, in response thereto, the respondents filed their
Answer with Counterclaim, assailing the jurisdiction of the regular court to rule on the
matter on the ground that it is agrarian in nature, which thus complies with the first
requisite, viz.:
BY WAY OF SPECIAL/AFFIRMATIVE DEFENSES, defendants further state that:
5. The Court has no jurisdiction over the subject matter and the nature of the action. Verily,
the allegations of the complaint would show that this involves the implementation of
Agrarian Reform law hence beyond the pale of jurisdiction of this Court. [39]
Anent the second requisite, the Court finds that the respondents failed to prove that they are
farmers, farmworkers, or are agricultural tenants.
Section 3 of R.A. No. 6657 defines farmers and farmworkers as follows:
(f) Farmer refers to a natural person whose primary livelihood is cultivation of land or the
production of agricultural crops, either by himself, or primarily with the assistance of his
immediate farm household, whether the land is owned by him, or by another person under a
leasehold or share tenancy agreement or arrangement with the owner thereof.
(g) Farmworker is a natural person who renders service for value as an employee or laborer
in an agricultural enterprise or farm regardless of whether his compensation is paid on a
daily, weekly, monthly or "pakyaw" basis. The term includes an individual whose work has
ceased as a consequence of, or in connection with, a pending agrarian dispute and who has
not obtained a substantially equivalent and regular farm employment.
An agricultural tenancy relation, on the other hand, is established by the concurrence of the
following elements enunciated by this Court in the case of Chico v. CA,[40]
(1) that the parties are the landowner and the tenant or agricultural lessee; (2) that the subject
matter of the relationship is an agricultural land; (3) that there is consent between the parties
to the relationship; (4) that the purpose of the relationship is to bring about agricultural
production; (5) that there is personal cultivation on the part of the tenant or agricultural
lessee; and (6) that the harvest is shared between the landowner and the tenant or agricultural
lessee.[41]
Contrary to the CA's conclusion and as opposed to the first requisite, mere allegation would
not suffice to establish the existence of the second requirement. Proof must be adduced by
the person making the allegation as to his or her status as a farmer, farmworker, or tenant.
The pertinent portion of Section 19 of R.A. No. 9700 reads:
AGRARIAN LAW
RECENT JURISPRUDENCE
If there is an allegation from any of the parties that the case is agrarian in nature and one of
the parties is a farmer, farmworker, or tenant, the case shall be automatically referred by the
judge or the prosecutor to the DAR xxx.
The use of the word "an" prior to "allegation" indicate that the latter qualifies only the
immediately subsequent statement, i.e., that the case is agrarian in .nature. Otherwise stated,
an allegation would suffice only insofar as the characterization of the nature of the action.
Had it been the intention that compliance with the second element would likewise be
sufficient by a mere allegation from one of the parties that he or she is a farmer, farm
worker, or tenant, the legislature should have used the plural form when referring to
"allegation" as the concurrence of both requisites is mandatory for the automatic referral
clause to operate.
Further instructive is this Court's ruling in the previously cited case of Chico. Therein, the
Court held that for the purpose of divesting regular courts of its jurisdiction in the
proceedings lawfully began before it and in order for the DARAB to acquire jurisdiction, the
elements of a tenancy relationship must be shown by adequate proof. It is not enough that
the elements are alleged. Likewise, self-serving statements in the pleadings are inadequate.
[42]
Hence, in light of the absence of evidence to show any tenancy agreement that would
establish the relationship of the parties therein, the Court in Chico granted the petition and
reinstated the proceedings before the RTC of Malolos, Bulacan.
Applying these principles in the matter on hand, in here, respondents merely alleged in their
Answer with Counterclaim that they are previous tenants in the subject landholdings
implying that a tenancy relationship exists between them and petitioner's predecessor-in-
interest, in this wise:
9. That defendants are actually tenants of the land long before the same was illegally
transferred in the name of the plaintiff;
10. That the lot subject matter of this case is formerly a hacienda devoted to agricultural
production;
11. That since the land is within the coverage of the [CARL], the defendants, are by law, the
qualified farm-beneficiaries who should be entitled to the compulsory acquisition and
distribution of the same;
12. That without the knowledge of the said defendants, the property was transferred to herein
plaintiff who in order to avoid the compulsory acquisition and distribution of the said land,
filed a "bogus" petition for conversion, x x x.[43]
Apart from these statements however, respondents failed to elaborate much less prove the
details of such tenancy agreement and the peculiarities of the subject landholding's previous
ownership. There was no evidence adduced of the existence of any tenancy agreement
between respondents and the petitioner's predecessor-in-interest. This, as discussed,
precludes the application of Section 50-A of R.A. No. 6657, as amended by R.A. No. 9700,
for failure to satisfy the second requisite.
WHEREFORE, in view of the foregoing disquisitions, the petition for review
on certiorari is hereby GRANTED. The Decision dated October 29, 2012 and Resolution
dated March 15, 2013 issued by the Court of Appeals in CA-G.R. SP No. 122519 are
hereby REVERSED AND SET ASIDE. Accordingly, the Complaint dated July 28, 2004 is
hereby ordered reinstated and the case remanded for further proceedings. The Regional Trial
19
Court of Guagua, Pampanga, Branch 52 is ordered to resolve the case with utmost dispatch.
No costs.
SO ORDERED.
Land Bank v. Manzano, January 24, 2018
I Republic Act No. 6657, Section 57 gives to the Special Agrarian Courts the "original and
Petitioner was not deprived of due process since it was given every reasonable opportunity
to ventilate its claims and objections.
Petitioner submitted before the commissioners its position paper and dispensed with the need
for further hearing. Its position paper contained its own valuations, comments, and
objections to respondents' position paper. 123
After the commissioners submitted their findings to the Regional Trial Court, petitioner filed
its Comment to the Consolidated Commissioners' Report and objected to the
recommendations made. 124
During the hearing set by the Regional Trial Court, petitioner opted to present documentary
evidence that was already incorporated in its position paper. Thus, it would have been
unnecessary and repetitive for the trial court to receive the same pieces of evidence. 125
A party cannot invoke deprivation of due process if he or she was given the opportunity of a
hearing, through either oral arguments or pleadings. 126 The hearing does not have to be a
trial-type proceeding in all situations.127 In National PowerCorporation v. Spouses Chiong:128
A formal hearing or trial was not required for the petitioner to avail of its opportunity to
object and oppose the majority report. Petitioner could have filed a motion raising all
possible grounds for objecting to the findings and recommendations of the commissioners. It
could have moved the trial court to remand the report to the commissioners for additional
facts. Or it could have moved to expunge the majority report, for reasons petitioner could
muster. Petitioner, however, failed to seize the opportunity to register its opposition or
objections before the trial court. It is a bit too late in the day now to be asking for a hearing
on the pretext that it had not been afforded due process. 129
II.A
The Regional Trial Court has the full discretion to make a binding decision on the value of
the properties. 130
Under Rule 67, Section 8 of the Rules of Court, the Regional Trial Court may accept the
Consolidated Commissioners' Report, recommit it to the same commissioners for further
report, set it aside and appoint new commissioners, or accept only a part of it and reject the
other parts.
The final determination of the Regional Trial Court sitting as a Special Agrarian Court must
be respected.
The determination of just compensation is a judicial function which cannot be curtailed or
limited by legislation, 131 much less by an administrative rule. In Export Processing Zone
Authority v. Dulay: 132
The determination of "just compensation" in eminent domain cases is a judicial function.
The executive department or the legislature may make the initial determinations but when a
party claims a violation of the guarantee in the Bill of Rights that private property may not
be taken for public use without just compensation, no statute, decree, or executive order can
mandate that its own determination shall prevail over the court's findings. Much less can the
courts be precluded from looking into the "just-ness" of the decreed compensation. 133
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners." In Republic Act No. 6657, Section 16(f):
Section 16. Procedure for Acquisition and Distribution of Private Lands. - For purposes of
acquisition of private lands, the following procedures shall be followed:
....
(f) Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation. (Emphasis supplied)
The use of the word "final" in the statute should not be construed to mean that the Special
Agrarian Court serves as an appellate court that must wait for the administrative agencies to
finish their valuation. 134
There is no need to exhaust administrative remedies through the Provincial Agrarian Reform
Adjudicator, Regional Agrarian Reform Adjudicator, or the Department of Agrarian Reform
Adjudication Board before a party can go to the Special Agrarian Court for determination of
just compensation. 135
The final decision on the value of just compensation lies solely on the Special Agrarian
Court. Any attempt to convert its original jurisdiction into an appellate jurisdiction is
contrary to the explicit provisions of the law. 136 In Land Bank of the Philippines v.
Montalvan: 137
It is clear from Sec. 57 that the [Regional Trial Court], sitting as a Special Agrarian Court,
has "original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners." This "original and exclusive" jurisdiction of the [Regional
Trial Court] would be undermined if the [Department of Agrarian Reform] would vest in
administrative officials original jurisdiction in compensation cases and make the [Regional
Trial Court] an appellate court for the review of administrative decisions. Thus, although the
new rules speak of directly appealing the decision of adjudicators to the [Regional Trial
Courts] sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and
exclusive jurisdiction to determine such cases is in the [Regional Trial Courts]. Any effort to
transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the
[Regional Trial Courts] into appellate jurisdiction would be contrary to Sec. 57 and therefore
would be void. Thus, direct resort to the [Special Agrarian Court] by private respondent is
valid. 138
Thus, aggrieved landowners can go directly to the Special Agrarian Court that is legally
mandated to determine just compensation, even when no administrative proceeding was
conducted before DAR. 139
This Court now takes this opportunity to ascertain, re-examine, and clarify the application of
the rationale in Association of Small Landowners in the Philippines, Inc. v. Secretary of
Agrarian Reform:140
AGRARIAN LAW
RECENT JURISPRUDENCE
The determination made by the [Department of Agrarian Reform] 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. 141
An interpretation that Special Agrarian Courts merely review the decisions of DAR, and that
DAR must first make a valuation of the property before the parties may seek judicial
recourse for just compensation defeats the provisions of Republic Act No. 6657.
What the law contemplates that the trial court should undertake is not a review of the
determination made by DAR, but an original determination as a lawful exercise of its
original and exclusive jurisdiction.
The volume of agrarian reform cases pending before this Court is a testament to the need to
speed up the process by which just compensation is determined. In clarifying the doctrine
in Association of Small Landowners, this Court seeks to expedite the resolution of agrarian
reform disputes.
II.B
Article III, Section 9 of the 1987 Constitution provides that "private property shall not be
taken for public use without just compensation." This rings true for agrarian reform cases
where private lands are taken by the State to be distributed to farmers who serve as
beneficiaries of these lands.
The amount of just compensation must be determined based on the fair market value of the
property at the time of the taking. In National Power Corporation v. Spouses Ileto,142 this
Court defined fair market value:
[T]he 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 intensify the
meaning of the word "compensation" and to convey thereby the idea that the equivalent to be
rendered for the property to be taken shall be real, substantial, full and ample.
In eminent domain or expropriation proceedings, the just compensation to which the owner
of a condemned property is entitled is generally the market value. Market value is "that sum
of money which a person desirous but not compelled to buy, and an owner willing but not
compelled to sell, would agree on as a price to be given and received therefor." [The market
value] is not limited to the assessed value of the property or to the schedule of market values
determined by the provincial or city appraisal committee. However, these values may serve
as factors to be considered in the judicial valuation of the property.
To determine the just compensation to be paid to the landowner, the nature and character of
the land at the time of its taking is the principal criterion. 143 (Citation omitted)
The Special Agrarian Court must ensure that the amount determined at the end of the
proceedings is equivalent to the fair market value of the property at the time of the taking,
and not based on a strict adherence to a particular set or series of rules imposed by
agricultural reform laws or administrative orders.
Petitioner invokes144 Land Bank of the Philippines v. Banal,145 Land Bank of the
Philippines v. Lim,146 and Land Bank of the Philippines v. Kumassie147 to argue that in.
determining just compensation, the Special Agrarian Court is mandated to apply the factors
20
laid down in Republic Act No. 6657, Section 17 in relation to Administrative Order No. 05-
98 and Joint Memorandum Circular No. 07-99. 148
Petitioner seems to be imposing a double standard, as it has not shown compliance with
Republic Act No. 6657, Section 17 itself. According to the Court of Appeals, petitioner
"merely considered the value as appearing in the tax declaration of the properties, together
with salvage values of the rubber trees but it failed to consider other factors cited under Sec.
17 of the law." 149 These factors include the current value of the properties, its nature, actual
use and income, and sworn valuation by the owner, among others. 150
In any event, the factual antecedents of the cases that petitioner cited are not on all fours
with this case. There is a glaring lack of any ascertainable standard by which the Regional
Trial Court arrived at a compensation that is truly just.
In Banal, the Special Agrarian Court relied solely on the submitted memoranda and took
judicial notice of the average production figures in another case pending before it, without
the consent of the parties. Moreover, there were no commissioners appointed in that case, or
any notice, hearing, or participation from all the parties concerned. 151
In Lim, the Special Agrarian Court set as just compensation the price which petitioner
previously paid for the land of respondent's brother. Such valuation can only be considered
as random and arbitrary. 152
In Kumassie, the Special Agrarian Court ignored Republic Act No. 6675; instead:
It merely cited the location of the subject land, nature of the trees planted thereon, and
[commissioner Oliver A.] Morales' appraisal report, as bases for fixing the value of the
subject land at ₱100,000.00 per hectare; which are not among the factors mentioned in
Section 17 of Republic Act No. 6657. 153
This Court's ruling in Lim is crucial: the Special Agrarian Court is "required to consider" the
factors in Republic Act No. 6657 and the formula in the administrative issuances.  154 This
must be construed to mean that the Special Agrarian Court is legally mandated to take due
consideration of these legislative and administrative guidelines to arrive at the amount of just
compensation. Consideration of these guidelines, however, does not mean that these are the
sole bases for arriving at the just compensation.
In Apo Fruits Corporation v. Land Bank, 155 this Court ruled that Republic Act No. 6657,
Section 17 merely provides for guideposts in ascertaining the valuations for the properties,
but the courts are not precluded from considering other factors. 156
In Land Bank of the Philippines v. Obias: 157
[A]dministrative issuances or orders, though they enjoy the presumption of legalities, are
still subject to the interpretation by the Supreme Court pursuant to its power to interpret the
law. While rules and regulations issued by the administrative bodies have the force and
effect of law and are entitled to great respect, courts interpret administrative regulations in
harmony with the law that authorized them and avoid as much as possible any construction
that would annul them as invalid exercise of legislative power. 158 (Emphasis supplied,
citation omitted)
Thus, while Section 17 requires due consideration of the formula prescribed by DAR, the
determination of just compensation is still subject to the final decision of the proper court. In
the recent case of Alfonso v. Land Bank, 159 this Court reiterated:
Out of regard for the DAR's expertise as the concerned implementing agency, courts should
henceforth consider the factors stated in Section 17 of RA 6657, as amended, as translated
into the applicable DAR formulas in their determination of just compensation for the
properties covered by the said law. If, in the exercise of their judicial discretion, courts find
that a strict application of said formulas is not warranted under the specific circumstances of
the case before them, they may deviate or depart therefrom, provided that this departure or
deviation is supported by a reasoned explanation grounded on the evidence on record. In
other words, courts of law possess the power to make a final determination of just
compensation. 160 (Emphasis supplied, citation omitted)
Taking into consideration the totality of these principles, this Court rules that the Court of
Appeals correctly affirmed the findings of the Special Agrarian Court. Petitioner's argument
on mandatory adherence to the provisions of the law and the administrative orders must fail.
The Regional Trial Court's judgment must be given due credence as an exercise of its legal
duty to arrive at a final determination of just compensation.
This Court does not deem it necessary to question the findings of the Special Agrarian Court
regarding the expanse of the area subject to the coverage. The issue on whether portions of
the subject land may be subject to coverage is a question of fact that this Court cannot
entertain or answer, absent any compelling circumstance or reason to do so. It requires an
examination of the evidence on record, and is best left to the determination of the Special
Agrarian Court as guided by the appropriate laws and administrative orders.
III
The Court of Appeals properly upheld the Regional Trial Court's issuance of a writ of
execution pending appeal.
Under Rule 39, Section 2(a), a judgment appealed before the Court of Appeals may still be
executed by the Regional Trial Court, provided there are good reasons for the judgment's
execution.
The Regional Trial Court found that respondents have been deprived of their land since
1999. 161 They were dispossessed of the beneficial use, fruits, and income of their properties,
which were taken from them 19 years ago without compensation. Thus, the denial of the
execution pending appeal will infringe on their constitutional right against taking of private
property without compensation. 162
Moreover, the just compensation for respondents' properties is not wholly payable in cash.
Sixty-five percent (65%) of the payment is in bonds, which will mature only after 10
years. 163 By then, the monetary value of the properties would no longer be the
same. 164 Denying the execution pending appeal can also stall the payment of respondents'
properties through the filing of frivolous motions and appeals. 165
In their motion for execution pending appeal, respondents "indicated [their] willingness to
return any amount in the event that the just compensation fixed by [the Regional Trial Court]
is modified by the appellate court." 166 This addresses petitioner's sole objection against
execution pending appeal.167
In Land Bank of the Philippines v. Spouses Orilla: 168
[The following are] the good reasons cited by the [Special Agrarian Court], as affirmed by
the Court of Appeals, namely: "(1) that execution pending appeal would be in consonance
with justice, fairness, and equity considering that the land had long been taken by the
[Department of Agrarian Reform and] (2) that suspending the payment of compensation will
AGRARIAN LAW
RECENT JURISPRUDENCE
prolong the agony that respondents have been suffering by reason of the deprivation of their
property . . .
Execution of a judgment pending appeal is governed by Section 2 (a) of Rule 39 of the Rules
of Court, to wit:
SEC. 2. Discretionary execution. –
(a) Execution of a judgment or a final order pending appeal. - On motion of the prevailing
party with notice to the adverse party filed in the trial court while it has jurisdiction over the
case and is in possession of either the original record or the record on appeal, as the case
may be, at the time of the filing of such motion, said court may, in its discretion, order
execution of a judgment or final order even before the expiration of the period to appeal.
....
Discretionary execution may only issue upon good reasons to be stated in a special order
after due hearing.
As provided above, execution of the judgment or final order pending appeal is discretionary.
As an exception to the rule that only a final judgment may be executed, it must be strictly
construed. Thus, execution pending appeal should not be granted routinely but only in
extraordinary circumstances.
The Rules of Court does not enumerate the circumstances which would justify the execution
of the judgment or decision pending appeal. However, we have held that "good reasons"
consist of compelling or superior circumstances demanding urgency which will outweigh the
injury or damages suffered should the losing party secure a reversal of the judgment or final
order. The existence of good reasons is what confers discretionary power on a court to issue
a writ of execution pending appeal. These reasons must be stated in the order granting the
same. Unless they are divulged, it would be difficult to determine whether judicial discretion
has been properly exercised.
In this case, do good reasons exist to justify the grant by the [Special Agrarian Court] of the
motion for execution pending appeal? The answer is a resounding YES.
The expropriation of private property under R.A. 6657 is a revolutionary kind of
expropriation, being a means to obtain social justice by distributing land to the farmers,
envisioning freedom from the bondage to the land they actually till. As an exercise of police
power, it puts the landowner, not the government, in a situation where the odds are
practically against him. He cannot resist it. His only consolation is that he can negotiate for
the amount of compensation to be paid for the property taken by the government. As
expected, the landowner will exercise this right to the hilt, subject to the limitation that he
can only be entitled to 'just compensation". Clearly therefore, by rejecting and disputing the
valuation of the [Department of Agrarian Reform], the landowner is merely exercising his
right to seek just compensation. 169 (Citations omitted)
Thus, this Court agrees with the Regional Trial Court that "[f]or reasons of equity, justice
and fair play, [respondents] should be paid to enable them to cope up with the loss they
sustained as a result of the taking and for their economic survival." 170
IV
21
The Regional Trial Court June 27, 2003 Order, as affirmed by the Court of Appeals,
correctly imposed the payment of legal interest on the just compensation award.
In Land Bank of the Philippines v. Lajom:171
With respect to the commonly raised issue on interest, the RTC may impose the same on the
just compensation award as may be justified by the circumstances of the case and in
accordance with prevailing jurisprudence. The Court has previously allowed the grant of
legal interest in expropriation cases where there was delay in the payment of just
compensation, deeming the same to be an effective forbearance on the part of the State. To
clarify, this incremental interest is not granted on the computed just compensation; rather, it
is a penalty imposed for damages incurred by the landowner due to the delay in its payment.
Thus, legal interest shall be pegged at the rate of 12% [per annum] from the time of taking
until June 30, 2013.1avvphi1 Thereafter, or beginning July 1, 2013, until fully paid, just
compensation shall earn interest at the new legal rate of 6% [per annum], conformably with
the modification on the rules respecting interest rates introduced by Bangko Sentral ng
Pilipinas Monetary Board Circular No. 799, Series of 2013. 172 (Citations omitted)
In Land Bank of the Philippines v. Spouses Orilla: 173
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
land while being made to wait for a decade or more before actually receiving the amount
necessary to cope with his loss.
Put differently, while prompt payment of just compensation requires the immediate deposit
and release to the landowner of the provisional compensation as determined by the
[Department of Agrarian Reform], it does not end there. Verily, it also encompasses the
payment in full of the just compensation to the landholders as finally determined by the
courts. Thus, it cannot be said that there is already prompt payment of just compensation
when there is only a partial payment thereof, as in this case. 174 (Emphasis supplied, citation
omitted)
In Land Bank of the Philippines v. Wycoco, 175 this Court held that the imposition of legal
interest per annum on the just compensation due to the landowner was "in the nature of
damages for delay in payment[.]" 176 In Apo Fruits v. Land Bank of the Philippines: 177
The owner's loss, of course, is not only his property but also its income-generating potential.
Thus, when property is taken, full compensation of its value must immediately be paid to
achieve a fair exchange for the property and the potential income lost. The just
compensation is made available to the property owner so that he may derive income from
this compensation, in the same manner that he would have derived income from his
expropriated property. If full compensation is not paid for property taken, then the State
must make up for the shortfall in the earning potential immediately lost due to the taking,
and the absence of replacement property from which income can be derived; interest on the
unpaid compensation becomes due as compliance with the constitutional mandate on
eminent domain and as a basic measure of fairness.
In the context of this case, when the [Land bank] took the petitioners' landholdings without
the corresponding full payment, it became liable to the petitioners for the income the
landholdings would have earned had they not immediately been taken from the petitioners.
What is interesting in this interplay, under the developments of this case, is that the
[Landbank], by taking landholdings without full payment while holding on at the same time
to the interest that it should have paid, effectively used or retained funds that should go to
the landowners and thereby took advantage of these funds for its own account. 178 (Emphasis
supplied)
In this case, the records show that petitioner already gave provisional compensation in the
form of cash and bonds, based on an initial valuation of the properties. Respondents
acknowledged the deposit of these amounts and later withdrew them. 179
However, while "the deposits might have been sufficient for purposes of the immediate
taking of the landholdings[, these deposits] cannot be claimed as amounts that would
excuse . . . the payment of interest on the unpaid balance of the compensation due." 180
Wycoco held that interest should be awarded to the landowner if there is no "prompt and
valid payment."181 There is no prompt payment if the payment is only partial. 182
This is consistent with this Court's ruling 183 on the matter of interest in expropriating private
property for a public use. In Republic v. Court of Appeals: 184
The constitutional limitation of "just compensation" is considered to be the sum equivalent
to the market value of the property, broadly described to be the price fixed by the seller in
open market in the usual and ordinary course of legal action and competition or the fair
value of the property as between one who receives, and one who desires to sell [it,] fixed at
the time of the actual taking by the government. Thus, if property is taken for public use
before compensation is deposited with the court having jurisdiction over the case, the final
compensation must include interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the
court. In fine, between the taking of the property and the actual payment, legal interests
accrue in order to place the owner in a position as good as (but not better than) the position
he was in before the taking occurred. 185 (Emphasis supplied, citations omitted)
Petitioner's delay186 in payment makes it liable for legal interest by way of damages. The
legal interest must be applied "on the unpaid balance of the compensation
due." 187 Therefore, the amount already received by respondents should be subtracted from
the total judgment, and the rate of legal interest should be calculated from that amount.
In view of this Court's ruling in Nacar v. Gallery Frames, 188 this Court modifies the rate of
legal interest to 12% per annum from the time of taking until June 30, 2013, and 6% per
annum from July 1, 2013 until fully paid.
In sum, the power of the State to expropriate property for public use is without question. In
eminent domain proceedings, courts have the power to decide on the final amount of just
compensation. This is especially true in cases of agrarian reform.
Since the determination of just compensation is an inherently judicial function, it cannot be
curtailed or limited by legislation. 189 The various agrarian reform laws and the other
administrative issuances are merely recommendatory to the trial court in determining just
compensation.190 Thus, there is a need for each case to be approached by the trial court with
particular sensitivity to the local market where the subject is to be found.
This Court, as the final arbiter of law and justice, has the power to rule and provide a
definitive legal standard by which a court that is acting as a Special Agrarian Court may rely
upon to arrive at an amount that will compensate landowners and fulfill the intention of
agrarian reform.
AGRARIAN LAW
RECENT JURISPRUDENCE
WHEREFORE, the Petition is DENIED. The Court of Appeals May 29, 2009 Decision in
CA-G.R. SP No. 77295-MIN is AFFIRMED with MODIFICATION in that the rate of
legal interest shall be twelve percent (12%) per annum from the time of taking until June 30,
2013, and six percent (6%) per annum from July 1, 2013 until fully paid. Moreover, the
amounts already withdrawn by respondents must be subtracted from the final amount in the
judgment on which the legal interest should be imposed.
SO ORDERED.
De Leon Brothers, Co. v. Land Bank, December 13, 2017
The instant case involves the question of the binding character of the DAR formula, pursuant
to Section 17 of R.A. 6657, on the SACs in the exercise of their judicial function.
The recent ruling of the Court in Alfonso v. Land Bank of the Philippines[26] has opportunely
restated the body of rules on this matter:
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.[27] (Boldface in the original)
Thus, it is mandatory for SACs to consider the DAR formula in the determination of just
compensation for properties covered by the Comprehensive Agrarian Reform Program.
However, SACs may depart from a strict application of the formula, provided the deviation
is sufficiently justified by the surrounding circumstances and clearly explained in the
decision. The ruling in Alfonso  harmonizes the courts' exercise of judicial discretion, on the
one hand, and the obligatory application of the compensation valuation factors in Section 17
of R.A. 6657 and the DAR formula, on the other.
In this case, the ruling of the CA fully embodies a strict application of the DAR formula:
Corollarily, a punctilious review of the records indubitably shows that respondent-appellant
Land Bank has indeed followed and used the formula provided by the administrative order
and considered all the factors set by RA 6657 in determining the correct valuation of
petitioner-appellant's property. The factors used in the computation were derived after the
field investigations were conducted and with reference to all other documents submitted and
attached to the claim folders. The computations made were likewise explained by
respondent-appellant Land Bank's officers who processed petitioner-appellant's claim
folders. Verily, We find respondent-appellant's valuation to be with factual, legal and
jurisprudential basis.[28]
On the other hand, the SAC relied entirely on its judgment in determining the appropriate
basis of the just compensation for petitioner's property:
The price given by defendant is very low, it is unfair and unjust to plaintiff. It is not in
accordance with the prevailing actual market value of the properties in the area, x x x
According to the New Zonal Valuation of Properties for the Province of Misamis Oriental,
22
kept in the Office of the Bureau of Internal Revenue, as reference in determining the value of
the land for taxation purposes, like transfer tax, capital gain[s] tax, donor['s] tax, estate tax,
and others, the zonal value of agricultural lands in Luna, Claveria, Misamis Oriental, is
P5.50 per square meter. This document is prepared and the valuation arrived at therein, after
consultation made with the different sectors, like the Department of Finance, represented by
the BIR, the Provincial and City Assessors, the non-governmental organizations, such as
Banks, and others. It is the observation of the court that the valuation of the property under
the Zonal Valuation of the BIR is far better and fair to the Landowner than the valuation by
the defendants Land Bank and the DAR, wherein the landowners has [sic] no representation.
It is to be taken into consideration, however, that assessments made by the government of
properties for taxation purposes are usually lesser than its actual market value. The Court is
inclined to use the appraisal under the BIR's New Zonal Valuation with a slight increase in
the price as the just compensation for the properties involved in this case. [29]
Notably, the statement of the SAC in this case that the price offered by respondent is "very
low, xxx unfair and unjust"[30]  approximates the statement by the SAC in Alfonso that the
government's valuation is "unrealistically low." [31] Furthermore, as in Alfonso, the ruling of
the SAC in the instant case does not provide any discussion of the reasons why the
compensation valuation factors enumerated in Section 17 of R.A. 6657 and the DAR
formula were not considered.
In using the zonal valuation of the BIR as basis for determining just compensation in this
case, the SAC provided a lone justification. It explained that the zonal valuation was arrived
at through consultation with different sectors - contrary to respondent's valuation, which was
made without landowner representation. We find this explanation insufficient to justify a
deviation from the strict application of the formula.
More importantly, the zonal valuation by the BIR pegged the price of land in Claveria,
Misamis Oriental, at P5.50 per square meter. Nevertheless, the SAC fixed the just
compensation at F8 per square meter, merely explaining that "assessments made by the
government of properties for taxation purposes are usually lesser [sic] than its [sic] actual
market value."[32] No evidence was cited to support the "slight increase in the price." [33]
Nothing prevents the SAC from using other factors in arriving at a reasonable just
compensation in this case, as long as the reasons are clearly and adequately explained in the
decision. On the other hand, we cannot readily uphold the strict application of the DAR
formula by the CA. While the SAC cannot completely ignore the compensation valuation
factors enumerated in Section 17 of R.A. 6657 and the DAR formula, the determination of
just compensation is still essentially a judicial function and, as such, subject to the court's
own judgment based on each peculiar circumstance.
It is thus necessary to remand this case to the SAC.
In fact, there is another reason to remand. In its Decision dated 14 January 2002, the SAC
found that despite the complete submission by petitioner of the documents for the latter's
voluntary offer to sell the property to the government in 1989, the valuation by respondent
commenced only three years later, or in 1992. [34] Meanwhile, farmer-beneficiaries have
already been placed in possession of the property.[35]
This matter was also raised by petitioner before this Court [36] and the CA[37] in support of its
contention that the valuation made by respondent was inadequate.
There is a need for the SAC to make an exact finding as to when petitioner was deprived of
the use and benefit of its property; [38] or when the property was taken by the government; or
when the property was transferred to the farmer-beneficiaries through the issuance of
emancipation patents, certificates of land ownership awards, or any other titles. [39]  The dates
are significant, for they shall fix the time of taking and form the basis for the determination
of just compensation.[40]
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated 30 March
2009 and the Resolution dated 20 November 2009, issued by the Court of Appeals Cagayan
de Oro City in CA-G.R. CV No. 75935-MIN, are REVERSED and SET ASIDE.
Civil Case No. 96-837 is REMANDED to the Regional Trial Court of Cagayan de Oro City,
Branch 22, for the determination of just compensation based on Section 17 of Republic Act
No. 6657 and the applicable administrative orders of the Department of Agrarian Reform,
and in consonance with prevailing jurisprudence.
Philcontrust Resources v. Santiago, July 26, 2017
The Issues
Inasmuch as the present case is one for review on certiorari from a final order of the CA, the
petition is essentially an attack on the DARAB ruling. The assault rests on two
grounds: first,  the DARAB had no subject matter jurisdiction over respondents' complaint;
and, second, the DARAB had violated petitioner's right to due process.
The Court shall resolve these issues and touch upon the manifold concerns of the case  ad
seriatim.
Discussion
The Court shall first deal with the claim that the CA had committed reversible error through
an ''improper adherence" to the rule on the period for the filing of an appeal. 41
At issue is Rule 43 of the Rules of Court,42 Section 4 of which provides:
Section 4. Period of appeal. The appeal shall be taken within fifteen (15) days from notice
of the award, judgment, final order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the denial of petitioner's motion for
new trial or reconsideration duly filed in accordance with the governing law of the court or
agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper motion
and the payment of the full amount of the docket fee before the expiration of the
reglementary period, the Court of Appeals may grant an additional period of fifteen (15)
days only within which to file the petition for review. No further extension shall be granted
except for t11e most compelling reason and in no case to exceed fifteen (15) days. (emphasis
ours)
We have said, time and again, that strict compliance with the Rules of Court is indispensable
for the orderly and speedy disposition of justice. 43 Section 4 of Rule 43 limits the extension
the appellate court may grant for the filing of an appeal. Clearly, the thirty-day extension that
petitioner requested of the CA is incompatible with the prescribed period.
Undeterred, petitioner invokes the prevailing trend in the computation of the period to
appeal, which is that of liberality. 44 Such liberality is in line with an overall jurisprudential
trend, duly noted in Asia United Bank v. Goodland Company, Inc.,45 that is inclined to a
flexible application of the Rules of Court, if so warranted. In said case, however, we
reminded the bench and the bar of a primordial judicial policy: that of a zealous compliance
with the Rules of Court. Consequently, we directed that a liberal and flexible application of
the technical rules be bestowed not only for reason of substantial justice, but also
for meritorious reasons.  We relate this to Cu-Unjieng v. CA,46 where we held that " ... the
mere invocation of substantial justice is not a magical incantation that will automatically
compel the Court to suspend procedural rules," as well as to  Redena v.  CA,47 where we held
that what constituted good and sufficient cause as would merit such suspension would be
discretionary upon the courts. Following case law, therefore, the pleading party must plead
both substantial justice and meritorious reasons before its request for liberality in the
application of the Rules of Court may be granted in accordance with sound judicial
discretion.
AGRARIAN LAW
RECENT JURISPRUDENCE
The reason petitioner gave for its inability to comply with the fifteen-day appeal period as
well as the additional fifteen days it was granted was simply that it was securing certified
true copies of certain documents from the DARAB, and that it had no control over the speed
with which the DARAB staff could release the copies. The requested copies are: (a)
petitioner's Omnibus Motion; (b) the Order of the adjudicator dated 03 September 2003; (c)
respondents' Notice of Appeal;  (d) respondents' Complaint; (e) the Order of the adjudicator
dated 7 October 2002; (f) the Certification dated 2 December 1996 of the HLURB; (g) the
Certification dated 7 August 2001 of the Tagaytay City Planning and Development Office;
(h) petitioner's Motion for Reconsideration, dated 30 October 2002, filed with the DARAB;
(i) respondents' Motion for Reconsideration dated "24 June 2005;" 48 (j) Certification dated
20 January 1992 of the DAR; (k) Certification dated 23 August 1994 of the DAR; (1)
Certification dated 31 July 1995 of the National Mapping and Resource Information
Authority; and (m) "45 other documents attached as Annexes to the Omnibus Motion dated
March 26, 2002."49
The CA found this reason to be not compelling. We see no error in this particular exercise of
discretion.
This Court is perplexed with petitioner's request for certified copies, as they include copies
of documents that petitioner itself had submitted to the DARAB and documents that were
copy-furnished to petitioner in the normal course of proceedings. Petitioner already should
have these documents in its possession, particularly in time for its appeal to the CA.
Petitioner could have preempted or dispelled our perplexity with an explanation, but it did
not. We are thus at a loss as to why, for example, petitioner had to request certified copies of
the orders of the adjudicator. Section 11, Rule VIII of the 1994 DARAB Rules of Procedure,
which prevailed at the time of the adjudicator's 2002 Order, provides:
SECTION 11. Finality of Judgment. Unless appealed, the decision, order or ruling disposing
of the case on the merits shall be final after the lapse of fifteen (15) days from receipt of a
copy thereof by the counsel or representative on record, or by the party himself who is
appearing on his own behalf. In all cases, the parties themselves shall be furnished with a
copy of the final decision. (emphasis ours)
A similar provision is likewise found in the 2003 DARAB Rules of Procedure, which
governed the adjudicator's 2003 Order.50 Notably, petitioner does not allege, let alone prove,
that it did not receive a copy of said orders. Absent such allegation and proof, petitioner is
thus deemed to have been duly furnished with the copies, following the presumption of
regularity in the performance of official duty. All told, we see no error in the CA's finding,
done in the exercise of its discretion, that petitioner presented no compelling reason for its
failure to seasonably file the appeal.
Parenthetically, petitioner also argues that the appeal should have been considered as having
been filed on time, if reckoned within the sixty-day period set by the Rules of Court for the
filing of a petition for certiorari, under Rule 65. Petitioner points out that among the
material allegations of its appeal was that the DARAB had rendered a decision "with grave
abuse of discretion amounting to lack or excess of jurisdiction," given that the board acted
outside of its subject matter jurisdiction when it took cognizance of respondents'
complaint.51 Thus, petitioner advances, the appeal qualifies as a Rule 65 petition.
We have heard of this argument before. 52 In the 2012 case of Villaran v. DARAB,53  this
Court held:
We agree with the Court of Appeals that petitioners have resorted to a wrong mode of appeal
by pursuing a Rule 65 petition from the DARAB's decision. Section 60 of Republic Act
(R.A.) No. 6657 clearly states that the modality of recourse from decisions or orders of the
then special agrarian courts is by petition for review. In turn, Section 61 of the law mandates
that judicial review of said orders or decisions are governed by the Rules of Court. Section
23
60 thereof is to be read in relation to R.A. No. 7902, which expanded the jurisdiction of the
Court of Appeals to include exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions. On this basis, the Supreme Court issued Circular
No. 1-95 governing appeals from all quasi-judicial bodies to the Court of Appeals by
petition for review regardless of the nature of the question raised. Hence, the Rules direct
that it is Rule 43 that must govern the procedure for judicial review of decisions, orders, or
resolutions of the DAR as in this case. Under Supreme Court Circular No. 2-90, moreover,
an appeal taken to the Supreme Court or the Court of Appeals by a wrong or inappropriate
mode warrants a dismissal.
Thus, petitioners should have assailed the January 16, 2001 decision and the June 25, 2002
resolution of the DARAB before the appellate court via a petition for review under Rule 43.
By filing a special civil action for certiorari under Rule 65 rather than the mandatory
petition for review, petitioners have clearly taken an inappropriate recourse. For this reason
alone, we find no reversible error on the part of the Court of Appeals in dismissing the
petition before it. While the rule that a petition for certiorari is dismissible when availed of
as a wrong remedy is not inflexible and admits of exceptions such as when public welfare
and the advancement of public policy dictates; or when the broader interest of justice so
requires; or when the writs issued are null and void; or when the questioned order amounts
to an oppressive exercise of judicial authority none of these exceptions obtains in the present
case. (emphasis ours and citations omitted)
In Spouses Bergonia v. CA,54 we held:
The right to appeal is not a natural right and is not part of due process. It is merely a
statutory privilege, and may be exercised only in accordance with the law. The party who
seeks to avail of the same must comply with the requirements of the Rules. Failing to do so,
the right to appeal is lost.
For this reason alone, we can already dismiss the petition. Nevertheless, we proceed to the
argument that the DARAB decision is void  ab initio, an argument that is couched on two
points: first, the DARAB had no jurisdiction over respondents' complaint, as the land subject
of the Complaint is not agricultural; and, second. the DARAB had violated petitioner's right
to due process.
There is supreme irony in the claim that the DARAB has no subject matter jurisdiction in
this case. To recall, what petitioner ultimately prays for is the remand of the case to the
DARAB adjudicator for further proceedings. In other words, what petitioner wants is that
the Complaint be sent back to the adjudicator of a board that petitioner believes does not
have subject-matter jurisdiction over it.
At any rate, the Court cannot subscribe to the claim for two reasons.
First.  It is axiomatic that the subject matter jurisdiction of a quasi-judicial body such as the
DARAB55 is determined  by the material allegations of the complaint before it and the
character of the reliefs prayed for, irrespective of whether the complainant is entitled to any
or all such reliefs.56 It is also axiomatic that the subject matter jurisdiction is conferred upon
the quasi-judicial body by the Constitution and law, and not by the consent or waiver of the
parties where the court otherwise would have no jurisdiction over the nature or subject
matter of the action.57
Accordingly, we turn to the subject complaint. 58 As has been observed, the complaint alleges
that respondents are the tenants and the cultivators of petitioner's property since 1935; that
the land is agricultural; that respondents and their predecessors had been paying lease rental
to the previous owner at the rate of one-fifth of the net harvest; that petitioner, the new
owner, had ordered them to stop cultivating the land and surrender its possession, and
offered them disturbance compensation; that respondents refused as the property was
covered by the agrarian reform program and they were the potential beneficiaries. As reliefs,
the Complaint prayed that respondents be declared as petitioner's agricultural tenants and
that the amounts respondents were to pay petitioner as lease rental be fixed.
These allegations and prayers clearly indicate an agrarian dispute,  a subject matter that is
within the competence of the DARAB and its adjudicators. Section 50 of R.A. No.
665759 and Section 17 of Executive Order (E.O.) No. 229 60 confer upon the DAR the primary
and exclusive jurisdiction, both original and appellate, to determine and adjudicate all
matters involving the implementation of agrarian reform. Correspondingly, and through E.0.
No. 129-A,61 the DARAB was created to assume the powers and functions of the DAR
pertaining to the adjudication of agrarian reform cases. 62 At the first instance, only the
DARAB, as the DAR's quasi-judicial body, can determine and adjudicate all agrarian
disputes,63 cases, controversies, and matters or incidents involving the implementation of the
CARP.64 In which case, the 1994 DARAB Rules of Procedure, 65 which was prevailing at the
time the subject complaint was filed, provided:
RULE II
JURISDICTION OF THE ADJUDICATION BOARD
SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction.  The Board shall
have primary and exclusive jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes involving the implementation of the Comprehensive
AgrarianReform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228,
and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential
Decree No. 27 and other agrarian laws and their implementing rules and regulations.
Specifically, such jurisdiction shall include but not be limited to cases involving the
following:
a) The rights and obligations of persons, whether natural or juridical, engaged in the
management, cultivation and use of all agricultural lands covered by the CARP and other
agrarian laws;
b) The valuation of land, and the preliminary determination and payment of just
compensation, fixing and collection of lease rentals, disturbance compensation, amortization
payments, and similar disputes concerning the functions of the Land Bank of the Philippines
(LBP);
xxxx
With respondents' allegations and prayers squaring with the above cases, the DARAB
obtained a foothold to take cognizance of their complaint.
Second.  We consider also the axiom that the jurisdiction of a tribunal cannot be made to
depend on the answer of the defendant or the agreement or waiver of the parties. 66 This
axiom exists, because otherwise, the question of jurisdiction would depend almost entirely
on defendant."67 In Laynesa v. Uy,68 the Court had occasion to rule that the DARAB retains
jurisdiction over disputes arising from agrarian reform matters even though the landowner or
defendant interposes the defense that the land involved has been reclassified from
agricultural to non-agricultural use.
In the course of assessing the present petition, however, the Court cannot help but notice
petitioner's arguments to support its claim that the subject land is no longer agricultural. If
AGRARIAN LAW
RECENT JURISPRUDENCE
only in passing, and to disabuse the mind of petitioner as well, the Court shall discuss why
these arguments are misplaced.
According to petitioner, the DARAB had declared the subject land to be non-agricultural.
Petitioner cites the following passage from the DARAB's 25 April 2005 decision as being on
point:
Even if it ceases to be an agricultural land, the owner must respect the status of the tenants or
occupants of the land as well as the relationship governing them. Plaintiffs have vested
rights over the properties in question. It is said that rights are vested when the right of
enjoyment, present or prospective, has become the property of some person as present
interest. They cannot avoid responsibility by simply saying that no tenancy relationship
existed between them as the subject property is no longer classified as agricultural. The law
must respect the contract between them. Thus, even if it ceases to be agricultural, the Board
should rule on the matter ... 69 (underlining, emphasis, and ellipsis in the original)
It is obvious, however, that the passage does not declare, whether explicitly or implicitly,
that the land is no longer agricultural. Instead, its language is subjunctive, hypothetical. By
no stretch of the imagination should it be said to be declarative. The Court need not belabor
this point. And even if we were to assume, arguendo,  that the DARAB had actually made
the vaunted declaration, then the DARAB would be acting outside of its jurisdiction. The
DARAB itself was aware of this. Contrary to what petitioner would have the Court believe,
the DARAB in the same decision took pains to expressly  state that it was not within its
competence to determine whether a piece of land was agricultural or not, to wit: "It is correct
to say that the Honorable Secretary of the DAR has the jurisdiction to determine whether or
not the subject property is no longer agricultural and not the Board. The determination is
beyond the power of the Honorable Board."70
We need not dwell at length on the claim that the subject land is no longer devoted to
agricultural activity and has been "classified" as residential. For these claims, petitioner put
together the following: (a) a certification of a "former" MAR0 71 that the land has "long been"
classified as residential; (b) a certification of the Department of Agriculture that it has ceased
to be economically viable or suitable for any agricultural purposes; (c) an HLURB Region
IV certification that per the land use map of Tagaytay City, the land is located within a
special conservation area; and (d) a certification of the City Planning and Development
Office of Tagaytay City that the land is located in a special conservation zone "as envisioned
in the city's land use and zoning plan."72
Fatally missing is a zoning ordinance, duly issued by the local government and approved by
the HLURB, on the reclassification of the subject land as residential. 73 It is this ordinance,
not any of the above, which would serve as conclusive proof of the land's "classification" as
residential. Yet even if such ordinance had been secured and presented, such would not
operate to oust the DARAB of jurisdiction. The previously cited Laynesa  v. Uy,74 held that
despite a local government's reclassification of a piece of land as non-agricultural, the
DARAB still retained jurisdiction over the therein complaint, filed by the land's tenant who
was threatened with ejectment, because the complaint's averments pertained to a matter
within the competence of the DARAB. This holds true for the complaint at bar. Incidentally,
also missing from petitioner's documents is an exemption clearance, which is issued by the
DAR Secretary. Without such clearance, petitioner would not be allowed to change the
land's use from agricultural to non-agricultural, even if it had already been reclassified by the
local government via a zoning ordinance.75
In the narration of facts, 76 petitioner mentions several ejectment cases with the MTCC,
Tagaytay City, that it allegedly filed against respondents. 77 Petitioner asserts that these cases
were decided in its favor,78 and that the CA affirmed the ruling in 2004. Attached to the
present petition are copies of the Consolidated Decision 79 and the Entry of Judgment 80 as
Annexes "F" and "G," respectively.
24
Interestingly, in the discussion of the petition's main points, however, petitioner no longer
took up or mentioned these ejectment cases. At any rate, the Court took a look at the
consolidated decision, Annex "F." It is assigned the docket number of "Civil Case Nos. 474-
2002 to 481-2002,"81 consistent with how petitioner identified the ejectment cases in the
narration of facts. In the Omnibus Motion with the adjudicator, however, where petitioner
first mentioned the cases, petitioner identifies them as "Civil Case Nos. 462-2002 to 469-
2002." To recall, petitioner alleged that respondents could be held liable for forum shopping
and perjury in view of these ejectment cases. 82 A scrutiny of the consolidated decision
however shows that its sets of respondents are not the exact same set of respondents
presently before us.83 Which brings us to another point. We have previously observed that
the petition at bar does not specifically describe its subject land; the petition refers to the
land simply as being located at Barangay Iruhin West, Tagaytay City, and titled in
petitioner's name. Curiously, despite the land's alleged registration, the petition also fails to
state its corresponding registration number/s. In contrast, the consolidated decision specifies
the registration numbers of the land in the ejectment suits, namely, Transfer Certificate of
Title Nos. 25373, 25379, 25378, 25380, 25374, 25402, 25400, and 25376. With the petition's
vague description of its subject land, it is impossible to ascertain if it is the same land in the
ejectment cases. Considering also that there is no similarity in the sets of the respondents in
the ejectment cases and in the present, the Court thus has no reason to consider that the
aforementioned ejectment cases may have any significant bearing on the case at bar.
We go now to the second point that props the argument of a void ab initio DARAB ruling,
i.e., the claim that the DARAB had violated petitioner's right to due process. The claim
chiefly rests on the fact that during the DARAB proceedings, no formal hearing on the
merits of the case was conducted.
Petitioner acknowledges that it was due to its own motion that the adjudicator had dismissed
the subject complaint, thereby obviating a formal hearing at that stage. To recall, the
dismissal led to respondents' elevation of the Complaint to the DARAB, which eventually
paved a way for a ruling in respondents' favor. Petitioner now contends that what the
DARAB should have done was to remand the case to the adjudicator for a formal hearing.
Citing Paranaque Kings Enterprises, Incorporated v. CA,84 petitioner insists that it was
"basic" that when a dismissal order is reviewed by a higher tribunal, the review is limited
only to the propriety of the dismissal.85 In other words, the DARAB should not have decided
the case. Petitioner thus argues that in this instance, when the DARAB ruled upon the merits
of respondents' complaint without a formal hearing, the board failed to give petitioner an
opportunity to present its case. In fine, petitioner asserts that the DARAB acted without
jurisdiction, for the reason that the board obtains appellate jurisdiction only after an
adjudicator below had conducted a formal hearing on a complaint and issued a ruling on the
merits, which did not happen in this case. Following this chief premise, petitioner also
contends that: (a) it was denied of the opportunity to file an answer to the complaint; (b) no
first and second preliminary conferences were held before the adjudicator, Contrary to Rule
IX, Section 1 of the DARAB Rules; (c) it was denied of an opportunity to file an appeal-
memorandum before the DARAB, contrary to Rule XIV, Section 9 of the DARAB Rules;
and (d) it was denied of an opportunity to file a reply-memorandum.
Petitioner also argues in this wise: "[w]orse, there was no evidentiary basis at all to the
conclusion of DARAB that respondents were tenants of petitioner over the property in
question. This evidentiary lack comes from the fact that no Answer and no further
proceedings to receive evidence ever took place before the Adjudicator himself, much less
before the DARAB."86
This sweeping argument is specious and incorrect. The burden of proving that respondents
had tenancy rights, as an aspect of their cultivation of the subject land, rested on the party
that had alleged it, i.e., the respondents. If such evidence be lacking, then the blame should
fall on respondents' complaint, and not on petitioner's Answer-or alleged lack thereof.
Secondly, it is not true that petitioner was denied the opportunity to file an answer. As noted
in the narration above, petitioner had in fact filed an answer with the adjudicator, but later
requested its withdrawal via an omnibus motion. Correspondingly, petitioner should not be
heard to say that it was deprived of the chance to file an answer. Finally, it is not true that
there is no evidence on record of respondents' tenancy rights. The sworn affidavits of
respondents and their witness, attached as annexes "A" and "B" of the complaint, were
submitted precisely in support of this factual allegation.87 As the present case is a Rule 45
review, the Court as a general rule cannot calibrate the evidence presented below. At any
rate, the Court is satisfied that, contrary to what petitioner would have the Court believe,
evidence of respondent's tenancy rights are in fact present in the records of the DARAB.
In Villaran v. DARAB,88 we held that in administrative proceedings, a fair and reasonable
opportunity to explain one's side suffices to meet the requirements of due process. Thus:
The essence of procedural due process is embodied in the basic requirement of notice and a
real opportunity to be heard. In administrative proceedings, such as in the case at bar,
procedural due process simply means the opportunity to explain one's side or the opportunity
to seek a reconsideration of the action or ruling complained of. "To be heard" does not mean
only verbal arguments in court; one may be heard also thru pleadings. Where opportunity to
be heard, either through oral arguments or pleadings, is accorded, there is no denial of
procedural due process.89
Petitioner certainly availed of the ample opportunities it had been given to present its side. It
had filed an answer and an omnibus motion with the adjudicator. It had filed a motion for
reconsideration with the DARAB.90 Thus, it should not be said that it was deprived of due
process.
Moreover, as respondents correctly point out in their comment, the DARAB and its
adjudicators are not bound by the technical rules. Section 3, Rule I, of the 1994 DARAB
Rules of Procedure provides:
SECTION 3. Technical Rules Not Applicable.  The Board and its Regional and Provincial
Adjudicators shall not be bound by technical rules of procedure and evidence as prescribed
in the Rules of Court, but shall proceed to hear and decide all agrarian cases, disputes or
controversies in a most expeditious manner, employing all reasonable means to ascertain the
facts of every case in accordance with justice and equity.x x x
This precautionary measure, established to assist expediency, was retained by the 2003
DARAB Rules of Procedure,91 which was effective at the time of the filing of
respondents' Notice of Appeal.  Given that the DARAB is mandated by its own rules to
resolve cases expeditiously, unhampered by the technical rules, petitioner's lamentations
involving foregone preliminary conferences and foregone submissions of reply and/or
appeal-memoranda are woefully out of place. Inasmuch as the DARAB operates under the
norms of procedural due process, the case cited by petitioner, Paranaque Kings,92 is not
availing. The tribunal involved in Paranaque Kings  was a trial court which, by its very
nature, must certainly cleave to the procedural laws. The Rules of Court does not provide
that the courts are not to be bound by the technical rules of procedure and evidence that it
contains.
All told, petitioner had not been denied due process in the DARAB proceedings.
WHEREFORE, premises considered, the Petition is hereby DENIED for lack of merit. The
Resolutions dated 19 June 2006 and 12 September 2006 of the Court of Appeals in CA-G.R.
SP No. 93735 are AFFIRMED.
SO ORDERED.
Land Bank v. Omengan, July 19, 2017
AGRARIAN LAW
RECENT JURISPRUDENCE
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 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 detail 46 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.
In LBP v. Heirs of Maximo Puyat,47the Court explains:
25
[T]he determination of just compensation is a judicial function; hence, courts cannot be
unduly restricted in their determination thereof. To do so would deprive the courts of their
judicial prerogatives and reduce them to the bureaucratic function of inputting data and
arriving at the valuation. While the courts should be mindful of the different formulae
created by the DAR in arriving at just compensation, they are not strictly bound to adhere
thereto if the situations before them do not warrant it. x x x:
x x x [T]he basic formula and its alternatives - administratively determined (as it is not found
in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998) - although
referred to and even applied by the courts in certain instances, does not and cannot strictly
bind the courts. To insist that the formula must be applied with utmost rigidity whereby the
valuation is drawn following a strict mathematical computation goes beyond the intent and
spirit of the law. The suggested interpretation is strained and would render the law inutile.
Statutory construction should not kill but give life to the law. As we have established in
earlier jurisprudence, the valuation of property in eminent domain is essentially a judicial
function which is vested in the regional trial court acting as a SAC, and not in administrative
agencies. The SAC, therefore, must still be able to reasonably exercise its judicial discretion
in the evaluation of the factors for just compensation, which cannot be arbitrarily restricted
by a formula dictated by the DAR, an administrative agency. Surely, DAR AO No. 5 did not
intend to straightjacket the hands of the court in the computation of the land valuation. While
it provides a formula, it could not have been its intention to shackle the courts into applying
the formula in every instance. The court shall apply the formula after an evaluation of the
three factors, or it may proceed to make its own computation based on the extended list in
Section 17 of Republic Act No. 6657, which includes other factors. 48
The above pronouncement is but a reflection of the Court's unwavering sentiment as
enunciated in the seminal case of EPZA v. Dulay, et al.,49that the determination of just
compensation is, and remains, a judicial function.
In fact, the question as to whether or not the R TC-SA Cs are mandated to strictly adhere to
DAR A.O. No. 5-98 is not entirely novel.1âwphi1 In the recent case of Spouses Nila and
Erlinda Mercado v. LBP,50the Court harmonized and summarized its pronouncements as to
the determination of just compensation vis-a-vis  the application of the prescribed formulae
under DAR A.O. No. 5-98 as follows:
In the recent cases of Land Bank of the Philippines v. Yatco Agricultural Enterprises, Land
Bank of the Phlippines v. Peralta, and Deartment of Agrarian Reform v. Spouses Diosdado
Sta. Romana and Resurreccion 0. Ramos,  the Court has made declarations as to the
determination of just compensation.
In Yatco,  the Court stated that the determination of just compensation is a judicial function
and the RTC, acting as SAC, has the original and exclusive power to determine just
compensation. It was also emphasized therein that in the exercise of its function, the RTC
must be guided by the valuation factors under Section 17 of RA 6657, translated into a basic
formula embodied in DAR A.O. No. 5. The factors under RA 6657 and the formula under
DAR A.O. No. 5 serve as guarantees that the compensation arrived at would not be absurd,
baseless, arbitrary or contradictory to the objectives of the agrarian reform laws. However,
the Court clarified that the RTC may relax the application of the DAR formula, if warranted
by the circumstances of the case and provided the R TC explains its deviation from the
factors or formula above mentioned.
In Peralta,  the Court confirmed the mandatory character of the guidelines under Section 17
of RA 6657 and restated that the valuation factors under RA 6657 had been translated by the
DAR into a basic formula as outlined in DAR A.O. No. 5.
In Sta. Romana,  it was held that the RTC is not strictly bound by the formula created by the
DAR, if the situations before it do not warrant its application. The RTC cannot be arbitrarily
restricted by the formula outlined by the DAR. While the DAR provides a formula, "it could
not have been its intention to shackle the courts into applying the formula in every instance."
Summarizing the pronouncements in the above-cited cases, the rule is that the RTC must
consider the guidelines set forth in Section 17 of RA 6657 and as translated into a formula
embodied in DAR A.O. No. 5. However, it may deviate from these factors/formula if the
circumstances warrant or, as stated in Sta. Romana,  "if the situations before it do not warrant
its application." In such a case, the RTC, as held in Yatco, must clearly explain the reason
for deviating from the aforesaid factors or formula.51 (Emphasis ours and citations omitted)
Emphatically, the Court En Banc held in the case of Ramon M Alfonso  v. LBP and
Department of Agrarian Reform,52and also in LBP, et al. v. Heirs of Lorenzo Tanada and
Expedita Ebarle,53that:
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.54 (Emphasis in the original)
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. 55
The RTC-SAC Incompletely
Applied the Basic Formula
Provided under DAR A.O. No. 5-
98; Reason for Deviation not
Clearly Explained
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:
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-
AGRARIAN LAW
RECENT JURISPRUDENCE
payment of taxes or loans secured from any government financing institution on the said AGP= Average Gross Production corresponding to the latest available 12 months' gross
land shall be considered as additional factors to determine its valuation. production immediately preceding the date of FI (field investigation) ULV = [Php71,250 (.90)] + [Php60,000 (.10)]

As translated into formula, the pertinent provisions of DAR A.O. No. 5-98 provides:
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)
  = Php64,125 + Php6,000
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
  = Php70,125
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.
LV = Php70,125(6.001)

CO = Cost of Operations
Where:   = Php420,820.125

Whenever the cost of operations could not be obtained or verified, an assumed net income
LV =Land Value rate (NIR) of 20% shall be used. Landholdings planted to coconut which are productive at With respect to the remaining four has, the parties agree that the same is cogonal. While
the time of FI shall continue to use the assumed NIR of 70 %. DAR and LBP shall continue respondent testified that it is also planted with fruit-bearing trees, bananas, cassava, and
to conduct joint industry studies to establish the applicable NIR for each crop covered under camote, he failed to establish the aggregate value of the crops produced. Thus, we cannot
CNI =Capitalized Net Income CARP. 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
CS = Comparable Sales (which it computed at Php 40,000) considering that the AGP and SP factors are not present.
0.12 = Capitalization rate59

MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant, and applicable.
Al. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
There being no CNI and CS, and only the MV is available, the RTCSAC should have
Petitioner argues that the RTC-SAC erred in computing the CNI as the Average Gross applied the formula prescribed under paragraph A3 of DAR A.O. No. 5-98, i.e.,  LV = MV x
Production (AGP) was not based on the latest available 12 months' gross production 2.
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 Thus, the UL V of the four has idle land should be:
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.

LV = (CNI x 0.9) + (MV x 0.1) ULV = Phpl0,000 x 2

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)
The selling price (SP) was, in tum, based by the RTC-SAC on the certification issued by the
NF A that the buying price of palay per k in the year 2000 is Php 10 during summer and Php   = Php20,000
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 NF A 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.
LV = Php20,000(4.000)

A3. When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV=MVx2
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 RTCSAC ostensibly used the
basic formula prescribed in paragraph Al 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.58Where:
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 P ARAD, 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 Phpl 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 (UL V) per ha of the
unirrigated riceland should be:
  = Php80,000
We also note that, in addition to the foregoing, the R TC-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.
Modification of Interest Rate

26
AGRARIAN LAW
RECENT JURISPRUDENCE
Petitioner assails the CA's imposition of six percent (6%) interest per annum  on the ground
that DAR A.O. No. 13-94 is inapplicable to expropriation under the agrarian reform
program. In any case, petitioner argues that it cannot be held liable for interest in the absence
of delay in the payment of just compensation.
There is no need to resolve whether DAR A.O. No. 13-94, which is specifically made
applicable to lands covered by P.D. No. 27 and E.O. No. 228, also applies to lands covered
by R.A. No. 6657 as case law 64 settles and instructs that the payment of just compensation
for the expropriated property amounts to an effective forbearance on the part of the State,
thus:
In other words, the just compensation due to the landowners amounts to an effective
forbearance on the part of the state-a proper subject of interest computed from the time the
property was taken until the full amount of just compensation is paid-in order to eradicate
the issue of the constant variability of the value of the currency over time. In the Court's own
words:
The Bulacan trial court, in its 1979 decision, was correct in imposing interest[s] on the zonal
value of the property to be computed from the time petitioner instituted condemnation
proceedings and "took" the property in September 1969. This allowance of interest on the
amount found to be the value of the property as of the time of the taking computed, being an
effective forbearance, at 12% per annum should help eliminate the issue of the constant
fluctuation and inflation of the value of the currency over time x x x. 65
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%) 67 per annum  should be imposed on
the balance due from the date of the taking, or on March 20, 2000 68 until June 30, 2013 and
the interest rate of six percent (6%) per annum is imposed from July 1, 2013 until fully paid.
WHEREFORE, the petition is GRANTED. The Decision dated January 6, 2011 and
Resolution dated April 7, 2011 of the Court of Appeals in CA-G.R. SP No. 110387
are REVERSED and SET ASIDE.
Petitioner Land Bank of the Philippines is ordered to pay to respondent Miguel Omengan the
amount of Php 281,295 .145 as balance on the final just compensation for the 10.001
hectares of expropriated property. Interest at the rate of twelve percent (12%)  per annum on
the balance of final just compensation is imposed from March 20, 2000 until June 3 0, 2013
and an interest at the rate of six percent (6%) per annum  is imposed from July 1, 2013 until
fully paid.
SO ORDERED.
Sandigan, et al. v. USM, June 28, 2017
27
We find that despite the lack of application for exemption, the CA was correct in ruling that
the subject land was exempt from the coverage of RA6657.
Section 10 of RA 6657, as amended by Republic Act No. 7881, provides:
Sec. 10. Exemptions and Exclusions. —
xxx
(c) Lands actually, directly and exclusively used and found to be necessary for national
defense, school sites and campuses, including experimental farm stations operated by
public or private schools for educational purposes, seeds and seedling research and
pilot production center, church sites and convents appurtenant thereto, mosque sites and
Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies
and penal farms actually worked by the inmates, government and private research and
quarantine centers and all lands with eighteen percent (18%) slope and over, except those
already developed, shall be exempt from the coverage of this Act. (Emphasis supplied.)
As correctly noted by the CA, prior to the date of effectivity of RA 6657 on June 15, 1988,
the subject 1023-hectare land has already been segregated and reserved for USM's use.
[53]
 Section 11 of RA 763 provides:
Sec. 11. The following property and all its improvements are hereby transferred to the
[USM] for the use of the [University] in carrying out the purposes of this Act:
C.T. Nos. 5 and 8, Lots Nos. 650-M and 649, PID-B.L. Survey 5 C-338-A, with sales
Applications Nos. 338-A (E-29) of the Rio Grande Rubber Estate Company, situated in the
municipal district of Kabacan, Province of Cotabato, Mindanao; containing an area of
1023.0025 hectares more or less (EPC Acct. No. 946).
The produce and income of the foregoing property and its improvements shall be expended
by the [University] as hereinabove stated.
We agree with the CA that Congress, through RA 763, as amended by RA 4127, withdrew
the land from the alienable and disposable lands of the public domain and reserved it for the
exclusive use of the school. The grant under Section 11 of RA 763 is necessary for USM to
carry out its purpose under Section 1, to wit:
Sec l. There is hereby established in the municipal district of Kabacan, Province of Cotabato,
Island of Mindanao, a vocational college to be known as the [USM] which will offer not
only elementary, secondary general, secondary vocational and normal courses of instruction
but also collegiate agricultural and industrial courses leading to bachelors' degrees. It shall
also offer opportunities for manual labor as assistance to self-supporting students.
Similarly, in Department of Agrarian Reform v. Philippine Communications Satellite
Corporation[54] (DAR v. PHILCOMSAT), we ruled that the property of PHILCOMSAT has
been excluded from the scope of RA 6657 after it was decreed by Presidential Decree No.
1845 (PD 1845) as a security zone. [55] Thus, subjecting it to the CARP would negate the very
purpose for which PD 1845, as amended, was decreed.[56]
We agree with USM that this case is more identical with CMU v. DARAB than with DAR v.
DECS. In CMU v. DARAB, the subject land, by virtue of a presidential proclamation, was
also reserved as a school site in favor of the university. Thus, at the time of the enactment of
RA 6657, it was no longer alienable and disposable land of the public domain. [57] In DAR v.
DECS, however, there was no such proclamation or reservation, but only an ordinary
donation of the subject lands from a private individual. Thus, the lands fall under the
category of alienable and disposable lands of the public domain suitable for agriculture
which can be proper subjects of the DAR's Notice of Coverage. [58]
The fact that USM did not file an application for exemption before the DAR to prove actual,
direct, and exclusive use for school and other educational purposes under Section 10 of RA
6657, as amended, is not fatal to its case. We also stress that USM had, in fact, opposed the
notice of coverage several times. As correctly held by the CA, RA 763 which was issued
prior to RA 6657 already withdrew the 1023-hectare land from the coverage of CARP. The
lack of an application for an exemption by USM cannot deprive the latter of the lot over
which it already acquired a vested right under Section 11 of RA 763.
To our mind, the reservation made by Congress also removes the burden from USM to prove
that the land will be actually, directly, and exclusively used for its purposes. As we have
previously held in DAR v. PHILCOMSAT:
We find it not necessary to determine whether or not the subject property is actually,
directly, and exclusively used for national defense, to be exempted from the coverage
of R.A. 6657. The law which decreed the areas a security zone is very clear in its
purpose. It is a principle in statutory construction that where there are two statutes that
apply to a particular case, that which was specifically designed for the said case must prevail
over the other.
[T]he determination as to whether or not the subject property is actually, directly, and
exclusively used for national defense usually entails a finding of fact which this Court will
not normally delve into considering that, subject to certain exceptions, in a petition for
certiorari under Rule 45 of the Rules of Court, the Court is called upon to review only errors
of law. Suffice it to state, however, that as a matter of principle, it cannot seriously be denied
that the act of securing [] vital communication facilities is an act of national defense.  Hence,
the law, by segregating an area for purposes of a security zone for such facilities, in
effect devoted that area to national defense.[59] (Citations omitted. Emphasis supplied.)
USM now intends to use its land for the expansion of PICRI's experimental station for palm
oil production. It should not be prevented from doing so just because it, at some point,
allowed petitioners to occupy and use its property under extraordinary circumstances.
At any rate, in CMU v. DARAB, we cautioned against a literal or technical definition of the
words "actual, direct, and exclusive use" because it will defeat the true meaning of Section
10, RA 6657 as to what lands are excluded from the coverage of the CARP. We held that a
too literal definition will restrict the land to its present needs or to a land area presently and
actively exploited and utilized by the university in carrying out its present educational
program with its present student population and academic facilities. By doing so, a very
significant factor of growth of the university in the years to come will be overlooked.
[60]
 Significantly, we also held that in determining when and what lands are found to be
necessary for use by CMU, the school is in the best position to resolve and answer the
question and pass upon the problem of its needs in relation to its avowed objectives for
which the land was given to it by the State.[61]
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated September 18, 2009 and January 11, 2010, respectively, are AFFIRMED.
SO ORDERED."
Spouses Rufo Valencia and Amparo Maulion v. Heirs of Sixto Marella, Jr., June 7, 2017
Petitioners' main defense against the cancellation of their CLOA and title is that the deeds of
conveyance are void pursuant to the last paragraph of Section 6 of RA 6657 which states:
SEC. 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
Upon the effectivity of this Act, any sale, disposition, lease, management, contract or
AGRARIAN LAW
RECENT JURISPRUDENCE
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.
This provision is, in turn, implemented by DAR AO No. 01, series of 1989, or the DAR
Rules and Procedures Governing Land Transactions.
DAR AO No. 1, series of 1989 set the deadline for the registration of transfers of agricultural
land prior to the effectivity of RA 6657 —
II
Rules on Validity of Land Transactions
xxx
 B. The following transactions are not valid:
1. Sale, disposition, lease, management contract or transfer of possession of private lands
executed by the original landowner prior to June 15, 1988, which are not registered on or
before September 13, 1988, or those executed after June 15, 1988, covering an area in excess
of the five-hectare retention limit in violation of R.A. 6657.
xxx
Finding merit in petitioners' argument, the DARAB granted their appeal and dismissed the
petition for cancellation, exemption/exclusion, and ejectment on the ground that respondents
are not the real parties in interest. The DARAB also declared the deeds of conveyance void
for allegedly violating the last paragraph of Section 6 of RA 6657. We find, however, that in
doing so, the DARAB prematurely declared the deeds of conveyance void and deprived
respondents of their right to due process.
At the time the DARAB nullified the deeds of conveyance on November 24, 2003, DAR
Memorandum Circular (MC) No. 02, series of 2001 or the "Guidelines on Annulment of
Deeds of Conveyance of Lands Covered by the [CARP] Executed in Violation of Section 6,
Paragraph 4 of [RA] No. 6657" was already in effect. The circular provides for the operating
procedures for the annulment of deeds of conveyance executed in violation of RA 6657:
SEC. 4. Operating Procedures.  — The procedures for annulment of deeds of conveyance
executed in violation of RA 6657 are as follows:
a) The Municipal Agrarian Reform Officer (MARO) shall undertake the following:
1. Secure certified true copy of certificate of title of the subject landholding, deed of
conveyance from the Register of Deeds (ROD), and Certificate of Aggregate Landholdings
from the Assessor's Office;
2. Identify the names of the original landowner- transferor and the transferee and prepare a
description of the land subject of illegal transfer; and
3. Submit a report on the illegal transaction, together with all relevant documents to the
Provincial Agrarian Reform Officer (PARO), through the Chief, Legal Division.
b) The Chief, Legal Division, of the Provincial Agrarian Reform Office, shall have the
following responsibilities:
28
1. Upon receipt of the MARO report, determine whether or not there was illegal transfer first be a validation from the DAR, through a final and executory decision, that the
of agricultural lands pursuant to Sec. 6, par. 4 of RA 6657; challenged transfer or disposition or transfer is illegal or unauthorized.
2. If there was illegal transfer, file a petition for annulment of the deed of conveyance in Due process must be observed in the annulment of allegedly illegal and unauthorized deeds
behalf of the PARO before the Provincial Agrarian Reform Adjudicator (PARAD). The of conveyances, regardless of whether they were executed before or after the effectivity of
petition shall state the material facts constituting the violation and pray for the issuance of an RA 6657. The need to observe administrative due process in the implementation of the
order from the PARAD directing the ROD to cancel the deed of conveyance and the TCT CARP cannot be overemphasized for it involves the taking of private property. We have
generated as a result thereof. As legal basis therefor, the petition shall cite Section 50 of RA held, time and again, that the CARP was not intended to take private property without due
6657 and Rule II, Section l(c) and (e) of the D ARAB New Rules of Procedure; process of law.[45]  As it stands, the conveyances between Corazon and respondents remain
valid.
3. Represent the PARO in the hearings of the petition and ensure that the case is
expeditiously resolved; Considering the foregoing, it was erroneous for the DARAB to immediately nullify the
deeds of conveyance without conducting the requisite proceedings. Consequently,
4. Upon finality of the decision granting annulment of the deed of conveyance, immediately respondents remain as transferees of the property, with the legal personality to bring the
secure a writ of execution to implement the same; present action before the PARAD.
5. After the writ of execution has been served, secure from the ROD the documents
necessary to facilitate land acquisition in the name of the original landowner. Thereafter, II
indorse the documents to the CARPO for Operations; and
The awards of land to qualified beneficiaries under the State's agrarian reform program are
6. In the event of an adverse decision or a denial of the petition, file a Notice of Appeal evidenced by Emancipation Patents (EPs), CLOAs, and other titles (e.g., Certificate of Land
within the 15- day reglementary period with the DARAB, and, thereafter, transmit the Title [CLT]). Specifically, a CLOA is evidence of ownership of land by a beneficiary under
records of the case to the Director, Bureau of Agrarian Legal Assistance (BALA), for RA 6657.[46]  Different requirements and procedures under the laws govern their issuances,
prosecution of the appeal. while their cancellation is sanctioned by the rules and procedures issued by the DAR.
c) The CARPO for Operations shall immediately initiate the acquisition and
distribution of the lands subject of illegal transfer upon receipt of the duly-served writ At the time of the filing of respondents' petition in 1996, the procedure governing the
of execution and other documents from the ROD. (Emphasis supplied.) cancellation of CLOAs, EPs, and other titles can be found under DAR AO No. 2, series of
1994. The grounds are enumerated in Part IV, paragraph B of the AO, as follows:
DAR MC No. 2, series of 2001, shows that when the cancellation of an illegal transfer under
Section 6, par. 4 of RA 6657 is initiated through a petition for annulment of the deed of B. Grounds for the cancellation of registered EPs or CLOAs may include but not limited to
conveyance filed before the PARAD, the MARO and the PARO Legal Division Chief must the following:
first follow a specific process before filing the petition.
1. Misuse or diversion of financial and support
First, the MARO should collate the relevant documents showing the identity of the
services extended to the [Agrarian Reform
land (i.e.,  certified true copy of certificate of title of the subject landholding, description of
Beneficiary (ARB)]; (Section 37 of R.A. No. 6657)
the land subject of illegal transfer), the transaction or transfer of the land (i.e., deed of
conveyance from the Register of Deeds), the basis for inferring that the transfer is in
violation of Section 6, paragraph 4 of RA 6657 (i.e., certificate of aggregate landholdings
2. Misuse of the land; (Section 22 of R.A. No. 6657)
from the Assessor's Office), and the identity of the parties to the transfer  (i.e.,  identify the
names of the original landowner-transferor and the transferee). Thereafter, the MARO will
submit a report on the illegal transaction with the relevant documents to the Chief, Legal 3. Material misrepresentation of the ARB's basic
Division of the PARO. Upon submission of the report, the PARO Legal Division Chief will qualifications as provided under Section 22 of R.A.
determine whether there was illegal transfer of agricultural lands pursuant to Section 6, No. 6657, P.D. No. 27, and other agrarian laws;
paragraph 4 of RA 6657. Once the PARO Legal Division Chief determines that there was an
illegal transfer of agricultural lands pursuant to Section 6, paragraph 4 of RA 6657, he shall
file, in behalf of the PARO, a petition for annulment of the deed of conveyance before the 4. Illegal conversion by the ARB; (Cf. Section 73,
PARAD. The petition shall state the material facts constituting the violation, pray for the Paragraph C and E of R.A. No. 6657)
issuance of an order from the PARAD directing the Register of Deeds to cancel the deed of
conveyance and the title, and cite Section 50 of RA 6657 and Rule II, Section 1 (c) and (e)
5. Sale, transfer, lease, or other forms of conveyance
of the DARAB New Rules of Procedure. This petition shall be the subject of hearings before
by a beneficiary of the right to use or any other
a decision is reached. Only upon finality of the decision in this proceedings will a writ of
usufructuary right over the land acquired by virtue
execution issue. Notably, it is the receipt of this writ of execution by the proper officer
which triggers the initiation of the acquisition proceedings. of being a beneficiary, in order to circumvent the
provisions of Section 73 of R.A. No. 6657,
P.D.No. 27, and other agrarian laws. However, if
There is no logical reason why the above procedure should not apply in this case. The
DARAB erred in cancelling the deeds on the sole ground that they were not registered the land has been acquired under P.D. No. 27/E.O.
No. 228, ownership may be transferred after full
within the time frame set by RA 6657. While the proviso in the last paragraph of Section 6
payment of amortization by the beneficiary; (Sec. 6
provides a deadline for registration of dispositions or transfers executed prior to RA 6657 to
lend validity to them, the fact alone of being unregistered does not automatically render ofE.O.No. 228)
these dispositions or transfers void. A prior determination in the proper proceedings, as
illustrated in DAR MC No. 2, series of 2001, will ensure that the conveyances involve land
6. Default in the obligation to pay an aggregate of
beyond the retention limit set in Section 6 of RA 6657.  Also, such proceedings will give the
three (3) consecutive amortizations in case of
parties to the conveyances the opportunity to raise defenses such as exemption from CARP
voluntary land transfer/direct payment scheme,
coverage. Thus, before a transferee is deprived of a land, due process dictates that there must
AGRARIAN LAW
RECENT JURISPRUDENCE
except in cases of fortuitous events and force
majeure;
7. Failure of the ARBs to pay for at least three (3)
annual amortizations to the LBP, except in cases of
fortuitous events and force majeure; (Section 26
of R.A. 6657);
8. Neglect or abandonment of the awarded land
continuously for a period of two (2) calendar years
as determined by the Secretary or his authorized
representative; (Section 22 of RA 6657) ;
9. The land is found to be exempt/excluded from P.D.
No. 27/E.O. No. 228 or CARP coverage or to be
part of the landowner's retained area as determined
by the Secretary or his authorized representative;
and
10. Other grounds that will circumvent laws related to
the implementation of agrarian reform program.
By the very language of AO No. 2, series of 1994, the list is not exhaustive. In addition to
the grounds listed above, there are cases where CLOAs, EPs and CLTs were nullified for
being issued in violation of the landowner's right to due process.
In the early case of Roxas & Co., Inc. v. Court of Appeals,,[47]  we declared void the
acquisition proceedings for failure to send the required notices under RA 6657 and pertinent
DAR administrative issuances. However, in view of the pending application for conversion
before the DAR, we refrained from nullifying the CLOAs and remanded the case to the
DAR for "proper acquisition proceedings and determination of the petitioner's application
for conversion."[48]  We recognized the mandate of the DAR in approving applications for
conversion of land from agricultural to non-agricultural.[49]
Nevertheless, in later cases, we proceeded to nullify both the proceedings, which were
marred by lack of due process, and the awards and titles arising from the same.
In Heirs of Nicolas Jugalbot v. Court of Appeals,[50] we ordered the Register of Deeds to
cancel a TCT and a Tax Declaration for being issued without factual and legal basis. There,
we found that not only did the DAR fail to give proper notice to the landowner, it also did
not conduct an ocular inspection and investigation on the subject property. [51]  We said that
"any act committed by the DAR or any of its agencies that results from its failure to comply
with the proper procedure for expropriation of land is a violation of constitutional due
process and should be deemed arbitrary, capricious, whimsical and tainted with grave abuse
of discretion."[52]
We are aware of our ruling in Roxas & Co., Inc.,  where we held that a due process violation
does not give this Court the power to nullify CLOAs already issued to farmer-beneficiaries
before the DAR is given a chance to correct its lapses in the acquisition proceedings. We
have, however, since qualified this ruling in Heirs of Dr. Jose Deleste  v. Land Bank of the
Philippines[53]  where we held:
Manifesting her disagreement that this Court cannot nullify illegally issued CLOAs and
should first ask the DAR to reverse and correct itself, Justice Ynares-Santiago, in her
Concurring and Dissenting Opinion, stated that "[i]f the acts of DAR are patently illegal and
the rights of Roxas & Co. violated, the wrong decisions of DAR should be reversed and set
aside. It follows that the fruits of the wrongful acts, in this case the illegally issued CLOAs,
must be declared null and void." She also noted that "[i]f CLOAs can under the DAR's own
order be cancelled administratively, with more reason can the courts, especially the Supreme
Court, do so when the matter is clearly in issue."
29
In the same vein, if the illegality in the issuance of the CLTs is patent, the Court must
immediately take action and declare the issuance as null and void. There being no question
that the CLTs in the instant case were "improperly issued, for which reason, their
cancellation is warranted." The same holds true with respect to the EPs and certificates of
title issued by virtue of the void CLTs, as there can be no valid transfer of title should the
CLTs on which they were grounded are void. Cancellation of the EPs and OCTs are clearly
warranted in the instant case since, aside from the violation of petitioners' right to due
process of law, the subject property is outside the coverage of the agrarian reform
program. [54]
In the more recent case of Holy Trinity Realty & Development Corporation v. Dela
Cruz,  [55] we held that "[t]he procedures provided by Section 16 of [RA 6657] and its
relevant DAR administrative issuances are to ensure compliance with the due process
requirements of the law. The result of their noncompliance is to deprive the landowner of its
constitutional right to due process." [56]  Thus, we ruled that the EPs awarded to respondents
should be nullified. We held that denial of due process to the petitioner sufficed to cast the
impress of nullity on the official act thereby taken. A decision rendered without due process
is void ab initio and may be attacked directly or collaterally. All the resulting acts are also
null and void. [57]
Bearing these principles in mind, we agree with the CA that the CLOAs and the TCTs
should be nullified for having been issued in patent violation of RA 6657 and its
implementing rules, which effectively deprived respondents of their property without due
process of law.
Section 16 of RA 6657 outlines the procedure to be observed in the acquisition of private
agricultural lands:
SEC. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of
private lands, the following procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR
shall send its notice to acquire the land to the owners thereof, by personal delivery or
registered mail, and post the same in a conspicuous place in the municipal building and
barangay hall of the place where the property is located. Said notice shall contain the
offer of the DAR to pay a corresponding value in accordance with the valuation set forth in
Sections 17, 18, and other pertinent provisions hereof.
(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR of
his acceptance or rejection of the offer.
(c) If the landowner accepts the offer of the DAR, the 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 muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land requiring the landowner, the LBP
and other interested parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from 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. (Emphasis and underscoring
supplied.)
Section 16(a) of RA 6657 requires that after identification of the land, landowners, and
farmer beneficiaries, the DAR shall send a Notice of Acquisition to the landowner, by
personal delivery or registered mail, and post it in a conspicuous place in the municipal
building and barangay hall of the place where the property is located. We have previously
held that the law leaves much to be desired as to how the identification process must be
made. Thus, DAR issued administrative orders to fill in the gaps in the procedure. [58]  The
pertinent DAR administrative order in this regard is DAR AO No. 12, series of 1989, as
amended by DAR AO No. 9, series of 1990, and DAR AO No. 1, series of 1993. In  Roxas &
Co., Inc,  we explained how DAR AO No. 1, series of 1993 modified the identification
process of the land by requiring a Notice of Coverage to the landowner:
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the
number of government agencies involved in the identification and delineation of the land
subject to acquisition. This time, the Notice of Coverage is sent to the landowner before the
conduct of the field investigation and the sending must comply with specific requirements.
Representatives of the DAR Municipal Office (DARMO) must send the Notice of Coverage
to the landowner by "personal delivery with proof of service, or by registered mail with
return card," informing him that his property is under CARP coverage and that if he desires
to avail of his right of retention, he may choose which area he shall retain. The Notice of
Coverage shall also invite the landowner to attend the field investigation to be scheduled at
least two weeks from notice. The field investigation is for the purpose of identifying the
landholding and determining its suitability for agriculture and its productivity. A copy of the
Notice of Coverage shall be posted for at least one week on the bulletin board of the
municipal and barangay halls where the property is located. The date of the field
investigation shall also be sent by the DAR Municipal Office to representatives of the LBP,
BARC, DENR and prospective farmer beneficiaries. The field investigation shall be
conducted on the date set with the participation of the landowner and the various
representatives. If the landowner and other representatives are absent, the field investigation
shall proceed, provided they were duly notified thereof. Should there be a variance between
the findings of the DAR and the LBP as to whether the land be placed under agrarian reform,
the land's suitability to agriculture, the degree or development of the slope, etc., the conflict
shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly
conduct further investigation. The team's findings shall be binding on both DAR and LBP.
After the field investigation, the DAR Municipal Office shall prepare the Field Investigation
Report and Land Use Map, a copy of which shall be furnished the landowner "by personal
delivery with proof of service or registered mail with return card." Another copy of the
Report and Map shall likewise be posted for at least one week in the municipal or barangay
halls where the property is located.
Clearly then, the notice requirements under the CARL are not confined to the Notice of
Acquisition set  forth in Section 16 of the law. They also include the  Notice of Coverage
first laid down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR
A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of Coverage
does not merely notify the landowner that his property shall be placed under CARP
and that he is entitled to exercise his retention right; it also notifies him, pursuant to
DAR A.O. No. 9,  Series of 1990, that a public hearing shall be conducted  where he
and representatives of the concerned sectors of society may attend to discuss the results
of the field investigation, the land valuation and other pertinent matters. Under DAR
A.O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner that a
field investigation of his landholding shall be conducted where he and the other
representatives may be present.[59] (Emphasis supplied.)
It may be understandable in this case that the Notice of Coverage was not addressed or sent
to respondents, considering that the deeds of conveyance were unregistered at the time of
acquisition. However, it remains an undisputed fact that the Notice of Coverage addressed to
"Corazon Agoncillo c/o Sixto Marella[,] Jr." was returned to sender and marked
"unclaimed." [60]  It is safe to deduce, therefore, that be it Corazon or the respondents, no
landowner was duly notified of the acquisition proceedings. In the process, there was a clear
violation of the right to attend the field investigation conducted to identify the land and
determine its suitability for agriculture. It can be fairly assumed that the field investigation
AGRARIAN LAW
RECENT JURISPRUDENCE
was conducted without their knowledge and participation, in contravention of the
requirements of DAR AO No. 1, series of 1999.
It also appears that no Notice of Acquisition was ever sent by the MARO. Neither were the
Notices of Coverage and Acquisition posted in a conspicuous place in the municipal
building and barangay hall of the place where the property is located. [61]  There was also no
showing that a copy of the Field Investigation Report and Land Use Map was furnished to
Corazon or respondents after the field investigation, whether by personal delivery with proof
of service or registered mail with return card. The copy of the Report and Map was likewise
not shown to be posted for at least one week in the municipal or barangay halls where the
property is located.
Further, petitioners' CLOA and TCT should be nullified because they were issued without
just compensation to respondents. We held in Holy Trinity that the taking of property under
RA 6657 is also an exercise of eminent domain which entitles the landowner to the payment
of just compensation. Full payment must precede the transfer of the title to the Republic of
the Philippines and the intended beneficiaries—
The Court has carefully explained in Roxas & Co., Inc. v. Court of Appeals  that the taking
under the CARL is an exercise of police power as well as of eminent domain. The taking of
the landholding by the State effectively results in the surrender by the landowner of its title
and physical possession to the beneficiaries. Hence, compensation should be given to the
landowner prior to the taking. This is the clear-cut directive of Section 16 (e) of Republic
Act No. 6657 which mandates the DAR to take immediate possession of the land only after
full payment and to thereafter request the Register of Deeds to transfer title in the name of
the Republic of the Philippines, and later on to the intended beneficiaries.
However, there was no evidence of payment prior to the cancellation of the petitioner's
TCTs submitted here. The requirement of prior payment was found in Republic Act No.
6657 and Presidential Decree No. 27, under which foil payment by the intended beneficiary
was a condition prior to the award of an EP. x x x[62]
Here, the determination of compensation for the property was aborted by the lack of due
process in the acquisition proceedings. Neither Corazon nor the respondents were given the
opportunity to accept or reject the offer because they never received the Notice of Coverage,
which would have included the offer of the compensation. Further, there was no evidence
that steps were taken to determine the valuation of the land. The allegation in the petition
and testimony of respondent Sixto Marella, Jr. that no such payment was ever received by
him or Corazon (with him as administrator of her estate) remained uncontroverted since no
evidence was presented to prove that payment was made. [63]  As a result, respondents'
property was taken without just compensation, contrary to Section 9, Article III [64]  and
Section 4, Article XIII[65] of the 1987 Constitution.
Finally, the noncompliance with the procedure in Section 16(e) of RA 6657 is also fatal. The
procedure mandates that the land must first be titled in the name of the Republic of the
Philippines before its distribution to the beneficiaries. As correctly found by the PARAD and
CA, the TCTs of the beneficiaries were registered with the Register of Deeds on June 28,
1996,[66]  while the cancellation of Corazon's TCT No. T-16030 and the transfer and
registration of title under TCT No. T-61710 in the name of the Republic of the Philippines
happened on July 12, 1996. [67]  Clearly, the mandatory procedure stated in Section 16(e), RA
6657 was violated. We quote the findings by the PARAD:
Second, the CLOAs and Transfer Certificates of Title were registered with the Register of
Deeds in the name of the private respondent on June 28, 1996 or eleven (11) days prior to
the registration of Transfer Certificate Title No. 61710 in the name of the Republic of the
Philippines on July 12, 1996. This is violative of Section 16 (e) which mandates that
redistribution of the land to qualified beneficiaries can be done only after the transfer of
ownership to the Republic of the Philippines. The procedure for acquisition of private lands
under [RA 6657] is mandatory and must be strictly followed as indicated by the word
"shall."[68]
Such abbreviated proceeding only affirms the DAR's tendency in this case to take shortcuts
in the issuance of the CLOAs over the property. This, however, the DAR should refrain
from. While zealous in its cause, the DAR should not disregard the procedure laid out in RA
30
6657 and its implementing issuances. After all, the CARP is not intended to oppress
landowners, but is envisioned to achieve a just  distribution of all agricultural lands.
In sum, we hold that the DAR's patent disregard of the provisions of RA 6657 and its own
pertinent implementing issuances in the acquisition of the property is violative of
respondents' constitutional rights. This warrants the cancellation of petitioners' CLOA and
TCT and the reinstatement of TCT No. T-16030 in Corazon's name.
WHEREFORE, the petition is DENIED. Accordingly, the Register of Deeds
is ORDERED to cancel TCT-CLOA No. 1380 and to reinstate TCT No. T-16030 in the
name of Corazon Agoncillo. The Landbank of the Philippines is also ORDERED to return
amortization payments, if any, to Spouses Rufo Valencia and Amparo Maulion.
No costs."
SO ORDERED."
Land Bank v. Chu, March 29, 2017
RA 6657-acquired property
The LBP correctly argued that consideration of the valuation factors under Section 17 of RA
6657 and the formula under DAR A.O. No. 05-98 35 is mandatory in ascertaining just
compensation for purposes of agrarian reform cases. In Land Bank of the Philippines v.
Gonzalez,36  we held that although the determination of just compensation is fundamentally a
judicial function vested in the RTC, the judge must still exercise his discretion within the
bounds of law. He ought to take into fall consideration the factors specifically identified in
RA 6657 and its implementing rules, as contained under the pertinent Administrative Orders
of the DAR, such as DAR A.O. No. 05-98, which contains the basic formula of the factors
enumerated under said law. He may not disregard the procedure laid down therein because
unless an administrative order is declared invalid courts have no option but to apply it.
Otherwise, the judge runs the risk of violating the agrarian reform law should he choose not
to use the formula laid down by the DAR for the determination of just compensation. The
Court reaffirmed this established jurisprudential rule in Alfonso v. Land Bank of the
Philippines37 when it categorically gave "full constitutional presumptive weight and credit to
Section 17 of RA6657, DARAO No. 5 (1998) and the resulting DAR basic formulas." 38
The Court then made the following pronouncement:
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, relaxformula's application to fit the
factual situations before them, subject only to 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.
xxxx
For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for
the DAR's expertise as the concerned implementing agency, courts should henceforth
consider the factors stated in Section 17 of RA 6657, as amended, as translated into the
applicable DAR formulas in their determination of just compensation for the properties
covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict
application of said formulas is not warranted under the specific circumstances of the case
before them, they may deviate or depart therefrom provided that this departure or deviation
is supported by a reasoned explanation grounded on the evidence on record. In other words,
courts of law possess the power to make a final determination of just compensation. 39
Be that as it may, we cannot sustain LBP's valuation of ₱263,928.57 as just compensation
for the RA 6657-acquired property for failure to substantiate the same.
In Land Bank of the Philippines v. Livioco,40 we held that "in determining just compensation,
LBP must substantiate its valuation." This pronouncement is a reiteration of our ruling
in Land Bank of the Philippines v. Luciano41 that:
Clearly, Land Bank's valuation of lands covered by CARL is considered only as an initial
determination, which is not conclusive, as it is the RTC, sitting as a [SAC], that should make
the final determination of just compensation, taking into consideration the factors
enumerated in Section 17 of RA 6657 and the applicable DAR regulations. Land Bank's
valuation had to be substantiated during the hearing before it could be considered sufficient
in accordance with Section 17 of RA No. 6657 and DAR AO No. x x x (Emphasis supplied)
In this case, we hold that the LBP was not able to justify its valuation. Although the LBP
maintained that it stringently applied the pertinent law and its relevant implementing rules in
arriving at its computation, it failed to adduce sufficient evidence to prove the truthfulness or
correctness of its assertions. Its Formal Offer of Exhibits, and the reasons therefor, consisted
only of the following:
1) Exhibit A-Field Investigation Report for the 7.7118 hectares
- To prove that an actual investigation of the area subject matter of the case was conducted
and participated by the personnel of the Department of Agrarian Reform, Land Bank of the
Philippines and the representative of the Agrarian Reform Committee that will show the
actual condition of the property at the time of the voluntary offer of the landowner of her
property to the government;
2) Exhibit B - Market Value per Ocular Inspection for the 7.7118 hectares
- To prove where the location adjustment factor is taken which is used in the computation of
valuation
xxxx
4) Exhibit D - Claims Valuation and Processing Form for the 7.7118 hectares
- To show the detailed computation/valuation made on the properties subject matter of this
case under DAR Administrative Order No. 5, series of 1998 using the formula LV = (CNI
x .90) + (MV x .10)
AGRARIAN LAW
RECENT JURISPRUDENCE
- To show the date of receipt of LANDBANK of the claim folder from the Department of
Agrarian Reform which is used as the basis [in] determining the average price of the crops
found in the property at the time of the field investigation/ocular inspection
xxxx
7) Exhibit G - PCA Municipal Selling Price for Coconut (Sorsogon Province)
- T[o] show the average selling price of copra per kilo for the municipality of Pilar[,]
Sorsogon for the period October 2001 to September 2002 which is P9.97 per
kilo.42 (Emphasis supplied)
The LBP used the formula LV = (CNI x. 90) + (MV x .10). Concededly, it was able to
sufficiently establish the Capitalized Net Income (CNI) factor 43 of the formula. However, the
same is not true regarding the Market Value (MV) component thereof While the CNI factor,
as computed in the Claims Valuation and Processing Form (Claims Form), finds support
from and can be adequately explained by a simple perusal of the documents forming part of
the records of this case,44 the MV component, on the other hand, does not have any similar
support and basis as a thorough search of the records failed to produce the same.
The Claims Form, which the LBP insists embodies a detailed computation using the formula
earlier cited, did not reflect how the data and figures were arrived at and if they were indeed
correct. The LBP did not present any testimonial evidence before the RTC which could
explain or corroborate how it came up with the figures and what credence ought to be
accorded to them. All that the Claims Form showed is the LBP's computation, and nothing
more. As we held in Land Bank of the Philippines v. Livioco,45  "the computation in the Form
may be mathematically correct, but there is no way of knowing if the values or data used in
the computation are true." For this reason we cannot uphold the LBP's valuation. Besides,
LB P's Formal Offer of Exhibits was admitted only when respondents failed to offer any
objection. In any case, even considering the absence of objection on the part of respondents,
LBP must still prove the basis and correctness of its computation. LBP miserably failed in
this regard.
We cannot agree to the valuations fixed by the PARAD and the RTC, valuations that found
their way into rulings that were affirmed in toto  and with modification by the CA,
respectively. These rulings were arrived at in clear disregard of the formula set forth under
DAR A.O. No. 05-98. As borne out by their respective Decisions, these tribunals considered
only the Comparable Sales (CS) factor to the exclusion of the other factors, namely, the CNI
and MY.
Aggravating the situation, the CS factor was not determined pursuant to the guidelines laid
down in DAR A.O. No. 05-98. Respondents merely submitted a notarized Deed of Absolute
Sale between them and Wilson Tarog reflecting an amount of ₱200,000.00 46 per hectare. A
second notarized Deed of Voluntary Land Transfer executed between Rudy Balisalisa and
Abegail Sapanza was submitted fixing the amount per hectare at
₱241,462.00.47 Additionally, respondents proffered in evidence Municipal Resolution No.
79, Series of2002,48 declaring the intent of Pilar, Sorsogon to develop Hacienda Chu as an
agri-economic-industrial site in accordance with its town expansion program. All of these,
however, are irrelevant as DAR A.O. No. 05-98 itself categorically enumerates the
guidelines for determining the CS factor, thus:
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.
31
- 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.
xxxx
C. 2. The criteria in the selection of the comparable sales transactions (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 1, 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 Items II.A.9.
Respondents presented only two comparable sales transactions. This falls short of the
requirements of DARA.O. No. 05-98.
The PARAD erroneously considered the municipal resolution as the third comparable sales
transaction when it noted and held that:
x x x And, last is a Municipal Resolution No. 79 Series of 2002 declaring the entire
Hacienda Chu [in] San Antonio Sapa, Pilar, Sorsogon as Town Expansion and classified the
same as an Industrial Area (Annex "C"). That the subject property is very productive, with
good location, very near x x x the Poblacion, and, accessible by land and water x x x
It is a well-settled rule that in determining the valuation of the properties a comparable sale
transaction of similar nearby places is admissible in evidence x x x. Thus from the evidence
submitted by the landowner, the Board is convinced that the valuation by the Land Bank of
the Philippines is in fact unreasonable, considering that the subject property [has] good
production, topography and [is] accessible on both land and water. The Board however
cannot grant the prayer for Three Hundred Fifty Thousand Pesos per hectare considering that
in comparable sales transactions the Board can only grant the lowest among those presented
as [evidence]. And, therefore the Board can only grant the amount of Two Hundred
Thousand Pesos per hectare (Annex A).49 (Emphasis supplied)
The municipal resolution could not in any manner be regarded as a comparable sales
transaction precisely because no sale transaction ever took place. At best, the said resolution
merely manifested the formal intention of the local government of Pilar to acquire certain
portions of the subject properties.
Equally glaring is the fact that none of the tribunals below took into full consideration the
factors laid down in Section 17 of RA 6657 - a necessary requirement which no court of law
is at liberty to disregard if sound judicial discretion is to be exercised at all in determining
just compensation. Instead, this Court notes that the RTC, not to mention the
CA, primarily took account of an extraneous factor- potentials of the land- to justify the
award of ₱200,000.00 per hectare. Discounting respondents' evidence on the comparable
sales transactions, the potentials of the landholding may then be said to have become the
main factor supporting the valuation thereof This conclusion is even borne out by the
Decisions of the PARAD, the RTC, and the CA whose discussions centered thereon.
However, this Court has a]ready reiterated in Land Bank of the Philippines v. Livioco50 that,
such factor, standing alone,  has already been dismissed as improper basis for assessing the
just compensation in the expropriation of agricultural lands. Thus:
x x x While the potential use of an expropriated property is sometimes considered in cases
where there is a great improvement in the general vicinity of the expropriated property, it
should never control the determination of just compensation (which appears to be what the
lower courts have erroneously done). The potential use of a property should not be the
principal criterion for determining just compensation for this will be contrary to the well-
settled doctrine that the fair market value of an expropriated property is determined by its
character and its price at the time of taking, not its potential uses. If at all, the potential use
of the property or its "adaptability for conversion in the future is a factor,
compensation.51 (Emphasis supplied)
Despite the foregoing, the PARAD, the RTC, and the CA, proceeded to rule in respondents'
favor on the basis of their evidence and, with meager evidence to support their
pronouncements, pegged the price of the RA 6657-acquired property at ₱200,000.00 and
₱300,000.00, respectively, per hectare. We cannot uphold the same.
As may be gleaned from the above discussion, the respective evidence of both parties are
insufficient to enable this Court to come up with a correct computation on the just
compensation to which respondents are entitled. However, as this Court is not a trier of facts,
this Court cannot receive new evidence from the parties that would aid or assist it in the
prompt resolution of this case. Thus, this Court is constrained to remand the case to the RTC
for the reception of evidence and the determination of just compensation in accordance with
our pronouncement in Alfonso v. Land Bank of the Philippines.52
PD 27-acquired land
a. Remand case to the RTC for determination of just compensation
b. Award of interest
a. Remand case to the RTC for determination of just compensation
The appellate court also incorrectly ruled that the formula under EO 228 should be followed
for purposes of computing just compensation in relation to PD 27-acquired lands.
Citing Land Bank of the Philippines v. Imperial,53 the CA held that the guidelines provided
AGRARIAN LAW
RECENT JURISPRUDENCE
under PD 27 and EO 228 remained operative despite the passage of RA 6657 given that EO
229 states that PD 27 shall continue to operate with respect to rice and com lands.
In a number of cases, such as Land Bank of the Philippines v. Hon. Natividad,54 Lubrica v.
Land Bank of the Philippines,55 Land Bank of the Philippines v. Gallego, Jr.,56 Land Bank of
the Philippines v. Heirs of Jvfaximo and Gloria Puyat, 57 and Land Bank of the Philippines v.
Santiago, Jr.,58 we definitively ruled that when the agrarian reform process is still
incomplete as the just compensation due the landowner has yet to be settled, just
compensation should be determined, and the process concluded, under Section 17 of RA
6657, which contains the specific factors to be considered in ascertaining just
compensation, viz.:
SECTION 17. Determination of Just Compensation. –
In determining just compensation, the cost of acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation by the owner, the tax
declarations, the assessment made by government assessors shall be considered. The social
and economic benefits contributed by the fanners 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.
In Land Bank of the Philippines  v. Gallego, Jr.,59 we explained that:
The Court has already ruled on the applicability of agrarian laws, namely, P.D. No. 27/E.O.
No. 228 in relation to Republic Act (RA.) No. 6657, in prior Cases concerning just
compensation.
In Paris v. Alfeche,  the Court held that the provisions of R.A. No. 6657 are also applicable
to the agrarian reform process of lands placed under the coverage of P.D. No. 27/E.O. No.
228, which has not been completed upon the effectivity of R.A. No. 6657. Citing  Land Bank
of the Philippines v. Court of Appeals, the Court in Paris held that P.D. No. 27 and E.O. No.
228 have suppletory effect to R.A. No. 6657, to wit:
We cannot see why Sec. 18 of RA [No.] 6657 should not apply to rice and com lands under
PD [No.] 27. Section 75 of RA [No.] 6657 clearly states that the provisions of PD [No.] 27
and EO [No.] 228 shall only have a suppletory effect. Section 7 of the Act also provides -
Sec. 7. Priorities. The DAR, in coordination with the PARC shall plan and program the
acquisition and distribution of all agricultural lands through a period of (10) years from the
effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and Com lands under P.D. 27; all idle or abandoned lands; all private lands
voluntarily offered by the owners of agrarian reform; x x x and all other lands owned by the
government devoted to or suitable foragriculture, Which shall be acquired and distributed
immediately upon the effectivity of this Act, with the implementation to be completed within
a period of not more than four (4) years x x x.
This eloquently demonstrates that RA [No.] 6657 includes PD [No.] 27 lands among the
properties which the DAR shall acquire and distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to.
In Association of Small Landowners of the Philippines v. Secretary of Agrarian
Reform[,] this Court applied the provisions (of) RA 6657 to rice and com lands when it
upheld the constitutionality of the payment of just compensation for PD [No.] 27 lands
through the different modes stated in Sec. 18.
32
Particularly, in Land Bank of the Philippines  v. Natividad, where the agrarian reform
process in said case "is still incomplete as the just compensation to be paid private
respondents has yet to be settled," the Court held therein that just compensation should be
determined and the process concluded under R.A. No. 6657.
The retroactive application of RA. No. 6657 is not only statutory but is also founded on
equitable considerations. In Lubrica v. Land Bank of the Philippines, the Court declared that
it would be highly inequitable on the part of the landowners therein to compute just
compensation using the values at the time of taking in 1972, and not at the time of payment,
considering that the government and the fanner-beneficiaries have already benefited from
the land although ownership thereof has not yet been transferred in their names. The same
equitable consideration is applicable to the factual milieu of the instant case. The records
show that respondents' property had been placed under the agrarian reform program in 1972
and had already been distributed to the beneficiaries but respondents have yet to receive just
compensation due them. (Emphases supplied)
It bears stressing that while this case was pending, Congress enacted RA 9700 entitled "An
Act Strengthening the Comprehensive Agrarian Reform Program [CARP], Extending the
Acquisition and Distribution of All Agricultural Lands, Instituting Necessary Reforms,
Amending for the Purpose Certain Provisions of Republic Act No. 6657, Othe1wise known
as The Comprehensive Agrarian Reform Law of 1988, as amended, and Appropriating
Funds Therefor."
Significantly, just as RA 6657 had so provided, RA 9700 also provides that it shall apply
even to PD 27-acquired lands, albeit those that are yet to be acquired and distributed by the
DAR. It likewise provided for further amendments to RA 6657, as amended, including
Section 17 thereof: by including two new factors in the determination of just compensation,
namely (a) the value of the standing crop and (b) seventy percent (70%) of the zonal
valuation of the Bureau of Internal Revenue, translated into a basic formula by the DAR,
subject to the final decision of the proper court.
Nevertheless, despite the enactment of RA 9700, we take the view that this case still falls
within the ambit of Section 17 of RA 6657, as amended. To emphasize, RA 9700 applies to
landholdings that are yet to be acquired and distributed by the DAR. In addition, RA 9700
itself contains the qualification that "previously acquired lands wherein valuation is subject
to challenge," such as the landholding subject of this case, "shall be completed and resolved
pursuant to Section 17 of RA 6657, as amended,"60 thus:
Section 5. Section 7 of Republic Act No. 6657, as amended, is hereby further amended to
read as follows:
SEC. 7. Priorities. - The DAR in coordination with the Presidential Agrarian Reform
Council (PARC) shall plan and program the final acquisition and distribution of all
remaining unacquired and undistributed agricultural lands from the effectivity of this Act
until June 30, 2014. Lands shall be acquired and distributed as follows:
Phase One: During the five (5)-year extension period hereafter all remaining lands above
fifty (50) hectares shall be covered for purposes of agrarian reform upon the effectivity of
this Act. All private agricultural lands of landowners with aggregate landholdings in excess
of fifty (50) hectares which have already been subjected to a notice of coverage issued on or
before December 10, 2008; rice and corn lands under Presidential Decree No. 27; all idle or
abandoned lands; all private lands voluntarily offered by the owners for agrarian
reform: Provided,  That with respect to voluntary land transfer, only those submitted by June
30, 2009 shall he allowed Provided, further, That after June 30, 2009, the modes of
acquisition shall be limited to voluntary offer to sell and compulsory acquisition:  Provided,
furthermore, That all previously acquired lands whereinvaluation is subject to challenge by
landowners shall be completed and finally resolved pursuant to Section 17 of Republic Act
No. 6657, as amended: x x x (Emphases supplied.)
Our ruling further finds support in DAR A.0. No. 02-09, the implementing rules of RA 9700,
Chapter VI (Transitory Provision) of which specifically provides:
VI. Transito1y Provision
With respect to cases where the Master List of ARBs has been :finalized on or before July 1,
2009 pursuant to Administrative Order No. 7, Series of2003, the acquisition and distribution
of landholdings shall continue to be processed under the provisions of R.A. No. 6657 prior
to its amendrp.ent by R.A. No. 9700.
However, with respect to land valuation, all Claim Folders received by LBP prior to July 1,
2009 shall be v:illued in accordance with Section 17 of RA. No. 6657 prior to its amendment
by RA. No. 9700. (Emphasis supplied)
From the foregoing, it is evident that DAR A.O. No. 02-09 requires that landholdings, the
claim folders of which had been received by LBP prior to July 1, 2009, be valued pursuant to
the old Section 17 of RA 6657, as amended,61 or prior to its further amendment by RA 9700.
Here, the Claim Folder was received on November 27, 2002, as evidenced by the
Memorandum Request to Value the Land. 62 Hence, by express mandate of RA 9700 vis-a-
vis DAR A.O. No. 02-09, Section 17 of RA 6657, as amended, shall apply for purposes of
ascertaining just compensation.
This pronouncement finds support in the Court's ruling in Land Bank of the Philippines v.
Kho,63  viz.:
Case law dictates that when the acquisition process under PD 27 is still incomplete, such as
in this case where the just compensation due to the landowner has yet to be settled, just
compensation should be determined and the process concluded under RA 6657, as amended.
For the purposes of determining just compensation, the fair market value of an expropriated
property is determined by its chan1cter and its price at the time of taking, or the time when
the landowner was deprived of the use and benefit of his property, such as when the title is
transferred in the name of the beneficiaries. In addition, the factors enumerated under
Section 17 of RA 6657, as amended, i.e., (a) the acquisition cost of the land, (b) the current
value of like properties, (c)  the nature and actual use of the property, and the income
therefrom, (d)  the owner's sworn valuation, (e) the tax declarations, (f) the a5sessment made
by government assessors, (g) the social and economic benefits contributed by the farmers
and the farmworkers, and by the government to the property, and (h) the nonpayment of
taxes or loans secured from any government financing institution on the said land, if any,
must be equally considered.
However, it bears pointing out that while Congress passed RA 9700 cm August 7, 2009,
further amending certain provisions of RA 6657, as amended, among them, Section 17, and
declaring '[t]hat all previously acquired lands wherein valuation is subject to challenge by
landowners shall be completed and finally resolved pursuant to Section 17 of [RA 6657], as
amended,' DAR AO 2, series of2009, which is the implementing rules of RA 9700, had
clarified that the said law shall not apply to claims/cases where the claim folders were
received by the LBP prior to July 1, 2009. In such situation, just compensation shall be
determined in accordance with Section 17 of RA 6657, as amended, prior to its further
amendment by RA 9700.
AGRARIAN LAW
RECENT JURISPRUDENCE
xxxx
It is significant to stress x x x that DAR AO 1, series of2010 which was issued in line with
Section 31 of RA 9700 empowering the DAR to provide the necessary rules and regulations
for its implementation, became effective only subsequent to July J, 2009. Consequently, it
cannot be applied in the determination of just compensation for the subject land where the
claim folders were undisputedly received by the LBP m:Jor to July 1, 2009,  and, as such,
should be valued in accordance with Section 17 of RA 665]  prior to its further amendment
by RA 9700 pursuant to the cut-off date set under DAR AO 2, series of 2009 (cut-off rule).
Notably, DAR AO 1, series of 2010 did not expressly or impliedly repeal the cut-0.ff rule set
under DAR AO 2, series of 2009, having made no reference to any cut-off date with respect
to land valuation for previously acquired lands under PA 27 and EO 228 wherein valuation
is subject to challenge by landowners. Consequently, the application of DAR AO 1, series of
2010 should be, thus, limited to those where the claim folders were received on or
subsequent to July 1, 2009.
In this case, x x x [s]ince the claim folders were received by the LBP prior to July 1, 2009,
the RTC should have computed just compensation using pertinent DAR regulations applying
Section 17 of RA 6657 prior to its amendment by RA 9700 instead of adopting the new
DAR issuance, absent any cogent justifications otherwise. Therefore, as it stands, the RTC
and the CA were duty-bound to utilize the basic formula prescribed and laid down in
pertinent DAR regulations existing prior to the passage of RA 9700, to determine just
compensation.
Nonetheless, the RTC, acting as a SAC, is reminded that it is not strictly bound by the
different [formulas] created by the DAR if the situations before it do not warrant their
application. To insist on a rigid application of the formula goes beyond the intent and spirit
of the law, bearing in mind that the valuation of property or the determination of just
compensation is essentially a judicial function which is vested with the courts, and not with
administrative agencies. Therefore, the RTC must still be able to reasonably exercise its
judicial discretion in the evaluation of the factors for just compensation, which cannot be
restricted by a formula dictated by the DAR when faced with situations that do not warrant
its strict application. However, the RTC must explain and justify in clear terms the reason
for any deviation from the prescribed factors and formula. (Emphasis in the original)
b. Award of interest
We also agree with the LBP's stance that the award of compounded interest is not proper.
In Land Bank of the Philippines v. Spouses Chico,64 we held that "when just compensation is
determined under R.A. No. 6657, no incremental, compounded interest of six percent
(6%) per annum shall be assessed x x x as the same applies only to lands taken under P.D.
No. 27 and E.0. No. 228, pursuant to DAR A.O. No. [13-94], x x x and not Sec. 26 of R.A.
No. 6657 x x x."
The rationale for this is explained in Land Bank of the Philippines  v. Court of Appeals65 to
wit: that DAR A.O. No. 13-94 aims to compensate the landowners for unearned interests
because had payment been made in 1972 when the GSP for rice was pegged at ₱35.00, and
this amount was deposited in a bank, it would have earned a compounded interest of 6%
per annum:
x x x Thus, if the PARAD used the 1972 GSP, then the product of (2.5 x AGP x ₱35 x x x)
could be multiplied by (l.06)n to determine the value of the land plus the additional 6%
compounded interest it would have earned from 1972. However, since the PARAD already
increased the GSP from ₱35.00 to ₱300.00/cavan of palay x x x, there is no more need to
add any interest thereon, much less compound it To the extent that it granted 6%
compounded interest to private respondent Jose Pascual, the Court of Appeals
erred.66 (Emphasis supplied)
33
If upon remand of this case the LBP is found to be in delay in the payment of just
compensation, then it is bound to pay interest. In Land Bank of the Philippines  v. Santiago,
Jr.,67 we ruled that interest may be awarded in expropriation cases, particularly where delay
attended the payment of just compensation. There, we categorically stressed that the interest
imposed in case of delay in payments in agrarian cases is in the nature of damages for delay
in payment which, "in effect, makes the obligation on the part of the government one of
forbearance."68 Upon this point, nothing could be any clearer than our pronouncement
in Land Bank of the Philippines v. Santiago, Jr., thus:
Quoting Republic v. Court of Appeals  this Court, in Land Bank of the Philippines v.
Rivera, held:
The constitutional limitation of just compensation is considered to be the sum equivalent to
the market value of the property, broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and competition or the fair value of
the property as between one who receives, and one who desires to sell, if fixed at the time of
the actual taking by the government. Thus, if property is taken for public use before
compensation is deposited with the court having jurisdiction over the case, the final
compensation must include interest on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court.
In fine, between the taking of the property and actual payment, legal interests accrue in order
to place the owner in a position as good as (but not better than) the position he was in before
the taking occurred.
xxxx
The Court, in Republic, recognized that the just compensation due to the landowners for
their expropriated property amounted to an effective forbearance on the part of the State. x x
x69 (Emphases supplied)
Be that as it may, the LBP is bound to pay interest at 12% per annum "from the time of
taking until June 30, 2013. Thereafter, or beginning July 1, 2013, until fully paid, the just
compensation due the landowners shall earn interest at the new legal rate of 6% per annum  x
x x.70 In Nacar  v. Galley Frames,71 citing Eastern Shipping Lines v. Court of
Appeals72 which has been modified to reflect Bangko Sentral ng Pilipinas-Monet.ary Board
Circular No. 799,73 we held that:
x x x [T]he guidelines laid down in the case of Eastern Shipping Lines are accordingly
modified to embody BSP-MB Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on "Damages" of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
l. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate of interest shall be
6% per annum to be computed from default, i.e., from judicial or extra judicial demand
under and subject to the provisions of Article 1169 of the Civil Code. (Emphasis supplied)
Against the foregoing backdrop, a 12% interest per annum  computed from the date of the
taking of the subject property until June 30, 2013, and 6% interest per annum  from July 1,
2013 until fully paid, on the just compensation to be ascertained by the RTC, shall be
imposed although not specifically prayed for by respondents. In Prince Transport, Inc.
v. Garcia,74 citing BPI Family Bank v. Buenaventura,75 we recognized that "the general
prayer is broad enough to justify [the grant] of a remedy different from or together with the
specific remedy" sought. Moreover, we stressed in Prince Transport, Inc. v. Garcia that
even if a specific remedy is not prayed for, we may confer on the party the proper relief if
the facts alleged in the complaint and the evidence presented so warrant as "[t]he prayer in
the complaint for other reliefs equitable and just in the premises justifies the grant of a relief
not otherwise specifically prayed for."76 This is the situation here.
Guidelines in the remand of the case
The Court notes that the date of taking of both of respondents' property cannot be reasonably
ascertained from the records of the case as neither the pleadings filed by the parties nor the
Decisions rendered by the lower tribunals contained any allegations nor findings thereon.
Thus, the Court hereby resolves to order the RTC to determine the date of taking - it being
an indispensable component of just compensation - of the subject landholdings. Accordingly,
the LBP may submit in evidence the Certificates of Land Ownership Award (for the RA
6657-acquired property) and Emancipation Patents (for the PD 27-acquired land), which are
conclusive proof of actual taking of the properties, granted to the farmer-beneficiaries of said
lands. Alternatively, it may present the Notice of Coverage, Notice of Valuation, Letter of
Invitation to A Preliminary Conference and Notice of Acquisition issued by the DAR to
confirm symbolic compulsory taking of the RA 6657-acquired property.77
It bears emphasis that despite the enactment of RA 9700, the determination of just
compensation for both landholdings shall be pursuant to Section 17 of RA 6657, as
amended, in view of the qualifications imposed by RA 9700.
It must be reiterated too that the factors laid down in Section 17 of RA 6657, as amended,
and the formula as translated by the DAR in its implementing rules, are mandatory and may
not be disregarded by the RTC. Both parties are reminded that they ought to present
evidence in accordance with the requirements set forth in the relevant DAR issuances. For
this reason, this Court restates that even if the landowner fails to prove a higher amount as
just compensation, the LBP must substantiate its valuation and prove the correctness of its
claims. Naturally, it behooves the LBP to present clear and convincing documentary and, if
necessary, testimonial, evidence to justify its valuation and how this was arrived at.
Moreover, as regards the RA 6657-acquired property, the RTC must be reminded that
although the potential use of an expropriated property may be factored in, especially in
instances where there is a significant improvement in the locality of the expropriated
property, that factor, however, should not be the controlling component in the determination
of just compensation. Otherwise, it will run afoul of the well-settled principle that the fair
market value of an expropriated property is determined essentially by its character and by its
price at the time of taking, not by its potential uses.
Finally, the RTC may not award compounded interest on the PD 27- acquired land,
considering that RA 6657, which is now applicable even to landholdings covered by PD 27,
does not itself expressly grant it; what is allowed is the grant of interest in the nature of delay
in payment of just compensation. Hence, the LBP is obliged to pay interest at 12% per
annum  from the date of taking until June 30, 2013, and 6% per annum  from July l, 2013
until fully paid, in the event it is found to be in delay in the payment of just compensation.
WHEREFORE, the Petition is hereby PARTLYI GRANTED. The January 18, 2010
Decision and May 24, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 93518
are REVERSED and SET ASIDE. Land Valuation Case Nos. LV-30-'03 and LV-48-'03 are
AGRARIAN LAW
RECENT JURISPRUDENCE
hereby REMANDED to the Regional Trial Court of Sorsogon City, Branch 52, for the
determination of the just compensation strictly in accordance 'With the guidelines set forth in
this Decision.
SO ORDERED.
Land Bank v. Heirs of Antonio Marcos, Sr., March 22, 2017
This Court finds this petition partly meritorious.
The LBP averred that the subject property was acquired by the government pursuant to
Republic Act No. (R.A. No.) 6657, thus, in determining the just compensation, Section 1 7
of the said law is applicable.21
In Land Bank of the Philippines v. Honeycomb Farms Corporation,22  this Court essentially
pointed out that the "just compensation" guaranteed to a landowner under Section 4, Article
XIII of the Constitution is precisely the same as the "just compensation" embodied in
Section 9, Article III of the Constitution. The just compensation due to an owner should be
the "fair and full price of the taken property," whether for land taken pursuant to the State's
agrarian reform program or for property taken for purposes other than agrarian reform. 23
It was further stressed in Honeycomb that just compensation paid for lands taken pursuant to
the State's agrarian reform program refers to the "full and fair equivalent of the property
taken from its owner by the expropriator x x x [the measure of which] is not the taker's gain
but the owner's loss. The word 'just' is used to intensify the meaning of the word
'compensation' to convey the idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full and ample."24
The determination of just compensation is fundamentally a function of the courts. Section 57
of R.A. No. 6657 explicitly vests in the RTC-SAC the original and exclusive jurisdiction to
determine just compensation for lands taken pursuant to the State's agrarian reform
program.25 However, this Court, in Land Bank of the Philippines v. Yatco Agricultural
Enterprise,26 underscored that, in the exercise of the essentially judicial function of
determining just compensation, the RTC-SAC is not granted unlimited discretion. The
factors under Section 1727 of R.A. No. 6657 were already translated into a basic formula by
the DAR pursuant to its rule-making power under Section 49 of R.A. No. 6657. 28 The said
factors and the DAR formula provide the uniform framework or structure by which just
compensation for property subject to agrarian reform should be determined. 29 Hence, aside
from considering the factors provided by law, the courts should apply the formula outlined
in DAR AO No. 5, series of 1998, in the computation of just compensation. Thus:
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: L V = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV =Market Value per Tax Declaration
34
The above formula shall be used if all three factors are present, relevant and applicable.
A 1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV =(CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV=MVx2
In the recent case of Alfonso v. Land Bank of the Philippines,30  this Court reiterated:
For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for
the DAR's expertise as the concerned implementing agency, courts should henceforth
consider the factors stated in Section 17 of RA 6657, as amended, as translated into the
applicable DAR formulas in their determination of just compensation for the properties
covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict
application of said formulas is not warranted under the specific circumstances of the case
before them, they may deviate or depart therefrom, provided that this departure or deviation
is supported by a reasoned explanation grounded on the evidence on record. In other words,
courts of law possess the power to make a final determination of just compensation.
The fixing of just compensation that is based on the landowner's prayer falls within the
exercise of the RTC-SAC's discretion and, therefore, should be upheld as a valid exercise of
its jurisdiction.31 Similarly, the fixing of just compensation based on the decision of the
Provincial Adjudicator in this case is within the context of this judicial prerogative.
However, a reading of the decisions of the P ARAD would reveal that he did not apply or
consider the formula in DAR AO No. 5, series of 1998. He based his decision with the rule
on admissibility of evidence of bona fide sales transaction of nearby places in determining
the market value of like properties and applied the valuation of LBP with the property of
Norma Marcos Clemente and Hacienda de Ares after .ruling that the properties of
respondents are comparable with the said properties. 32 His decisions did not mention the
consideration of the formula laid down by the DAR in the valuation of the properties of
respondents.
Likewise, the R TC-SAC ruled that the sales transaction concluded by LBP and Norma
Marcos Clemente and Hacienda de Ares can be used and be admissible in evidence in
determining the market value of the properties of the respondents since the productivity of
the coconut in the land of the respondents is comparable to that of the properties of Norma
Marcos Clemente and Hacienda de Ares. 33 It did not conduct an independent assessment and
computation using the considerations required by the law and the rules and merely relied
upon the Provincial Adjudicator's decision. Although it took into consideration and
mentioned some of the factors, it did not point to any particular consideration that impelled it
to set the just compensation at ₱283,302.10and ₱446,786.03.
To reiterate, when acting within the parameters set by the law itself, the RTC-SACs are not
strictly bound to apply the DAR formula to its minute detail, particularly when faced with
situations that do not warrant the formula's strict application; they may, in the exercise of
their discretion, relax the formula's application to fit the factual situations before them. They
must, however, clearly explain the reason for any deviation from the factors and formula that
the law and the rules have provided.34
In the case at bar, the RTC-SAC did not clearly explain why the formula was not applied
although the factors enumerated were considered in determining just compensation. There
was no reasoned explanation grounded on evidence on record why the court did not comply
with the established rules. Thus, this Court finds that the case does not warrant for deviation
from the factors and formula set forth by the law and rules applicable.
The LBP averred that the PARAD cannot abrogate, vary or alter a consummated contract
between the government and the respondents in regard to subject properties. 1âwphi1 It
further alleged that the P ARAD committed grave abuse of discretion when he conducted
summary administrative proceedings despite the acceptance by the landowner of the
preliminary valuation computed by the LBP and offered by the DAR.35
The implementation of R.A. No. 6657 is an exercise of the State's police power and power of
eminent domain.36 It was also settled that the taking of private property by the Government
in the exercise of its power of eminent domain does not give rise to a contractual
obligation.37 Thus, acquisition of lands under the CARP is not governed by ordinary rules on
obligations and contracts but by R.A. No. 6657 and its implementing rules.
Unlike in the ordinary sale of real property where the buyer and the seller are free to
determine, by offer and acceptance, the consideration for the subject matter of the
transaction, acquisition of lands under the CARP is governed by administrative rules
intended to ensure that the rights of the 1andowners to just compensation are respected. 38
The LBP's valuation of lands covered by the CARP Law is considered only as an initial
determination, which is not conclusive, as it is the RTC-SAC that could make the final
determination of just compensation, taking into consideration the factors provided in R.A.
No. 6657 and the applicable DAR regulations. The LBP's valuation has to be substantiated
during an appropriate hearing before it could be considered sufficient in accordance with
Section 17 of R.A. No. 6657 and the DAR regulations. 39
Since it is the RTC-SAC that could make the final determination of just compensation, the
supposed acceptance of the LBP's valuation cannot be considered as consummated contract.
R.A. No. 6657 provided that the landowner, his administrator or representative shall inform
the DAR of his acceptance or rejection of the offer within thirty (30) days from the date of
receipt of written notice by personal delivery or registered mail. 40 It also further provided
that the DAR shall conduct summary administrative proceedings to determine the
compensation for the land in case of rejection or failure to reply. 41
It is noted that on August 11, 1997, or more than a year since the valuation of the LBP, the
respondents, through Ramiro, filed their acceptance of valuation of their landholdings. The
lapse of more than a year before informing the DAR of their acceptance can be considered as
failure to reply as contemplated by the law. Furthermore, it is noted that it is the DAR that
brought the matter of valuation to the DARAB and requested that summary administrative
proceedings be conducted to determine the just compensation for the landholdings.
This Court deems it premature to determine with finality the matter in controversy,
considering the lack of sufficient data to guide this Court in the proper determination of just
compensation following the guidelines that was discussed at length. This Court is not a trier
of facts and cannot receive any new evidence from the parties to aid the prompt resolution of
this case.
AGRARIAN LAW
RECENT JURISPRUDENCE
Therefore, we are compelled to remand the case to the court of origin for the reception of
evidence and the determination of just compensation with the cautionary reminder for the
proper observance of the factors enumerated under Section 17 of R.A. No. 6657 and of the
formula prescribed under the pertinent DAR administrative orders.
WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed
Decision and Resolution, dated May 26, 2006 and December 6, 2006, respectively, of the
Court of Appeals in CA-G.R. SP No. 83711, are REVERSED. The Civil Case
is REMANDED to the RTC, Sorsogon City, Branch 52, for trial on the merits with dispatch.
The trial judge is DIRECTED to OBSERVE strictly the procedures in determining the
proper valuation of the subject property.
SO ORDERED.
Land Bank v. Heirs of Lorenzo Tanada, January 11, 2017
After carefully weighing the issues and arguments presented by the parties in this case, we
find the petition meritorious.
In Land Bank of the Philippines v. American Rubber Corporation,  11 we elaborated on the
concept of just compensation in this wise:
This Court has defined "just compensation" for parcels of land taken pursuant to the agrarian
reform program as "the full and fair equivalent of the property taken from its owner by the
expropriator." The measure of compensation is not the taker's gain but the owner's loss. Just
compensation means the equivalent for the value of the property at the time of its taking. It
means a fair and full equivalent value for the loss sustained. All the facts as to the condition
of the property and its surroundings, its improvements and capabilities should be considered.
x x x. (Citations omitted.)
Since there is no dispute that the subject properties are qualified for coverage under the
agrarian reform law, the just compensation for the said properties must be governed by the
valuation factors under Section 17 of Republic Act No. 6657 which provides:
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
nonpayment of taxes or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its valuation.
Thus, we have held that when handling just compensation cases, the trial court acting as a
SAC should be guided by the following factors: (1) the acquisition cost of the land; (2) the
current value of the properties; (3) its nature, actual use, and income; (4) the sworn valuation
by the owner; (5) the tax declarations; (6) the assessment made by government assessors; (7)
the social and economic benefits contributed by the farmers and the farmworkers, and by the
government to the property; and (8) the nonpayment of taxes or loans secured from any
government financing institution on the said land, if any. 12
Pursuant to the rule-making power of the Department of Agrarian Reform (DAR) under
Section 49 of Republic Act No. 6657, 13 the enumerated factors were translated into a
formula that was outlined in DAR Administrative Order No. 17, series of 1989, as amended
35
by DAR Administrative Order No. 03, series of 1991, and as further amended by DAR
Administrative Order No. 06, series of 1992, entitled "RULES AND REGULATIONS
AMENDING THE VALUATION OF LANDS VOLUNTARILY OFFERED AND
COMPULSORILY ACQUIRED AS PROVIDED FOR UNDER ADIVHNISTRATIVE
ORDER NO. 17, SERIES OF 1989, AS AMENDED, ISSUED PURSUANT TO
REPUBLIC ACT NO. 6657. 14
In determining the just compensation to be paid to respondents, petitioner utilized the
formula indicated in DAR Administrative Order No. 06, series of 1992, which was in effect
at the time the lots of respondents were subjected to coverage by the government's land
reform program. The said formula is reproduced as follows:
II. THE FOLLOWING RULES AND REGULATIONS ARE HEREBY PROMULGATED
TO AMEND CERTAIN PROVISIONS OF ADMINISTRATIVE ORDER NO. 17, SERIES
OF 1989, AS AMENDED BY ADMINISTRATIVE ORDER NO. 3, SERIES OF 1991
WHICH GOVERN THE VALUATION OF LANDS SUBJECT OF ACQUISITION
WHETHER UNDER VOLUNTARY OFFER TO SELL (VOS) OR COMPULSORY
ACQUISITION (CA)
A. There shall be one basic formula for the valuation of land covered by VOS or CA
regardless of the date of offer or coverage of the claim:
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 the three factors are present, relevant, and applicable.
Al. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV = MV x 215
It is settled in jurisprudence that, in order to determine just compensation, the trial court
acting as a SAC must take into consideration the factors prescribed by Section 17 of
Republic Act No. 6657 and is obliged to apply the formula crafted by the DAR. We
discussed the long line of cases calling for the mandatory application of the DAR formula
in Land Bank of the Philippines v. Honeycomb Farms Corporation,  16 to wit:
In Land Bank of the Philippines v. Sps. Banal, we recognized that the DAR, as the
administrative agency tasked with the implementation of the agrarian reform program,
already came up with a formula to determine just compensation which incorporated the
factors enumerated in Section 17 of RA 6657. We said:
These factors [enumerated in Section 17] have been translated into a basic formula in DAR
Administrative Order No. 6, Series of 1992, as amended by DAR Administrative Order No.
11, Series of 1994, issued pursuant to the DAR's rule-making power to carry out the object
and purposes of R.A. 6657, as amended.
In Landbank of the Philippines v. Celada, we emphasized the duty of the RTC to apply the
formula provided in the applicable DAR AO to determine just compensation, stating that:
While [the RTC] 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 R.A. 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. [The] DAR
[Administrative Order] precisely "filled in the details" of Section 17, R.A. No. 6657 by
providing a basic formula by which the factors mentioned therein may be taken into account.
The [RTC] 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, courts cannot ignore administrative issuances especially
when, as in this case, its validity was not put in issue. Unless an administrative order is
declared invalid, courts have no option but to apply the same.
We reiterated the mandatory application of the formula in the applicable DAR administrative
regulations in Land Bank of the Philippines v. Lim, Land Bank of the Philippines v. Heirs of
Eleuterio Cruz,  and Land Bank of the Philippines v. Barrido.  x x x.
In Land Bank of the Philippines v. Gonzalez,  17 we reiterated this doctrine:
While the determination of just compensation is essentially a judicial function vested in the
R TC acting as a SAC, the judge cannot abuse his discretion by not taking into full
consideration the factors specifically identified by law and implementing rules. SACs are not
at liberty to disregard the formula laid down in DAR A.O. No. 5, series of 1998, because
unless an administrative order is declared invalid, courts have no option but to apply it.
Simply put, courts cannot ignore, without violating the agrarian reform law, the formula
provided by the DAR for the determination of just compensation. (Citation omitted.)
To settle the lingering legal objections to the use of Section 17 of Republic Act No. 6657
and the implementing formulas of the DAR in the valuation of properties covered by the
government's agrarian reform program, the Court En Banc held in the recent case of Alfonso
v. Land Bank of the Philippines18:
AGRARIAN LAW
RECENT JURISPRUDENCE
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 the case at bar, the trial court, in arriving at the amount of just compensation to be paid to
respondents, solely based its conclusion on the alleged selling price or market value of the
land adjoining respondents' properties.
Likewise, the Court of Appeals merely sustained the trial court's method of valuation which
was chiefly based on the market value of adjoining properties. The appellate court held:
In the case at bench, it cannot be gainsaid that the valuation of respondents' properties was
based mainly on the market value of properties within the surrounding area. To our mind,
the trial court's fixing of the just compensation for respondents' properties at ₱150,000.00
per hectare or at ₱l5.00 per square meter is a fair valuation considering their suitability for
agriculture, accessibility to both provincial and municipal roads and close proximity to the
barangay road in the locality. Aside from the income-yielding crops and fruit bearing trees to
which the subject realties are already planted, we find that the trial court also correctly took
appropriate note of the fact that properties within the area commanded the price of ₱3.24 per
square meter in 1977 and ₱l5.91 per square meter in 1996. 19 (Citations omitted.)
Notably, in Alfonso, we recognized that comparable sales is one of the factors that may be
considered in determining the just compensation that may be paid to the landowner.
However, there must still be proof that such comparable sales met the guidelines set forth in
DAR AO No. 5 (1998), which included among others, that such sales should have been
executed within the period January 1, 1985 to June 15, 1988 and registered within the period
January 1, 1985 to September 13, 1988.
It is apparent from the foregoing that both the trial court and the Court of Appeals did not
observe the valuation factors under Section 17 of Republic Act No. 6657 as translated into a
basic formula in DAR Administrative Order No. 06, series of 1992, without a well-reasoned
justification for the deviation as supported by the evidence on record. This is in clear
violation of the express mandate of both the law and jurisprudence concerning the
determination of just compensation of land subjected to coverage by the agrarian reform law.
For this reason, the valuation made by the trial court cannot be upheld and must be struck
down as illegal.
However, despite the necessity of setting aside the computation of just compensation of the
trial court, the Court cannot automatically adopt petitioner's own calculation as prayed for in
the instant petition. As we decreed in Heirs of Lorenzo and Carmen Vidad v. Land Bank of
the Philippines,20the "LBP's valuation has to be substantiated during an appropriate hearing
before it could be considered sufficient in accordance with Section 17 of Republic Act No.
6657 and the DAR regulations."
36
The veracity of the facts and figures which petitioner used in arriving at the amount of just
compensation under the circumstances involves the resolution of questions of fact which is,
as a rule, improper in a petition for review on certiorari.  We have likewise consistently
taken the position that the Court is not a trier of facts.  21 Thus, a remand of this case for
reception of further evidence is necessary in order for the trial court acting as a SAC to
determine just compensation in accordance with Section 17 of Republic Act No. 6657 and
the applicable DAR regulations.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The
Decision dated April 8, 2005 and the Resolution dated November 22, 2005 of the Court of
Appeals in CA-G.R. SP No. 79245 are REVERSED and SET ASIDE. Civil Case Nos.
6328 and 6333 are REMANDED to the Regional Trial Court of Bataan, Branch 1 for the
determination of just compensation, based on Section 17 of Republic Act No. 6657 and the
applicable administrative orders of the Department of Agrarian Reform, and in consonance
with prevailing jurisprudence.
SO ORDERED.
Malabanan v. Heirs of Alfredo Restrivera, December 1, 2016
Respondents have no legal standing
to assail the award of the subject
land to petitioners.
Fortich v. Corona[40] ordains that farmer-beneficiaries who are not approved awardees of
CARP have no legal standing to question the exclusion of an agricultural land from CARP
coverage. This pronouncement is anchored on the rule that any person seeking legal relief
must have a real or present substantial interest, as opposed to mere expectancy; or a future,
contingent, subordinate, or consequential interest in the matter under litigation. [41]
Simply put, the policy under the Constitution is that courts can only resolve actual
controversies involving rights that are legally demandable and enforceable; judicial power
cannot be invoked to settle mere academic issues or to render advisory opinions. [42]
In Samahang Magsasaka ng 53 Hektarya v. Mosquera,[43] a farmer's association challenged
the exemption from land distribution of a 53-hectare property. On the issue of whether the
individual members of the Samahan were real parties in interest, we ruled that those farmer-
members could not be deemed to possess the legal personality to question the property's
exclusion from CARP, unless two requirements are fulfilled: the actual approval by the DAR
and the consequent grant of CLOAs and award of the disputed land to those members. The
generation of CLOAs under their names was of no consequence; at best, they had a mere
expectancy, which was inadequate to vest them with the requisite interest in the subject
matter of the litigation.
In this case, respondents trace their alleged ownership of the disputed property to OCT No.
0-13. Their claim that the property was illegally acquired by the IRC is unsubstantiated. The
CA correctly noted that the issue of whether the acquisition of the property by IRC was
lawful or not was still undetermined by the proper tribunal. Without question, however, the
last known owner of the land before it was surrendered to the PCGG was the IRC. In fact,
the derivative titles under question cancelled the latter's title under TCT No. 28631, instead
of OCT NO. 0-13. All things considered, there is yet no sufficient basis to say that Alfredo
Restrivera was the previous owner of the land prior to its award to petitioners.
Respondents cannot rely solely on their father's title to assert ownership over the subject
land. A title is merely evidence of ownership of the particular property described therein.
Ownership is not the same as a certificate of title. [44]
On the other hand, we cannot just disregard the existence of TCT No. 28631, which is under
the name of the IRC. A Torrens certificate is the best evidence of ownership of registered
land and serves as evidence of an indefeasible title to the property in favor of the person in
whose name it was issued. [45] In the absence of a definitive ruling that TCT No. 28631 was
illegally procured, we can only take the titles presented in evidence at their face value. At
this point, respondents cannot claim ownership of the land, or any interest therein that could
have been the subject of succession. Concomitantly, they have no legal standing to challenge
the propriety of its distribution under CARP by virtue of their interest as Alfredo's
compulsory heirs.
Neither can respondents claim to have any present substantive interest in the disputed
property as preferred beneficiaries under paragraph 2 of the MOA between DAR and the
PCGG on sequestered lands. The cited paragraph states:
[2.] The PCGG shall transfer to the Republic of the Philippines the titles to  those
agricultural lands defined in paragraph 1 above that have been voluntarily turned over
or surrendered to the PCGG and whose titles can now be transferred to the Republic
without the need of further adjudication by the Sandiganbayan. These lands are to be
distributed by MAR to qualified applicants/beneficiaries in accordance with R.A. 3844 and
other pertinent law, rules and regulations; provided that the  preferential rights over these
lands of laborers, farmers, wage earners and employees of Independent Realty
Corporation and other registered owners of these lands at the time they were
surrendered or turned over voluntarily to PCGG, who have been occupying and/or
working on said lands shall he recognized and respected by all parties concerned.
[46]
 (Emphases supplied)
The right recognized under the above paragraph is conditioned on possession of title and
actual occupation of property. In respondents' case, the most they have established is that the
land used to be registered under Alfredo's name.
On the other hand, Section 22 of R.A. 6657 reads:
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 farm workers;
(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
AGRARIAN LAW
RECENT JURISPRUDENCE
his right to continue as such beneficiary. The DAR shall submit periodic reports on the
performance of the beneficiaries to the PARC.
If, due to the landowner's retention rights or to the number of tenants, lessees, or workers on
the land, there is not enough land to accommodate any or some of them, they may be granted
ownership of other lands available for distribution under this Act, at the option of the
beneficiaries.
Farmers already in place and those not accommodated in the distribution of privately-owned
lands will be given preferential rights in the distribution of lands from the public domain.
( Emphases supplied)
The law, therefore, does not automatically vest preferential rights upon the children of
landowners.[47] To avail themselves of this right, claimants must show that: (1) their parents
owned the subject land; and (2) it has been determined in the proper proceeding that the
claimants are qualified beneficiaries of the agrarian reform program. Proof of these
circumstances, however, are utterly wanting in this case.
In sum, respondents failed to show any real or present substantial interest in the subject land.
Indeed, procedural rules can be relaxed in the interest of justice, but the present case does
not merit such leniency. The requirement that a party must have real interest in the case is
not simply procedural; it is essential to the administration of justice. [48] For these reasons, we
set aside the CA's finding that respondents have the legal personality to assail the award of
the subject land to petitioners.
DARAB has no jurisdiction over the
petition filed by respondents.
It is settled that for DARAB to have jurisdiction over a case, there must be an agrarian
dispute or tenancy relationship existing between the parties. [49] There must be harmony
between this settled principle and the rules that apply to the petition for the cancellation of
CLOAs filed by respondents. The applicable set of rules is the 2003 DARAB Rules of
Procedure, under which Section 1,[50] Rule II, grants DARAB and its adjudicators
jurisdiction over cases involving the correction, partition, cancellation, secondary and
subsequent issuances of CLOAs and Emancipation Patents (EPs) which are registered with
the Land Registration Authority.
It is not sufficient that the controversy involves the cancellation of a CLOA already
registered with the Land Registration Authority as in this case. For purposes of determining
whether DARAB has jurisdiction, the central consideration is the existence of an agrarian
dispute.[51]
Section 3 (d) of R.A. 6657 defines agrarian dispute as follows:
(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. (Emphases supplied)
37
In this case, respondents have not alleged any tenurial relationship with petitioners. Rather,
their petition is centered on their supposed preferential right as farmer-beneficiaries and the
suitability of the land for CARP coverage. These are matters falling under the primary and
exclusive jurisdiction of DAR, which is supposed to determine and adjudicate all matters
involving the implementation of agrarian reform. [52]
Section 2, Rule I of DAR Administrative Order No. 03, series of 2003,  defines, by
[53]
enumeration, ALI cases over which the regional director has primary jurisdiction. These
cases include, among others, those arising from or involving the classification and
identification of landholdings for CARP coverage (including protests of and petitions for
lifting that coverage); and the classification, identification, inclusion, exclusion,
qualification, or disqualification of potential/actual farmer-beneficiaries.
The proceedings in ALI cases are commenced by the filing of an initiatory pleading or
petition either before the DAR Regional Office (DARRO) or the DAR Municipal Office
(DARMO), depending on whether or not there has been a notice of CARP coverage. [54] After
notice to all parties concerned, investigation and ocular inspection shall be conducted. The
investigating officer may require the submission of position papers prior to the issuance of a
decision.[55]
The question of whether the TCTs issued to petitioners should be cancelled hinges on
whether the landholding is exempt from CARP coverage, which remains undetermined up
this point.[56] As DARAB correctly pointed out in its Decision dated 28 April 2006, the
investigation conducted by the regional director does not measure up to the proceedings and
outcome described above. Hence, RARAD should not have acted on the petition. Under
Section 5,[57] Rule II of the procedural rules on ALI cases, the petition should have been
referred to the office of the DAR Secretary for the determination of pending ALI issues;
specifically, whether the subject land was exempt from CARP coverage, and whether
respondents were qualified and preferred farmer-beneficiaries.
Relevant to this case, too, is DAR Administrative Order No. 09-97 [58] as amended. This
issuance sets the guidelines for the recovery of lands turned over to DAR pursuant to E.O.
407,[59] but those lands were later found to be outside the coverage of CARP. Under these
guidelines, the petition for reconveyance should be filed with the provincial, regional or
national offices of DAR.[60] Moreover, the Order of Reconveyance should be issued by the
regional director,[61] which can only be appealed to the DAR Secretary.[62]
Based on the above, we find that the Decision of RARAD was rendered without authority
and jurisdiction; hence, it is void.
WHEREFORE, premises considered, the Petition for Review on Certiorari is GRANTED.
The Court of Appeals Decision dated 20 June 2008 and Resolution dated 11 November 2008
in CA-G.R. SP No. 97787 are REVERSED and SET ASIDE.
The DARAB Decision dated 28 April 2006 is hereby AFFIRMED and REINSTATED.
Moreover, the Office of the Secretary of the Department of Agrarian Reform is directed to
expedite the resolution of this case.
SO ORDERED.
Alfonso v. Land Bank, November 29, 2016
We GRANT the petition in part.
The ruling of the Court will thus be divided into four (4) component parts.
To provide context for proper understanding, Part I will discuss the history of Philippine
land reform, with emphasis on the development, over the years, of the manner of fixing just
compensation, as well as the development of jurisprudence on the same.
In Part II, the Court will evaluate the challenged CA ruling based on the law and prevailing
jurisprudence.
Part III will address all issues raised by way of dissents and separate concurring opinion
against the mandatory application of the DAR formulas. It will also discuss (1) primary
jurisdiction and the judicial function to determine just compensation; (2) how the entire
regulatory scheme provided under RA 6657 represents reasonable policy choices on the part
of Congress and the concerned administrative agency, given the historical and legal context
of the government's land reform program; and (3) how matters raised in the dissents are
better raised in a case directly challenging Section 17 and the resulting DAR formulas. We
shall also show how the current valuation scheme adopted by the DAR is at par with
internationally-accepted valuation standards.
Part IV will conclude by affirming the law, the DAR regulations and prevailing
jurisprudence which, save for a successful direct change, must be applied to secure certainty
and stability of judicial decisions.
I. Contextual Background
    A. History of Philippine land reform laws
       Section 4, Article XIII of the Constitution provides:
Sec. 4. The State shall, by law, undertake an agrarian reform program founded on the right
of farmers and regular farmworkers, who are landless, to own directly or collectively the
lands they till or, in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In determining retention limits, the State shall
respect the right of small landowners. The State shall further provide incentives for
voluntary land-sharing.
Congress first attempted to provide for land reform in 1955, when it enacted Republic Act
No. 1400, or the Land Reform Act of 1955 (RA 1400). Its scope was limited to the
expropriation of private agricultural lands in excess of 300 hectares of contiguous area, if
held by a natural person, and those in excess of 600 hectares if owned by corporations.
[35]
 With respect to determining just compensation, it provided that the courts take into
consideration the following:
(a) Prevailing prices of similar lands in the immediate area;
(b) Condition of the soil, topography, and climate hazards;
(c) Actual production;
(d) Accessibility; and
(e) Improvements.[36]
Afterwards, Congress enacted Republic Act No. 3844, otherwise known as the Agricultural
Land Reform Code of 1963 (RA 3844). Its scope, though expanded, was limited by an order
of priority based on utilization and area.[37] Just compensation under this law was based on
the annual lease rental income, without prejudice to the other factors that may be considered.
[38]
On October 21, 1972, then President Ferdinand Marcos issued Presidential Decree No.
27[39] (PD 27). It provided for a national land reform program covering all rice and corn
lands.[40] This was a radical shift in that, for the first time in the history of land reform, its
coverage was national, compulsorily covering all rice and corn lands. Even more radical,
AGRARIAN LAW
RECENT JURISPRUDENCE
however, is its system of land valuation. Instead of providing factors to be considered in the
determination of just compensation, similar to the system under RA 1400 and RA 3844, PD
27 introduced a valuation process whereby just compensation is determined using a  fixed
mathematical formula provided within the law itself. The formula was also exclusively
production based, that is, based only on the income of the land.
Under PD 27, landowner's compensation was capped to 2.5 times the annual yield, as
follows:
Land Value = Average harvest of 3 normal crop years x (2.5)
Notably, this valuation scheme under PD 27 closely resembled those applied in agrarian
reform programs earlier implemented in other Asian countries. In Taiwan, for example,
compensation was capped at 2.5 times the annual yield of the main crop, when the land
values at the time averaged four to six times the annual yield. [41] South Korea, which
commenced its land reform program sometime in the 1940s, on the other hand, capped
compensation at 1.25 times the value of the annual yield, when the land values at the time
averaged five times the annual yield. [42] In Japan, the price for the acquisition of agricultural
land under its land reform program, at one point, "could not be greater than forty times the
'official rental value' (chintai-kakaku)  of rice fields or forty-eight times the 'official rental
value' of dry fields x x x."[43]
While the constitutionality of PD 27 was upheld in the cases of De Chavez v.
Zobel  [44] and Gonzales v. Estrella,[45] these cases did not rule on the validity of the
mathematical valuation formula employed.
Under President Corazon C. Aquino's Executive Order No. 228 (EO 228) issued on July 17,
1987, the system under PD 27 was more or less retained for purposes of valuing the
remaining unvalued rice and corn lands. Land value under EO 228 was computed based on
the average gross production (AGP) multiplied by 2.5, the product of which shall be
multiplied by either P35.00 or P31.00, the Government Support Price (GSP) for
one cavan of palay or corn, respectively. Thus:
Land Value = (AGP x 2.5) x GSP[46]
On June 10, 1988, RA 6657 was enacted implementing a comprehensive agrarian reform
program (CARP). Unlike PD 27 which covered only rice and com lands, CARP sought to
cover all public and private agricultural lands. It was (and remains to be) an ambitious
endeavor, targeting an estimated 7.8 million hectares of land for acquisition and
redistribution to landless farmer and farmworker beneficiaries. [47]
     B. Regulatory scheme to determine just compensation under RA 6657
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
38
Council (PARC)[48] with the power to issue rules and regulations, both substantive and
procedural, 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
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 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 [49] (DAR AO No. 6 [1989]),
its first 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." [50] Reduced to
equation form, the formulation is as follows:
Total Land= MV + AMV + DV
Value
    3  
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= Refers to the assessment made by government assessors.
Value(AMV)
     
Declared Value (DV) = Refers to the landowner's declaration under EO 229 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 three preceding normal croppings is a classic
illustration of simplicity and productivity-based land valuation.[53] (Emphasis supplied.)
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.[54] It thus suggested control measures to prevent manipulation of the existing
formula, including the setting of cut-off dates for AMV and guidelines for comparable sales.
[55]
 It 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]
It was also around this time that the infamous Garchitorena estate deal was exposed. Under
this deal, land acquired privately for only P3.1 Million in 1988 was proposed to be
purchased by the DAR a year later at "an extremely inflated price" of P62.5 Million. [57] In his
book A Captive Land: The Politics of Agrarian Reform in the Philippines, Dr. James Putzel
wrote:
Under the compensation formula finally included in the law and the early [guidelines] of
DAR, landowners could secure even more than [market value]  compensation for their lands.
x x x With the passage of [RA 6657] in June 1988, DAR decided that the value of land
would be determined by averaging three estimates of market value: the 'assessed market
AGRARIAN LAW
RECENT JURISPRUDENCE
value' (AMV) reported in a landowner's most recent tax declaration, the 'market value' (MV)
as an average of three sales of comparable land in the vicinity of a landholding inflated by
the consumer price index, and the owner's own 'declaration of fair market value' (DMV)
made during the government's land registration programme, Listasaka 1 and II,  between
1987 and 1988. While the compensation formula included a safeguard against extreme
[overvaluation] in the owner's own declaration, it still permitted compensation at up to 33
per cent more than the market value x x x.
Such a compensation formula might have guaranteed against excessive compensation, in
terms of the [market value] criteria enunciated in the law, if state institutions like DAR or
the tax bureau[ ] were immune to landowner influence. However, DAR officials were urged
to demonstrate results by closing as many deals as possible with landowners. There were
several ways in which the formula was abused. First, DAR officials often chose to establish
market value (MV) as an average of three sales of highly-valued land, labelling the sales as
'comparable.' The arbitrary character of their choice along with the tendency for land
speculation demonstrated the unsoundness of using  'comparable sales' as an element in the
compensation formula. Secondly, landowners were able to pay just one tax instalment on the
basis of an inflated land value and thus raise the level of 'assessed market value' (AMV). The
nearer that assessed value was to the market value, the higher could be their own declared
value and the resulting compensation. There was no obligation for landowners to pay unpaid
tax arrears at the inflated level, but beneficiaries who received the land would be required to
pay taxes at this level. Thirdly, because DAR officials discussed with landowners the level
of comparable sales being chosen, landowners could both influence that choice and plan the
most advantageous level for their 'declared market value' (DMV). The formula was therefore
extremely susceptible to abuse by the landowners and opened the door to corrupt practices
by DAR officials.[58]
Within the same year, DAR Administrative Order No. 17 [59] (DAR AO No. 17 [1989]) was
issued 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,[60] provided a cut-off date for Market Value per Tax
Declaration (MV),[61] and placed greater weight to productivity through the Capitalized Net
Income (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%.[63] This decrease was presumably made for the benefit of the landowners,
considering a lower capitalization rate results to a higher CNI valuation.
The next major change in the basic formula came with the issuance of DAR Administrative
Order No. 6[64] (DAR AO No. 6 [1992]) on October 30, 1992, which, among others, gave
even more 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[67] and submission
of statements as to the income claimed to be derived from the property (whether from the
crop harvest/lease of the property). [68] It is only when the landowner fails to submit the
statement, or the 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
39
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 land is devoted to intercropping, or
the practice of planting seasonal or other permanent crop/s between or under existing
permanent or seasonal crops [70] and to account for lease contracts. [71] There are existing
valuation guidelines which also take into account the types of crops found in the property
sought to be covered, i.e., Cavendish bananas,[72] sugarcane,[73] rubber,[74] and standing
commercial trees,[75] among others.
     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 [76] (RA
8532), extending the CARP implementation for another ten (10) years and providing funds
augmentation of P50 billion.[77] This additional allocation of funds expired in June 2008. In
Joint Resolution No. 1 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 Sections 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. [79] So, on August 7, 2009, Congress passed Republic
Act No. 9700[80] (RA 9700), extending the program to June 30, 2014. It also amended
Section 17 to read:
Sec. 17. Determination of Just Compensation. — In determining just compensation, the cost
of acquisition of the land, the value o[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 seventv 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[81] (DAR AO No. 1 [2010]) and Administrative Order No.
7[82] (DAR AO 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 rice (SP), both of which are relevant to the CNI factor, to June 30, 2009.
[83]
 The MV factor was also amended and adjusted to the fair market value equivalent to
seventy percent (70%) of the Bureau of Internal Revenue (BIR) zonal valuation. [84] The basic
formula under DAR AO No. 7 (2011) appears to be the prevailing land formula to date.
     F. Constitutional challenge to RA 6657
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):[85]
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—
x x x [T]he 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.
To be sure, the determination of just compensation is a function addressed to the courts of
justice and may not be usurped by any other branch or official of the government. [EPZA v.
Dulay] resolved a challenge to several decrees promulgated by President Marcos providing
that the just compensation for property under expropriation should be either the assessment
of the property by the government or the sworn valuation thereof by the owner, whichever
was lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice
Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the
power to determine the just compensation for the property, following the applicable decrees,
its task would be relegated to simply stating  the lower value of the property as declared
either by the owner or the assessor. As a necessary consequence, it would be useless for the
court to appoint commissioners under Rule 67 of the Rules of Court. Moreover, the need to
satisfy the due process clause in the taking of private property is seemingly fulfilled since it
cannot be said that a judicial proceeding was not had before the actual taking. However, the
strict application of the decrees during the proceedings would be nothing short of a mere
formality or charade as the court has only to choose between the valuation of the owner and
that of the assessor, and its choice is always limited to the lower of the two. The court cannot
exercise its discretion or independence in determining what is just or fair. Even a grade
school pupil could substitute for the judge insofar as the determination of constitutional just
compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of whether the
courts under P.D. No. 1533, which contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to appoint commissioners for
such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the valuation in
the tax documents is unfair or wrong. And it is repulsive to the basic concepts of justice and
fairness to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail
over the judgment of a court promulgated only after expert commissioners have actually
viewed the property, after evidence and arguments pro and con have been presented, and
after all factors and considerations essential to a fair and just determination have been
judiciously evaluated.
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
AGRARIAN LAW
RECENT JURISPRUDENCE
interested parties are nevertheless allowed an opportunity to submit evidence on the
real value of the property. But more importantly, the determination of the just
compensation by the DAR is not by any means final and conclusive upon the
landowner or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
The determination made by the DAR is only  preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review  with
finality the said determination in the exercise of what is admittedly a judicial function.
[86]
 (Emphasis and underscoring supplied. Citations omitted.)
     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, [87] and the basic
formula laid down by the DAR. [88] This was the holding of the Court on July 20, 2004 when
it decided the case of Landbank of the Philippines v. Banal[89] (Banal) which involved the
application 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.[90] (Emphasis and underscoring supplied.)
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. [92] In Land Bank of the Philippines v.
Celada[93] (Celada), we held:
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.
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
40
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, courts cannot ignore administrative issuances
especially when, as in this case, its validity was not put in issue. Unless an
administrative order is declared invalid, courts have no option but to apply the same.
[94]
 (Emphasis and underscoring supplied.)
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.
[95]
 This rule, set forth in Land Bank of the Philippines v. Yatco Agricultural
Enterprises[96] (Yatco), was a qualification of the application of Celada, to wit:
That the RTC-SAC must consider the factors mentioned by the law (and consequently
the DAR's implementing formula) is not a novel concept. In Land Bank of the
Philippines v. Sps. Banal,  we said that the RTC-SAC must consider the factors enumerated
under Section 17 of R.A. No. 6657, as translated into a basic formula by the DAR, in
determining just compensation.
We stressed the RTC-SAC's duty to apply the DAR formula in determining just
compensation in Landbank of the Philippines v. Celada  and reiterated this same ruling
in Land Bank of the Philippines v. Lim, Land Bank of the Philippines v. Luciano, and Land
Bank of the Philippines v. Colarina,  to name a few.
In the recent case of Land Bank of the Philippines v. Honeycomb Farms Corporation,  we
again affirmed the need to apply Section 17 of R.A. No. 6657 and DAR AO 5-98 in just
compensation cases. There, we considered the CA and the RTC in grave error when they
opted to come up with their own basis for valuation and completely disregarded the DAR
formula. The need to apply the parameters required by the law cannot be doubted; the DAR's
administrative issuances, on the other hand, partake of the nature of statutes and have in their
favor a presumption of legality. Unless administrative orders are declared invalid or unless
the cases before them involve situations these administrative issuances do not cover,
the courts must apply them.
In other words, in the exercise of the Court's essentially judicial function of
determining just compensation, the RTC-SACs are not granted unlimited discretion
and must consider and apply the R.A. No. 6657 — enumerated factors and the DAR
formula that reflect these factors. These factors and formula provide the uniform
framework or structure for the computation of the just compensation for a property subject to
agrarian reform. This uniform system will ensure that they do not arbitrarily fix an amount
that is absurd, baseless and even contradictory to the objectives of our agrarian reform laws
as just compensation. This system will likewise ensure that the just compensation fixed
represents, at the very least, a close approximation of the full and real value of the property
taken that is fair and equitable for both the farmer-beneficiaries and the landowner.
When acting within the parameters set by the law itself, the RTC-SACs, however, are
not strictly bound to apply the DAR formula to its minute detail, particularly when
faced with situations that do not warrant the formula's strict application; they may, in
the exercise of their discretion, relax the formula's application to fit the factual
situations before them. They must, however, clearly explain the reason for any
deviation from the factors and formula that the law and the rules have provided.
The situation where a deviation is made in the exercise of judicial discretion should at all
times be distinguished from a situation where there is utter and blatant disregard of the
factors spelled out by law and by the implementing rules. For in such a case, the RTC-SAC's
action already amounts to grave abuse of discretion for having been taken outside of the
contemplation of the law.[97] (Emphasis and underscoring supplied.)
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]
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;[99] (2) data from the Philippine Coconut Authority (PCA) as to municipal
selling price for coconut in the Sorsogon Province; [100] and (3) the Schedule of Unit Market
Value (SUMV).[101]
Due to the absence of relevant comparable sales transactions in the area, [102] the DAR and the
LBP used the following formula:
LV= (CNI x 0.9) + (MV x 0.1)
It valued the San Juan and Bibincahan properties at P39,974.22 [103] and P792,869.06,
[104]
 respectively.
The SAC, in its Decision dated May 13, 2005, rejected this valuation for being
"unrealistically low"[105] and instead adopted Commissioner Chua's Cuervo Report, which
valued the San Juan and Bibincahan properties at the "more realistic" amounts of
P442,830.00 and P5,650,680.00, 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)[107] and averaged the indications resulting from the two
approaches. He thereafter 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
AGRARIAN LAW
RECENT JURISPRUDENCE
explanation, a capitalization rate of eight percent (8%), [109] instead of the twelve percent
(12%) 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.[110] (Emphasis and underscoring supplied.)
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.
[111]
 There is nothing in the SAC's Decision to show why  it found Commissioner Chua's
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.
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.[112] Aside from lack of proof of fact of said sales, the Report likewise
failed to explain 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 1, 1985, to
September 13, 1988.
41
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),[113] whereas DAR AO No. 5 (1998) had already and previously set the cut-off
between June 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. [114] and 952kgs./ha.,[115] the Cuervo Report asserts
1,656 kgs./ha. and 1,566 kgs./ha., [116] for the San Juan and Bibincahan properties,
respectively. Where the government alleges an average selling price of P5.58 for coconuts,
[117]
 the Cuervo Report claims P12.50.[118] The Cuervo Report, however, is completely bereft
of evidentiary support by which the 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."[119] In this sense, we AFFIRM the Court of Appeals'
finding of 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.
Part III shall now address the concerns raised in the dissents.
III. The Dissents/Separate Concurring Opinion
     A. Summary of issues raised Dissents/Separate Concurring Opinion
Justice Leonen proposes that this Court abandon the doctrines in Banal  and Celada,  arguing
that Section 17 of RA 6657 and DAR AO No. 5 (1998) are unconstitutional to the extent
they suggest that the basic formula is mandatory on courts. [120] His principal argument is
grounded on the premise that determination of just compensation is a judicial function.
Along the same lines, Justice Carpio cites Apo Fruits Corporation v. Court of Appeals (Apo
Fruits)[121] to support his view that the basic formula "does not and cannot strictly bind the
courts."[122] Justice Velasco, for his part, calls for a revisit of the decided cases because a rule
mandating strict application of the DAR formula could only straitjacket the judicial function.
Justice Carpio also raises an issue of statutory construction.[123] He argues that Section 17 and
DAR AO No. 5 (1998) apply only when the landowner and the tenant agree on the proffered
value, but not otherwise.
     B. Dissents as indirect constitutional attacks
At this juncture, we emphasize that petitioner Alfonso never himself questioned the
constitutionality of Section 17 of RA No. 6657 and the DAR Administrative Order
implementing the same. The main thrust of Alfonso's petition concerns itself only with the
non-binding nature of Section 17 of RA 6657 and the resulting DAR formula in relation to
the judicial determination of the just compensation for his properties.
Petitioner is a direct-injury party who could have initiated a direct attack on Section 17 and
DAR AO No. 5 (1998). His failure to do so prevents this case from meeting the "case and
controversy" requirement of Angara.[124] It also deprives the Court of the benefit of the
"concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions."[125]
The dissents are, at their core, indirect attacks on the constitutionality of a provision of law
and of an administrative rule or regulation. This is not allowed under our regime of judicial
review. As we held in Angara v. Electoral Commission,[126] our power of judicial review is
limited:
x x x [T]o actual cases and controversies to be exercised after full opportunity of
argument by the parties, and limited further to the constitutional question raised or the
very lis mota presented. Any attempt at abstraction could only lead to dialectics and barren
legal questions and to sterile conclusions unrelated to actualities. Narrowed as its function is
in this manner, the judiciary does not pass upon questions of wisdom, justice or expediency
of legislation. More than that, courts accord the presumption of constitutionality to
legislative enactments, not only because the legislature is presumed to abide by the
Constitution but also because the judiciary in the determination of actual cases and
controversies must reflect the wisdom and justice of the people as expressed through their
representatives in the executive and legislative departments of the government.
[127]
 (Emphasis supplied.)
Our views as individual justices cannot make up for the deficiency created by the petitioner's
failure to question the validity and constitutionality of Section 17 and the DAR formulas. To
insist otherwise will be to deprive the government (through respondents DAR and LBP) of
their due process right to a judicial review made only "after full opportunity of argument by
the parties."[128]
Most important, since petitioner did not initiate a direct attack on constitutionality, there is
no factual foundation of record to prove the invalidity or unreasonableness of Section17 and
DAR AO No. 5 (1998). This complete paucity of evidence cannot be cured by the arguments
raised by, and debated among, members of the Court. As we held in Ermita-Malate Hotel
and Motel Operators Association, Inc. v. City Mayor of Manila:[129]
It admits of no doubt therefore that there being a presumption of validity, the necessity for
evidence to rebut it is unavoidable, unless the statute or ordinance is void on its face,
which is not the case here. The principle has been nowhere better expressed than in the
leading case of O'Gorman& Young v. Hartford Fire Insurance Co., where the American
Supreme Court through Justice Brandeis tersely and succinctly summed up the matter thus:
"[t]he statute here questioned deals with a subject clearly within the scope of the police
power. We are asked to declare it void on the ground that the specific method of regulation
prescribed is unreasonable and hence deprives the plaintiff of due process of law.  As
underlying questions of fact may condition the constitutionality of legislation of this
character, the presumption of constitutionality must prevail in the absence of some
factual foundation of record for overthrowing the statute." No such factual foundation
being laid in the present case, the lower court deciding the matter on the pleadings and the
stipulation of facts, the presumption of validity must prevail and the judgment against the
ordinance set aside.[130] (Emphasis and underscoring supplied.)
Issues on the constitutionality or validity of Section 17 of RA 6657 and DAR AO No. 5
(1998) not having been raised by the petitioner, much less properly pleaded and ventilated, it
behooves the Court to apply, not abandon, Banal, Celada  and Yatco, and postpone
consideration of the dissents' arguments in a case directly attacking Section 17 of RA 6657
and DAR AO No. 5 (1998).
If, however, left unanswered, the objections now casting Section 17 and the DAR formulas
in negative light might be used as bases for the abandonment of the rule established
in Banal and clarified in Yatco. The net practical effect, whether intended or not, of such a
course of action would be to strip the implementing DAR regulations of all presumption of
validity. We would then place upon the government the burden of proving the formula's
appropriateness in every case, as against the valuation method chosen by the
AGRARIAN LAW
RECENT JURISPRUDENCE
landowner, whatever it may be. It would allow the landowner to cherry-pick, so to speak, a
factor or set of factors to support a proposed valuation method. As the case below has
shown, such a process has allowed the SAC to conclude, without explanation, that
Commissioner Chua's higher valuation was "more realistic" than the government's
"ridiculously low" valuation and, therefore, in its opinion, more just.
Allowing the SAC to arrive at a determination of just compensation based on open-ended
standards like "more realistic" and "ridiculously low" bodes ill for the future of land reform
implementation. One can only imagine the havoc such a ruling, made in the name of
ensuring absolute freedom of judicial discretion, would have on the government's agrarian
reform program and the social justice ends it seeks to further. It could open the floodgates to
the mischief of the Garchitorena estate scandal where, to borrow terms used by the SAC in
this case, a property acquired at a "ridiculously low" cost of P3.1 million was proposed to be
purchased by the DAR for the "more realistic" amount of P6.09 million.
We thus feel compelled to address these issues, if only to assure those directly affected, that
the law and the implementing DAR regulations are reasonable policy choices made by the
Legislative and Executive departments on how best to implement the law, hence, the heavy
premium given their application.
     C. Primary jurisdiction and the judicial power/function to determine just compensation
Section 1, Article VIII of the 1987 Constitution [131] provides that "judicial power includes the
duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable."
The right of a landowner to just compensation for the taking of his or her private property is
a legally demandable and enforceable right guaranteed by no less than the Bill of Rights,
under Section 9, Article III of the Constitution. [132] The determination of just compensation in
cases of eminent domain is thus an actual controversy that calls for the exercise of judicial
power by the courts. This is what the Court means when it said that "[t]he determination of
'just compensation' in eminent domain cases is a judicial function." [133]
Before RA 6657, the courts exercised the power to determine just compensation under the
Rules of Court. This was true under RAs 1400 and 3844 and during the time when President
Marcos in Presidential Decree No. 1533 attempted to impermissibly restrict the discretion of
the courts, as would be declared void in EPZA v. Dulay (EPZA). RA 6657 changed this
process by providing for preliminary determination by the DAR of just compensation.
Does this grant to the DAR of primary jurisdiction to determine just compensation limit, or
worse, deprive, courts of their judicial power? We hold that it does not. There is no
constitutional provision, policy, principle, value or jurisprudence that places the
determination of a justiciable controversy beyond the reach of Congress' constitutional
power to require, through a grant of primary jurisdiction, that a particular controversy be
first referred to an expert administrative agency for adjudication, subject to subsequent
judicial review.
In fact, the authority of Congress to create administrative agencies and grant them
preliminary jurisdiction flows not only from the exercise of its plenary legislative power,
[134]
 but also from its constitutional power to apportion and diminish the jurisdiction of courts
inferior to the Supreme Court. [135]
Tropical Homes, Inc. v. National Housing Authority,[136] has settled that "[t]here is no
question that a statute may vest exclusive original jurisdiction in an administrative agency
over certain disputes and controversies falling within the agency's special expertise." [137]
In San Miguel Properties, Inc. v. Perez,[138] we explained the reasons why Congress, in its
judgment, may choose to grant primary jurisdiction over matters within the erstwhile
jurisdiction of the courts, to an agency:
The doctrine of primary jurisdiction  has been increasingly called into play on matters
demanding the special competence of administrative agencies even if such matters are
at the same time within the jurisdiction of the courts. A case that requires for its
determination the expertise, specialized skills, and knowledge of some administrative
42
board or commission because it involves technical matters or intricate questions of
fact, relief must first be obtained in an appropriate administrative proceeding before a
remedy will be supplied by the courts although the matter comes within the jurisdiction of
the courts. The application of the doctrine does not call for the dismissal of the case in the
court but only for its suspension until after the matters within the competence of the
administrative body are threshed out and determined.
To accord with the doctrine of primary jurisdiction, the courts cannot and will not determine
a controversy involving a question within the competence of an administrative tribunal, the
controversy having been so placed within the special competence of the administrative
tribunal under a regulatory scheme. In that instance, the judicial process is suspended
pending referral to the administrative body for its view on the matter in dispute.
Consequently, if the courts cannot resolve a question that is within the legal competence of
an administrative body prior to the resolution of that question by the latter, especially
where the question demands the exercise of sound administrative discretion requiring
the special knowledge, experience, and services of the administrative agency to
ascertain technical and intricate matters of fact, and a uniformity of ruling is essential
to comply with the purposes of the regulatory statute administered, suspension or
dismissal of the action is proper.[139] (Emphasis and underscoring supplied.)
Rule 43 of the Revised Rules of Court, which provides for a uniform procedure for appeals
from a long list of quasi-judicial agencies to the Court of Appeals, is a loud testament to the
power of Congress to vest myriad agencies with the preliminary jurisdiction to resolve
controversies within their particular areas of expertise and experience.
In fact, our landmark ruling in Association  has already validated the grant by Congress to
the DAR of the primary jurisdiction to determine just compensation. There, it was held that
RA 6657 does not suffer from the vice of the decree voided in  EPZA,[140] where the valuation
scheme was voided by the Court for being an "impermissible encroachment on judicial
prerogatives."[141] In EPZA,  we held:
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under the Constitution is reserved to it for final determination.
x x x [T]he strict application of the decrees during the proceedings would be nothing short of
a mere formality or charade as the court has only to choose between the valuation of the
owner and that of the assessor, and its choice is always limited to the lower of the two. The
court cannot exercise its discretion or independence in determining what is just or fair. Even
a grade school pupil could substitute for the judge insofar as the determination of
constitutional just compensation is concerned.[142]
Unlike EPZA,  and in answer to the question raised in one of the dissents, [143] the scheme
provided by Congress under RA 6657 does not take discretion away from the courts in
determining just compensation in agrarian cases. Far from it. In fact, the DAR valuation
formula is set up in such a way that its application is dependent on the existence of a
certain set of facts, the ascertainment of which falls within the discretion of the court.
Applied to the facts of this case, and confronted with the LBP/DAR valuation and the court-
appointed commissioner's valuation, it was entirely within the SAC's discretion to ascertain
the factual bases for the differing amounts and decide, for itself, which valuation would
provide just compensation. If, in its study of the case, the SAC, for example, found that the
circumstances warranted the application of a method of valuation different from that of the
DAR's, it was free to adopt any other method it deemed appropriate (including the Cuervo
method), subject only to the Yatco  requirement that it provide a reasoned explanation
therefor.
As pointed out earlier in this Opinion, however, the SAC in this case simply adopted the
Cuervo valuation as the "more realistic" amount and rejected the DAR/LBP valuation for
being "unrealistically low." In fact, there is nothing in its Decision to indicate that the SAC
actually looked into the evidentiary bases for the opposing valuations to satisfy itself of the
factual bases of each. This, in tum, explains the utter dearth of explanation for the stark
inconsistencies between Commissioner Chua and the DAR/LBP's factual  findings. Thus,
and with all due respect, it is quite incorrect to say that the present rule requiring strict
application of the DAR formula completely strips courts of any discretion in determining
what compensation is just for properties covered by the CARP.
More importantly, in amending Section 17 of RA 6657, Congress provided that the
factors and the resulting basic formula shall be "subject to the final decision of the proper
court." Congress thus clearly conceded that courts have the power to look into the "justness"
of the use of a formula to determine just compensation, and the "justness" of the factors and
their weights chosen to flow into it.
In fact, the regulatory scheme provided by Congress in fact sets the stage for
a heightened judicial review of the DAR's preliminary determination of just compensation
pursuant to Section 17 of RA 6657. In case of a proper challenge, SACs are actually
empowered to conduct a de novo review of the DAR's decision. Under RA 6657, a full trial
is held where SACs are authorized to (1) appoint one or more commissioners, [144] (2) receive,
hear, and retake the testimony and evidence of the parties, and (3) make findings of fact
anew.[145] In other words, in exercising its exclusive and original jurisdiction to determine
just compensation under RA 6657, the SAC is possessed with exactly the same powers and
prerogatives of a Regional Trial Court (RTC) under Rule 67 of the Revised Rules of Court.
In such manner, the SAC thus conducts a more exacting  type of review, compared to the
procedure provided either under Rule 43 of the Revised Rules of Court, which governs
appeals from decisions of administrative agencies to the Court of Appeals, or under Book
VII, Chapter 4, Section 25 [146] of the Administrative Code of 1987, [147] which provides for a
default administrative review process. In both cases, the reviewing court decides based on
the record, and the agency's findings of fact are held to be binding when supported by
substantial evidence.[148] The SAC, in contrast, retries the whole case, receives new evidence,
and holds a full evidentiary hearing.
Having established that the regulatory scheme under RA 6657 does not, in principle, detract
from (but rather effectuates) the exercise of the judicial function, we shall now show how the
DAR valuation process is at par with internationally-accepted valuation practices and
standards.
     H. DAR Valuation process is at par with international standards
Valuation is not an exact science. [149] In clear recognition of the inherent difficulty such a
task entails, the DAR declared:
Just compensation in regard to land cannot be an absolute amount disregarding
particularities of productivity, distance to the marketplace and so on. Hence, land valuation
is not an exact science but an exercise fraught with inexact estimates requiring integrity,
conscientiousness and prudence on the part of those responsible for it What is important
ultimately is that the land value approximates, as closely as possible, what is broadly
considered to be just.[150]
Nevertheless, there are existing standards which are observed to ensure the competence and
integrity of valuation practice. At present, we have the Philippine Valuation Standards
(PVS), or the reference standards for local government assessors and other agencies
undertaking property valuations.[151] The PVS are, in tum, based on the International
Valuation Standards (IVS), also known as the Generally Accepted Valuation Principles
(GAVP). The IVS represents the internationally accepted best practices in the valuation
profession and were formulated by the International Valuations Standards Committee
(IVSC).[152]
Of note is the IVSC's stature in the valuation profession. Composed of professional valuation
associations from around the world, the IVSC is a non-governmental organization (NGO)
member of the United Nations which provides advice and counsel relating to valuation and
seeks to coordinate its Standards and work programs with related professional discipline in
the public interest, and cooperates with international agencies in determining and
promulgating new standards. It was granted Roster status with the United Nations Economic
and Social Council in May 1985.[153]
AGRARIAN LAW
RECENT JURISPRUDENCE
Based on the foregoing, the process involves, among others, utilizing one or more valuation The Philippines has kept abreast with the internationally-recognized and accepted standards
There also exists a process which allows for a systematic procedure [154] to be followed in approaches, with each individual approach producing a particular value indication, [155] and for valuation practice.
answering questions about real property value: thereafter, reconciling the different value indications to arrive at "a supported opinion of
defined value."[156] As previously discussed, we already have the PVS used by local government assessors and
other agencies in conducting property valuations. [169] There is also Republic Act No. 9646
The valuation process is applied to develop a well-supported opinion of a defined value (RA 9646), otherwise known as the Real Estate Service Act of the Philippines, which
Part One: Definition of the Problem based on an analysis of pertinent general and specific data. Appraisers develop an opinion of mandates the conduct of licensure examinations to ensure the technical competence,
Identification ofIntended Purpose ofDate ofIdentification Extra- Hypo- property value with specific appraisal procedures that reflect the different approaches to data responsibility and professionalism of real estate practitioners in general (including
client/intended use ofappraisal opinion ofof ordinary thetical analysis.[157] appraisers, in particular).[170]
users appraisal (including value characteristics assumptions conditions
definition of property The PVS and the IVS, discussed earlier, list three market-based valuation approaches: the Actual valuation reforms to overcome the "multiplicity of fragmented policies and
of value) (including sales comparison approach, the income capitalization approach and the cost approach. [158] regulations which have previously characterized both the public and private sectors" [171] have
location and also been undertaken. In April 2010, the Department of Finance (DOF) issued a Mass
property rights The sales comparison approach considers the sales of similar or substitute properties and Appraisal Guidebook for the "operationalization and practical application of the Philippine
to be valued related market data, and establishes a value estimate by processes involving comparison. In Valuation Standards." [172] The PVS also appear in the Manual on Real Property Appraisal
general, a property being valued is compared with sales of similar properties that have been and Assessment Operations published by the DOF as guidelines to aid local assessors in
Part Two: Scope of Work transacted in the market.[159] discharging their functions.[173]

In the income capitalization approach, income and expense data relating to the property A Valuation Reform Act[174] is currently being proposed to harmonize valuation
being valued are considered and value is estimated through a capitalization process. in both public and private sectors by providing uniform valuation standards which "shall
Part Three: Data Collection and Property Description Capitalization relates income (usually a net income figure) and a defined value type by conform with generally accepted international valuation standards and principles." [175]
converting an income amount into a value estimate. This process may
consider direct relationships (known as capitalization rates), yield or discount  rates The existence of these standards and measures highlights the emerging importance of
Market Analysis Subject PropertyComparable Property Data (reflecting measures of return on investment), or both. [160] valuation, not only in the context of land reform implementation, but as a profession, with
Data high standards of competence, a distinct body of knowledge continually augmented by
The cost approach considers the possibility that, as an alternative to the purchase of a given contributions of practitioners, and a code of ethics and standards of practice with members
General characteristics ofSpecific Sale, listings, offerings, vacancies, cost
property, one could acquire a modem equivalent asset that would provide equal utility. In a willing to be subject to peer review. [176]
region, city andcharacteristics of landand depreciation, income and expenses,
real estate context, this would involve the cost of acquiring equivalent land and constructing
neighborhood and improvement,capitalization rates, etc.
an equivalent new structure. Unless undue time, inconvenience and risk are involved, the An examination of the terms of the DAR issuances would show that the implementing
personal property,
price that a buyer would pay for the asset being valued would not be more than the cost of agency has indeed taken pains to ensure that its valuation system is at par with local and
business assets, etc.
the modem equivalent. Often the asset being valued will be less attractive than the cost of international valuation standards. The pertinent portion of DAR AO No. 7 (2011) reads:
the modern equivalent because of age or obsolescence.[161]
Part IV. Data Analysis
Section 85. Formula for Valuation. The basic formula for the valuation of lands covered by
These approaches are used in all  estimations of value.[162] Depending on the circumstances VOS or CA shall be:
attendant to each particular case, one or more of these approaches may be used.
Market Analysis Highest and Best Use Analysis LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
The final analytical step in the valuation process is the reconciliation of the value indications
derived into a single peso figure or a range into which the value will most likely fall:
In the valuation process, more than one approach to value is usually applied, and each
approach typically results in a different indication of value. If two or more approaches are Where:
Demand studiesSite as though vacant
Supply studiesIdeal improvement used, the appraiser must reconcile at least two value indications. Moreover, several value
Marketability studies Property as improved indications may be derived in a single approach. x x x
LV = Land Value
CNI = Capitalized Net Income (based on land use and productivity)
Part V. Land Value Opinion x x x Resolving the differences among various value indications is called reconciliation. x x
CS = Comparable Sales (based on fair market value equivalent to 70% of BIR Zonal
x[163] (Emphasis supplied.)
Value)
MV = Market Value per Tax declaration (based on Government assessment)
Reconciliation requires appraisal judgment and a careful, logical analysis of the procedures
that lead to each value indication. Appropriateness, accuracy and quantity of evidence are
Part VI. Application of the Approaches to Value the criteria with which an appraiser forms a meaningful, defensible and credible final
The CS factor refers to the Market Data Approach under the standard appraisal
opinion of value.[164]
approaches which is based primarily on the principle of substitution where a prudent
individual will pay no more for a property than it would cost to purchase a comparable
The valuation process concludes with a final report/opinion of value. This reported value is
substitute property. This factor is determined by the use of 70% of the BIR zonal valuation.
      the appraiser's opinion[165] and reflects the experience and judgment  that has been applied to
Cost Sales Comparison Income the study of the assembled data.[166]
The CNI factor, on the other hand, refers to the Income Capitalization Approach under
the standard appraisal approaches which is considered the most applicable valuation
Part VII. Reconciliation of Value Indications and Final Opinion of Value For a well-supported opinion of a defined value, however, there must be an analysis of
technique for income-producing properties such as agricultural landholdings. Under this
pertinent general and specific data[167] using an accepted and systematic valuation process.
approach, the value of the land is determined by taking the sum of the net present value of
Following the generally accepted valuation process, there is an application of the appropriate
the streams of income, in perpetuity, that will be forgone by the LO due to the coverage of
approaches to value and, where multiple approaches have been employed, the reconciliation
his landholding under CARP.
of the different value indications to arrive at a final opinion of value. Reconciliation, in large
part, relies on the proper application of appraisal techniques and the appraiser's judgment
Part VIII. Report of Defined Value The MV factor is equivalent to the Market Data Approach, except that this is intended for
and experience.[168]
taxation purposes only. (Emphasis and underscoring supplied.)

43
AGRARIAN LAW
RECENT JURISPRUDENCE
The administrative order's express reference to "standard appraisal approaches," namely the
Market Data Approach and the Income Capitalization Approach, as discussed earlier, is in
line with the PVS and the IVS/GAVP.
     I. The whole regulatory scheme provided under RA 6657 (and operationalized through
the DAR formulas) are reasonable policy choices to best implement the purposes of the law
The whole regulatory scheme provided under RA 6657 (and implemented through the DAR
formulas) are reasonable policy choices made by the Congress and the DAR on how best to
implement the purposes of the CARL. These policy choices, in the absence of contrary
evidence, deserve a high degree of deference from the Court.
On the Section 17 enumeration.  Congress, in adopting Section 17, opted for the enumeration
of multiple factors provided under RAs 1400 and 3844, to replace the exclusively production
based formula provided in PD 27. The Court cannot now fault Congress for not
enumerating all  possible valuation factors, a task even this Court cannot conceivably
achieve, and use the Congress' limitation as a reason to void the enumeration.
On the use of a formula. In the absence of evidence of record to the contrary, it is reasonable
to assume that DAR decided that a formula is a practical method to arrive at a determination
of just compensation due the landowner. This became necessary considering the multiple
factors laid down by the Congress in Section 17. For one, the formulas provide a concrete,
uniform and consistent equation, applicable to all agricultural land nationwide, regardless of
their location. It thus assures prompt, consistent and even-handed implementation by
limiting the exercise of discretion by DAR officials. We have also earlier noted how
formulas worked in the agrarian reform programs of other Asian countries. Finally, we have
also noted how the absence of a formula resulted in the Garchitorena estate scandal. The
Garchitorena estate scandal underscores the wisdom of deferring to the DAR's choice to use
a formula in its judgment, "uniformity of ruling is essential to comply with the purposes
of[RA 6657]."[177]
On the choice of the formula's components and their weights.  DAR reformulated its
formulas every so often as it gained experience in its implementation. We can see from AO
No. 5 (1998) that the DAR finally settled on two approaches to value: the income
capitalization approach and the sales comparison approach, represented under the CNI and
CS factors, respectively. While the cost approach was excluded, market value of the land as
per tax declaration of the owner (MV) is nevertheless considered. DAR also decided on the
relative weights to allocate to each component.
The inclusion of the CNI as a component factor was in apparent reaction to the suggestion of
the UP-IAS study, which roundly criticized DAR AO No. 6 (1989) for not having
considered the production income of the land. While the same study recommended that the
appropriate formula should "value land based only on production/productivity,"[178] he DAR,
however, chose to also consider comparable sales and market value as per tax declaration.
This is in keeping with the mandate of Section 17 which provided that "current value of like
properties" and "the sworn valuation by the owner, the tax declarations," and the
"assessment made by government assessors" shall also be considered.
We note that while "cost of acquisition of the land" was also included as a factor to be
considered in determining just compensation, it was not included as a component in the
basic formula. Again, in the absence of contrary evidence of record, it is reasonable to
assume that the DAR acted, on the knowledge that most agricultural lands are inherited. This
makes their acquisition cost nil. To include the same as a component of the formula would
only serve to reduce the resulting value, much to the prejudice of the landowner. [179]
On the formula as DAR's expert opinion.  The general function of an appraisal or valuation
exercise is to develop an opinion  of a certain type of value. [180] This process, though
subjective, is amenable to a rigorous process that should result in a considered  opinion of
value. As earlier discussed, there is an application of the generally accepted approaches to
value and, where multiple approaches have been employed, the reconciliation of the
different value indications to arrive at a final opinion of value. [181] In this case, the DAR,
applying the law and using the accepted valuation process and approaches to value, acted no
44
different from a valuation appraiser and gave an opinion as to what components make up the
right formula.
Similar to the valuation profession which recognizes that the integrity and credibility of a
valuation opinion rests in large part on the appraiser's judgment and experience, [182] the
DAR's choices on the formula's component parts and their corresponding weights was based
on its expertise, judgment and actual experience in the field of agrarian reform. We have
taken pains to show how the DAR formula, and valuation process, is consistent and at par
with recognized, international relation processes. There is no contrary evidence of record.
We shall now discuss the detailed arguments of the dissents as they relate to the DAR
formulas.
     J. Responses to specific arguments in the Dissents and Separate Concurring Opinion
Justice Leonen asserts that the Congress and the DAR failed to capture all the factors [183] (if
not the "important," [184] "highly influential,"[185] and "critical"[186] ones) to fully determine
market value. Since the listing of factors in Section 17 is incomplete, any formula derived
therefrom would also (and necessarily) be incomplete for purposes of arriving at just
compensation.
We note that Justice Leonen cites the UP-IAS study in his dissent. This study analyzed the
DAR formula under DAR AO No. 06 (1989). Our case now involves the DAR formula
under DAR AO No. 5 (1998). Not only is the latter formula completely different from that
under DAR AO No. 6 (1989), it has, as earlier discussed, already "improved" on the formula
by incorporating the suggestions and recommendations of the UP-IAS study cited.
Furthermore, Justice Leonen did not point to a complete or exhaustive listing of factors upon
which he based his assertion of the law's incompleteness. Neither did he show how courts
are to actually approach valuation (in the absence of Section 17 and the implementing DAR
formula) as to avoid "underrating the effect of each property's peculiarities." [187]
Even granting, for the sake of argument, that there is an infinite  number of factors that can
be considered in the valuation of property, we see no conceptual inconsistency between
applying a formula to determine just compensation and giving all attendant factors due
consideration.
This is evident when one considers the indispensability of the approaches to value in any
estimation of value.[188] Following the generally-accepted valuation process, after all relevant
market area data, subject property data and comparable property data have been gathered
and analyzed,[189] the approaches to value will be applied [190] and the resulting value
indications reconciled[191] to arrive at a final opinion of value. Thus, while there can arguably
be an infinite number of factors that can be considered for purposes of determining a
property's value, they would all ultimately be distilled into any one of the three valuation
approaches. In fact, and as part of their discipline, appraisers are expected to "apply all the
approaches that are applicable and for which there is data." [192]
Justice Leonen also seems to favor the use of the discounted cash flow (DCF)/discounted
future income method (a variant of the yield capitalization technique) where the present
DAR basic formula makes use of the direct capitalization technique. [193] He thereafter
equates this to a lack of consideration for future income and ventures that, in turn, might be
the reason why landowners always feel that the DAR/LBP assessment is severely
undervalued.[194]
We disagree. Direct capitalization and yield capitalization are both methods used in the
income capitalization approach to value.
Direct capitalization is distinct from yield capitalization x x x in that the former does not
directly consider the individual cash flows beyond the first year. Although yield
capitalization explicitly calculates year-by-year effects of potentially changing income
patterns, changes in the original investment's value, and other considerations, direct
capitalization processes a single year's income into an indication of value. x x x[195]
In fact, and applied to the same set of facts,  use of either method can be expected to produce
similar results:
x x x Either direct capitalization or yield capitalization may correctly produce a supportable
indication of value when based on relevant market information derived from comparable
properties, which should have similar income expense ratios, land value-to-building value
ratios, risk characteristics, and future expectations of income and value changes over a
typical holding period. A choice of capitalization method does not produce a different
indication of value under this circumstance.[196] (Emphasis supplied.)
Selection of the appropriate income capitalization method to use depends on the attendant
circumstances. While direct capitalization is used when properties are already operating on
a stabilized basis, it is not useful where the property sought to be valued is going through an
initial lease-up or when income and/or expenses are expected to change in an irregular
pattern over time. In the latter case, yield capitalization techniques are considered to be more
appropriate.[197]
In fact, the DAR uses yield capitalization methods where, based on its experience, such
method is appropriate. In Joint Memorandum Circular No. 07, Series of 1999, for example,
the DAR and the LBP revised their initial valuation guidelines for rubber plantations, to wit:
I. PREFATORY STATEMENT
The rubber plantation income models presented under the old rubber Land Valuation
Guideline (LVG No. 6, Series of 1990) recognized the income of rubber plantations based
on processed crumb rubber. However, recent consultations with rubber authorities
(industry, research, etc.) disclosed that the standard income approach to valuation
should measure the net income or productivity of the land based on the farm produce
(in their raw forms) and not on the entire agri-business income enhanced by the added
value of farm products due to processing. Hence, it is more appropriate to determine
the Capitalized Net Income (CNI) of rubber plantations based on the actual yield and
farm gate prices of raw products (field latex and cuplump) and the corresponding cost
of production.
There is also a growing market for old rubber trees which are estimated to generate net
incomes ranging between P20,000 and P30,000 per hectare or an average of about P100 per
tree, depending on the remaining stand of old trees at the end of its economic life. This
market condition for old rubber trees was not present at the time LVG No. 6, Series of 1990,
was being prepared. (The terminal or salvage value of old rubber trees was at that time
pegged at only P6,000 per hectare, representing the amount then being paid by big
landowners to contractors for clearing and uprooting old trees.)
LVG No. 6, Series of 1990, was therefore revised to address the foregoing considerations
and in accordance with DAR Administrative Order (AO) No. 05, Series of 1998. (Emphasis
and underscoring supplied.)
What can be fairly inferred from the DAR's adoption of the direct capitalization method in
its formula is the operational assumption [198] that the agricultural properties to be valued are,
in general, operating on a stabilized basis, or are expected to produce on a steady basis. This
choice of capitalization method is a policy decision made by the DAR drawn, we can
presume, from its expertise and actual experience as the expert administrative agency.
Justice Velasco, for his part, calls for a revisit of the established rule on the ground that the
same "have veritably rendered hollow and ineffective the maxim that the determination of
just compensation is a judicial function." [199] According to him, the view that application of
the DAR formulas cannot be made mandatory on courts is buttressed by: (1) Section  50 of
RA 6657 which expressly provides that petitions for determination of just compensation fall
within the original and exclusive jurisdiction of the SACs; [200] (2) Land Bank of the
Philippines v. Belista[201] which already settled that petitions for the determination of just
compensation are excepted from the cases falling under the DAR's special original and
AGRARIAN LAW
RECENT JURISPRUDENCE
exclusive jurisdiction under Section 57 of RA 6657; and (3) Heirs of Lorenzo and Carmen
Vidad v. Land Bank of the Philippines, (Heirs of Vidad)[202] which held that the DAR's
process of valuation under Section 16 of RA 6657 is only preliminary, the conclusion of
which is not a precondition for purposes of invoking the SAC's original and exclusive
jurisdiction to determine just compensation.
Justice Velasco correctly pointed out this Court's statement in Belista excepting petitions for
determination of just compensation from the list of cases falling within the DAR's original
and exclusive jurisdiction.[203] Justice Velasco is also correct when he stated that the Court,
in Heirs of Vidad, summarized and affirmed rulings which "invariably upheld the [SAC's]
original and exclusive jurisdiction x x x notwithstanding the seeming failure to exhaust
administrative remedies before the DAR." [204] Later on, he would point out, again correctly,
the seemingly conflicting rulings issued by this Court regarding the imposition upon the
courts of a formula to determine just compensation.
We acknowledge the existence of statements contained in our rulings over the years which
may have directly led to the inconsistencies in terms of the proper interpretation of the
CARL. As adverted to earlier in this Opinion, this Court thus takes this case as a good
opportunity to affirm, for the guidance of all concerned, what it perceives to be the better
jurisprudential rule.
Justice Velasco reads both Belista and Heirs of Vidad as bases to show that SACs possess
original and exclusive jurisdiction to determine just compensation, regardless of prior
exercise by the DAR of its primary jurisdiction.
We do not disagree with the rulings in Belista and Heirs of Vidad, both of which
acknowledge the grant of primary jurisdiction to the DAR, subject to judicial review. We
are, however, of the view that the better rule would be to read these seemingly conflicting
cases without having to disturb established doctrine.
Belista, for example, should be read in conjunction with Association, the landmark case
directly resolving the constitutionality of RA 6657. In Association, this Court unanimously
upheld the grant of jurisdiction accorded to the DAR under Section 16 to preliminarily
determine just compensation. This grant of primary jurisdiction is specific, compared to the
general grant of quasi-judicial power to the DAR under Section 50. Belista, which speaks of
exceptions to the general grant of quasi-judicial power under Section 50, cannot be read to
extend to the specific grant of primary jurisdiction under Section 16.
Heirs of Vidad should also be read in light of our ruling in Land Bank of the Philippines v.
Martinez[205] another landmark case directly and affirmatively resolving the issue of whether
the DAR's preliminary determination (of just compensation) can attain finality. While the
determination of just compensation is an essentially judicial function, Martinez teaches us
that the administrative agency's otherwise preliminary determination may become
conclusive not because judicial power was supplanted by the agency's exercise of
primary jurisdiction but because a party failed to timely invoke the same. The Court
said as much in Heirs of Vidad:
It must be emphasized that the taking of property under RA 6657 is an exercise of the State's
power of eminent domain. 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. When the parties cannot agree on the amount of
just compensation, only the exercise of judicial power can settle the dispute with binding
effect on the winning and losing parties. On the other hand, the determination of just
compensation in the RARAD/DARAB requires the voluntary agreement of the parties.
Unless the parties agree, there is no settlement of the dispute before the
RARAD/DARAB, except if the aggrieved party fails to file a petition for just
compensation on time before the RTC.[206] (Emphasis and underscoring supplied.)
Considering the validity of the grant of primary jurisdiction, our ruling in Heirs of
Vidad should also be reconciled with the rationale behind the doctrine of primary
jurisdiction. In this sense, neither landowner nor agency can disregard the administrative
process provided under the law without offending the already established doctrine of
primary jurisdiction:
45
x x x [I]n cases raising issues of fact not within the conventional experience of judges or
cases requiring the exercise of administrative discretion, agencies created by Congress for
regulating the subject matter should not be passed over. This is so even though the facts after
they have been appraised by specialized competence serve as a premise for legal
consequences to be judicially defined. Uniformity and consistency in the regulation of
business entrusted to a particular agency are secured, and the limited functions of
review by the judiciary are more rationally exercised, by preliminary resort for
ascertaining and interpreting the circumstances underlying legal issues to agencies that
are better equipped than courts by specialization, by insight gained through
experience, and by more flexible procedure.[207] (Emphasis supplied.)
Arguing against the binding nature of the DAR formula, Justice Carpio, in his Separate
Concurring Opinion, cites Apo Fruits[208] which held, to wit:
What is clearly implicit, thus, is that the basic formula and its alternatives—administratively
determined (as it is not found in Republic Act No. 6657, but merely set forth in DAR AO
No. 5, Series of 1998)—although referred to and even applied by the courts in certain
instances, does not and cannot strictly bind the courts. x x x[209]
The argument of Apo Fruits that the DAR formula is a mere administrative order has,
however, been completely swept aside by the amendment to Section 17 under RA 9700. To
recall, Congress amended Section 17 of RA 6657 by expressly providing that the valuation
factors enumerated be "translated into a basic formula by the DAR x x x." This amendment
converted the DAR basic formula into a requirement of the law itself. In other words, the
formula ceased to be merely an administrative rule, presumptively valid as subordinate
legislation under the DAR's rule-making power. The formula, now part of the law itself, is
entitled to the presumptive constitutional validity of a statute.[210] More important, Apo
Fruits  merely states that the formula cannot "strictly" bind the courts. The more reasonable
reading of Apo Fruits  is that the formula does not strictly apply in certain
circumstances. Apo Fruits  should, in other words, be read together with Yatco.
Justice Carpio also raises an issue of statutory construction of Section 18 of RA 6657 in
relation to Section 17. Section 18 reads:
Sec. 18. Valuation and Mode of Compensation. —  The LBP shall compensate the landowner
in such amounts as may be agreed upon by the landowner and the DAR and the LBP, in
accordance with the criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as the just compensation for
the land.
The Justice reads Section 18 to mean that Section 17 and the implementing DAR formula
operate only to qualify the offer to be made by the DAR and the LBP to the landowner.
Section 17 is not a qualifying imposition on the court in its determination of just
compensation. Stated differently, where there is disagreement on the issue of just
compensation, Section 17 and the basic formula do not apply.
We disagree. Sections 16, 17 and 18 should all be read together in context [211] as to give
effect to the law.[212] This is the essence of the doctrines we laid down in Banal,
Celada  and Yatco.
Section 16 governs the procedure for the acquisition of private lands. The relevant provision
reads:
Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of
private lands, the following procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR shall
send its notice to acquire the land to the owners thereof, by personal delivery or
registered mail, and post the same in a conspicuous place in the municipal building and
barangay hall of the place where the property is located. Said notice shall contain the
offer of the DAR to pay a corresponding value in accordance with the valuation set
forth in Sections 17, 18, and other pertinent provisions hereof. x x x (Emphasis
supplied.)
It is clear from the foregoing provision that the procedure for acquisition of private land is
commenced by the DAR's notice of acquisition and offer of compensation to the landowner.
At such point, the DAR does not know whether the landowner will accept its offer. Section
16(a), however, states without qualification  that the DAR shall make the offer in accordance
with Sections 17 and 18. In case the landowner does not reply or rejects the offer, then the
DAR initiates summary administrative proceedings to determine just compensation, subject
to the final determination of the court. In the summary proceedings, the DAR offer remains
founded on the criteria set forth in Section 17. Section 16(a) did not distinguish between the
situation where the landowner accepts the DAR's offer and where he/she does not. Section
17, as amended, itself also did not distinguish between a valuation arrived at by agreement or
one adjudicated by litigation. Where the law does not distinguish, we should not distinguish.
[213]
Section 18, on the other hand, merely recognizes the possibility that the landowner will
disagree with the DAR/LBP's offer. In such case, and where the landowner elevates the issue
to the court, the court needs to rule on the offer of the DAR and the LBP. Since the
government's offer is required by law to be founded on Section 17, the court, in exercising
judicial review, will necessarily rule on the DAR determination based on the factors
enumerated in Section 17.
Now, whether the court accepts the determination of the DAR will depend on its exercise of
discretion. This is the essence of judicial review. That the court can reverse, affirm or
modify the DAR/LBP's determination cannot, however, be used to argue that Section 18
excuses observance from Section 17 in cases of disagreement.
Finally, there is no cogent policy or common sense reason to distinguish. Worse, this reading
flies in the face of the contemporaneous interpretation and implementation given by the
DAR and the LBP to Sections 16, 17 (as amended) and 18. DAR AO No. 5 (1998) expressly
provides that the basic formula applies to both voluntary offers to sell and to compulsory
acquisition?[214]
     K. The matters raised by the dissents are better resolved in a proper case directly
challenging Section 17 of RA 6657 and the resulting DAR formulas
The following central issues of fact underlying many of the arguments raised by the dissents
are better raised in a case directly impugning the validity of Section 17 and the DAR
formulas:
(1) Whether, under the facts of a proper case, the use of a basic formula (based on factors
enumerated by Congress) to determine just compensation is just and reasonable.
Evidence must be taken to determine whether, given the scale of the government's agrarian
reform program, the DAR and the LBP (and later, Congress) acted justly and within reason
in choosing to implement the law with the enumeration of factors in Section 17 and the use
of a basic formula, or, whether, under the facts, it is more just and reasonable to employ
a case to case method of valuation.
A core and triable question of fact is whether the DAR and the LBP can effectively and
fairly implement a large scale land reform program without some guide to canalize the
discretion of its employees tasked to undertake valuation. Otherwise stated, how can the
DAR and the LBP commence CARP implementation if the different DAR and LBP
employees tasked with making the offer, and spread nationwide, are each given complete
AGRARIAN LAW
RECENT JURISPRUDENCE
discretion to determine value from their individual reading of Section 17? This will resolve
the factual underpinnings of the argument advanced that the valuation factors enumerated in
Section 17 apply only where there is agreement on value as between the DAR/LBP and the
landowner, but not when there is disagreement.
(2) Whether, under the facts of a proper case, the enumeration of the factors in Section 17
and the resulting formula, are themselves just and reasonable.
To resolve this, there must be a hearing to determine: (a) whether, following generally-
accepted valuation principles, the enumeration under Section 17 is sufficient or under-
inclusive; (2) how the DAR arrived at selecting the components of the formula and their
assigned weights; (3) whether there are fairer or more just and reasonable alternatives, or
combinations of alternatives, respecting valuation components and their weights; and (4)
whether the DAR properly computes or recognizes net present value under the CNI factor,
and whether DAR employs a fair capitalization rate in computing CNI.
All things considered, it is important that the DAR and the LBP be heard so that they can
present evidence on the cost and other implications of doing away with the use of a basic
formula, or using a different mix of valuation components and weights.
IV. Conclusion
The determination of just compensation is a judicial function. The "justness" of the
enumeration of valuation factors in Section 17, the "justness" of using a basic formula, and
the "justness" of the components (and their weights) that flow into the basic formula, are all
matters for the courts to decide. As stressed by Celada,  however, until Section 17 or the
basic formulas are declared invalid in a proper case, they enjoy the presumption of
constitutionality. This is more so now, with Congress, through RA 9700, expressly providing
for the mandatory consideration of the DAR basic formula. In the meantime, Yatco, akin to a
legal safety net, has tempered the application of the basic formula by providing for
deviation, where supported by the facts and reasoned elaboration.
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. This rule, as expressed by the doctrine of stare decisis, is
necessary for securing certainty and stability of judicial decisions, thus:
Time and again, the Court has held that it is a very desirable and necessary judicial practice
that when a court has laid down a principle of law as applicable to a certain state of facts, it
will adhere to that principle and apply it to all future cases in which the facts are
substantially the same. Stare decisis et non quieta movere. Stand by the decisions and
disturb not what is settled. Stare decisis  simply means that for the sake of certainty, a
conclusion reached in one case should be applied to those that follow if the facts are
substantially the same, even though the parties may be different. It proceeds from the first
principle of justice that, absent any powerful countervailing considerations, like cases ought
to be decided alike. Thus, where the same questions relating to the same event have been put
forward by the parties similarly situated as in a previous case litigated and decided by a
competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.
[215]
This Court thus for now gives full constitutional presumptive weight and credit to Section 17
of RA 6657, DAR AO No. 5 (1998) and the resulting DAR basic formulas. To quote the
lyrical words of Justice Isagani Cruz in Association:
The CARP Law and the other enactments also involved in these cases have been the subject
of bitter attack from those who point to the shortcomings of these measures and ask that they
be scrapped entirely. To be sure, these enactments are less than perfect; indeed, they should
46
be continuously re-examined and rehoned, that they may be sharper instruments for the
better protection of the farmer's rights. But we have to start somewhere. In the pursuit of
agrarian reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls
and expected difficulties. This is inevitable. The CARP Law is not a tried and tested project.
On the contrary, to use Justice Holmes's words, "it is an experiment, as all life is an
experiment," and so we learn as we venture forward, and, if necessary, by our own mistakes.
We cannot expect perfection although we should strive for it by all means. Meantime, we
struggle as best we can in freeing the farmer from the iron shackles that have
unconscionably, and for so long, fettered his soul to the soil.[216]
For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for
the DAR's expertise as the concerned implementing agency, courts should henceforth
consider the factors stated in Section 17 of RA 6657, as amended, as translated into the
applicable DAR formulas in their determination of just compensation for the properties
covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict
application of said formulas is not warranted under the specific circumstances of the case
before them, they may deviate or depart therefrom, provided that this departure or deviation
is supported by a reasoned explanation grounded on the evidence on record. In other words,
courts of law possess the power to make a final determination of just compensation. [217]
A final note
We must be reminded that the government (through the administrative agencies) and the
courts are not adversaries working towards different ends; our roles are, rather,
complementary. As the United States Supreme Court said in Far East Conference v. United
States:[218] x x x [C]ourt and agency are not to be regarded as wholly independent and
unrelated instrumentalities of justice, each acting in the performance of its prescribed
statutory duty without regard to the appropriate function of the other in securing the plainly
indicated objects of the statute. Court and agency are the means adopted to attain the
prescribed end, and, so far as their duties are defined by the words of the statute, those
words should be construed so as to attain that end through coordinated action. Neither
body should repeat in this day the mistake made by the courts of law when equity was
struggling for recognition as an ameliorating system of justice; neither can rightly be
regarded by the other as an alien intruder, to be tolerated if must be, but never to be
encouraged or aided by the other in the attainment of the common aim. [219] (Emphasis
supplied.)
The Congress (which wrote Section 17 and funds the land reform land acquisition), the DAR
(author of DAR AO No.5 [1998] and implementer of land reform), and the LBP (tasked
under EO 405 with the valuation of lands) are partners to the courts. All are united in a
common responsibility as instruments of justice and by a common aim to enable the farmer
to "banish from his small plot of earth his insecurities and dark resentments and "rebuild in it
the music and the dream."[220] Courts and government agencies must work together if we are
to achieve this shared objective.
WHEREFORE, the petition is PARTIALLY GRANTED. Civil Case Nos. 2002-7073 and
2002-7090 are REMANDED to the Special Agrarian Court for the determination of just
compensation in accordance with this ruling.
SO ORDERED.
J. Milleza Estate Development v. Simoy, June 8, 2016
The petition lacks merit.
Right of retention expressly recognized
and enshrined in the 1987 Constitution
The 1987 Constitution expressly recognizes the 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.12
P.D. No. 27 and R.A. No. 6657
In the case of Heirs of Sandueta v. Robles13 (Sandueta), the Court expounded on the concept,
nature, purpose, restrictions and coverage or applicability of the right of retention.
The right of retention, as protected and enshrined in the Constitution, balances the effects of
compulsory land acquisition by granting the landowner the right to choose the area to be
retained subject to legislative standards. Necessarily, since the said right is granted to limit
the effects of compulsory land acquisition against the landowner, it is a prerequisite that the
land falls under the coverage of the OLT Program of the government. If the land is beyond
the ambit of the OLT Program, the landowner need not — as he should not — apply for
retention since the appropriate remedy would be for him to apply for exemption. As
explained in the case of Daez v. CA  (Daez):
Exemption and retention in agrarian reform are two (2) distinct concepts.
P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers
tenanted rice or corn lands. The requisites for coverage under the OLT program are the
following: (1) the land must be devoted to rice or corn crops; and (2) there must be a system
of share-crop or lease-tenancy obtaining therein. If either requisite is absent, a landowner
may apply for exemption. If either of these requisites is absent, the land is not covered under
OLT. Hence, a landowner need not apply for retention where his ownership over the entire
landholding is intact and undisturbed.
If the land is covered by the OLT Program which hence, renders the right of retention
operable, PD 27 — issued on October 21, 1972 — confers in favor of covered landowners
who cultivate or intend to cultivate an area of their tenanted rice or corn land the right to
retain an area of not more than seven (7) has thereof. Subsequently, or on June 10, 1998,
Congress passed R.A. 6657 which modified the retention limits under PD 27. In particular,
Section 6 of RA 6657 states that covered landowners are allowed to retain a portion of their
tenanted agricultural land not, however, to exceed an area of five (5) has. and, further
thereto, provides that an additional three (3) has. may be awarded to each child of the
landowner, subject to the following qualifications: (1) that he is at least fifteen (15) years of
age; and (2) that he is actually tilling the land or directly managing the farm. In the case of
Heirs of Aurelio Reyes v. Garilao (Reyes), however, the Court held that a landowner's
retention rights under RA 6657 are restricted by the conditions set forth in LOI 474 issued
on October 21, 1976 which reads:
WHEREAS, last year I ordered that small landowners of tenanted rice/corn lands with areas
of less than twenty-four hectares but above seven hectares shall retain not more than seven
hectares of such lands except when they own other agricultural lands containing more than
seven hectares or land used for residential, commercial, industrial or other urban purposes
from which they derive adequate income to support themselves and their families;
WHEREAS, the Department of Agrarian Reform found that in the course of implementing
my directive there are many landowners of tenanted rice/corn lands with areas of seven
hectares or less who also own other agricultural lands containing more than seven hectares
AGRARIAN LAW
RECENT JURISPRUDENCE
or lands used for residential, commercial, industrial or other urban purposes where they
derive adequate income to support themselves and their families;
WHEREAS, it is therefore necessary to cover said lands under the Land Transfer Program of
the government to emancipate the tenant-farmers therein.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, do
hereby order the following:
1.  You shall undertake to place under the Land Transfer Program of the government
pursuant to Presidential Decree No. 27, all tenanted rice/corn lands with areas of seven
hectares or less belonging to landowners who own other agricultural lands of more than
seven hectares in aggregate areas or lands used for residential, commercial, industrial or
other urban purposes from which they derive adequate income to support themselves and
their families.
2. Landowners who may choose to be paid the cost of their lands by the Land Bank of the
Philippines shall be paid in accordance with the mode of payment provided in Letter of
Instructions No. 273 dated May 7,1973.cralawr
ed
Based on the above-cited provisions, it may be readily observed that LOI 474 amended
PD 27 by removing any right of retention from persons who own:
(a) other agricultural lands of more than seven (7) has. in aggregate areas;  or
(b) lands used for residential, commercial, industrial or other urban purposes from which
they derive adequate income to support themselves and their families.
To clarify, in Santiago v. Ortiz-Luis, the Court, citing the cases of Ass'n. of Small
Landowners and Reyes, stated that while landowners who have not yet exercised their
retention rights under PD 27 are entitled to new retention rights provided for by RA 6657,
the limitations under LOI 474 would equally apply to a landowner who filed an application
under RA 6657.
xxx
Nevertheless, while the CA properly upheld the denial of the petition for retention, the Court
must point out that the November 24, 2009 DARCO Order inaccurately phrased Romulo
Sandueta's entitlement to the remaining 14.0910-hectare landholding, outside of the 4.6523-
hectare subject portion, as a vestige of his retention right. Since the 14.0910-hectare
landholding was not shown to be tenanted and, hence, outside the coverage of the OLT
Program, there would be no right of retention, in its technical sense, to speak of. Keeping
with the Court's elucidation in Daez, retention is an agrarian reform law concept which is
only applicable when the land is covered by the OLT Program; this is not, however, the
case with respect to the 14.0910-hectare landholding. Thus, if only to correct any confusion
in terminology, Romulo Sandueta's right over the 14.0910-hectare landholding should not be
deemed to be pursuant to any retention right but rather to his ordinary right of ownership as
it appears from the findings of the DAR that the landholding is not covered by the OLT
Program.14 [Emphases Supplied]
Petitioner not entitled to exercise its
retention right over the subject land
In this case, the piece of land that was the subject of retention, measuring 87,313 square
meters or 8.7313 hectares and registered in petitioner's name, was transferred to respondents
and registered in the Register of Deeds, Province of Iloilo, on August 30, 1998, pursuant to
the EPs issued by the DAR. Respondents were farmer-beneficiaries of the landholding
chosen by petitioner as its retention area under P.D. No. 27.
At this point, petitioner basically contends that it is entitled to new retention rights under
R.A. No. 6657 and based on the decision of the Court in  Small Landowners and Daez cases.
Respondents, on the other hand, argue that the petitioner should not be granted retention
rights because it has still vast landholdings or more than enough properties in its name.
Respondents are correct.
47
Records show that based on the Order 15 of the Regional Director of DAR Regional Office
No. 6, dated May 22, 2001, petitioner submitted certifications, among others, to support its
application for retention, dated October 17, 2000, which included the certification, dated
April 3, 2001, issued by the Office of the City Assessor of Iloilo City and the certification,
dated April 4, 2001, issued by the Office of the Provincial Assessor of the Province of Iloilo,
confirming that petitioner had no agricultural lands registered in its name in the city and
province of Iloilo. The Order16 of the DAR Secretary, dated June 20, 2005, however,
explicitly stated that petitioner had aggregate agricultural landholdings of 68.2140 hectares
covered by the following Transfer Certificates of Title (TCTs):
TCT No. 76779 (2.6884 has.)
TCT No. 76780 (.2894 ha.)
TCT No. 76781 (.4791 has.)
TCT No. 76782 (.1934 ha.)
TCT No. 76783 (6.3882 has.)
TCT No. 76784 (1.0739 ha.)
TCT No. 76785 (2.3539 has.)
TCT No. 76786 (8.7313 has.)
TCT No. 76787 (1.5738 has.)
TCT No. 76788 (39. 4806 has.)
TCT No. 76789 (.9943 ha.)
All these lands were placed under the OLT program of the government.
This fact has been affirmed by the electronic copies of the TCTs 17 on record submitted by no
less than the respondents. All the said TCTs are still in the name of J. Melliza Estates
Development Company, Inc. and existing in the Register of Deeds of the Province of Iloilo.
Among the said TCTs, only TCT No. 76785 has been cancelled. Moreover, respondents
claim that aside from this 68.2140 landholding of petitioner, six (6) of its corporate
stockholders have total landholdings of 1, 358, 317 square meters or 135.8317 hectares
embraced in one (1) title - TCT No. T-66933 issued on September 1, 1971.
The Court agrees with respondents that petitioner has more than enough properties registered
in its name. Of the total landholdings of petitioner and that of its corporate stockholders,
only eight (8) hectares have been subjected to the OLT. Even if the land areas owned by its
corporate stockholders would be excluded, petitioner still has 68.2140 hectares in its name.
Its vast land ownership of 68.2140 definitely disqualifies it from exercising its right of
retention over the subject lands under P.D. No. 27 and R.A. No. 6657.
Although petitioner is correct in saying that a landowner who failed to exercise his right of
land retention may do so under R.A. No. 6657, such landowner must, nevertheless, be
qualified to retain land. Unfortunately, petitioner in this case is not qualified to retain the
subject land because it has 68.2140 hectares of collective landholdings as evidenced by the
electronic copies of the TCTs on record. As it is not entitled to retain land under the
combined application of P.D. No. 27 and R.A. No. 6657, it is also disqualified to retain land
under R.A. No. 6657.
The case of Pangilinan v. Balatbat18 applies. In the said case, petitioner filed a petition for
cancellation of Certificates of Land Transfer (CLTs) issued in favor of his tenants pursuant
to P.D. No. 27. The Court wrote:
In this case, the DARAB and the Court of Appeals agreed that respondents' total landholding
is 25.2548 hectares, and that 9.8683 hectares thereof was riceland, which was subjected to
Operation Land Transfer, while 15.3864 hectares was sugarland. In addition, the PARAD
and the DARAB found that the 15.3864 hectares of sugarland was subdivided by
respondents into a 4.8836 subdivision lot to support themselves and their family; hence,
under LOI No. 474 and Administrative Order No. 4, series of 1991, the PARAD and the
DARAB held that respondents are no longer entitled to retain seven hectares of the land
subject to Operation Land Transfer. The decisions of the PARAD and the DARAB are
supported by the Court's ruling in Heirs of Aurelio Reyes v. Garilao cited above. As the
PARAD and the DARAB found that respondents are disqualified to retain the parcel of
land, which is the subject matter of this case, there was no ground to cancel the
emancipation patent of petitioner; hence, the DARAB affirmed the decision of the PARAD
dismissing respondents' complaint for lack of merit.19 [Emphases Supplied]
Also in the cited case of Sandueta, the Court did not favor retention when the landowner had
more than what could be kept. Thus:
In this case, records reveal that aside from the 4.6523-hectare tenanted riceland covered by
the OLT Program, i.e. the subject portion, petitioners' predecessors-in-interest, Sps.
Sandueta, own other agricultural lands with a total area of 14.0910 has_which therefore
triggers the application of the first disqualifying condition under LOI 474 as above-
highlighted. As such, petitioners, being mere successors-in-interest, cannot be said to
have acquired any retention right to the subject portion. Accordingly, the subject
portion would fall under the complete coverage of the OLT Program hence, the 5 and
3-hectare retention limits as well as the landowner's right to choose the area to be
retained under Section 6 of RA 6657 would not apply altogether.20 [Emphasis and
Underscoring Supplied]
Considering that petitioner failed to qualify for retention, there is no need to discuss the
other issues raised.
WHEREFORE, the petition is DENIED.
SO ORDERED.chanroblesvirtuallawlibrary
SAMMANA v. Tan, April 18, 2016
We DENY the present petition for review on certiorari as we find no reversible error
committed by the CA in issuing its assailed decision and resolution.
A. The petitioner is not a real party-in-interest to
question the July 26, 2000 DAR Order; the
Constitutional right to form associations does
not make the petitioner a real party-in-interest
in this case.
Unless otherwise authorized by law or the Rules of Court, every action must be prosecuted
and defended in the name of the real party-in-interest. 23 The Rules of Court defines a real
party in interest as "the party who stands to be benefited or injured by the judgment in the
suit, or the party entitled to the avails of the suit." 24 To be properly considered as such, the
party must have a real, actual, material, or substantial interest   in the subject matter of
the action,25 NOT a mere expectancy or a future, contingent, subordinate, or
consequential interest.26
Republic Act (RA) No. 665727 in relation with Section 3 of the Rules of Court expressly
allows farmers, farmworkers, tillers, cultivators, etc., organizations and associations, through
their leaders, to represent their members in any proceedings before the DAR. It must be
pointed out, however, that the law should be harmonized with the interest  requirement in
bringing actions and suits. In other words, while organizations and associations may
represent their members before the DAR, these members must have such real, actual,
material, or substantial interest in the subject matter of the action, NOT merely an
expectancy, or a future contingent interest.
Here, the petitioner alleged that it is duly registered with the SEC acting on behalf of its
farmers and fishermen members which allegation gave it the right to represent its members.
However, it failed to allege and prove that these members are identified and registered
qualified beneficiaries of the subject land, or have already been actually awarded portions
AGRARIAN LAW
RECENT JURISPRUDENCE
of it, or have been issued Certificates of Land Ownership Award (CLOAs) for which they
could validly claim the status of the land’s grantees having a  real, actual, material
interest  to question the July 26, 2000 Order of the DAR Secretary lifting the Notice of
Coverage. Not being identified and duly registered qualified beneficiaries, these members’
interest over the subject land were at most an expectancy that, unfortunately for them, did
not ripen to actual award and ownership.
In Fortich v. Corona,28 the Court did not consider as real parties in interest the movants in
the case who were merely recommendee farmer-beneficiaries. The movants in Fortich, who
claimed to be farmer-beneficiaries of the disputed agricultural land in San Vicente, Sumilao,
Bukidnon, attached to their motion for intervention a "Master List of Farmer-Beneficiaries"
to show that they are real parties in interest in the case. The document merely showed that
the movants were those "Found Qualified and Recommended for Approval" as farmer-
beneficiaries; thus, the Court held that they were not real parties in interest as their interest
over the land in question was a mere expectancy.
The Court was later confronted with the same issue in Sumalo Homeowners Association of
Hermosa, Bataan v. Litton29 and Samahang Magsasaka ng 53 Hektarya v. Mosquera.30
In Sumalo Homeowners Association of Hermosa, Bataan, the Court rejected the petitioners’
claim as real parties in interest in the case because, aside from their self-serving assertions,
the records were devoid of proof that they have been identified and registered as qualified
CARP beneficiaries.
Subsequently, in Samahang Magsasaka ng 53 Hektarya, the Court ruled that being ‘mere
qualified beneficiaries of the CARP’ was not enough to be considered a party in interest. The
Court, applying Fortich, held that "farmer-beneficiaries, who are not approved awardees of
CARP, are not real parties in interest;" 31 that the fact that there was "x x x certification that
CLOAs were already generated in their names, but were not issued because of the present
dispute, does not vest any right to the farmers since the fact remains that they have not yet
been approved as awardees, actually awarded lands, or granted CLOAs x x x." 32
As earlier pointed out, the petitioner in this case merely alleged that its members, composed
of farmers and fishermen, were long-time residents of Sitio Talaga, Barangay Ipag,
Mariveles, Bataan, and were conducting farming activities in the area. No evidence was
presented to show that the petitioner’s members were approved as awardees, or were granted
CLOAs over their respective portions of the disputed property. The petitioner even admits
that the case folders of its members were not processed because of the DAR Secretary’s July
26, 2000 Order.33
Thus, notwithstanding its representative capacity, the petitioner and its members are not real
parties-in-interest to question the DAR’s July 26, 2000 Order.
In Department of Agrarian Reform v. Department of Education Culture and Sports, the
BARC certified the farmers-individuals who claimed to be permanent and regular
farmworkers of the disputed land as potential CARP beneficiaries. Also, the Notice of
Coverage issued by the MARO over the disputed land was approved by the DAR Regional
Director, and finally by the DAR Secretary. On the DECS’s appeal, the CA set aside the
DAR Secretary’s decision approving the Notice of Coverage.
The Court reversed the CA decision, declaring (on the issue of whether the farmers are
qualified beneficiaries of CARP) that the identification of actual and potential beneficiaries
under CARP is vested in the DAR Secretary pursuant to Section 15 of RA No. 6657. "Since
the identification and selection of CARP beneficiaries are matters involving strictly the
administrative implementation of the CARP, it behooves the courts to exercise great caution
in substituting its own determination of the issue, unless there is grave abuse of discretion
committed by the administrative agency. In this case, there was none." 34
48
In contrast with the petitioner’s case, its members were not identified and registered by the
BARC as the subject land’s beneficiaries; and the Notice of Coverage was in fact lifted by
the DAR Secretary via the July 26, 2000 Order which Order the OP subsequently affirmed.
As the identification and selection of CARP beneficiaries are matters involving strictly the
administrative implementation of the CARP which the Court generally respects, the CA’s
finding that the subject land is covered by RA No. 6657 (which is not even reflected in its
decision’s fallo) cannot be validly relied upon by the petitioner. At most, it is a non-
binding obiter dictum.
DAR Administrative Order No. 9, series of 1994,35 the rules governing the hearing of
protests involving the coverage of lands under RA No. 6657 at the time the PCGG Chairman
filed the letter request with the DAR Secretary, did not provide any minimum period of time
within which the protest or, in this case, the PCGG letter-request must be decided. As A.O.
No. 9, series of 1994 provided, the MARO or PARO shall, once the protest is filed,
"comment on said protest and submit the same to the Regional Director who shall rule on the
same."36
In short, the DAR’s lifting of the Notice of Coverage issued by the MARO over the subject
land one day after the PCGG letter-request was filed was not inconsistent with then existing
rules and was, therefore, not irregular.
B. The constitutional considerations: provisions
governing agrarian reform program do not
entail automatic grant of lands to every farmer
and farmworker.
Social justice in the land reform program also applies to landowners, not merely to farmers
and farmworkers. This is precisely why the law – RA No. 6657 – and the applicable rules
provide for the procedure for determining the proper beneficiaries and grantees or awardees
of the lands covered or to be covered under the CARP.
These procedures ensure that only the qualified, identified, and registered farmers and/or
farmworkers-beneficiaries acquire the covered lands which they themselves actually till
(subject to the landowners retention rights as protected by the law). Conversely, these
procedures likewise ensure that landowners do not lose their lands to usurpers and other
illegal settlers who wish to take advantage of the agrarian reform program to acquire lands to
which they are not entitled.
In this light, for a particular land and its farmers, farmworkers, tillers, etc. to be covered
under the CARP, two requisites must concur: first,  the land should be covered by the
corresponding Notice of Coverage;37 and second, the beneficiaries must be qualified and
registered by the DAR, in coordination with the Barangay Agrarian Reform Committee
(BARC); copy of the BARC list or registry must be posted 38 in accordance with the
guidelines established by the Presidential Agrarian Reform Council
(PARC).39
In Sumalo Homeowners Association of Hermosa, Bataan v. Litton, et al.,40 the Court pointed
out that the "CARL is specific in its requirements for registering qualified beneficiaries."
Those who have not been identified and registered as qualified beneficiaries are not real
parties-in-interest.
Thus, Section 15 of the CARL explicitly provides:
SEC. 15. Registration of Beneficiaries. – The DAR in coordination with the Barangay
Agrarian Reform Committee (BARC) as organized in this Act, shall register all agricultural
lessees, tenants and farm workers who are qualified to be beneficiaries with the assistance of
the BARC and the DAR shall provide the following data:
a) Names and members of their immediate farm household;
b) Location and area of the land they work;
c) Crops planted; and
d) Their share in the harvest or amount of rental paid or wages received.
A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be
posted in the barangay hall, school or other public buildings in the barangay where it shall be
open to inspection by the public at all reasonable hours.
In other words, a claimant may fall under one of the categories of qualified beneficiaries as
enumerated under Section 22 of RA No. 6657, but he or she does not automatically become
a grantee of the covered land. RA No. 6657 specifically requires that not only must he or she
be a qualified beneficiary, he or she must, above everything else, be identified and registered
as such in accordance with the procedures and guidelines laid out in the law and applicable
rules.
In these lights, the views of Associate Justice Marvic M.V.F. Leonen (Justice Leonen)  that
the social justice principles of the Constitution guarantees the petitioner automatic standing
to question the DAR’s July 26, 2000 Order is misplaced. So also, Justice Leonen cannot rely
on Department of Agrarian Reform v. Department of Education Culture and Sports  that the
petitioner is a real party-in-interest because the land has already been subjected to the
coverage of the CARP. To emphasize and reiterate, the land must be covered by the
corresponding Notice of Coverage and the beneficiaries must be both qualified and
registered by the DAR for the subject land and the petitioner’s farmers and fishermen
members to be covered by the CARP. There is thus nothing irregular in the procedure
undertaken by the DAR Secretary in the lifting of the Notice of Coverage a day after the
request was filed by the PCGG Chairman.
C. The July 26, 2000 DAR Order has already
attained finality is no longer reviewable
by this Court.
Even assuming that the petitioner is a real party-in-interest, which we reiterate it is not, the
present petition for review on certiorari  still fails because the July 26, 2000 Order of the
DAR, which the petitioner ultimately seeks this Court to review, has already attained
finality.
The petitioner alleged that they filed with the DAR their petition to revoke the lifting of the
Notice of Coverage on the subject 129.4227-hectare property only on October 29, 2004, or
more than four (4) years after the Order was issued by Secretary Morales on July 26, 2000.
Section 15 of Executive Order (E.O.) No. 292,41 the applicable general law at the time the
assailed order was issued, provides that:
SECTION 15. Finality of Order. — The decision of the agency shall become final and
executory fifteen (15) days after the receipt of a copy thereof by the party adversely affected
unless within that period an administrative appeal or judicial review, if proper, has been
AGRARIAN LAW
RECENT JURISPRUDENCE
perfected. One motion for reconsideration may be filed, which shall suspend the running of
the said period.1âwphi1
Without any motion for reconsideration or appeal filed from the assailed July 26, 2000 order,
the order lapsed to finality and can no longer be reviewed.
This Court has held that administrative decisions must end sometime, as fully as public
policy demands that finality be written on judicial controversies. 42 In the absence of any
showing that the subject final order was rendered without jurisdiction or with grave abuse of
discretion, no court, not even this Court, has the power to revive, review, change, or alter a
final and executory judgment or decision.
WHEREFORE, we DENY the petitioner's petition for review on certiorari.  The decision
dated July 27, 2010 and resolution dated February 10, 2011 of the Court of Appeals in CA-
G.R. SP No. 100926 are hereby AFFIRMED.
SO ORDERED.
Land Bank v. Padilla-Munsayac, March 16, 2016
The Petitions are denied.
R.A. 6657, as amended by R.A. 9700,
is the applicable law in this case.
When the agrarian reform process under P.D. 27 remains incomplete and is overtaken by
R.A. 6657, the rule is that just compensation for the landowner — if it has yet to be settled
— should be determined and the process concluded under R.A. 6657, with P.D. 27 and E.O.
228 applying only suppletorily.23
Land Bank of the Philippines v. Natividad24 is instructive:
Land Bank's contention that the property was acquired for purposes of agrarian reform on
October 21, 1972, the time of the effectivity of P.D. 27, ergo just compensation should be
based on the value of the property as of that time and not at the time of possession in 1993,
is likewise erroneous. In  Office of the President, Malacañang, Manila v. Court of
Appeals, we ruled that the seizure of the landholding did not take place on the date of
effectivity of P.D. 27 but would take effect [upon] payment of just compensation.
Under the factual circumstances of this case, the agrarian reform process is still
incomplete as the just compensation to be paid private respondents has yet to be
settled. Considering the passage of R.A. 6657 before the completion of this process, the
just compensation should be determined and the process concluded under the said law.
Indeed, R.A. 6657 is the applicable law, with P.D. 27 and EO 228 having only
suppletory effect, conformably with our ruling in Paris v. Alfeche.
xxxx
It would certainly be inequitable to determine just compensation based on the guideline
provided by P.D. 27 and EO 228 considering the DAR's failure to determine just
compensation for a considerable length of time. That just compensation should be
determined in accordance with R.A. 6657, and not P.D. 27 or EO 228, is especially
imperative considering that just compensation should be the full and fair equivalent of
the property taken from its owner by the expropriator, the equivalent being real,
substantial, full and ample.25 (Emphases supplied)
49
The Court applied the ruling in Land Bank of the Philippines v. Natividad to its ruling in
Meneses v. Secretary of Agrarian Reform:26
As previously noted, the property was expropriated under the Operation Land Transfer
scheme of P.D. No. 27 way back in 1972. More than 30 years have passed and petitioners
are yet to benefit from it, while the farmer-beneficiaries have already been harvesting its
produce for the longest time. Events have rendered the applicability of P.D. No. 27
inequitable. Thus, the provisions of R.A. No. 6657 should apply in this case.27 (Emphasis
supplied)
Still, in Lubrica v. Land Bank of the Philippines,28 the Court also adhered to Land Bank of
the Philippines v. Natividad:
The Natividad case reiterated the Court's ruling in Office of the President v. Court of
Appeals [413 Phil. 711] that the expropriation of the landholding did not take place on the
effectivity of P.D. No. 27 on October 21, 1972 but seizure would take effect on the payment
of just compensation judicially determined.
Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals [489
SCRA 590], we held that expropriation of landholdings covered by R.A. No. 6657 takes
place, not on the effectivity of the Act on June 15, 1988, but on the payment of just
compensation.29
This ruling was reiterated in a recent case, Holy Trinity Realty & Development Corp. v. Dela
Cruz:30
The terse statement by the OIC-Regional Director that the Dakila property would still be
subject to Republic Act No. 6657 should Presidential Decree No. 27 be inapplicable did not
meet the requirements under Republic Act No. 6657. Section 7 of Republic Act No. 6657
identified rice and corn lands subject to Presidential Decree No. 27 for priority distribution
in the first phase and implementation of the CARP.
Insofar as the interplay of these two laws was concerned, the Court has said that during
the effectivity of the Republic Act No. 6657 and in the event of incomplete acquisition
under Presidential Decree No. 27, the former should apply, with the provisions of the
latter and Executive Order No. 228 having only suppletory effect. 31 (Citations omitted;
emphasis supplied)
Indeed, R.A. 6657,32 which took effect on 15 June 1988, was enacted to promote social
justice for landless farmers and provide "a more equitable distribution and ownership of land
with due regard for the rights of landowners to just compensation and to the ecological needs
of the nation."33 Section 4 thereof provides that the Comprehensive Agrarian Reform Law
shall cover all public and private agricultural lands, including other lands of public domain
suitable for agriculture. Pertinent to this provision is Section 75 of R.A. 6657, which reads:
SECTION 75.  Suppletory Application of Existing Legislation. — The provisions of
Republic Act No. 3844 as amended, Presidential Decree Nos. 27 and 266 as amended,
Executive Order Nos. 228 and 229, both Series of 1987; and other laws not inconsistent with
this Act shall have suppletory effect.
It is clear from the above that R.A. 6657 is the applicable law when the acquisition process
under P.D. 27 is still incomplete and is overtaken by the former's enactment. Petitioners,
therefore, cannot insist on applying P.D. 27; otherwise, Section 75 of R.A. 6657 would be
rendered inutile.
This Court is mindful of a new agrarian reform law, R.A. 9700, entitled "An Act
Strengthening the Comprehensive Agrarian Reform Program (CARP), Extending the
Acquisition and Distribution of all Agricultural Lands, Instituting Necessary Reforms,
Amending for the Purpose Certain Provisions of Republic Act No. 6657, Otherwise Known
as the Comprehensive Agrarian Reform Law of 1988, as amended, and Appropriating Funds
Therefor." This law, which further amended R.A. 6657, was passed by the Congress on 01
July 2009.34 Notwithstanding this new law, R.A. 6657 is still applicable. The later is
supported by R.A. 9700, Section 5 of which provides:
Section 5. Section 7 of Republic Act No. 6657, as amended, is hereby further amended to
read as follows:
SEC. 7. Priorities. - The DAR, in coordination with the Presidential Agrarian Reform
Council (PARC) shall plan and program the final acquisition and distribution of all
remaining unacquired and undistributed agricultural lands from the effectivity of this Act
until June 30, 2014. Lands shall be acquired and distributed as follows:
Phase One: During the five (5)-year extension period hereafter all remaining lands above
fifty (50) hectares shall be covered for purposes of agrarian reform upon the effectivity of
this Act. All private agricultural lands of landowners with aggregate landholdings in excess
of fifty (50) hectares which have already been subjected to a notice of coverage issued on or
before December 10, 2008; rice and corn lands under Presidential Decree No. 27; all idle
or abandoned lands; all private lands voluntarily offered by the owners for agrarian reform:
Provided, That with respect to voluntary land transfer, only those submitted by June 30,
2009 shall be allowed Provided, further, That after June 30, 2009, the modes of acquisition
shall be limited to voluntary offer to sell and compulsory acquisition: Provided,
furthermore, That all previously acquired lands wherein valuation is subject to
challenge by landowners shall be completed and finally resolved pursuant to Section 17
of Republic Act No. 6657, as amended x x x.35 (Emphases supplied)
The word "challenge" shall refer to the expression of non-acceptance of valuation by the
landowner through the filing of a just compensation case in Court; a written protest or a
similar instrument; or impliedly thru noncompliance with the requirement to submit pre-
payment/documentary requirements despite receipt of notice or demand. 36 Considering that
the just compensation offered by the DAR or the LBP for the acquisition of respondents' rice
land is being challenged by the landowners, who are respondents in court, it cannot be
gainsaid that this case falls squarely within the ambit of Sec. 5 of R.A. 9700.
For purposes of determining the valuation
and the landowners' compensation involving
lands under P.D. 27 and E.O. 228, the
guidelines provided in Section 17 of
R.A. 6657, as amended by R.A. 9700,
may be applied.
Having established that R.A. 6657, as amended by R.A. 9700, is the applicable law in this
case, we now proceed to the determination of the appropriate just compensation for
respondents. Note that we are here determining only whether the CA committed serious
errors in law in affirming the RTC determination of just compensation. Respondents herein
accept the formula adopted by the RTC.
Section 17, R.A. 6657, which is particularly relevant, providing as it does the guideposts for
the determination of just compensation, reads as follows: 37
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. (Underscoring
supplied)
The RTC ruled:
After examining the evidence in the record as well as the location of the subject landholding,
its use, average gross production, and the prevailing land value in the locality vis-a-vis the
DAR's and LBP's valuation, this Court adopts the recommendation of Commissioners
AGRARIAN LAW
RECENT JURISPRUDENCE
Esguerra and Wong that the just compensation for the subject landholding be fixed at
P120,000 per hectare. The Court notes that the Commissioners took into consideration the
different factors provided for in Section 17, R.A. 6657 such as average gross production,
current value, like properties, nature of the subject properties and actual use. This Court sees
no reason to reject the findings of the Commissioners. 38 (Underscoring supplied)
The CA also held:
Again, this Court finds no errors on the part of the trial court in adopting the
recommendation of the commissioners:
In any expropriation proceedings and for purposes of determining the just compensation, it is
almost always expected that Commissioners are appointed. In the instant case as expected,
Commissioners were appointed.
Under Section 17 of R.A. 6657 is provided the following:
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
the government assessors shall be considered.
As shown in the Report of Commissioners, the amount of P120,000 per hectare was
somehow based on the above-quoted provision of the law.39 (Underscoring supplied)
The RTC, as affirmed by the CA, arrived at the just compensation for respondents' property
after taking into consideration the Commissioners' Report on the nature of the subject
landholding, its use, average gross production, and the prevailing value of the lands in the
vicinity. This Court is convinced that the RTC correctly determined the amount of just
compensation for respondents in accordance with, and guided by, R.A. 6657 and existing
jurisprudence.
Petitioner asks that we reevaluate the RTC-appointed Panel of Commissioners' evidentiary
basis for determining the value of respondents' property. In effect, petitioner LBP is praying
for the resolution of a question of fact, which is improper in the instant Rule 45 Petition.
It is settled that a review on certiorari under a Rule 45 petition is generally limited to the
review of legal issues; the Court only resolves questions of law that have been properly
raised by the parties during the appeal and in the petition. 40 It is not the function of this Court
to analyze or weigh all over again evidence already considered in the proceedings below, its
jurisdiction being limited to reviewing only errors of law that may have been committed by
the lower court.41 The resolution of factual issues is the function of the lower courts, whose
findings on these matters are received with respect. 42
The RTC's factual findings were supported by the report of the independent Panel of
Commissioners and were duly affirmed by the CA. 43 Absent any allegation of irregularity or
grave abuse of discretion, the factual findings of the lower courts, will no longer be
disturbed.44 Hence, the judicial determination of the value of the expropriated portion
amounting to P120,000 per hectare is affirmed.
It must also be noted that the date of the taking of the subject lot from respondents was 21
October 1972 and the landowners are still unpaid up to this date. For years, respondents have
been deprived of the use and enjoyment of their landholding without payment of just
compensation. Although the purpose of P.D. 27 is the emancipation of tenants from the
bondage of the soil and the transfer to them of the ownership of the land they till, this noble
purpose should not trample on the right of the landowners to be fairly and justly
compensated for the value of their property. 45
Considering these circumstances, we grant legal interest on the just compensation for
respondents where there is a delay in payment, 46 since the landowners' just compensation
was considered an effective forbearance on the part of the State.
WHEREFORE, the Petitions are DENIED. The consolidated Decision dated 14 September
2011 rendered by the Court of Appeals in CA-G.R. SP No. 109992 and CA-G.R. SP No.
109778 is AFFIRMED with MODIFICATION. Legal interest on the award for just
50
compensation shall run at the rate of 12% inteiest per annum from 21 October 1972 until 30
June 2013. Thereafter, or beginning 1 July 2013 until fully paid, legal interest shall be at 6%
per annum.
SO ORDERED.
Land Bank v. Hababag, Sr., September 16, 2015
The petitions lack merit.
In the landmark case of Association of Small Landowners in the Philippines, Inc. v. Hon.
Secretary of Agrarian Reform,[40] the Court defined the term "just compensation" as follows:
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 taker's gain but the owner's loss. The word "just" is used to intensify the meaning of
the word "compensation" to convey the idea that the equivalent to be rendered for the
property to be taken shall be real, substantial, full [and] ample. [41]
In this relation, the RTC, sitting as a Special Agrarian Court, has been conferred with the
original and exclusive power to determine just compensation for parcels of land acquired by
the State pursuant to the agrarian reform program. [42] To guide the RTC in this function,
Section 17[43] of RA 6657 enumerates the factors which must be taken into consideration to
accurately determine the amount of just compensation to be awarded in a particular case.
They are: (a) the acquisition cost of the land; (b) the current value of like properties; (c) the
nature and actual use of the property, and the income therefrom; (d) the owner's sworn
valuation; (e) the tax declarations; (f) the assessment made by government assessors; (g) the
social and economic benefits contributed by the farmers and the farmworkers, and by the
government to the property; and (h) the nonpayment of taxes or loans secured from any
government financing institution on the said land, if any. [44] Corollarily, pursuant to its rule-
making power under Section 49[45] of the same law, the DAR translated these factors into a
basic formula,[46] which courts have often referred to and applied, as the CA did in this case.
It, however, bears stressing that courts are not constrained to adopt the said formula in every
case since the determination of the amount of just compensation essentially partakes the
nature of a judicial function. In this accord, courts may either adopt the DAR formula or
proceed with its own application for as long as the factors listed in Section 17 of RA 6657
have been duly considered.[47]
In keeping with these considerations, the Court finds the CA's valuation - which made use of
the DAR formula - as reflective of the factors set forth in Section 17 of RA 6657. Records
disclose that the CA's computation, as adopted from the LBP's own computation, is based
on: (a) actual production data; (b) the appropriate industry selling prices of the products
from the Philippine Coconut Authority and the Bureau of Agricultural Statistics of
Sorsogon; and (c) the actual uses of the property. Likewise, the (a) income from the coconut
fruit-bearing trees, as well as the unirrigated riceland, (b) cumulative cost of the non-fruit-
bearing trees; and (c) market value of the cogonal land have been duly considered. The
Court observes that the holistic data gathered therefrom adequately consider the factors set
forth in Section 17 of RA 6657, as well as the DAR formula. As such, the CA's computation,
which was derived from the same, must be sustained. Lest it be misunderstood, the
ascertainment of just compensation on the basis of the landholdings' nature, location, and
market value, as well as the volume and value of the produce is valid and accords with
Section 17 of RA 6657[48] and the DAR formula, as in this case.
On the contrary, the Court finds the RTC's valuation to be improper, as it contradicts the
definition of "market value" as crafted by established jurisprudence on expropriation.
To elucidate, in determining the amount of just compensation for the subject lands, the RTC
applied the Income Productivity Approach which approximated the income for the
remaining productive life of the crops therein, without considering the fortuitous events and
plant diseases, and with the expectation that they would be compensated by developments
which could be made by the property owner. [49] The Court has repeatedly ruled that the
constitutional limitation of just compensation is considered to be the sum equivalent of the
market value of the property, which is, in turn, defined as the price fixed by the seller in
open market in the usual and ordinary course of legal action and competition, or the fair
value of the property as between one who receives and one who desires to sell it, fixed at the
time of the actual taking by the government.[50] In this accord, therefore, the Court cannot
sustain the formula used by the RTC which was "based on the principle
of anticipation which implies that the value of a property is dependent on the potential net
benefit that may be derived from its ownership." [51] Clearly, this approach, which is largely
characterized by the element of futurity, is inconsistent with the idea of valuing the
expropriated property at the time of the taking.
Furthermore, the Court also observes that the Income Productivity Approach, as applied by
the RTC, adopts an investor's point of view which is actually off-tangent with the
governmental purpose behind the acquisition of agricultural lands. On this score, case law
states that agricultural lands are not acquired for investment purposes but for redistribution
to landless farmers in order to lift their economic status [52] by enabling them to own directly
or collectively the lands they till or to receive a just share of the fruits thereof. [53] In this
regard, farmer-beneficiaries are not given those lands so they can live there but so that they
can till them. Since they generally live on a hand-to-mouth existence, their source of
repaying the just compensation is but derived out of their income from their cultivation of
the land. Hence, in order to be just, the compensation for the land must be what the farmer-
beneficiaries can reasonably afford to pay based on what the land can produce. [54] It would
therefore be highly inequitable that in the 30-year allowable period [55] to pay the annual
amortizations for the lands, farmer-beneficiaries would be required to pay for the same
income they expect to earn therefrom on top of the computed market value of the
landholdings. Such could not have been the intent of the State's agrarian reform program. In
fine, the Court cannot sustain the RTC's application of the Income Productivity Approach
used as one of its bases in arriving at its decreed valuation. Not only is the same aversive to
the jurisprudential concept of "market value," but it also deviates from the factors laid down
in Section 17 of RA 6657 and thus, remains legally baseless and unfounded.
On the issue of interests, suffice it to state that the just compensation due to the landowners
for their expropriated property is treated as an effective forbearance on the part of the State.
[56]
 The rationale therefor, as enunciated in the case of Apo Fruits Corporation v. LBP,[57] is
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. In other words, the award of 12%
interests is imposed in the nature of damages for the delay in the payment of the full just
compensation award.[58]
In the present case, the LBP had already made the corresponding deposit of their offered
valuation in the amount of P1,237,850.00 in cash and in bonds prior to the DAR's possession
of the property.[59] This amount is lower than the just compensation awarded and, hence, in
view of the above-stated principle, the payment of interests remains in order insofar as the
unpaid balance is concerned.
Anent the time of accrual, the interests should be computed from the time of the taking of
the subject lands. This is based on the principle that interest "runs as a matter of law and
follows from the right of the landowner to be placed in as good position as money can
accomplish, as of the date of the taking."[60]
With respect to the rate of interests, the Court observes that from the time of the taking up
until June 30, 2013, the interest must be pegged at the rate of 12% p.a. pursuant to Section
2[61] of Central Bank Circular No. 905, series of 1982, which was the prevailing rule on
interest rates during such period. From July 1, 2013 onwards and until full payment, the
interest rate should then be pegged at the rate of 6% p.a. pursuant to Bangko Sentral ng
Pilipinas Circular No. 799, series of 2013, [62] which accordingly amended the old 12% p.a.
interest rate.
WHEREFORE, the petitions are DENIED. Accordingly, the Decision dated November 15,
2005 and the Resolution dated April 19, 2006 of the Court of Appeals in CA-G.R. SP Nos.
86066 and 86167 are hereby AFFIRMED with the MODIFICATION imposing interests
on the unpaid balance of the just compensation due to the Heirs of Alfredo Hababag, Sr. at
the rate of 12% p.a., reckoned from the taking of the expropriated property until June 30,
2013, and thereafter, at 6% p.a. until full payment.
SO ORDERED.
AGRARIAN LAW
RECENT JURISPRUDENCE
DAR v. Woodland Agro-Development, June 29, 2015
Article XIII, Section 4 of the 1987 Constitution encapsulates the people's yearning for
genuine agrarian reform. The provision states:
The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers, who are landless, to own directly or collectively the lands
they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just distribution of all agricultural
lands, subject to such priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In determining retention limits, the State shall
respect the right of small landowners. The State shall further provide incentives for
voluntary land-sharing.
Sixteen months after the ratification of the Constitution, Congress enacted the CARL. 19 The
policy of the law is to pursue a Comprehensive Agrarian Reform Program that shall give
highest consideration to the welfare of landless farmers and farmworkers to promote social
justice; move the nation toward sound rural development and industrialization; and establish
owner cultivatorship of economic-size farms as the basis of Philippine agriculture. To this
end, a more equitable distribution and ownership of land shall be undertaken with due regard
for the rights of landowners to just compensation and to the ecological needs of the nation to
provide farmers and farmworkers with the opportunity to enhance their dignity and improve
the quality of their lives through greater productivity of agricultural lands. 20
In Secretary of Agrarian Reform v. Tropical Homes, lnc., 21 we recognized the CARL as a
"bastion of social justice of poor landless farmers, the mechanism designed to redistribute to
the underprivileged the natural right to toil the earth, and to liberate them from oppressive
tenancy." To those who seek the law's benefit, it is the means towards a viable livelihood
and ultimately, a decent life.22
The Court is guided by these principles in the resolution of the present Petition for Review
on Certiorari.
The agrarian reform program, being one of the immutable hallmarks of the 1987
Constitution, must be faithfully implemented to meet the ends of social justice. The Court
cannot subscribe to Woodland's stance that the DAR's authority to issue notices of coverage
and acquisition ceased after the 10-year implementation period mentioned in Section 5 of the
CARL. Such a view runs afoul of the constitutional mandate firmly lodged in Article XIII,
Section 4, which seeks the just distribution of all agricultural lands to qualified farmers and
farm workers to free them from oppressive tenancy agreements.
The success of the CARP depends heavily on the adept implementation by the DAR. The
agency's primordial procedural tool for realizing the law's objectives is the issuance of
Notices of Coverage and Acquisition. For us to sustain Woodland's theory that the DAR can
no longer issue those notices after 15 June 1998 despite the enactment of R.A. 8532 would
thwart the CARP's purpose. As the Court ruled in Gonzales v. Court of Appeals: 23
[O]ur laws on agrarian reform were enacted primarily because of the realization that there is
an urgent need to alleviate the lives of the vast number of poor farmers in our country. Yet,
despite such laws, the majority of these farmers still live on a hand-to-mouth existence. This
can be attributed to the fact that these agrarian laws have never really been effectively
implemented. Woodland asserts that R.A. 8532 only amended R.A. 6657 insofar as the
funding requirements for the CARP are concerned. It disputes the extension of the DAR's
authority to acquire and distribute private agricultural lands.
51
The first paragraph of Section 63, as originally worded and as amended, used the phrase
"this Act" to refer to CARL as a whole.
Originally, the first paragraph of Section 63 reads:
SECTION 63. Funding Source. - The initial amount needed to implement this Act for the
period of ten (10) years upon approval hereof shall be funded from the Agrarian Reform
Fund created under Sections 20 and 21 of Executive Order No. 229. (Emphasis supplied)
As amended by R.A. 8532, the first paragraph of Section 63 stated:
SECTION 63. Funding Source. - The amount needed to implement this Act until the year
2008 shall be funded from the Agrarian Reform Fund. (Emphasis supplied)
In 2009, Congress again amended certain provisions of the CARL, including Section
63.24 The latest revision of the first paragraph recites:
SECTION 63. Funding Source. - The amount needed to further implement the CARP as
provided in this Act, until June 30, 2014, upon expiration of funding under Republic Act No.
8532 and other pertinent laws, shall be funded from the Agrarian Reform Fund and other
funding sources in the amount of at least One hundred fifty billion pesos
(₱150,000,000,000.00). (Emphasis supplied)
Clearly, Section 63 refers to the implementation of the CARL in its entirety, not just the
funding source. Indeed, R.A. 8532 specifically amended Section 63 of R.A. 6657, but it does
not follow that only Section 63 had been affected by the amendment. The fact that Section
63 falls under the chapter on "Financing" only emphasizes its general applicability. Hence,
the phrase "until the year 2008" used in R.A. 8532 unmistakably extends the DAR's
authority to issue NOCs for purposes of acquiring and distributing private agricultural lands.
Finally, R.A. 9700 extended the acquisition and distribution of all agricultural lands until 30
June 2014.25 The title alone of R.A. 9700 - An Act Strengthening the Comprehensive
Agrarian Reform Program (CARP), Extending the Acquisition and Distribution of All
Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose Certain
Provisions of Republic Act No. 6657, Otherwise Known as the Comprehensive Agrarian
Reform Law of 1988, As Amended, and Appropriating Funds Therefor - reveals that the
CARP was indeed extended from 1998 to 2008 via R.A. 8532. Had there been no prior
extension from 1998 to 2008, how else could the CARP have been extended by R.A. 9700
until 30 June 2014? There could have been an extension only if the program sought to be
extended had not expired.
WHEREFORE, the foregoing Petition is GRANTED. The Decision dated 2 February 2009
and Order dated 8 May 2009 of the Regional Trial Court of Davao City Branch 14 in Special
Civil Case No. 30855-2005 are REVERSED and SET ASIDE. The DAR's Notice of
Coverage dated 11 December 2003 and Notice of Acquisition dated 5 October 2004 are
UPHELD with full effect.
SO ORDERED.
Land Bank v. Lee-Laurenaria, January 12, 2015
The foregoing assignment of errors notwithstanding, however, the essential issue for
resolution in this case boils down to the question of how much is the just compensation of
the 7.0877 hectares land voluntarily offered for sale in 2001 by respondent Laurenaria to
DAR pursuant to pertinent laws, rules and regulations?
In its Memorandum, petitioner LBP alleged that the Court of Appeals did not consider, much
less give probative value and weight to its relevant and competent evidence. It averred that
the Court of Appeals simply skipped the vital and relevant issues, and did not consider the
DAR's authority to issue rules and regulations and the validity of DAR A.O. No. 11, S. 1994,
as amended by DAR A.O. No. 5, S. 1998. And it asserted that the Court of Appeals totally
disregarded Section 17 of Republic Act No. 6657, as amended, and the aforementioned
administrative orders.
In essence, petitioner LBP is asking the Court to review the pieces of evidence it had
adduced during trial.
At the outset, it must be remembered that in resolving a petition for review, the Court "does
not sit as an arbiter of facts for it is not the function of the Supreme Court to analyze or
weigh all over again the evidence already considered in the proceedings below." [13] However,
there are notable exceptions, such as: a) when the Court of Appeals failed to notice certain
relevant facts which, if properly considered, would justify a different conclusion; and b)
when the findings of fact are conclusions without citation of the specific evidence on which
they are based.[14]
The Court finds the above exceptions applicable in this case. Both the appellate and trial
courts adopted in toto the findings of fact of the Provincial Adjudicator, but their decisions
neither cited the evidentiary bases upon which their resolutions were based, nor referred to
applicable jurisprudence.
Based on the Field Investigation Report, the subject property is composed of two types of
land: 5.0877 hectares of coconut land and 2 hectares of idle land.
Coconut Land
Contrary to petitioner LBP's claim, a review of the Provincial Adjudicator's decision reveals
that the latter applied the formula stated in DAR A.O. No. 5, S. 1998, specifically the
formula under II(A)(A.1), which states:
II. The following rules and regulations are hereby promulgated to govern the valuation of
lands subject of acquisition whether under voluntary offer to sell (VOS) or compulsory
acquisition (CA).
A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
     
  LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
   
The above formula shall be used if all the three factors are present, relevant, and
applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall
be:
   
AGRARIAN LAW
RECENT JURISPRUDENCE
  LV = (CNI x 0.9) + (MV x 0.1) PROVINCIAL ADJUDICATOR LAND BANK

other appropriate
Pertinent documentary evidence on record shows also that the foregoing formula was MV = 15,300 x 1.08 x 0.90 - 75 x 150 x MV= 15,300 x 93% x 1.111 = 15,808.42
regulatory bodies or, in
correctly used considering that there was no comparable sales in the area. The field 1.08 x 0.90 RCPI= 172.7/155.5 = 1.111
their absence, from the
investigation report stated that "there is no available comparable sale transaction within the = 14,871.60 - 10,935.00 = 25,806.60[19] 75 t/ha x P50.00 x 93% x 1.111 = 3, 874.61
Bureau of Agricultural
municipality and province."[15] This was confirmed by petitioner LBP's agrarian reform Statistics. If possible, SP
specialist, who was presented in court as witness.[16] data shall be gathered for = 19,683.03.[20]
the barangay or
municipality where the
However, when the Court evaluated the computations of both the Provincial Adjudicator and property is located. In
petitioner LBP, it found discrepancies in the values they used vis-a-vis the specific factors the absence thereof, SP
that make up the formula as provided under DAR A.O. No. 5, S. 1998. may be secured within Idle Land
the province or region.
Particularly, both the Provincial Adjudicator and petitioner LBP failed to heed the guideline As for the idle land, the Provincial Adjudicator correctly used the following formula based
under DAR A.O. No. 5, S. 1998 on how to compute for the "capitalized net income" or CNI, CO = Cost of Operations on II(A)(A.3) of DAR A.O. No. 5, S. 1998, to wit:
to wit: Whenever the cost of
operations could not be
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall
obtained or verified, an
A. FORMULA FOR CAPITALIZED NET INCOME (CNI) OF COCONUT LAND. be:
assumed net income rate
(NIR) of 20% shall be
used. Landholdings LV = MV x 2
PROVINCIAL ADJUDICATOR'S LAND BANK'S planted to coconut which
DAR'S FORMULA
FORMULA FORMULA are productive at the
Capitalized Net Income - [CNI = AGP x SP [CNI = AGP x   time of FI shall continue In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of
This shall refer to the x CO - SP x CO] to use the assumed NIR land within the same estate under consideration or within the same barangay or municipality
difference between the 0.12] 0.12 of 70%. DAR and LBP (in that order) approved by LBP within one (1) year from receipt of claim folder.
gross sales (AGP x SP) = AGP x SP shall continue to conduct
= AGP x  
and total cost of x 0.70 - joint industry studies to
SP x 0.70
operations (CO) 0.12 establish the applicable but the numerical factors he applied in the formula appears to be erroneous.
0.12
capitalized at 12%. = 820 x NIR for each crop
= (820.50 x covered under CARP.
16.00 x 5.52 x 70%)
0.70 - 0.12 [18]
Provincial Adjudicator's Computation
Expressed in equation = 76, LV = MV x 2
form: 0.12 0.12 = Capitalization
533.33 x MV = 15,300.00
Rate LV = 15,300.00 x 2
0.90 [17]

= 30,600.00 x 2.0000 [hectares]

CNI (AGP x = 61,200.00[21]
= SP) - CO To emphasize, firstly, the Provincial Adjudicator multiplied the CO (0.70) with the product
0.12 of AGP and SP, when he should have subtracted the same therefrom. Petitioner LBP also did
the exact mistake in its computation. And secondly, the Provincial Adjudicator subtracted The Provincial Adjudicator did not explain in his decision where he obtained the value of
Where:
the capitalization rate of 12% instead of making it a divisor. Oddly enough, the figure "15,300.00" he used in the formula. The Court can only assume that the value was taken
CNI = Capitalized Net
76,533.33 can be arrived at if 12% had been made a divisor. from Annex "T" (Schedule of Fair Market Values) of this petition, which states that the
Income
market value of a third class coconut land is P15,300.00.
AGP = Annual Gross    
Production The Court is baffled by the above discrepancy. The DAR's formula is clear and easy to
corresponding to the follow. However, both the Provincial Adjudicator and petitioner LBP failed to adhere But this is incorrect for the simple reason that the said value (15,300.00) applies to coconut
latest available 12 thereto. Worse, no explanation was presented to account for the deviation from the DAR- land and not to idle land.
months' gross production prescribed formula.
immediately preceding
the date of the FI. Note that after going through the record of the case, the Court did not find a copy of the tax
B. MARKET VALUE (MV) OF COCONUT LAND declaration of the subject parcel of land upon which it could verify the " market value"
thereof.
SP = The average of the
latest available 12 The Court likewise observed that in computing for the MV of the coconut land, both the
months' selling prices Provincial Adjudicator and petitioner LBP did not follow the guideline in DAR A.O. No. 5, Petitioner LBP also argues that the selling price for copra should have been based on the 12-
prior to the date of S. 1998, which provides that the value of the MV is to be taken from the Tax Declaration of month average selling price prior to the receipt of the claim folder by it from the DAR,
receipt of the CF by LBP the real property in question. Instead, both of them applied different formulas and number of which was in September 2001. Thus, it follows that the 12-month period covered is from
for processing, such factors to come up with the value for the MV. Further, the Court noted a mathematical error August 2000 to August 2001.
prices to be secured from in the Provincial Adjudicator's mathematical computation,  i.e.,  the value of 25,806.60
the Department of cannot possibly be the difference between 14,871.60 and 10,935.00, but their sum.
Agriculture (DA) and However, the records reveal that petitioner LBP's selling price of P5.52 was taken from the
average of the selling prices from July 2000 to July 2001. Strictly speaking, this does not

52
AGRARIAN LAW
RECENT JURISPRUDENCE
fall within the 12-month period, and if used in the computation of just compensation, may
not result in a fair and just value.
Moreover, petitioner LBP avers that it was error for the appellate court to adopt the Decision
of the RTC, which used factors such as "all the potentials of the property" and "comparable
sales of like properties" as parameters in the determination of just compensation. It insists
that the said factors are not among the parameters provided in Section 17 of Republic Act
No. 6657.
In this, the Court agrees. Section 17 of Republic Act No. 6657 states:
Section 17. Determination of Just Compensation. — In determining just compensation, the
cost of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made by
government assessors shall be considered. The social and economic benefits contributed by
the farmers and the farmworkers and by the Government to the property as well as the
nonpayment of taxes or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its valuation.
Nowhere in Section 17 of Republic Act No. 6657 can one find " all potentials of the
property" and "comparable sales of like properties" as factors in determining the just
compensation. In addition, the field investigation report shows that "there is no available
comparable sale transaction within the municipality and province." This is the reason why
the formula excluded CS as one of the factors. As such, the Court will not further discuss
comparable sales as it is irrelevant in the subject property.
While the determination of just compensation is essentially a judicial function vested in the
RTC acting as a Special Agrarian Court, the judge cannot abuse his discretion by not taking
into full consideration the factors specifically identified by law and implementing rules.
[23]
 As the law now stands, it is clear that the Special Agrarian Courts are duty-bound to take
into consideration the factors fixed by Section 17 of Republic Act No. 6657 and apply the
basic formula prescribed and laid down in the pertinent administrative regulations, [24] in this
case DAR A.O. No. 5, S. 1998 to determine just compensation.
Sadly, the cited discrepancies in the factors used in the proper formula and mathematical
errors in the computation of the Provincial Adjudicator were replicated in the Decisions of
the Court of Appeals and the RTC.
Note, however, that even if the Court has identified the errors committed in the computation,
it is unable to determine the just compensation of the subject parcel of land in view of the
nonexistence of a copy of the tax declaration thereof from which the "market value" may be
determined.
Hence, given all the foregoing, a remand of the case to the RTC is imperative for the
reception of additional evidence relative to the "market value" of the subject 7.0877 hectares
parcel of land, and thereafter, the proper computation of the just compensation due to
respondent Laurenaria following to the letter the guidelines and formula dictated by DAR
A.O. No. 5, S. 1998, as discussed herein.
WHEREFORE, premises considered, the case is REMANDED to the court of origin,
Regional Trial Court of Sorsogon City, Branch 52, for further reception of evidence on the
"market value" and the re-computation of the correct and proper just compensation of the
subject 7.0877 hectares parcel of land bearing in mind the mathematical errors noted by the
Court; and to identify all data and formulas to be used, as well as to explain the bases of the
figures to be applied.
53
SO ORDERED."
Almero v. Heirs of Miguel Pacquing, November 19, 2014
We now proceed to the merits of the case.
R.A. No. 6657 or the Comprehensive Agrarian Reform Law (CARL) of 1988 covers all
public and private agricultural lands as provided in Proclamation No. 131 15 and E.O. No.
229,16 including other lands of the public domain suitable for agriculture. Section 4 of R.A.
6657, as amended,17 specifically lists the lands covered by the CARP, which include:
(a) All alienable and disposable lands of the public domain devoted to or
suitable for agriculture. No reclassification of forest or mineral lands to
agricultural lands shall be undertaken after the approval of this Act until
Congress, taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the public
domain;
(b) All lands of the public domain in excess to the specific limits as determined
by Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for
agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon.
And Section 10 of R.A. 6657, as amended, 18 expressly provides for the lands exempted or
excluded from the CARP, namely:
(a) Lands actually, directly and exclusively used for parks, wildlife, forest
reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and
mangroves shall be exempt from the coverage of this Act
(b) Private lands actually, directly and exclusively used for prawn farms and
fishponds shall be exempt from the coverage of this Act: Provided, that said
prawn farms and fishponds have not been distributed and Certificate of Land
Ownership (CLOA) issued under the Agrarian Reform Program; and
xxxx
(c) Lands actually, directly and exclusively used and found to be necessary for
national defense, school sites and campuses, including experimental farms
stations operated by public or private schools for educational purposes, seeds
and seedlings research and pilot production centers, church sites and covenants
appurtenant thereto, mosque sites and Islamic centers appurtenant thereto,
communal burial grounds and cemeteries, penal colonies and penal farms
actually worked by the inmates, government and private research and
quarantine centers and all lands with eighteen percent (18%) slope and over,
except those already developed, shall be exempt from the coverage of this Act.
The subject land, being agricultural in nature, is clearly not exempt from CARP coverage.
But Linda argues that the subject land is exempt from CARP primarily because it was
acquired by her father viaa homestead patent. She claims that the rights of homestead
grantees have been held superior to those of agrarian reform tenants and, thus, her right to
the subject land must be upheld. The OP, agreeing with the respondent, stated that:
"There can be no question that, weighed against each other, the rights of a homesteader
prevail over the rights of the tenants guaranteed by agrarian reform laws.
As early as the case of Patricio v. Bayug, it has been held that the more paramount and
superior policy consideration is to uphold the right of the homesteader and his heirs to own
and cultivate personally the land acquired from the State without being encumbered by
tenancy relations.
Just right after the promulgation of Republic Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), the doctrine enunciated in Patricio was
applied in Alita v. Court of Appeals where it was held thatPresidential DecreeNo. 27 cannot
be invoked to defeat the very purpose of the enactment of the Public Land Act or
Commonwealth Act No. 141. It was further pointedout that even the Philippine Constitution
respects the superiority of the homesteaders’ rights over the rights of the tenants guaranteed
by the Agrarian Reform statute."19 (Citations omitted.)
The right of homestead grantees to retain or keep their homestead is, however, not absolutely
guaranteed by law. Section 6 of R.A 6657 provides that:
"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. Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen (15) years of age; and (2)
that he is actually tilling the land or directly managing the farm: provided, that landowners
whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the
areas originally retained by them thereunder: provided, further, that original homestead
grantees or their direct compulsory heirs who still own the original homestead at the time of
the approval of this Act shall retain the same areas as long as they continue to cultivate said
homestead. (Emphasis ours)
Thus, in order for the homestead grantees or their direct compulsory heirs to retain or keep
their homestead, the following conditions must first be satisfied: (a) they must still be the
owners of the original homestead at the time of the CARL's effectivity, and (b) they must
continue to cultivate the homestead land.
In this case, Linda, as the direct compulsory heir of the original homestead grantee, is no
longer cultivating the subject homestead land. The OP misinterpreted our ruling in Paris v.
Alfeche20 when it held that Linda's mere expression of her desire to continue or to start anew
with the cultivation of the land would suffice to exempt the subject homestead land from the
CARL. On the contrary, we specifically held in Paris v. Alfeche that:
"Indisputably, homestead grantees or their direct compulsory heirs can own and retain the
original homestead, only for "as long as they continue to cultivate" them. That parcels of
land are covered by homestead patents will not automatically exempt them from the
operation of land reform. It is the fact of continued cultivation by the original grantees or
AGRARIAN LAW
RECENT JURISPRUDENCE
their direct compulsory heirs that shall exempt their lands from land reform
coverage."21 (Emphasis supplied) WHEREFORE, in view of the foregoing, we hereby:
(a) REVERSE and SET ASIDE the February 16, 2011 Decision and July 19,
2011 Resolution of the Office of the President in OP Case No. 1 O-C-152;
(b) RECALL and REVOKE the August 22, 2011 Certificate of Finality issued
by the Department of Agrarian Reform Bureau of Agrarian Legal Assistance;
and
(c) AFFIRM the August 18, 2009 Order of the Department of Agrarian Reform
Secretary in DARCO Order No. MS-0908-295 Series of 2009 A-999-10-CLT-
028-09.
SO ORDERED.
Holy Trinity Realty & Development Corp. v. Dela Cruz, October 22, 2014
We reverse the CA, and reinstate the decision of the OP.
I. Procedural Issue
We first resolve the issue of the supposedly defective verification.
The verification of a petition is intended to secure an assurance that the allegations contained
in the petition have been madein good faith, are true and correct and not merely
speculative.38 This requirement affects the form of the pleading, and its non-compliance will
not render the pleading defective. It is a formal, not a jurisdictional requisite. 39 The courts
may order the correction of the pleading if the verification is lacking, and may even act on
an unverified pleading if doing sowill serve the ends of justice. 40
Under the foregoing, the CA rightly allowed the petition for review of the respondents
despite the statement that the allegations therein were based on their "knowledge and belief."
We underscore thatthe defect was even lifted upon the voluntary submission by the
respondents themselves of their corrected verification in order to comply with the Rules of
Court.
We cannot also subscribe to the argument that the respondents were not appropriate parties
to sign the verification. They were, considering that when the DAR issued the EPs, they
became the real parties in interest in the proceedings, giving them the requisite personality to
sign the verification. Moreover, there is no question that the party himself need not sign the
verification, for it was enough that the party’s representative, lawyer, or any person who
personally knew the truth of the facts alleged in the pleadings could sign the verification. 41 In
any event, the respondents, as the identified beneficiaries, had legal standing and interest to
intervene to protect their rights or interests under Republic Act No. 6657. This is clear from
Section 19 of Republic Act No. 9700,42 which amended Republic Act No. 6657 by adding
Section 50-A, to wit:
Section 19. Section 50of Republic Act No. 6657, as amended, is hereby further amended by
adding Section 50-A to read as follows:
54
Section 50-A. Exclusive Jurisdiction on Agrarian Dispute. – x x x
In cases where regular courtsor quasi-judicial bodies have competent jurisdiction, agrarian
reform beneficiaries or identified beneficiaries and/or their associations shall have legal
standing and interest to intervene concerning their individual or collective rights and/or
interests under the CARP.
xxxx
II. Courts can pass upon matters related to the issues raised by the parties
As a general rule, appellate courts are precluded from discussing and delving into issues that
are not raised by the parties. The pertinent rule is Section 8, Rule 51 of the Rules of Court, to
wit:
Section 8. Questions that may be decided. – No error which does not affect the jurisdiction
over the subject matter or the validity of the judgment appealed from or the proceedings
therein will be considered unless stated in the assignment of errors, or closely related to or
dependent on an assigned error and properly argued in the brief, save as the court may pass
upon plain errors and clerical errors.
In Philippine National Bank v. Rabat,43 the Court explained how this rule operates, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now
includes some substantial changes in the rules on assignment of errors. The
basic procedural rule is that only errors claimed and assigned by a party will be
considered by the court, except errors affecting its jurisdiction over the subject
matter. To this exception has now been added errors affecting the validity
ofthe judgment appealed from or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his
assignment of errors butthe same is closely related to or dependent on an
assigned error and properly argued in his brief, such error may now be
considered by the court. These changes are of jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as that in the
Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it
has been held that the latter is clothed with ample authority to review matters,
even if they are not assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a just decision of the case. Also, an
unassigned error closely related to an error properly assigned (PCIB vs. CA, et
al., L-34931, Mar. 18, 1988), or upon which the determination of the question
raised by error properly assigned is dependent, will be considered by the
appellate court notwithstanding the failure to assign it as error (Ortigas, Jr. vs.
Lufthansa German Airlines, L-28773, June 30, 1975; Soco vs. Militante,et al.,
G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is
authorized to consider a plain error, although it was not specifically assigned
by the appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it
would be sacrificing substance for technicalities. 44 (Emphasis supplied)
Conformably with the foregoing, the CA is vested with sufficient authority and discretion to
review matters, not assigned as errors on appeal, if it finds that consideration thereof
isnecessary in arriving at a complete and just resolution of the case or to serve the interests
of justice or to avoid dispensing piecemeal justice. 45 In fact, the CA is possessed with
inherent authority to review unassigned errors that are closely related to an error properly
raised, or upon which the determination of the error properly assigned is dependent, or
where it finds that consideration thereof is necessary in arriving at a just decision of the
case.46
It cannot be gainsaid that the validity of the EPs was closely intertwined with the issue of
whether the Dakila property was covered by the agrarian reform laws. When the CA
declared that the Dakila property came within the coverage of Republic Act No. 6657, the
CA barely scraped the surface and left more questions unresolved rather than writing finison
the matter. To recall, this case originated from the letter of BARC Chairman Enriquez
requesting that the Dakila property be placed under the OLT pursuant to Presidential Decree
No. 27. But, as the petitioner correctly argues, the two laws, although similarly seeking to
alleviate the plight of landless farmers or farmworkers from the bondage of tilling the soil,
are distinct from each other. Republic Act No. 6657 is broader in scope than Presidential
Decree No. 27, for the former applies to all agricultural lands in which agricultural activities
are conducted, while the latter requires that the covered agricultural land betenanted and
primarily devoted to rice or corn cultivation.
In Sigre v. Court of Appeals,47 the Court also stated:
[T]he Court need not belabor the fact that R.A. 6657 or the CARP Law operates distinctly
from P.D. 27. R.A. 6657 covers all public and private agricultural land including other lands
of the public domain suitable for agriculture as provided for in Proclamation No. 131 and
Executive Order No. 229; while, P.D. 27 covers rice and corn lands. On this score, E.O. 229,
which provides for the mechanism of the Comprehensive Agrarian Reform Program,
specifically states: "(P)residential Decree No. 27, as amended, shall continue to operate with
respect to rice and corn lands, covered thereunder. x x x" It cannot be gainsaid, therefore,
that R.A. 6657 did notrepeal or supersede, in any way, P.D. 27. And whatever provisions of
P.D. 27 that are not inconsistent with R.A. 6657 shall be suppletory to the latter, and all
rights acquired by the tenant-farmer under P.D. 27 are retainedeven with the passage of R.A.
6657.48
In addition, the tenurial instruments issued to agrarian reform beneficiaries differ under these
laws. Ownership of the beneficiary under Presidential Decree No. 27 is evidenced by an EP
while a certificate of land ownership award (CLOA) is issued under Republic Act No. 6657.
For this reason, the CA could not have simply set aside the issue of whether the EPs issued
to the respondents were validly made by the DAR considering its declaration that the Dakila
property was subject to Republic Act No. 6657.
III. The Dakila property was not an agricultural land within the coverage of R.A.No. 6657 or
P.D. No. 27
The CA declared that the Dakila property as an agricultural land; and that there was no valid
reclassification under Municipal Resolution No. 16-98 because the law required an
ordinance, not a resolution.
We agree in part with the CA.
Under Republic Act No. 7160, local government units, such as the Municipality of Malolos,
Bulacan, are vested with the power to reclassify lands. However, Section 20, Chapter II,
Title I of Republic Act No. 7160 ordains:
AGRARIAN LAW
RECENT JURISPRUDENCE
Section 20. Reclassification of Lands. – (a) A city or municipality may, through an
ordinance passed by the sanggunian after conducting public hearings for the purpose,
authorize the reclassification of agricultural lands and provide for the manner of their
utilization or disposition in the following cases: (1) when the land ceases to be economically
feasible and sound for agricultural purposes as determined by the Department of Agriculture
or(2) where the land shall have substantially greater economic value for residential,
commercial, or industrial purposes, as determined by the sanggunian concerned: x x x.
(Emphasis supplied)
Clearly, an ordinance is required in order to reclassify agricultural lands, and such may only
be passed after the conduct of public hearings.
The petitioner claims the reclassification on the basis of Municipal Resolution No. 16-98.
Given the foregoing clarifications, however, the resolution was ineffectual for that purpose.
A resolution was a mere declaration of the sentiment or opinionof the lawmaking body on a
specific matter that was temporary in nature, and differed from an ordinance in that the latter
was a law by itself and possessed a general and permanent character. 49 We also note that the
petitioner did not show if the requisite public hearings were conducted at all.In the absence
of any valid and complete reclassification,therefore, the Dakila property remained under the
category of an agricultural land.
Nonetheless, the Dakila property was not an agricultural land subject to the coverage of
Republic Act No. 6657 or Presidential Decree No. 27.
Verily, the basic condition for land tobe placed under the coverage of Republic Act No.
6657 is that it must either be primarily devoted to or be suitable for agriculture. 50 Perforce,
land that is not devoted to agricultural activity is outside the coverage of Republic Act No.
6657.51 An agricultural land, according to Republic Act No. 6657, is one that is devoted to
agricultural activity and not classified as mineral, forest, residential, commercial or industrial
land.52 Agricultural activity includes the "cultivation of the soil, planting of crops, growing
of fruit trees, raising livestock, poultry or fish, including the harvesting of such farm
products; and other farm activities and practices performed by a farmer in conjunction with
such farming operations doneby persons whether natural or juridical." 53
Consequently, before land may be placed under the coverage of Republic Act No. 6657, two
requisites must be met, namely: (1) that the land must be devoted to agricultural activity; and
(2) that the land must not be classified as mineral, forest, residential, commercial orindustrial
land. Considering that the Dakila property has not been classified as mineral, forest,
residential, commercial or industrial, the second requisite is satisfied. For the first requisite
tobe met, however, there must be a showing that agricultural activity is undertaken on the
property.
It is not difficult to see why Republic Act No. 6657 requires agricultural activity in order to
classify land as agricultural. The spirit of agrarian reform laws is not to distribute lands per
se, but to enable the landless to own land for cultivation. Thisis why the basic qualification
laid down for the intended beneficiary is to show the willingness, aptitude and ability to
cultivate and make the land as productive as possible. 54 This requirement conforms with the
policy direction set in the 1987 Constitution to the effect that agrarian reform laws shall be
founded on the right of the landless farmers and farmworkers to own, directly or
collectively, the lands they till.55 In Luz Farms v. Secretary of the Department of Agrarian
Reform,56 we even said that the framers of the Constitution limited agricultural lands to the
"arable and suitable agricultural lands."
Here, no evidence was submitted to show that any agricultural activity – like cultivation of
the land, planting of crops, growing of fruit trees, raising of livestock, or poultry or fish,
including the harvesting of such farm products, and other farm activities and practices –
were being performed on the Dakila property in order to subject it to the coverage of
55
Republic Act No. 6657. We take particular note that the previous tenants had themselves
declared that they were voluntarily surrendering their tenancy rights because the land was
not conducive to farming by reason of its elevation, among others. 57 Also notable is the
second Whereas Clause of Municipal Resolution No. 16-98, which mentioned that the
Dakila property was not fit for agricultural use due to lack of sufficient irrigation and that it
was more suitable for residential use, thus:
WHEREAS, after an ocular inspection of the subject lots and matured deliberation, the
Sangguniang Bayan found merit in the request for the following reasons, thus:
1. The properties are untenanted;
2. That they are not fitted [sic] for agricultural use for lack of sufficient
irrigation;
3. There are improvements already introduce[d] on the property by its owner
like construction of subdivision roads;
4. Lack of oppositor to the intend[ed] subdivision project on the properties by
its owner;
5. That they are more suitable for residential use considering their location viz-
a-viz (sic) with (sic) the residential lots in the area.58 (Emphasis supplied)
The terse statement by the OIC-Regional Director that the Dakila property would still be
subject to Republic Act No. 6657 should Presidential Decree No. 27 be inapplicable 59 did
not meet the requirements under Republic Act No. 6657. Section 7 of Republic Act No.
6657 identified rice and corn lands subject to Presidential Decree No. 27 for priority
distribution in the first phase and implementation ofthe CARP. Insofar as the interplay of
these two laws was concerned, the Court has said that during the effectivity of the Republic
Act No. 6657and in the event of incomplete acquisition under Presidential Decree No. 27,
the former should apply, with the provisions of the latter and Executive Order No.
22860 having only suppletory effect.61
Even if we supplemented the provisions of Presidential Decree No. 27, the outcome is still
the same, because the Dakila property was still not within the scope of the law. For land to
be covered under Presidential Decree No. 27, it must be devoted to rice or corn crops, and
there must be a system of share-crop or lease-tenancy obtaining therein. If either requisite is
absent, the land must be excluded. Hence, exemption from coverage followed when the land
was not devoted to rice or corn even if it was tenanted; or the land was untenanted even
though it was devoted to rice or corn. 62 Based on these conditions, the DAR Regional Office
erred in subjecting the Dakila property under the OLT.
The first requirement, that the land be devoted to rice or corn cultivation, was not
sufficiently established. In this regard, the OIC-Regional Director inaccurately based his
holding on the report submitted by the Legal Services Division that—
[P]ortion of the property embraced under TCT No. 103697 with an area of 2.5611 hectares
more or less, was placed under PD [No.] 27 and subsequently an approved survey plan (Psd-
03-020270) has been prepared which was then the basis of the issuance of titles in favor of
Felix Surio and Silvino Manalad under EP Nos. 345262 and 342561. On the other hand, the
land subject of this controversy was, likewise, subdivided and now covered by an approved
plan ASP No. Psd-031410-066532.63
What can be gathered from the report of the Legal Services Division was that the land
owned by the petitioner and covered by Presidential Decree No. 27 was the Sumapang
Matanda property under TCT No. 103697. As to the Dakila property, we can only infer from
the report that it was merely subdivided. The report did not mention whatsoever the
agricultural activities performed in the Dakila property. Nor was there a finding that the
Dakila property was devoted to either rice or corn cultivation as to justify its coverage under
Presidential Decree No. 27. Such a finding was necessary, for the Court has observed in
Solmayor v. Arroyo:64
Although this Court will not disregard the evidence presented by petitioners that the land is
devotedto rice and corn crops in 1993, when the ocular inspection by the DAR personnel
was conducted, it must be noted that around the time of the passage of Presidential Decree
No. 27 up to 1978, when the subject property was placed under the coverage of Operation
Land Transfer, the available evidence issued and certified by the different government
agencies, closer in time to the mentioned time frame will show that respondent’s property
has, indeed, been classified as within the residential and commercial zones of Davao City. It
cannot escape the notice of this Court that more than a decade before the issuance of the said
ocular investigation reportstating that the land is devoted to agricultural production,
government agencies equipped with the technical expertise to determine the proper
classification of the subject land have already determined that the land is part of the
residential and commercial zones of Davao City making it suitable for other urban use.
Therefore, it is only reasonable to conclude, based on the certification of various executive
agencies issued when this controversy arose, that at the time of the passage of Presidential
Decree No. 27, respondent’s property was not agricultural.65
For land to come within the coverage of the OLT, indeed, there must be a showing that it is
devoted to the cultivation of rice or corn, and there must be a system of share-crop or lease
tenancy obtaining on October 21, 1972, the time when Presidential Decree No. 27 took
effect.66 Unfortunately, no such evidence was presented, nor was there any field
investigation conducted to verify whether or not the landholding was primarily devoted to
the cultivation of rice or corn. Accordingly, the Dakila property should be excluded from the
OLT.
The DAR Secretary affirmed the validity of the EPs in favor of the respondents only
"pursuant to the Order of the Regional Director." 67 We note, however, that the evidence to
establish in the proceedings below that they or their predecessors had been tenants of the
petitioner’s predecessorin-interest to make them the rightful beneficiaries of the Dakila
property was severely wanting. For tenancy to exist, there must be proof that: (1) the parties
are the landholder and the tenant; (2) the subject is agricultural land; (3) there is consent; (4)
the purpose isagricultural production; (5) there is consideration; 68 and (6) there is a sharing
of the harvests. All these requisites are necessary to create a tenancy relationship, and the
absence of one or more of them will not make the alleged tenant a de facto tenant. 69 Unless a
person has established his status as a de juretenant, he is not entitled to security of tenure;
nor is he covered by the land reform program of the Government under the existing tenancy
laws.70 Here, the consent to establish a tenant-landlord relationship was manifestly absent. In
view of the petitioner’s repeated denial of the tenancy, the respondents ought then to
establish the tenancy relationship, but did not do so. Tenancy could not be presumed, but
must be established by evidence; its mere allegation is neither evidence nor equivalent to
proof of its existence.71
There was also no showing that the respondents were engaged in any agricultural activities,
or agreed with Santiago or the petitioner on the sharing of harvests. The OIC-Regional
Director obviously disregarded the affidavit of Barangay Captain Felino M. Teodoro of
Dakila, Malolos, Bulacan stating that the respondents were never the actual farmers on the
Dakila property.72
IV. The petitioner was deprived of due process
AGRARIAN LAW
RECENT JURISPRUDENCE
The petitioner posits that it was denied due process by the failure of the OIC-Regional
Director to see to the compliance withthe procedures outlined by Republic Act No. 6657 and
Presidential Decree No. 27. It claims that the OIC-Regional Director resorted to "procedural
shortcuts" and irregularities73 in issuing the EPs to the respondents.
We agree with the petitioner’s position.
In Reyes v. Barrios,74 we identified the procedural requirements that must be followed prior
to the issuance of an EP, viz:
The Primer on Agrarian Reform enumerates the steps in transferring the land to the tenant-
tiller, thus:
a. First step: the identification of tenants, landowners, and the land covered by
OLT.
b. Second step: land survey and sketching of the actual cultivation of the
tenantto determine parcel size, boundaries, and possible land use;
c. Third step: the issuance of the Certificate of Land Transfer (CLT). To ensure
accuracy and safeguard against falsification, these certificatesare processed at
the National Computer Center (NCC) at Camp Aguinaldo;
d. Fourth step: valuation of the land covered for amortization computation;
e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year
period; and
f. Sixth step: the issuance of the Emancipation Patent.
Thus, there are several steps to be undertaken before an Emancipation Patent can be issued.
x x x.
xxxx
Furthermore, there are several supporting documents which a tenant-farmer must submit
before he can receive the Emancipation Patent, such as:
a. Application for issuance of Emancipation Patent;
b. Applicant's (owner's) copy of Certificate of Land Transfer.
c. Certification of the landowner and the Land Bank of the Philippines that the
applicant has tendered full payment of the parcel of land as described in the
application and as actually tilled by him;
d. Certification by the President of the Samahang Nayon or by the head of
farmers' cooperative duly confirmed by the municipal district officer (MDO)
of the Ministry of Local Government and Community Development (MLGCD)
56
that the applicant is a full-fledged member of a duly registered farmers'
cooperative or a certification to these effect;
e. Copy of the technical (graphical) description of the land parcel applied for
prepared by the Bureau of Land Sketching Team (BLST) and approved by the
regional director of the Bureau of Lands;
f. Clearance from the MAR field team (MARFT) or the MAR District Office
(MARDO) legal officer or trial attorney; or in their absence, a clearance by the
MARFT leader to the effect that the land parcel applied for is not subject of
adverse claim, duly confirmed by the legal officer or trial attorney of the MAR
Regional Office or, in their absence, by the regional director;
g. Xerox copy of Official Receipts or certification by the municipal treasurer
showing that the applicant has fully paid or has effected up-to-date payment of
the realty taxes due on the land parcel applied for; and
h. Certification by the MARFT leader whether applicant has acquired farm
machineries from the MAR and/or from other government agencies.
Majority of these supporting documents are lacking in this case. Hence, it was improper for
the DARAB to order the issuance of the Emancipation Patent in favor of respondent without
the required supporting documents and without following the requisite procedure before an
Emancipation Patent may be validly issued.75
Furthermore, Section 16 of Republic Act No. 6657 outlines the procedure in acquiring
private lands subject to its coverage, viz:
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 orregistered 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 inaccordance 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 landowners, his administrator or
representative shall inform the DAR of his acceptance or rejection of the
former.
(c) If the landowner accepts the offer of the DAR, the Land Bank of the
Philippines shall pay the landowner the purchase price of the land within thirty
(30) days after he executes and delivers a deed of transfer in favor of the
Government and surrenders the Certificate of Title and other muniments of
title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land 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 notice. After the expiration of the above period, the matter is
deemed submitted for decision. The DAR shall decide the case within thirty
(30) daysafter 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 tothe 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.
Under Republic Act No. No. 6657 and DAR A.O. No. 12, Series of 1989, two notices should
be sent to the landowner — the first, the notice of coverage; and the other, the notice of
acquisition. The Court cannot consider and declare the proceedings conducted by the OIC-
Regional Director as a substantial compliance with the notice requirements. Compliance
with such requirements, being necessary to render the implementation of the CARP valid,
was mandatory. As the Court observed in Roxas & Co., Inc. v. Court of Appeals: 76
For a valid implementation of the CAR Program, two notices are required: (1) the Notice of
Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant
to DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to the landowner
under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to
the conference, and its actual conduct cannot be understated. They are steps designed to
comply with the requirements of administrative due process. The implementation of the
CARL is an exercise of the State’s police power and the power of eminent domain. To the
extent that the CARL prescribes retention limits to the landowners, there is an exercise of
police power for the regulation of private property in accordance with the Constitution. But
where, to carry out such regulation, the owners are deprived of lands they own in excess of
the maximum area allowed, there is also a taking under the power of eminent domain. The
taking contemplated is not a mere limitation of the use of the land. What is required is the
surrender of the title to and physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer beneficiary. The Bill of Rights provides that
"[n]o person shall be deprived of life, libertyor property without due process of law." The
CARL was not intended to take away property without due process of law. The exercise of
the power of eminent domain requires that due process be observed in the taking of private
property.
xxxx
Clearly then, the notice requirements under the CARL are not confined to the Notice of
Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage first
laid down in DAR A. O. No. 12, Series of 1989 and subsequently amended in DAR A. O.
No. 9, Series of 1990 and DAR A. O. No. 1, Series of 1993. This Notice of Coverage does
not merely notify the landowner that his property shall be placed under CARP and that he is
entitled to exercise his retention right; it also notifies him, pursuant to DAR A. O. No. 9,
Series of 1990, that a public hearing shall be conducted where he and representatives of the
concerned sectors of society may attend to discuss the results of the field investigation, the
land valuation and other pertinent matters. Under DAR A. O. No. 1, Series of 1993, the
Notice of Coverage also informs the landowner that a field investigation of his landholding
AGRARIAN LAW
RECENT JURISPRUDENCE
shall be conducted where he and the other representatives may be present. 77 (Emphasis
supplied)
The procedures provided by Section 16 of Republic Act No. 6657 and its relevant DAR
administrative issuances are to ensure the compliance with the due process requirements of
the law. The result of their non-compliance is to deprive the landowner of its constitutional
right to due process.
The Court has carefully explained in Roxas & Co., Inc. v. Court of Appeals that the taking
under the CARL isan exercise of police power as well as of eminent domain. The taking of
the landholding by the State effectively results in the surrender by the landowner of its title
and physical possession to the beneficiaries. Hence, compensation should be given to the
landowner prior to the taking. This is the clear-cut directive of Section 16(e) of Republic Act
No. 6657 which mandates the DAR to take immediate possession of the land only after full
payment and to thereafter request the Register of Deeds to transfer title inthe name of the
Republic of the Philippines, and later on to the intended beneficiaries.
However, there was no evidence of payment prior to the cancellation of the petitioner’s
TCTs submitted here. The requirement of prior payment was found in Republic Act No.
6657 and Presidential Decree No. 27, under which full payment by the intended beneficiary
was a condition prior to the award of an EP. We haveexplicitly pronounced in Coruña v.
Cinamin78 that the emancipation of tenants does not come free. The transfer of lands under
Presidential Decree No. 27 remained subject to the terms and conditions provided in said
law. In Paris v. Alfeche,79 we said:
x x x. Section 2 of PD 266 states:
"After the tenant-farmer shall have fully complied with the requirements for a grant of title
under Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be issued by
the Department of Agrarian Reform on the basis of a duly approved survey plan."
On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:
"For the purpose of determining the cost of the land to be transferred to the tenant-farmer
pursuant to this Decree, the value of the land shall be equivalent to two and one-half (2 ½)
times the average harvest of three normal crop years immediately preceding the
promulgation of this Decree;
"The total cost of the land, including interest at the rate of six (6) per centum per annum,
shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations[.]"
Although, under the law, tenant farmers are already deemed owners of the land they till, they
are still required to pay the cost of the land, including interest, within fifteen years before the
title is transferred to them.80 (Emphasis supplied)
The unquestioned non-compliance with the procedures set by Republic Act No. 6657 and its
relevant rules and regulations further denied to the petitioner the exercise of its right of
retention.81 In doing so, the OICRegional Director disregarded this constitutionally
guaranteed right. We cannot understate the value of the right of retention as the means to
mitigate the effects of compulsory land acquisition by balancing the rights of the landowner
and the tenant and by implementing the doctrine that social justice is not meant to perpetrate
an injustice against the landowner.82
57
We also consider the manner by which the Dakila property was apportioned to the
respondents highly suspect. It appears from the face of the EPs that the individual lots were
allocated based on how the landholding was subdivided by the petitioner. Moreover, all the
respondents were awarded lots exceeding three hectares in violation of Section 23 of
Republic Act No. 6657, which provides that "[n]o qualified beneficiary may own more than
three (3) hectares of agricultural land."
In fine, the order of the OIC-Regional Director was patently null and void. The denial of due
process to the petitioner sufficed to cast the impress of nullity on the official act thereby
taken. A decision rendered without due process is void ah initio and may be attacked directly
or collaterally.83 All the resulting acts were also null and void. Consequently, the EPs
awarded to the respondents should be nullified.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and
SETS ASIDE the decision promulgated on July 27, 2011 by the Court of Appeals;
REINSTATES the assailed decision of the Office of the President issued on March 1, 2010;
DIRECTS the cancellaticm of Emancipation Patents No. 00783329, No. 00783330, No.
0078331, No. 0078332, No. 0078333, and No. 0078334 issued to the respondents for being
NULL and VOID; and ORDERS the respondents to pay the costs of suit.
SO ORDERED.
Espiritu v. Del Rosario, October 15, 2014
Lands classified as non-agricultural in zoning ordinances approved by the Housing and Land
Use Regulatory Board or its predecessors prior to June 15, 1998 are outside the coverage of
the compulsory acquisition program of the Comprehensive Agrarian Reform Law. However,
there has to be substantial evidence to prove that lands sought to be exempted fall within the
non-agricultural classification. xxx
Respondent’s landholdings were agricultural, not industrial
Prior to the enactment of Republic Act No. 6657, lands were classified into agricultural,
residential, or industrial by law or by zoning ordinances enacted by local government units.
In Heirs of Luna v. Afable:44
It is undeniable that local governments have the power to reclassify agricultural into non-
agricultural lands. Section 3 of RA No. 2264 (The Local Autonomy Act of 1959)
specifically empowers municipal and/or city councils to adopt zoning and subdivision
ordinances or regulations in consultation with the National Planning Commission. By virtue
of a zoning ordinance, the local legislature may arrange, prescribe, define, and apportion the
land within itspolitical jurisdiction into specific uses based not only on the present, but also
on the future projection of needs. It may, therefore, be reasonably presumed that when city
and municipal boards and councils approved an ordinance delineating an area or district in
their cities or municipalities as residential, commercial, or industrial zone pursuant to the
power granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at
the same time, reclassifying any agricultural lands within the zone for non-agricultural use;
hence, ensuring the implementation of and compliance with their zoning
ordinances.45 (Emphasis supplied) Republic Act No. 6657 became effective on June 15,
1988, and it covered all public and private lands, including lands of the public domain suited
for agriculture.46 Upon its enactment, questions arose as to the authority of the Department
of Agrarian Reform to approve or disapprove applications for conversion of agricultural land
to non-agricultural. Then Agrarian Reform Secretary Florencio B. Abad (Secretary Abad)
was of the opinion that laws prior to Republic Act No. 6657 authorized the Department of
Agrarian Reform, together with the Department of Local Government and Community
Development and the Human Settlements Commission, to allow or disallow conversions. In
response to Secretary Abad’s query, the Department of Justice issued Opinion No. 44 on
March 16, 1990, written by then Secretary of Justice Franklin M. Drilon. The opinion,
reproduced in full, states:
Sir:
This refers to your letter of the 13th instant stating your "position that prior to the passage of
R.A. 6657, the Department of Agrarian Reform had the authority to classify and declare
which agricultural lands are suitable for non-agricultural purposes, and to approve or
disapprove applications for conversion from agricultural to non-agricultural uses."
In support of the foregoing view, you contend that under R.A. No. 3844, as amended, the
Department of Agrarian Reform (DAR) is empowered to "determine and declare an
agricultural land to be suited for residential, commercial, industrial or some other urban
purpose" and to "convert agricultural land from agricultural to non-agricultural purposes";
that P.D. No. 583, as amended by P.D. No. 815 "affirms that the conversion of agricultural
lands shall be allowed only upon previous authorization of the [DAR]; with respect to
tenanted rice and corn lands"; that a Memorandum of Agreement dated May 13, 1977
between the DAR, the Department of Local Government and Community Development and
the then Human Settlements Commission "further affirms the authority of the [DAR] to
allow or disallow conversion of agricultural lands"; that E.O. No. 129-A expressly invests
the DAR with exclusive authority to approve or disapprove conversion of agricultural lands
for residential, commercial, industrial and other land uses'; and that while in the final version
of House Bill 400, Section 9 thereof provided that lands devoted to "residential, housing,
commercial and industrial sites classified as such by the municipal and city development
councils as already approved by the Housing and Land Use Regulatory Board, in their
respective zoning development plans" be exempted from the coverage of the Agrarian
Reform program, this clause was deleted from Section 10 of the final version of the
consolidated bill stating the exemptions from the coverage of the Comprehensive Agrarian
Reform Program. We take it that your query has been prompted by the study previously
made by this Department for Executive Secretary Catalino Macaraig Jr. and Secretary
Vicente Jayme (Memorandum dated February 14, 1990) which upheld the authority of the
DAR to authorize conversions of agricultural lands to non-agricultural uses as of June 15,
1988, the date of effectivity of the Comprehensive Agrarian Reform Law (R.A. No. 6657).
[I]t is your position that the authority of DAR to authorize such conversion existed even
prior to June 15, 1988 or as early as 1963 under the Agricultural Land Reform Code(R.A.
No. 3844; as amended).
It should be made clear at the outset that the aforementioned study of this Department was
based on facts and issues arising from the implementation of the Comprehensive Agrarian
Reform Program (CARP). While there is no specific and express authority given to DAR in
the CARP law to approve or disapprove conversion of agricultural lands to nonagricultural
uses, because Section 65 only refers to conversions effected after five years from date of the
award, we opined that the authority of the DAR to approve or disapprove conversions of
agricultural lands to nonagricultural uses applies only to conversions made on or after June
15, 1988, the date of effectivity of R.A. No. 6657, solely on the basis of our interpretation of
DAR's mandate and the comprehensive coverage of the land reform program. Thus, we said:
"Being vested with exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, it is believed to be the agrarian reform law's intention
that any conversion of a private agricultural land to non-agricultural uses should be cleared
beforehand by the DAR. True, the DAR's express power over land use conversion is limited
to cases in which agricultural lands already awarded have, after five years, ceased to be
economically feasible and sound for agricultural purposes, or the locality has become
urbanized and the land will have a greater economic value for residential, commercial or
industrial purposes. But to suggest that these are the only instances when the DAR can
require conversion clearances would open a loophole in the R.A. No. 6657, which every
landowner may use to evade compliance with the agrarian reform program. Hence, it should
logically follow from the said department's express duty and function to execute and enforce
AGRARIAN LAW
RECENT JURISPRUDENCE
the said statute that any reclassification of a private land as a residential, commercial or
industrial property should first be cleared by the DAR."
It is conceded that under the laws in force prior to the enactment and effective date of R.A.
No. 6657, the DAR had likewise the authority, to authorize conversions of agricultural lands
to other uses, but always in coordination with other concerned agencies. Under R.A. No.
3344, as amended by R.A. No. 6389, an agricultural lessee may, by order of the court, be
dispossessed of his landholding if after due hearing, it is shown that the "landholding is
declared by the [DAR] upon the recommendation of the National Planning Commission to
be suited for residential, commercial, industrial or some other urban purposes."
Likewise, under various Presidential Decrees (P.D. Nos. 583, 815 and 946) which were
issued to give teeth to the implementation of the agrarian reform program decreed in P.D.
No. 27, the DAR was empowered to authorize conversions of tenanted agricultural lands,
specifically those planted to rice and/or corn, to other agricultural or to non-agricultural uses,
"subject to studies on zoning of the Human Settlements Commissions" (HSC). This non-
exclusive authority of the DAR under the aforesaid laws was, as you have correctly pointed
out, recognized and reaffirmed by other concerned agencies, such as the Department of
Local Government and Community Development (DLGCD) and the then Human
Settlements Commission (HSC) in a Memorandum of Agreement executed by the DAR and
these two agencies on May 13, 1977, which is an admission that with respect to land use
planning and conversions, the authority is not exclusive to any particular agency but is a
coordinated effort of all concerned agencies.
It is significant to mention that in 1978, the then Ministry of Human Settlements was granted
authority to review and ratify land use plans and zoning ordinance of local governments and
to approve development proposals which include land use conversions (see LOI No. 729
[1978]). This was followed by P.D. No. 648 (1981) which conferred upon the Human
Settlements Regulatory Commission (the predecessors of the Housing and Land Use
Regulatory Board [HLURB][)] the authority to promulgate zoning and other land use control
standards and guidelines which shall govern land use plans and zoning ordinances of local
governments, subdivision or estate development projects of both the public and private
sector and urban renewal plans, programs and projects; as well as to review, evaluate and
approve or disapprove comprehensive land use development plans and zoning components
of civil works and infrastructure projects, of national, regional and local governments,
subdivisions, condominiums or estate development projects including industrial estates.
P.D. No. 583, as amended by P.D. No. 815, and the 1977 Memorandum of Agreement,
abovementioned, cannot therefore, be construed as sources of authority of the DAR; these
issuances merely affirmed whatever power DAR had at the time of their adoption.
With respect to your observation that E.O. No. 129-A also empowered the DAR to approve
or disapprove conversions of agricultural lands into non-agricultural uses as of July 22,
1987, it is our view that E.O. No. 129-A likewise did not provide a new source of power of
DAR with respect to conversion but it merely recognized and reaffirmed the existence of
such power as granted under existing laws. This is clearly inferrable from the following
provision of E.O. No. 129-A to wit:
"Sec. 5. Powers and Functions. Pursuant to the mandate of the Department, and in order to
ensure the successful implementation of the Comprehensive Agrarian Reform Program, the
Department is hereby authorized to:
1) Have exclusive authority to approve or disapprove conversion of agricultural lands for
residential, commercial, industrial and other land uses as may be provided by law"
Anent the observation regarding the alleged deletion of residential, housing, commercial and
industrial sites classified by the HLURB in the final version of the CARP bill, we fail to see
58
how this [sic] circumstances could substantiate your position that DAR's authority to
reclassify or approve conversions of agricultural lands to non-agricultural uses already
existed prior to June 15, 1988. Surely, it is clear that the alleged deletion was necessary to
avoid a redundancy in the CARP law whose coverage is expressly limited to "all public and
private agricultural lands" and "other lands of the public domain suitable for agriculture"
(Sec. 4, R.A. No. 6657). Section 3(c) of R.A. No. 6657 defines "agricultural land" as that
"devoted to agricultural activity as defined in the Act and not classified as mineral forest,
residential, commercial or industrial land."
Based on the foregoing premises, we reiterate the view that with respect to conversions of
agricultural lands covered by R.A. No. 6657 to non-agricultural uses, the authority of DAR
to approve such conversions may be exercised from the date of the law's effectivity on June
15, 1988. This conclusion is based on a liberal interpretation of R.A. No. 6657 in the light of
DAR's mandate and the extensive coverage of the agrarian reform program. 47 (Emphasis
supplied) Department of Justice Opinion No. 44 became the basis of subsequent issuances
by the Department of Agrarian Reform, stating in clear terms that parties need not seek prior
conversion clearance from the Department of Agrarian Reform for lands that were classified
as non-agricultural prior to Republic Act No. 6657. The subsequent rulings are outlined in
Junio v. Secretary Garilao:48
Following the opinion of the Department of Justice (DOJ), the DAR issued Administrative
Order (AO)No. 6, Series of 1994, stating that conversion clearances were no longer needed
for lands already classified as non-agricultural before the enactment of Republic Act 6657.
Designed to "streamline the issuance of exemption clearances, based on DOJ Opinion No.
44," the AO provided guidelines and procedures for the issuance of exemption clearances.
Thereafter, DAR issued AO 12, Series of 1994, entitled "Consolidated and Revised Rules
and Procedures Governing Conversion of Agricultural Lands to Non-Agricultural Uses." It
provided that the guidelines on how to secure an exemption clearance under DAR AO No. 6,
Series of 1994, shall apply to agricultural lands classified or zoned for non-agricultural uses
by local government units (LGUs); and approved by the Housing and Land Use Regulatory
Board (HLURB) before June 15, 1988. Under this AO, the DAR secretary had the ultimate
authority to issue orders granting or denying applications for exemption filed by landowners
whose lands were covered by DOJ Opinion No. 44.49 (Citations omitted)
Accordingly, lands are considered exempt from the coverage of Republic Act No. 6657 if
the following requisites are present:
1. Lands were zoned for non-agricultural use by the local government unit; and
2. The zoning ordinance was approved by the Housing and Land Use
Regulatory Board before June 15, 1998.
In revoking the prior order of exemption, Secretary Pangandaman took note of the following
considerations:
● The Certification dated 18 November 2003, of Mr. David D. David,
Planning Officer IV and Zoning Administrator of the City of Angeles states
that the City Planning and Development Office, Zoning Administration Unit
(CPDO-ZAU) certifies that subject property covered by TCT No. 11804 is
classified as agricultural based on the certified photocopy of Zoning
Ordinance, Ordinance No. 13, Series of 1978, issued by the Housing and Land
Use Regulatory Board, Regional Office No. 3 (HLURB-Region III) on 03
September 2001;
● Also, upon verification with HLURB-Region III, we were informed that as
per copy of the approved Zoning Plan of 1978, the subject properties were
classified as agricultural. The said Zoning Plan of 1978 was approved under
NCC Plan dated 24 September 1980; and
● Based on the ocular inspection conducted by the CLUPPI Inspection Team,
it was found that the area remained agricultural. In fact, it is still dominantly
planted with sugar cane and corn.50
(Emphasis supplied)
Upon respondent’s motion for reconsideration, Secretary Pangandaman also took into
consideration the recommendations of the Center for Land Use Policy, Planning, and
Implementation Committee, thus:
During the 50th Special CLUPPI Committee-B Meeting, held on 18 December 2007, the
Motion for Reconsideration filed by Sylvia Espirilla [sic] was deliberated upon and the
Committee recommended the DENIAL of the Motion for Reconsideration based on the
following grounds:
● The certifications issued by the HLURB shows that the subject properties
were classified as agricultural before 15 June 1986 [sic]; and
● Based on the ocular inspection conducted by the CLUPPI Inspection Team,
it was found out that the area remained agricultural. In fact, it [is] still
dominantly planted with sugar cane and corn.51 (Emphasis supplied)
Secretary Pangandaman also found that:
The certifications submitted by the [respondents] which is the Certification dated 18
November 2003, of Mr. David D. David, Planning Officer IV and Zoning Administrator of
the City of Angeles states that the City Planning Development Office, Zoning
Administration Unit (CPDOZAU) certifies that the subject properties covered by TCT No.
T-11804 is classified as agricultural based on the certified photocopy of Zoning Ordinance,
Ordinance No. 13[,] Series of 1978 issued by the Housing and Land Use Regulatory Board,
Regional Office No. 3 (HLURB-Region III) on 03 September 2001.
Such certification was corroborated by a certification issued by the HLURB Regional
Director, Region III, Ms. Edithat [sic] Barrameda in its certification dated 28 May 2001 and
24 November 2003. It was stated in the said certification that the subject landholding is
within the agricultural zone based on Comprehensive Land Use Plan and Zoning Ordinance
of the City Council of Angeles City approved through HLURB Resolution No. 705 dated 17
October 2001. Also a certification was issued by Director Barrameda on 01 June 2001,
stating therein that, "Duplicate copies of the Certification issued by this Board to Ms.
Lutgarda Torres on 18 December 1991 and 8 July 1998, respectively are not among the files
for safekeeping when she assumed as Regional Officer on 03 July 2000.["] 52 (Emphasis
supplied)
These findings were sustained on appeal by the Office of the President, stating that:
[Respondents'] argument that the land has ceased to be agricultural by virtue of
reclassification under Ordinance No. 13, series of 1978 cannot be sustained since the records
of the case or the evidence presented thereto are bereft of any indication showing the same.
AGRARIAN LAW
RECENT JURISPRUDENCE
In fact, nowhere was it shown that a certified true copy of the said Ordinance was presented
before this Office or the office a quo.53
The factual findings of administrative agencies are generally given great respect and finality
by the courts as it is presumed that these agencies have the knowledge and expertise over
matters under their jurisdiction.54 Both the Department of Agrarian Reform and the Office of
the President found respondent's lands to be agricultural. We see no reason to disturb these
findings.
WHEREFORE, the petition is GRANTED. The decision dated September 28, 2012 and
resolution dated November 29, 2012 of the Court of Appeals are SET ASIDE. The order
dated June 15, 2006 of the Department of Agrarian Reform and the decision dated May 7,
2009 of the Office of the President are REINSTATED.
SO ORDERED.
Automat Realty Development Corp. v. Dela Cruz, October 1, 2014
The issues for resolution are as follows:
I. Whether an agricultural tenancy relationship exists between Automat and
respondent spouses; and
II. Whether the DAR exemption orders have an effect on the DARAB’s earlier
exercise of jurisdiction.
I Agricultural Lands to NonAgricultural Uses:
No agricultural tenancy relationship
The elements to constitute a tenancy relationship are the following: "(1) the parties are the
landowner and the tenant or agricultural lessee; (2) the subject matter of the relationship
isagricultural land; (3) there is consent between the parties to the relationship; (4) the
purpose of the relationship is to bring about agricultural production; (5) there is personal
cultivation on the part of the tenant or agricultural lessee;and (6) the harvest is shared
between the landowner and the tenant or agricultural lessee." 39
There must be substantial evidence on the presence of all these requisites; otherwise, there is
no de jure tenant.40 Only those who have established de jure tenant status are entitled to
security of tenure and coverage under tenancy laws.41
Well-settled is the rule that he who alleges must prove. 42 Respondent spouses filed the
petition before the PARAD, praying to be maintained in peaceful possession of the property.
They were the ones claiming they had a tenancy relationship with Automat. Thus, they had
the burden of proof to show that such relationship existed.
I.A
Actual tillers
59
On the first requisite, respondent spouses contend that the Municipal Agrarian Reform
Office (MARO) Officer Job A. Candanido issued a certification on October 18, 2000 that
respondent spouses are the actual tillers of the land. 43 Three farmers of adjacent
lands44 testified on the same fact — that respondent spouses are the actual tillers. 45 Irrigation
Superintendent Cesar Amador also issued a certification that respondent spouses paid the
irrigation service fees.46
Petitioners counter with MARO Officer Candanido’s March 23, 2001 amended certification.
This later certification states that there are "No Records of Tenancy or written Agricultural
Leasehold Contract to any farmer/tiller"47 in relation to the property.
This court has held that a MARO certification "concerning the presence or the absence of a
tenancy relationship between the contending parties, is considered merely preliminary or
provisional, hence, such certification does not bind the judiciary." 48
The amended certification does not bind this court. Several elements must be present before
the courts can conclude that a tenancy relationship exists. MARO certifications are limited to
factual determinations such as the presence of actual tillers. It cannot make legal conclusions
on the existence of a tenancy agreement.
Thus, petitioners’ reliance on the amended MARO certification fails to persuade.
Nevertheless, the finding in the original MARO certification on the presence of actual tillers
is closely related to the nature of the land. This brings us to the second requisite that the
property must be agricultural land.
I.B
Not agricultural land
Petitioners submit that the two parcels of land were classified as industrial prior to the
effectivity of CARL on June 15, 1988. This was done through the Municipal Zoning
Ordinance of Sta. Rosa Laguna No. XVIII, series of 1981, approved on December 2, 1981
by the then Human Settlements Regulatory Commission, now the Housing and Land Use
Regulatory Board or HLURB.49 This classification was reiterated in the town plan or Zoning
Ordinance No. 20-91 of Sta. Rosa, Laguna, approving the town plan classifying the lands
situated in Barangay Malitlit as industrial land.50
Respondent spouses counter that the reclassification of the lands into non-agricultural was
done in 1995, after the effectivity of CARL, by virtue of Sangguniang Bayan Resolution as
approved by the Sangguniang Panlalawigan Resolution No. 811, seriesof 1995. Section 20
of the Local Government Code 51 governs the reclassification of land in that "[a] city or
municipality may, through an ordinance passed by the Sanggunian after conducting public
hearing for the purpose, authorize [sic] the reclassification of agricultural lands. . . ." 52
Respondent spouses then argue that a subsequent reclassification does not automatically
remove the land from CARP coverage. "A valid certificate of exemption [or] exclusion,or a
duly approved conversion order, must first be secured. . . ." 53
The land in this case cannot be considered as agricultural land.
First, it is undisputed that the DAR Region IV-A CALABARZON had already issued two
orders,54 both dated March 30, 2010, exempting the property from CARP coverage. 55 These
orders were submitted before the Court of Appeals 56 and raised again before this court. The
orders provide in part:
Department of Justice Opinion No. 44, series of 1990 ruled that "Lands already classified as
commercial, industrial or residential use and approved by the HLURB prior to the effectivity
of RA No. 6657 on June 15, 1988 no longer need any conversion clearance. Moreover, the
term agricultural lands as defined in Section 3 (c) of RA 6657 do not include those lands
already classified as mineral, forest, residential, commercial or industrial. The case at hand
shows that the subject property is within the non-agricultural zone prior to 15 June 1988.
Further, said lands reclassified to non-agricultural prior to June 15, 1988 ceased to be
considered as"agricultural lands" and removed from the coverage of the Comprehensive
Agrarian Reform Program.
After a careful evaluation of the documents presented, this office finds substantial
compliance by the applicant with the documentary requirements prescribed under DAR
Administrative Order No. 04, Series of 2003.57 (Emphasis supplied)
The exemption orders clearly provide that the lands were reclassified to non-agricultural
prior to June 15, 1988, or prior to the effectivity of Republic Act No. 6657 known as the
Comprehensive Agrarian Reform Law of 1988 (CARL).58
Section 3(c) of the CARL defines "agricultural land" as "land devoted to agricultural activity
as defined in this Act and not classified as mineral, forest, residential, commercial or
industrial land."
This meaning was further explained by DAR Administrative Order No. 1, Series of 1990,
otherwise known as the Revised Rules and Regulations Governing Conversion of Private
. . . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657
and not classified as mineral or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its
preceding competent authorities prior to 15 June 1988 for residential, commercial or
industrial use.59 (Emphasis in the original)
While the earlier Republic Act No. 3844,60 otherwise known as the Agricultural Land
Reform Code, focuses on actual use of the land when it defines "agricultural land"as "land
devoted to any growth, including but not limited to crop lands, salt beds, fish ponds, idle
land61 and abandoned land62 as defined in paragraphs 18 and 19 of this Section,
respectively,"63 this must be read with the later Republic Act No. 6675 (CARL) that qualifies
the definition with land classifications.
Second, in Sta. Ana v. Carpo64 cited at length by the Court of Appeals, this court found that
the PARAD and the Court of Appeals both acted without jurisdiction in ruling that "the land
had become non-agricultural based on a zoning ordinance of 1981 – on the strength of a
mere vicinity map."65
In Sta. Ana, the land owner had the burdenof proof in filing a complaint for ejectment due to
non-payment of lease rentals. In the instant case, respondent spouses have the burden of
proving all elements of tenancy in filing their petition to be maintained in peaceful
possession of the property. Unlike the facts in Sta. Ana, respondent spouses do not contend
that the reclassification of the land was by a "mere vicinity map." Their contention is that it
AGRARIAN LAW
RECENT JURISPRUDENCE
was made only in 1995, thus, the land remains within CARP coverage unless petitioners
secure a certificate of exemption or exclusion, or a duly approved conversion order.
As earlier discussed, petitioners have secured exemption orders for the lands.
I.C
Consent; nature of relationship
Respondent spouses allege that petitioners "never contest[ed] nor refute[d] [respondent’s]
cultivation and occupation of residence in the land (since 1990) for the past ten (10) years or
so."66 This brings us to the third requisite on consent.
Respondent spouses argue that petitioners’ inaction or failure to refute their occupation and
cultivation of the land for the past 10 years, coupled with the acceptance of payments for use
of the land, is "indicative of consent, if not acquiescence to . . . tenancy relations." 67 They
contend that a "[t]enancy relationship may be deemed established by implied agreement
[when a] land owner allows another [to] cultivate his land in the concept of a tenant for a
period of ten (10) years."68 They add that Automat cannot deny the authority of
administrator, petitioner Cecilia, whose acts are binding on the land owner.69
On the other hand, petitioners argue that the acts of the parties "taken in their entirety must
be demonstrative of an intent to continue a prior tenancy relationship established by the
landholder."70 There should be "no issue . . . [on] the authority of the overseer to establish a
real right over the land."71
Petitioners contend that there is no prior tenancy relationship to speak of between respondent
spouses and Automat. Petitioner Cecilia executed an affidavit submitted to the DARAB
categorically denying respondent spouses’ allegations that he instituted them as agricultural
tenants.72 Petitioner Lim executed a similar affidavit "debunking [respondent spouses’] claim
that they were instituted as agricultural tenants." 73 Petitioners, thus, emphasize that
petitioners Cecilia and Lim’s authority to establish a real right over the land has been
properly questioned, and no special power of attorney 74 has been presented by respondent
spouses on such authority.75
The PARAD agreed in that "it would be totally behind [sic] human comprehension for
Automat to institutea tenant on their untenanted lands [as] [i]t has been of public knowledge
that landowners were paying millions of pesos a hectare just to get rid of their tenants in
Sta.Rosa, Laguna since 1989 so that they could fully and freely [dispose] and [use] their
lands. . . . it would be easier for this Office to believe and be convinced that, in deed [sic], if
ever petitioners were allowed entry into the land it would be for any other purposes other
than the establishment of a tenancy [relationship]."76
This court has ruled that "[t]enancyis not a purely factual relationship dependent on what the
alleged tenant does upon the land [but] is also a legal relationship." 77 Tenancy relationship
cannot bepresumed. The allegation of its existence must be proven by evidence, and working
on another’s landholding raises no presumption of an agricultural tenancy. 78 Consequently,
the landowner’s consent to an agricultural tenancy relationship must be shown.
While this court agrees with the conclusion that no agricultural tenancy relationship can
exist in thiscase, we find that the element of consent in establishing a relationship, not
necessarily of agricultural tenancy, is present.
60
This court finds that Automat consented to a relationship with respondent spouses when (a)
through petitioner Lim,it constituted respondent Ofelia dela Cruz as caretaker of the property
with the understanding that she would vacate when asked by Automat, and (b) it accepted
rental payments from respondent spouses.
First, petitioner Lim executed an affidavit stating that "Mrs. Ofelia dela Cruz or Nida
volunteered to act as caretakerof the properties bought by Automat Realty only for the
purpose ofpreventing squatters from entering the same and on the understandingthat she
would vacate the properties voluntarily when asked todo so by Automat Realty." 79
Automat confirmed this agreement entered into by petitioner Lim on its behalf when it
included such allegation in the statement of facts in its memorandum with this court. 80
While Automat questioned petitioners Lim and Cecilia’s authority to establish a real right
over the property in that "[r]espondents had not shown any special power of attorney
showing that Cecilia was authorized by Automat Realty to install any agricultural tenant on
the latter’s properties," 81 it never denied giving consent to installing respondent spouses as
caretakers of the land.
Second, while both petitioners Lim and Cecilia denied in their affidavits being the
authorized administrator of Automat, 82 petitioner Cecilia nevertheless confirms accepting
checks as rental payments from respondent spouses for convenience, considering that he
often went to Makati where petitioner Lim holds office and Quezon City where Automat has
its office.83
Automat never denied receipt of these rentals.
Respondent spouses’ petition for maintenance of peaceful possession filed with the PARAD
alleged that "as regards the sharing arrangement derived from the rice/palay harvests,
petitioners were verbally instructed to deliver the same to . . . Lito Cecilia who was
authorized to collect for and in behalf of Automat every cropping period, the amount of
Fifteen Thousand Five Hundred Pesos covering the two (2) parcels of land." 84 They attached
photocopies of five (5) checks in the name of Automat for the following amounts: (a)
8,000.00 dated December 31, 1993; (b) 7,500.00 dated December 31, 1993; (c) 7,500.00
dated January 5, 1995; (d) 8,000.00 dated January 10, 1995; and (e) 7,500.00 dated June 22,
1997.85
I.C.1
Civil lease
Automat is considered to haveconsented to a civil lease.86
Article 1643 of the Civil Code provides that "[i]n the lease of things, one of the parties binds
himself to giveto another the enjoyment or use of a thing for a price certain, and for a period
which may be definite or indefinite. . . ."
The Civil Code accommodates unwritten lease agreements such as Article 1682 that
provides: "The lease of a piece of rural land, when its duration has not been fixed, is
understood to have been for all the time necessary for the gathering of the fruitswhich the
whole estate leased may yield in one year, or which it may yield once, although two or more
years may have to elapse for the purpose."
On the other hand, Article 1687 statesthat "[i]f the period for the lease has not been fixed, it
is understood to be from year to year, if the rent agreed upon is annual; from month to
month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the
rent is to be paid daily. . . ." Applying this provision, "the contract expires at the end of such
month [year, week, or day] unless prior thereto, the extension of said term has been sought
by appropriate action and judgment is, eventually, rendered therein granting the relief." 87
Under the statute of frauds, an unwritten lease agreement for a period of more than one year
is unenforceable unless ratified.88
Respondent spouses were allowed to stay in the property as caretakers and, in turn, they paid
petitioners rent for their use of the property. Petitioners’ acceptance of rental payments may
be considered as Ratification 89 of an unwritten lease agreement whose period depends on
their agreed frequency of rental payments.
I.C.2
Builder, planter, sower
In the alternative, if the facts can show that the proper case involves the Civil Code
provisions on builders, planters, and sowers, respondent spouses may be considered as
builders, planters, or sowers in good faith, provided such is proven before the proper court.
Article 448 of the Civil Code provides that if the landowner opts to "appropriate as his own
the works, sowing or planting," he must pay indemnity to the builder, planter, or sower in
good faith in accordance with the relevant provisions of the Code:
ART. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built
or planted to pay the price of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obligedto buy the land ifits value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building ortrees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
....
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor
ingood faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value which the thing may have
acquired by reason thereof.
....
Art. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in
good faith; but he may remove the ornaments with which he has embellished the principal
thing if it suffers no injury thereby, and ifhis successor in the possession does not prefer to
refund the amount expended. (Emphasis supplied)
AGRARIAN LAW
RECENT JURISPRUDENCE
Article 448 of the Civil Code on builders, planters, and sowers in good faith applies when
these parties have a claim of title over the property. 90 This court has expanded this limited
definition in jurisprudence:
This Court has ruled that this provision covers only cases in which the builders, sowers or
planters believe themselves to be owners of the land or, at least, to have a claim of title
thereto. It does not apply when the interest is merely that of a holder,such as a mere tenant,
agent or usufructuary. From these pronouncements, good faith is identified by the belief that
the land is owned; or that — by some title — one has the right to build, plant, or sow
thereon.
However, in some special cases, this Court has used Article 448 by recognizing good faith
beyond this limited definition. Thus, in Del Campo v. Abesia, this provision was applied to
whose house — despite having been built at the time he was still co-owner — overlapped
with the land of another. This article was also applied to cases wherein a builder had
constructed improvements with the consent of the owner. The Court ruled that the law
deemed the builder tobe in good faith. In Sarmiento v. Agana, the builders were found to be
in good faith despite their reliance on the consent of another, whom they had mistakenly
believed to be the owner of the land.91 (Emphasis supplied)
Respondent spouses alleged in their petition before the PARAD that they "introduced
various agricultural improvements purposely to make the said landholdings productive,
harvests ofwhich were remitted and delivered to . . . AUTOMAT through its administrator
LITO CECILIA. . . ." 92 The Court of Appeals’ recitation offacts also state that respondent
spouses "cultivated the area, improved the same and shared the palay produced therein to the
owner, Automat,through its authorized agent, Lito Cecilia." 93
Petitioners allege in their memorandumbefore this court that at the time Automat purchased
the property, these "were not irrigated and they were not planted to rice or any other
agricultural crop."94 No further allegations were made on whether the property was planted
with trees or crops after its purchase in 1990, until respondent spouses were asked to vacate
in 2000. However, this court is not a trier of facts and can only entertain questions of
law.95 This court also applies the rule that damages must be proven in order to be awarded. 96
The causes of action of respondent spouses, if these can be supported by the facts and
evidence, may be pursued in the proper case either under builder, planter, or sower
provisions, or civil lease provisions before the proper court.
II
DARAB jurisdiction
Petitioners submit that in light of the exemption orders, "[a]s a matter of law, the subject
properties were never subject to the jurisdiction of the DARAB, which issued the decision
erroneously affirmed by the Court of Appeals." 97
In the same breath, petitioners recognize the PARAD’s jurisdiction in praying that this court
"reinstat[e] the Decision of the Provincial Agrarian Reform Adjudication (PARAD) for the
Province of Laguna dated August 28, 2001 in Reg Case No. R-0403-0041, dismissing the
‘Petition to Maintain Peaceful Possession with Injunction’ filed by the respondents." 98
The DARAB has "primary and exclusive jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes involving the implementation of the
[CARP] . . . and other agrarian laws and their implementing rules and regulations:" 99
61
RULE II
Jurisdiction Of The Adjudication Board
SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction.– The Board shall
have primary and exclusive jurisdiction, both original and appellate, todetermine and
adjudicate all agrarian disputesinvolving the implementation ofthe Comprehensive Agrarian
Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, 229, and
129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree
No. 27 and other agrarian laws and their implementing rules and regulations. Specifically,
such jurisdiction shall include but not be limited to cases involving the following:
a) The rights and obligations of persons, whether natural or juridical, engaged
in the management, cultivation and use of all agricultural lands covered by the
CARP and other agrarian laws;
b) The valuation of land, and the preliminary determination and payment of
just compensation,fixing and collection of lease rentals, disturbance
compensation, amortization payments, and similar disputes concerning the
functions of the Land Bank of the Philippines (LBP);
c) The annulment or cancellation oflease contracts or deeds of sale or their
amendments involving lands under the administration and disposition of the
DAR or LBP;
d) Those cases arising from, or connected with membership or representation
in compact farms, farmers’ cooperatives and other registered farmers’
associations or organizations, related to lands covered by the CARP and other
agrarian laws;
e) Those involving the sale, alienation, mortgage, foreclosure, pre-emption and
redemption of agricultural lands under the coverage of the CARP orother
agrarian laws;
f) Those involving the issuance, correction and cancellation of Certificates of
Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are
registered with the Land Registration Authority;
g) Those cases previously falling under the original and exclusive jurisdiction
of the defunct Court of Agrarian Relations under Section 12 of Presidential
No. 946, except sub-paragraph (q) thereof and Presidential Decree No. 815.
It is understood that the aforementioned cases, complaints or petitions were filed with the
DARAB after August 29, 1987.
Matters involving strictly the administrative implementation of Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 and other
agrarian laws as enunciated by pertinent rules shall be the exclusive prerogative of and
cognizable by the Secretary of the DAR.
h) And such other agrarian cases, disputes, matters or concerns referred to it by the Secretary
of the DAR.
SECTION 2. Jurisdiction of the Regional and Provincial Adjudicators. – The RARAD and
the PARAD shall have concurrent original jurisdiction with the Board to hear, determine and
adjudicate all agrarian cases and disputes, and incidents in connection therewith, arising
within their assigned territorial jurisdiction.100 (Emphasis supplied)
"Agrarian dispute" has been defined under Section 3(d) of Republic Act No. 6657 101 as
referring to "any controversy relating to tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to agriculture. . . ."
This court has held that "jurisdiction of a tribunal, including a quasijudicial office or
government agency, over the nature and subject matter of a petition or complaint is
determined by the material allegationstherein and the character of the relief prayed for
irrespective of whether the petitioner or complainant is entitled to any or all such reliefs." 102
The petition filed by respondent spouses before the PARAD alleged that "AUTOMAT
REALTY AND DEV’T CORP. . . is the registered owner of two (2) parcels of agricultural
land. . .",103 respondent spouses were "instituted as tenant-tillers of the two (2) parcels of rice
landholdings by . . . AUTOMAT through its authorized administrator LITO
CECILIA",104 and that "shares of the harvests of . . . AUTOMAT were paid and delivered in
the form of checks payable in cash in the name of . . . AUTOMAT. . . ." 105
However, jurisdiction is conferred by law, and "an order or decision rendered by a tribunal
or agency without jurisdiction is a total nullity."106
The DAR exemption orders have determined with certainty that the lands were reclassified
as non-agricultural prior to June 15, 1988. Consequently, the petition filed by respondent
spouses in 2000 before the PARAD did not involve "lands devoted to agriculture" and,
necessarily, it could not have involved any controversy relating to such land. Absent an
"agrarian dispute," the instant case cannot fall under the limited jurisdiction of the DARAB
as a quasi-judicial body. WHEREFORE, the petition is GRANTED. The Court of Appeals'
August 19, 2009 decision and April 14, 2010 resolution are REVERSED and SET ASIDE.
The PARAD's decision dated August 28, 2001 and DARAB's decision dated February 8,
2005 are declared NULL and VOID for lack of jurisdiction, without prejudice to the filing of
a civil case with the proper court.
SO ORDERED.
Land Bank v. Peralta, April 23, 2014
The petition is partly meritorious.
Under Section 1 (b), Rule II of the 1994 Rules of Procedure of the Department of Agrarian
Reform Adjudication Board (1994 DARAB Rules), which is applicable in the present case,
the DARAB is vested with primary and exclusive jurisdiction over cases involving the
valuation of land and the preliminary determination and payment of just compensation,
fixing and collection of lease rentals, disturbance compensation, amortization payments, and
similar disputes concerning the functions of the LBP.
Rule XIII, Section 11 of the 1994 DARAB Rules provides:
Section 11. Land Valuation and Preliminary Determination and Payment of Just
Compensation. The decision of the Adjudicator on land valuation and preliminary
determination and payment of just compensation shall not be appealable to the Board but
shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts
AGRARIAN LAW
RECENT JURISPRUDENCE
within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only
one motion for reconsideration. (Emphasis supplied.)
In Phil. Veterans Bank v. Court of Appeals, 19 we explained that the consequence of the said
rule is that the adjudicator’s decision on land valuation attains finality after the lapse of the
15-day period. Republic v. Court of Appeals 20 and subsequent cases21 clarified that the
determination of the amount of just compensation by the DARAB is merely a preliminary
administrative determination which is subject to challenge before the SACs which have
original and exclusive jurisdiction over all petitions for the determination of just
compensation under Section 57, R.A. No. 6657.
The Court in Soriano v. Republic  summarized the 15-day period rule for challenging the
22
DAR valuation in just compensation cases, as follows: The Court notes that although the
petition for determination of just compensation in Republic v. Court of Appeals was filed
beyond the 15-day period, Republic v. Court of Appeals does not serve as authority for
disregarding the 15-day period to bring an action for judicial determination of just
compensation. Republic v. Court of Appeals, it should be noted, was decided at a time when
Rule XIII, Section 11 was not yet present in the DARAB Rules. Further, said case did not
discuss whether the petition filed therein for the fixing of just compensation was filed out of
time or not. The Court merely decided the issue of whether cases involving just
compensation should first be appealed to the DARAB before the landowner can resort to the
SAC under Section 57 of R.A. No. 6657. In any event, any speculation as to the validity of
Rule XIII, Section 11 was foreclosed by our ruling in Philippine Veterans Bank where we
affirmed the order of dismissal of a petition for determination of just compensation for
having been filed beyond the 15-day period under said Section 11. In said case, we
explained that Section 11 is not incompatible with the original and exclusive jurisdiction of
the SAC. In Land Bank of the Philippines v. Martinez, we reaffirmed this ruling and stated
for the guidance of the bench and bar that "while a petition for the fixing of just
compensation with the SAC is not an appeal from the agrarian reform adjudicator’s decision
but an original action, the same has to be filed within the 15-day period stated in the
DARAB Rules; otherwise, the adjudicator’s decision will attain finality."
Notwithstanding the foregoing rulings, we noted in Land Bank of the Philippines v.
Umandap that "[s]ince the SAC statutorily exercises original and exclusive jurisdiction over
all petitions for the determination of just compensation to landowners, it cannot be said that
the decision of the adjudicator, if not appealed to the SAC, would be deemed final and
executory, under all circumstances." In certain cases, the Court has adopted a policy of
liberally allowing petitions for determination of just compensation even though the
procedure under DARAB rules have not been strictly followed, whenever circumstances so
warrant. x x x x (Emphasis supplied.)
In the case at bar, the DAR Regional Adjudicator issued his resolution ordering the payment
of ₱17,240.00 as just compensation for respondent’s landholding on August 23, 2000. While
respondent did not indicate the date when he received a copy of the said resolution, the filing
of the petition with the SAC was done only on October 17, 2000 or 55 days from the
issuance of the DAR resolution. Nonetheless, such failure to comply with the 15-day period
did not render the DAR valuation final and executory as to bar respondent’s action for
judicial determination of just compensation. We note that even before the conduct of DAR
proceedings and respondent’s filing of a petition with the SAC, R.A. No. 6657, otherwise
known as "The Comprehensive Agrarian Reform Law of 1988," already took effect on June
15, 1988. Hence, the parties litigated on the issue of whether P.D. No. 27/E.O. No. 288 or
R.A. No. 6657 should apply in determining just compensation in this case.
The Court has, in several cases, for reason of equity, applied R.A. No. 6657 in determining
just compensation for lands acquired under P.D. No. 27 and before the effectivity of R.A.
No. 6657.
62
In Gabatin v. Land Bank of the Philippines, 23 this Court declared that the reckoning period
for the determination of just compensation is the time when the land was taken applying
P.D. No. 27 and E.O. No. 228. However, in Land Bank of the Philippines v. Natividad, 24 we
ruled that where the agrarian reform process is still incomplete at the time of effectivity of
R.A. 6657, the just compensation should be determined and the process concluded under the
latter law. Thus:
Land Bank’s contention that the property was acquired for purposes of agrarian reform on
October 21, 1972, the time of the effectivity of PD 27, ergo just compensation should be
based on the value of the property as of that time and not at the time of possession in 1993,
is likewise erroneous. In Office of the President, Malacañang, Manila v. Court of Appeals,
we ruled that the seizure of the landholding did not take place on the date of effectivity of
PD 27 but would take effect on the payment of just compensation.
Under the factual circumstances of this case, the agrarian reform process is still incomplete
as the just compensation to be paid private respondents has yet to be settled. Considering the
passage of Republic Act No. 6657 (RA 6657) before the completion of this process, the just
compensation should be determined and the process concluded under the said law. Indeed,
RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect,
conformably with our ruling in Paris v. Alfeche.
xxxx
It would certainly be inequitable to determine just compensation based on the guideline
provided by PD 27 and EO 228 considering the DAR’s failure to determine the just
compensation for a considerable length of time. That just compensation should be
determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative
considering that just compensation should be the full and fair equivalent of the property
taken from its owner by the expropriator, the equivalent being real, substantial, full and
ample.25 (Emphasis supplied; citations omitted.)
The above ruling was likewise applied in Land Bank of the Philippines v. Heirs of Angel T.
Domingo.26 In the latter case, landowner Domingo filed a petition for determination and
payment of just compensation despite his receipt of LBP’s partial payment. This Court held
that since the amount of just compensation to be paid the landowner has yet to be settled,
then the agrarian reform process was still incomplete; thus it should be completed under
R.A. No. 6657.27
In Land Bank of the Philippines v. Heirs of Maximo Puyat,  the same doctrine was applied
28
where the Court noted that both the taking of the landowner’s property and the valuation
occurred during the effectivity of R.A. No. 6657. Since the acquisition process under P.D.
No. 27 remains incomplete and is overtaken by R.A. No. 6657, the process should be
completed under R.A. No. 6657, with P.D. No. 27 and E.O. No. 228 having suppletory
effect only.29 Similarly, in Land Bank of the Philippines v. Soriano, 30 this Court held that
Section 17 of R.A. No. 6657 should be the principal basis of the computation for just
compensation. While the lands involved therein were acquired under P.D. No. 27, the Court
noted that the complaint for just compensation was only lodged before the court (SAC) on
November 23, 2000 or long after the passage of R.A. No. 6657.
In sum, if the issue of just compensation is not settled prior to the passage of R.A. No. 6657,
it should be computed in accordance with the said law, although the property was acquired
under P.D. No. 27.
Records confirm that petitioner had deposited its initial valuation in the amount of
₱17,240.00 on April 2, 1982 and the same had already earned interest, the total amount due
plus increment is ₱73,604.95 as computed by LBP. 31 Respondent protested this valuation
even as he signed the LTPA for the benefit of the tenants-beneficiaries and considering that
his land had been divided and distributed to the said farmers. Eventually, respondent
challenged the valuation made by DAR in August 2000 which was still based on P.D. No. 27
and E.O. No. 228, by filing a petition with the SAC for judicial determination of just
compensation on October 17, 2000. Clearly, the agrarian reform process initiated under P.D.
No. 27 remains incomplete when R.A. No. 6657 took effect on June 15, 1988.
As to the time of actual "taking," this Court has already resolved the matter in the aforecited
case of Land Bank of the Philippines v. Heirs of Angel T. Domingo, 32 which held:
LBP’s contention that the property was taken on 21 October 1972, the date of effectivity of
PD 27, thus just compensation should be computed based on the GSP in 1972, is erroneous.
The date of taking of the subject land for purposes of computing just compensation should
be reckoned from the issuance dates of the emancipation patents. An emancipation patent
constitutes the conclusive authority for the issuance of a Transfer Certificate of Title in the
name of the grantee. It is from the issuance of an emancipation patent that the grantee can
acquire the vested right of ownership in the landholding, subject to the payment of just
compensation to the landowner.
In Land Bank of the Philippines v. Heirs of Salvador Encinas, 33 this Court reiterated this
long-established principle, thus:
The "taking of private lands under the agrarian reform program partakes of the nature of an
expropriation proceeding." In computing the just compensation for expropriation
proceedings, the RTC should take into consideration the "value of the land at the time of the
taking, not at the time of the rendition of judgment." "The ‘time of taking’ is the time when
the landowner was deprived of the use and benefit of his property, such as when title is
transferred to the Republic."34
In DAR v. Tongson,35 we remanded the case back to the SAC for reception of evidence as to
the date of the grant of the emancipation patents (EPs) which shall serve as the reckoning
point for the computation of just compensation due respondent. The date of the issuance of
EPs covering the subject lands have not been attached to the records of the case. Here, the
records likewise failed to show the date when such EPs have been issued to the tenant-
beneficiaries who signed the LTPA. Accordingly, the case should be remanded to the SAC
for reception of evidence thereof.
Remand is also necessary for the reason that the SAC based its determination of just
compensation solely on the opinion of the municipal assessor as to the current market value
of respondent’s land which was not supported by any documentary evidence.
Section 17 of R.A. No. 6657 enumerates the factors to be considered in determining just
compensation to the landowner, viz:
SEC. 17. Determination of Just Compensation. — In determining just compensation, the cost
of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made by
government assessors shall be considered. The social and economic benefits contributed by
the farmers and the farmworkers and by the Government to the property as well as the non-
payment of taxes or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its valuation.
The above factors had already been translated into a basic formula by the DAR pursuant to
its rule-making power under Section 49 of R.A. No. 6657. Thus, the Court held in Land
Bank of the Philippines v. Celada, 36 that the formula outlined in DAR A.O. No. 5, series of
1998 should be applied in computing just compensation.
AGRARIAN LAW
RECENT JURISPRUDENCE
The mandatory application of the aforementioned guidelines in determining just
compensation was reiterated in Land Bank of the Philippines v. Lim 37 and Land Bank of the
Philippines v. Heirs of Eleuterio Cruz, 38 wherein we also ordered the remand of the cases to
the SAC for the determination of just compensation strictly in accordance with the
applicable DAR regulations.39
The Court is mindful of the new agrarian reform law, R.A. No. 9700 or the CARPER Law,
passed by Congress on July 1, 2009, further amending R.A. No. 6657, as amended. In the
recent case of Land Bank of the Philippines v. Santiago, Jr., 40 we held that under the new
law, the landowner’s challenge on the valuation of previously acquired lands as in the case at
bar may still be resolved on the basis of the old Section 17 of R.A. No. 6657, thus:
That this case, despite the new law, still falls under Section 17 of Republic Act No. 6657 is
supported even by Republic Act No. 9700, which states that "previously acquired lands
wherein valuation is subject to challenge shall be completed and resolved pursuant to
Section 17 of Republic Act No. 6657, as amended," viz.:
Section 5. Section 7 of Republic Act No. 6657, as amended, is hereby further amended to
read as follows:
SEC. 7. Priorities. - The DAR, in coordination with the Presidential Agrarian Reform
Council (PARC) shall plan and program the final acquisition and distribution of all
remaining unacquired and undistributed agricultural lands from the effectivity of this Act
until June 30, 2014. Lands shall be acquired and distributed as follows:
Phase One: During the five (5)-year extension period hereafter all remaining lands above
fifty (50) hectares shall be covered for purposes of agrarian reform upon the effectivity of
this Act. All private agricultural lands of landowners with aggregate land holdings in excess
of fifty (50) hectares which have already been subjected to a notice of coverage issued on or
before December 10, 2008; rice and corn lands under Presidential Decree No. 27; all idle or
abandoned lands; all private lands voluntarily offered by the owners for agrarian reform: x x
x Provided, furthermore, That all previously acquired lands wherein valuation is subject to
challenge by landowners shall be completed and finally resolved pursuant to Section 17 of
Republic Act No. 6657, as amended: x x x. (Emphases supplied.)
Section 7 of Republic Act No. 9700, further amending Section 17 of Republic Act No. 6657,
as amended, reads:
Section 7. Section 17 of Republic Act No. 6657, as amended, is hereby further amended to
read as follows:
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 nonpayment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to determine its
valuation. (Emphases supplied; further amendments made to Section 17 of R.A. No. 6657, as
amended, are italicized.)
The foregoing shows that the Section 17 referred to in Section 5 of Republic Act No. 9700 is
the old Section 17 under Republic Act No. 6657, as amended; that is, prior to further
amendment by Republic Act No. 9700. A reading of the provisions of Republic Act No.
63
9700 will readily show that the old provisions, under Republic Act No. 6657, are referred to
as Sections under "Republic Act No. 6657, as amended," as distinguished from "further
amendments" under Republic Act No. 9700.
DAR AO No. 02-09, the Implementing Rules of Republic Act No. 9700, which DAR
formulated pursuant to Section 31 of Republic Act No. 9700, makes the above distinction
even clearer, to wit:
VI. Transitory Provision
With respect to cases where the Master List of ARBs has been finalized on or before July 1,
2009 pursuant to Administrative Order No. 7, Series of 2003, the acquisition and distribution
of landholdings shall continue to be processed under the provisions of R.A. No. 6657 prior
to its amendment by R.A. No. 9700.
However, with respect to land valuation, all Claim Folders received by LBP prior to July 1,
2009 shall be valued in accordance with Section 17 of R.A. No. 6657 prior to its amendment
by R.A. No. 9700. (Emphasis supplied.)
Thus, DAR AO No. 02-09 authorizes the valuation of lands in accordance with the old
Section 17 of Republic Act No. 6657, as amended (prior to further amendment by Republic
Act No. 9700), so long as the claim folders for such lands have been received by LBP before
its amendment by Republic Act No. 9700 in 2009. 41
Considering that respondent’s land had been previously acquired under P.D. No. 27 but the
valuation has been the subject of his challenge before the SAC, the completion and final
resolution of just compensation should therefore be computed in accordance with Section 17
of R.A. No. 6657 prior to its amendment by R.A. No. 9700.
Given the insufficient evidence for the determination of just compensation under Section 17
of R.A. No. 6657 and applicable DAR regulations, and the absence of evidence in the
records pertaining to the date of issuance of the EPs to the tenant-beneficiaries, we are
constrained to remand this case to the SAC for reception of such and any other relevant
evidence for a complete resolution of the issue of just compensation, consistent with our
disquisitions.
WHEREFORE, the Decision dated July 5, 2007 and Resolution dated April 24, 2008 of the
Court of Appeals Mindanao Station in CA-G.R. SP No. 00161 are hereby SET ASIDE. The
case is hereby REMANDED to the Special Agrarian Court, Branch 9, of the Regional Trial
Court of Malaybalay City, Bukidnon, for further reception of evidence to determine just
compensation strictly in accordance with Section 17 of R.A. No. 6657, DAR AO No. 05,
series of 1998 and applicable DAR regulations.
No pronouncement as to costs.
SO ORDERED.
Jopson v. Mendez, December 11, 2013
In essence, the issues are: (1) whether petitioner is a bona fide  tenant of the subject property,
and (2) whether the PARAD and DARAB have jurisdiction over the present case.
At the outset, it must be emphasized that in order for a tenancy agreement to arise, it is
essential to establish all its indispensable elements, viz.: (1) the parties are the landowner and
the tenant or agricultural lessee; (2) the subject matter of the relationship is an agricultural
land; (3) there is consent between the parties to the relationship; (4) the purpose of the
relationship is to bring about agricultural production; (5) there is personal cultivation on the
part of the tenant or agricultural lessee; and (6) the harvest is shared between the landowner
and the tenant or agricultural lessee. All these requisites are necessary to create a tenancy
relationship, and the absence of one or more requisites will not make the alleged tenant a de
facto  tenant.12
In this case, however, the facts substantiating a de jure tenancy are missing.
First, besides petitioner’s bare assertion that a tenancy relationship exists between him and
respondent DBP, no other concrete proof was presented by petitioner to demonstrate the
relationship of petitioner and respondent DBP as tenant and landowner. In fact, respondent
DBP resolutely argued that petitioner is not a tenant but a mere caretaker of the subject
landholding.
Second, the subject matter of the relationship is not an agricultural land but a commercial
land. Section 3 (c) of Republic Act (R.A.) No. 6657,13 otherwise known as
the Comprehensive Agrarian Reform Law (CARL), states that "an agricultural land refers to
land devoted to agricultural activity as defined therein and not classified as mineral, forest,
residential, commercial or industrial land."
As per Certification by the Office of the Zoning Administrator of Naga City, the subject
landholding covered by TCT No. 21190 is classified as secondary commercial zone based on
Zoning Ordinance No. 603 adopted on December 20, 1978 by the City Council and
approved by the National Coordinating Council for Town Planning and Zoning, Human
Settlements Commission on September 24, 1980. Thus, the reclassification of the subject
landholding from agricultural to commercial removes it from the ambit of agricultural land
over which petitioner claims a tenancy relationship is founded.
As extensively discussed by the CA –
Indeed, the subject landholding is no longer an agricultural land despite its being planted
with palay. It had long been reclassified as a commercial land and it even forms part of
Laura Subdivision. Whatever the landowner does to the subject landholding, like plant it
with palay, does not convert it to an agricultural land nor divest it of its actual classification.
xxx
xxxx
The reclassification of the subject landholding from agricultural to non-agricultural by the
City Council of Naga City through a zoning ordinance is undoubtedly binding to remove it
from the coverage of the CARL. "In Natalia Realty, Inc. v. Department of Agrarian Reform,
it was held that lands not devoted to agricultural activity are outside the coverage of CARL
including lands previously converted to non-agricultural uses prior to the effectivity of
CARL by government agencies other than DAR. This rule has been reiterated in a number of
subsequent cases. Despite claims that the areas have been devoted for agricultural
production, the Court has upheld the ‘non-agricultural’ classification made by the NHA over
housing and resettlement projects, zoning ordinances passed by local government units
classifying residential areas, and certifications over watershed areas issued by the
Department of Environment and Natural
Resources (DENR)." In addition, the power of the City Council of Naga City to adopt
zoning ordinances is validly recognized under the law. x x x
AGRARIAN LAW
RECENT JURISPRUDENCE
xxxx
Furthermore, the reclassification of the subject landholding does not need a conversion
clearance from the DAR for it to be legal since such reclassification occurred prior to 15
June 1988, the effectivity of R.A. No. 6657. As it is, only land classifications or
reclassifications which occur from 15 June 1988 onwards require conversion clearance from
the DAR.
x x x 14
Third, the essential element of consent is absent. In the present case, no proof was presented
that respondent DBP recognized or hired petitioner as its legitimate tenant. Besides
petitioner’s self-serving assertions that he succeeded his father in tilling the subject
landholding, no other concrete evidence was presented to prove consent of the landowner.
Anent the second issue, we rule that the PARAD and the DARAB have no jurisdiction over
petitioner’s claim.
Specifically, the PARAD and the DARAB have primary and exclusive jurisdiction, both
original and appellate, to determine and adjudicate all agrarian disputes involving the
implementation of the CARL under R.A. No. 6657. Thus, the jurisdiction of the PARAD
and the DARAB is only limited to cases involving agrarian disputes, including incidents
arising from the implementation of agrarian laws.15 Section 3 (d) of R.A. No. 6657 defines
an agrarian dispute in this wise:
xxxx
(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
R.A. 6657 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.
From the foregoing, it is clear that no agrarian dispute exists in the instant case, since what is
involved is not an agricultural land and no tenancy relationship exists between petitioner and
respondent DBP.
As aptly held by the CA, for the DARAB to have jurisdiction over a case, there must be a
tenancy relationship between the parties. Perforce, the ruling of the PARAD, as well as the
decision and resolution of the DARAB which were rendered without jurisdiction, are
without force and effect.
WHEREFORE, premises considered, the instant petition is DENIED. The Decision dated
July 9, 2009 and Resolution dated February 12, 2010 of the Court of Appeals, in CA-G.R.
SP No. 70781, are hereby AFFIRMED.
Hacienda Luisita, Inc. v. PARC, April 24, 2012
64
Basically, the issues raised by HLI and Mallari, et al. boil down to the following: (1)
determination of the date of "taking"; (2) propriety of the revocation of the option on the part
of the original FWBs to remain as stockholders of HLI; (3) propriety of distributing to the
qualified FWBs the proceeds from the sale of the converted land and of the 80.51-hectare
Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just compensation for the homelots
given to the FWBs.
Payment of just compensation
HLI contends that since the SDP is a modality which the agrarian reform law gives the
landowner as alternative to compulsory coverage, then the FWBs cannot be considered as
owners and possessors of the agricultural lands of Hacienda Luisita at the time the SDP was
approved by PARC.4 It further claims that the approval of the SDP is not akin to a Notice of
Coverage in compulsory coverage situations because stock distribution option and
compulsory acquisition are two (2) different modalities with independent and separate rules
and mechanisms. Concomitantly, HLI maintains that the Notice of Coverage issued on
January 2, 2006 may, at the very least, be considered as the date of "taking" as this was the
only time that the agricultural lands of Hacienda Luisita were placed under compulsory
acquisition in view of its failure to perform certain obligations under the SDP. 5
Mallari, et al. are of a similar view. They contend that Tarlac Development Corporation
(Tadeco), having as it were majority control over HLI, was never deprived of the use and
benefit of the agricultural lands of Hacienda Luisita. Upon this premise, Mallari, et al. claim
the "date of taking" could not be at the time of the approval of the SDP. 6
A view has also been advanced that the date of the "taking" should be left to the
determination of the Department of Agrarian Reform (DAR) in conjunction with its
authority to preliminarily determine the just compensation for the land made subject of
CARP.
Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita (AMBALA), in its
Comment/Opposition (to the Motion to Clarify and Reconsider Resolution of November 22,
2011) dated January 30, 2012, on the other hand, alleges that HLI should not be paid just
compensation altogether.7 It argues that when the Court of Appeals (CA) dismissed the
case8 the government of then President Ferdinand E. Marcos initially instituted and won
against Tadeco, the CA allegedly imposed as a condition for its dismissal of the action that
should the stock distribution program fail, the lands should be distributed to the FWBs, with
Tadeco receiving by way of compensation only the amount of PhP 3,988,000.9
AMBALA further contends that if HLI or Tadeco is, at all, entitled to just compensation, the
"taking" should be reckoned as of November 21, 1989, the date when the SDP was
approved, and the amount of compensation should be PhP 40,000 per hectare as this was the
same value declared in 1989 by Tadeco to ensure that the FWBs will not control the majority
stockholdings in HLI.10
At the outset, it should be noted that Section 2, Rule 52 of the Rules of Court states, "No
second motion for reconsideration of a judgment or final resolution by the same party shall
be entertained." A second motion for reconsideration, as a rule, is prohibited for being a
mere reiteration of the issues assigned and the arguments raised by the parties. 11
In the instant case, the issue on just compensation and the grounds HLI and Mallari, et al.
rely upon in support of their respective stance on the matter had been previously raised by
them in their first motion for reconsideration and fully passed upon by the Court in its
November 22, 2011 Resolution. The similarities in the issues then and now presented and
the grounds invoked are at once easily discernible from a perusal of the November 22, 2011
Resolution, the pertinent portions of which read:
In Our July 5, 2011 Decision, We stated that "HLI shall be paid just compensation for the
remaining agricultural land that will be transferred to DAR for land distribution to the
FWBs." We also ruled that the date of the "taking" is November 21, 1989, when PARC
approved HLI’s SDP per PARC Resolution No. 89-12-2.
In its Motion for Clarification and Partial Reconsideration, HLI disagrees with the
foregoing ruling and contends that the "taking" should be reckoned from finality of the
Decision of this Court, or at the very least, the reckoning period may be tacked to January 2,
2006, the date when the Notice of Coverage was issued by the DAR pursuant to PARC
Resolution No. 2006-34-01 recalling/revoking the approval of the SDP.
For their part, Mallari, et al. argue that the valuation of the land cannot be based on
November 21, 1989, the date of approval of the SDP. Instead, they aver that the date of
"taking" for valuation purposes is a factual issue best left to the determination of the trial
courts.
At the other end of the spectrum, AMBALA alleges that HLI should no longer be paid just
compensation for the agricultural land that will be distributed to the FWBs, since the Manila
Regional Trial Court (RTC) already rendered a decision ordering the Cojuangcos to transfer
the control of Hacienda Luisita to the Ministry of Agrarian Reform, which will distribute the
land to small farmers after compensating the landowners P3.988 million. In the event,
however, that this Court will rule that HLI is indeed entitled to compensation, AMBALA
contends that it should be pegged at forty thousand pesos (PhP 40,000) per hectare, since this
was the same value that Tadeco declared in 1989 to make sure that the farmers will not own
the majority of its stocks.
Despite the above propositions, We maintain that the date of "taking" is November 21, 1989,
the date when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2, in view of the
fact that this is the time that the FWBs were considered to own and possess the agricultural
lands in Hacienda Luisita. To be precise, these lands became subject of the agrarian reform
coverage through the stock distribution scheme only upon the approval of the SDP, that is,
November 21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued
under compulsory acquisition. Further, any doubt should be resolved in favor of the FWBs.
As this Court held in Perez-Rosario v. CA:
It is an established social and economic fact that the escalation of poverty is the driving force
behind the political disturbances that have in the past compromised the peace and security of
the people as well as the continuity of the national order. To subdue these acute disturbances,
the legislature over the course of the history of the nation passed a series of laws calculated
to accelerate agrarian reform, ultimately to raise the material standards of living and
eliminate discontent. Agrarian reform is a perceived solution to social instability. The edicts
of social justice found in the Constitution and the public policies that underwrite them, the
extraordinary national experience, and the prevailing national consciousness, all command
the great departments of government to tilt the balance in favor of the poor and
underprivileged whenever reasonable doubt arises in the interpretation of the law. But
annexed to the great and sacred charge of protecting the weak is the diametric function to put
every effort to arrive at an equitable solution for all parties concerned: the jural postulates of
social justice cannot shield illegal acts, nor do they sanction false sympathy towards a certain
class, nor yet should they deny justice to the landowner whenever truth and justice happen to
be on her side. In the occupation of the legal questions in all agrarian disputes whose
outcomes can significantly affect societal harmony, the considerations of social advantage
must be weighed, an inquiry into the prevailing social interests is necessary in the adjustment
of conflicting demands and expectations of the people, and the social interdependence of
these interests, recognized. (Emphasis and citations omitted.)
Considering that the issue on just compensation has already been passed upon and denied by
the Court in its November 22, 2011 Resolution, a subsequent motion touching on the same
issue undeniably partakes of a second motion for reconsideration, hence, a prohibited
AGRARIAN LAW
RECENT JURISPRUDENCE
pleading, and as such, the motion or plea must be denied. Sec. 3 of Rule 15 of the Internal
Rules of the Supreme Court is clear:
SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second motion
for reconsideration, and any exception to this rule can only be granted in the higher interest
of justice by the Court en banc upon a vote of at least two-thirds of its actual membership.
There is reconsideration "in the higher interest of justice" when the assailed decision is not
only legally erroneous, but is likewise patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to the parties. A second motion for
reconsideration can only be entertained before the ruling sought to be reconsidered becomes
final by operation of law or by the Court’s declaration.
In the Division, a vote of three Members shall be required to elevate a second motion for
reconsideration to the Court En Banc.
Nonetheless, even if we entertain said motion and examine the arguments raised by HLI and
Mallari, et al. one last time, the result will be the same.
Sec. 4, Article XIII of the 1987 Constitution expressly provides that the taking of land for
use in the agrarian reform program of the government is conditioned on the payment of just
compensation. As stated:
Section 4. The State shall, by law, undertake an agrarian reform program founded on the
right of farmers and regular farm workers, who are landless, to own directly or collectively
the lands they till or, in the case of other farm workers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. (Emphasis supplied.)
Just compensation has been defined as "the full and fair equivalent of the property taken
from its owner by the expropriator." 12 The measure is not the taker’s gain, but the owner’s
loss.13 In determining just compensation, the price or value of the property at the time it was
taken from the owner and appropriated by the government shall be the basis. If the
government takes possession of the land before the institution of expropriation proceedings,
the value should be fixed as of the time of the taking of said possession, not of the filing of
the complaint.14
In Land Bank of the Philippines v. Livioco, the Court held that "the ‘time of taking’ is the
time when the landowner was deprived of the use and benefit of his property, such as when
title is transferred to the Republic." 15 It should be noted, however, that "taking" does not only
take place upon the issuance of title either in the name of the Republic or the beneficiaries of
the Comprehensive Agrarian Reform Program (CARP). "Taking" also occurs when
agricultural lands are voluntarily offered by a landowner and approved by PARC for CARP
coverage through the stock distribution scheme, as in the instant case. Thus, HLI’s
submitting its SDP for approval is an acknowledgment on its part that the agricultural lands
of Hacienda Luisita are covered by CARP. However, it was the PARC approval which
should be considered as the effective date of "taking" as it was only during this time that the
government officially confirmed the CARP coverage of these lands.
Indeed, stock distribution option and compulsory land acquisition are two (2) different
modalities under the agrarian reform program. Nonetheless, both share the same end goal,
that is, to have "a more equitable distribution and ownership of land, with due regard to the
rights of landowners to just compensation."16
65
The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives corporate landowners the
option to give qualified beneficiaries the right to avail of a stock distribution or, in the
phraseology of the law, "the right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities, bears in
relation to the company’s total assets," does not detract from the avowed policy of the
agrarian reform law of equitably distributing ownership of land. The difference lies in the
fact that instead of actually distributing the agricultural lands to the farmer-beneficiaries,
these lands are held by the corporation as part of the capital contribution of the farmer-
beneficiaries, not of the landowners, under the stock distribution scheme. The end goal of
equitably distributing ownership of land is, therefore, undeniable. And since it is only upon
the approval of the SDP that the agricultural lands actually came under CARP coverage,
such approval operates and takes the place of a notice of coverage ordinarily issued under
compulsory acquisition.
Moreover, precisely because due regard is given to the rights of landowners to just
compensation, the law on stock distribution option acknowledges that landowners can
require payment for the shares of stock corresponding to the value of the agricultural lands
in relation to the outstanding capital stock of the corporation.
Although Tadeco did not require compensation for the shares of stock corresponding to the
value of the agricultural lands in relation to the outstanding capital stock of HLI, its inability
to receive compensation cannot be attributed to the government. The second paragraph of
Sec. 31 of RA 6657 explicitly states that "[u]pon certification by DAR, corporations owning
agricultural lands may give their qualified beneficiaries the right to purchase such proportion
of the capital stock of the corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the company’s total assets, under such terms and
conditions as may be agreed upon by them. x x x" 17 On the basis of this statutory provision,
Tadeco could have exacted payment for such shares of stock corresponding to the value of
the agricultural lands of Hacienda Luisita in relation to the outstanding capital stock of HLI,
but it did not do so.
What is notable, however, is that the divestment by Tadeco of the agricultural lands of
Hacienda Luisita and the giving of the shares of stock for free is nothing but an enticement
or incentive for the FWBs to agree with the stock distribution option scheme and not further
push for land distribution. And the stubborn fact is that the "man days" scheme of HLI
impelled the FWBs to work in the hacienda in exchange for such shares of stock.
Notwithstanding the foregoing considerations, the suggestion that there is "taking" only
when the landowner is deprived of the use and benefit of his property is not incompatible
with Our conclusion that "taking" took place on November 21, 1989. As mentioned in Our
July 5, 2011 Decision, even from the start, the stock distribution scheme appeared to be
Tadeco’s preferred option in complying with the CARP when it organized HLI as its spin-
off corporation in order to facilitate stock acquisition by the FWBs. For this purpose, Tadeco
assigned and conveyed to HLI the agricultural lands of Hacienda Luisita, set at 4,915.75
hectares, among others. These agricultural lands constituted as the capital contribution of the
FWBs in HLI. In effect, Tadeco deprived itself of the ownership over these lands when it
transferred the same to HLI.
While it is true that Tadeco has majority control over HLI, the Court cannot subscribe to the
view Mallari, et al. espouse that, on the basis of such majority stockholding, Tadeco was
never deprived of the use and benefit of the agricultural lands of Hacienda Luisita it divested
itself in favor of HLI.
It bears stressing that "[o]wnership is defined as a relation in law by virtue of which a thing
pertaining to one person is completely subjected to his will in everything not prohibited by
law or the concurrence with the rights of another." 18 The attributes of ownership are: jus
utendi or the right to possess and enjoy, jus fruendi or the right to the fruits, jus abutendi or
the right to abuse or consume, jus disponendi or the right to dispose or alienate, and jus
vindicandi or the right to recover or vindicate.19
When the agricultural lands of Hacienda Luisita were transferred by Tadeco to HLI in order
to comply with CARP through the stock distribution option scheme, sealed with the
imprimatur of PARC under PARC Resolution No. 89-12-2 dated November 21, 1989,
Tadeco was consequently dispossessed of the afore-mentioned attributes of ownership.
Notably, Tadeco and HLI are two different entities with separate and distinct legal
personalities. Ownership by one cannot be considered as ownership by the other.
Corollarily, it is the official act by the government, that is, the PARC’s approval of the SDP,
which should be considered as the reckoning point for the "taking" of the agricultural lands
of Hacienda Luisita. Although the transfer of ownership over the agricultural lands was
made prior to the SDP’s approval, it is this Court’s consistent view that these lands officially
became subject of the agrarian reform coverage through the stock distribution scheme only
upon the approval of the SDP. And as We have mentioned in Our November 22, 2011
Resolution, such approval is akin to a notice of coverage ordinarily issued under compulsory
acquisition.
Further, if We adhere to HLI’s view that the Notice of Coverage issued on January 2, 2006
should, at the very least, be considered as the date of "taking" as this was the only time that
the agricultural portion of the hacienda was placed under compulsory acquisition in view of
HLI’s failure to perform certain obligations under the SDP, this Court would, in effect, be
penalizing the qualified FWBs twice for acceding to the adoption of the stock distribution
scheme: first, by depriving the qualified FWBs of the agricultural lands that they should
have gotten early on were it not for the adoption of the stock distribution scheme of which
they only became minority stockholders; and second, by making them pay higher
amortizations for the agricultural lands that should have been given to them decades ago at a
much lower cost were it not for the landowner’s initiative of adopting the stock distribution
scheme "for free."
Reiterating what We already mentioned in Our November 22, 2011 Resolution, "[e]ven if it
is the government which will pay the just compensation to HLI, this will also affect the
FWBs as they will be paying higher amortizations to the government if the ‘taking’ will be
considered to have taken place only on January 2, 2006." As aptly observed by Justice
Leonardo-De Castro in her Concurring Opinion, "this will put the land beyond the capacity
of the [FWBs] to pay," which this Court should not countenance.
Considering the above findings, it cannot be gainsaid that effective "taking" took place in the
case at bar upon the approval of the SDP, that is, on November 21, 1989.
HLI postulates that just compensation is a question of fact that should be left to the
determination by the DAR, Land Bank of the Philippines (LBP) or even the special agrarian
court (SAC).20 As a matter of fact, the Court, in its November 22, 2011 Resolution,
dispositively ordered the DAR and the LBP to determine the compensation due to HLI. And
as indicated in the body of said Resolution:
The foregoing notwithstanding, it bears stressing that the DAR’s land valuation is only
preliminary and is not, by any means, final and conclusive upon the landowner. The
landowner can file an original action with the RTC acting as a special agrarian court to
determine just compensation. The court has the right to review with finality the
determination in the exercise of what is admittedly a judicial function.
As regards the issue on when "taking" occurred with respect to the agricultural lands in
question, We, however, maintain that this Court can rule, as it has in fact already ruled on its
reckoning date, that is, November 21, 1989, the date of issuance of PARC Resolution No.
89-12-2, based on the above-mentioned disquisitions. The investment on SACs of original
AGRARIAN LAW
RECENT JURISPRUDENCE
and exclusive jurisdiction over all petitions for the determination of just compensation to
landowners21 will not preclude the Court from ruling upon a matter that may already be
resolved based on the records before Us. By analogy, Our ruling in Heirs of Dr. Jose Deleste
v. LBP is applicable:
Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive
jurisdiction over all matters involving the implementation of the agrarian reform program.
However, this will not prevent the Court from assuming jurisdiction over the petition
considering that the issues raised in it may already be resolved on the basis of the records
before Us. Besides, to allow the matter to remain with the Office of the DAR Secretary
would only cause unnecessary delay and undue hardship on the parties. Applicable, by
analogy, is Our ruling in the recent Bagong Pagkakaisa ng Manggagawa ng Triumph
International v. Department of Labor and Employment Secretary, where We held:
But as the CA did, we similarly recognize that undue hardship, to the point of injustice,
would result if a remand would be ordered under a situation where we are in the position to
resolve the case based on the records before us. As we said in Roman Catholic Archbishop
of Manila v. Court of Appeals:
[w]e have laid down the rule that the remand of the case to the lower court for further
reception of evidence is not necessary where the Court is in a position to resolve the dispute
based on the records before it. On many occasions, the Court, in the public interest and for
the expeditious administration of justice, has resolved actions on the merits instead of
remanding them to the trial court for further proceedings, such as where the ends of justice,
would not be subserved by the remand of the case.22 (Emphasis supplied; citations omitted.)
Even though the compensation due to HLI will still be preliminarily determined by DAR and
LBP, subject to review by the RTC acting as a SAC, the fact that the reckoning point of
"taking" is already fixed at a certain date should already hasten the proceedings and not
further cause undue hardship on the parties, especially the qualified FWBs.
By a vote of 8-6, the Court affirmed its ruling that the date of "taking" in determining just
compensation is November 21, 1989 when PARC approved HLI’s stock option plan.
As regards the issue of interest on just compensation, We also leave this matter to the DAR
and the LBP, subject to review by the RTC acting as a SAC.
Option will not ensure
control over agricultural lands
In Our November 22, 2011 Resolution, this Court held:
After having discussed and considered the different contentions raised by the parties in their
respective motions, We are now left to contend with one crucial issue in the case at bar, that
is, control over the agricultural lands by the qualified FWBs.
Upon a review of the facts and circumstances, We realize that the FWBs will never have
control over these agricultural lands for as long as they remain as stockholders of HLI. In
Our July 5, 2011 Decision, this Court made the following observations:
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural land must always be in the hands of the
farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers should
always own majority of the common shares entitled to elect the members of the board of
66
directors to ensure that the farmers will have a clear majority in the board. Before the SDP is
approved, strict scrutiny of the proposed SDP must always be undertaken by the DAR and
PARC, such that the value of the agricultural land contributed to the corporation must
always be more than 50% of the total assets of the corporation to ensure that the majority of
the members of the board of directors are composed of the farmers. The PARC composed of
the President of the Philippines and cabinet secretaries must see to it that control over the
board of directors rests with the farmers by rejecting the inclusion of non-agricultural assets
which will yield the majority in the board of directors to non-farmers. Any deviation,
however, by PARC or DAR from the correct application of the formula prescribed by the
second paragraph of Sec. 31 of RA 6675 does not make said provision constitutionally
infirm. Rather, it is the application of said provision that can be challenged. Ergo, Sec. 31 of
RA 6657 does not trench on the constitutional policy of ensuring control by the farmers.
In line with Our finding that control over agricultural lands must always be in the hands of
the farmers, We reconsider our ruling that the qualified FWBs should be given an option to
remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control
given the present proportion of shareholdings in HLI.
A revisit of HLI’s Proposal for Stock Distribution under CARP and the Stock Distribution
Option Agreement (SDOA) upon which the proposal was based reveals that the total assets
of HLI is PhP 590,554,220, while the value of the 4,915.7466 hectares is PhP 196,630,000.
Consequently, the share of the farmer-beneficiaries in the HLI capital stock is 33.296%
(196,630,000 divided by 590,554.220); 118,391,976.85 HLI shares represent 33.296%.
Thus, even if all the holders of the 118,391,976.85 HLI shares unanimously vote to remain
as HLI stockholders, which is unlikely, control will never be placed in the hands of the
farmer-beneficiaries. Control, of course, means the majority of 50% plus at least one share
of the common shares and other voting shares. Applying the formula to the HLI
stockholdings, the number of shares that will constitute the majority is 295,112,101 shares
(590,554,220 divided by 2 plus one [1] HLI share). The 118,391,976.85 shares subject to the
SDP approved by PARC substantially fall short of the 295,112,101 shares needed by the
FWBs to acquire control over HLI. Hence, control can NEVER be attained by the FWBs.
There is even no assurance that 100% of the 118,391,976.85 shares issued to the FWBs will
all be voted in favor of staying in HLI, taking into account the previous referendum among
the farmers where said shares were not voted unanimously in favor of retaining the SDP. In
light of the foregoing consideration, the option to remain in HLI granted to the individual
FWBs will have to be recalled and revoked.
Moreover, bearing in mind that with the revocation of the approval of the SDP, HLI will no
longer be operating under SDP and will only be treated as an ordinary private corporation;
the FWBs who remain as stockholders of HLI will be treated as ordinary stockholders and
will no longer be under the protective mantle of RA 6657. (Emphasis in the original.)
HLI, however, takes exception to the above-mentioned ruling and contends that "[t]here is
nothing in the Constitution nor in the agrarian laws which require that control over the
agricultural lands must always be in the hands of the farmers." 23 Moreover, both HLI and
Mallari, et al. claim that the option given to the qualified FWBs to remain as stockholders of
HLI is neither iniquitous nor prejudicial to the FWBs. 24
The Court agrees that the option given to the qualified FWBs whether to remain as
stockholders of HLI or opt for land distribution is neither iniquitous nor prejudicial to the
FWBs. Nonetheless, the Court is not unmindful of the policy on agrarian reform that control
over the agricultural land must always be in the hands of the farmers. Contrary to the stance
of HLI, both the Constitution and RA 6657 intended the farmers, individually or
collectively, to have control over the agricultural lands of HLI; otherwise, all these rhetoric
about agrarian reform will be rendered for naught. Sec. 4, Art. XIII of the 1987 Constitution
provides:
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.)
Pursuant to and as a mechanism to carry out the above-mentioned constitutional directive,
RA 6657 was enacted. In consonance with the constitutional policy on agrarian reform, Sec.
2 of RA 6657 also states:
SECTION 2. Declaration of Principles and Policies. - It is the policy of the State to pursue a
Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and
farm workers will receive the highest consideration to promote social justice and to move the
nation towards sound rural development and industrialization, and the establishment of
owner cultivatorship of economic-sized farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to the
rights of landowners to just compensation and to the ecological needs of the nation, shall be
undertaken to provide farmers and farm workers with the opportunity to enhance their
dignity and improve the quality of their lives through greater productivity of agricultural
lands.
The agrarian reform program is founded on the right of farmers and regular farm workers,
who are landless, to own directly or collectively the lands they till or, in the case of other
farm workers, to receive a share of the fruits thereof. To this end, the State shall encourage
the just distribution of all agricultural lands, subject to the priorities and retention limits set
forth in this Act, having taken into account ecological, developmental, and equity
considerations, and subject to the payment of just compensation. The State shall respect the
right of small landowners and shall provide incentives for voluntary land-sharing.
The State shall recognize the right of farmers, farm workers and landowners, as well as
cooperatives and other independent farmers’ organization, to participate in the planning,
organization, and management of the program, and shall provide support to agriculture
through appropriate technology and research, and adequate financial, production, marketing
and other support services.
The State shall apply the principles of agrarian reform or stewardship, whenever applicable,
in accordance with law, in the disposition or utilization of other natural resources, including
lands of the public domain, under lease or concession, suitable to agriculture, subject to prior
rights, homestead rights of small settlers and the rights of indigenous communities to their
ancestral lands.
The State may resettle landless farmers and farm workers in its own agricultural estates,
which shall be distributed to them in the manner provided by law.
By means of appropriate incentives, the State shall encourage the formation and maintenance
of economic-sized family farms to be constituted by individual beneficiaries and small
landowners.
The State shall protect the rights of subsistence fishermen, especially of local communities,
to the preferential use of communal marine and fishing resources, both inland and offshore.
It shall provide support to such fishermen through appropriate technology and research,
AGRARIAN LAW
RECENT JURISPRUDENCE
adequate financial, production and marketing assistance and other services, The State shall
also protect, develop and conserve such resources. The protection shall extend to offshore
fishing grounds of subsistence fishermen against foreign intrusion. Fishworkers shall receive
a just share from their labor in the utilization of marine and fishing resources.
The State shall be guided by the principles that land has a social function and land ownership
has a social responsibility. Owners of agricultural land have the obligation to cultivate
directly or through labor administration the lands they own and thereby make the land
productive.
The State shall provide incentives to landowners to invest the proceeds of the agrarian
reform program to promote industrialization, employment and privatization of public sector
enterprises. Financial instruments used as payment for lands shall contain features that shall
enhance negotiability and acceptability in the marketplace.
The State may lease undeveloped lands of the public domain to qualified entities for the
development of capital-intensive farms, traditional and pioneering crops especially those for
exports subject to the prior rights of the beneficiaries under this Act. (Emphasis supplied.)
Based on the above-quoted provisions, the notion of farmers and regular farmworkers
having the right to own directly or collectively the lands they till is abundantly clear. We
have extensively discussed this ideal in Our July 5, 2011 Decision:
The wording of the provision is unequivocal –– the farmers and regular farmworkers have a
right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The basic
law allows two (2) modes of land distribution—direct and indirect ownership. Direct transfer
to individual farmers is the most commonly used method by DAR and widely accepted.
Indirect transfer through collective ownership of the agricultural land is the alternative to
direct ownership of agricultural land by individual farmers. The aforequoted Sec. 4
EXPRESSLY authorizes collective ownership by farmers. No language can be found in the
1987 Constitution that disqualifies or prohibits corporations or cooperatives of farmers from
being the legal entity through which collective ownership can be exercised. The word
‘collective’ is defined as ‘indicating a number of persons or things considered as constituting
one group or aggregate,’ while ‘collectively’ is defined as ‘in a collective sense or manner;
in a mass or body.’ By using the word ‘collectively,’ the Constitution allows for indirect
ownership of land and not just outright agricultural land transfer. This is in recognition of the
fact that land reform may become successful even if it is done through the medium of
juridical entities composed of farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows
workers’ cooperatives or associations to collectively own the land, while the second
paragraph of Sec. 31 allows corporations or associations to own agricultural land with the
farmers becoming stockholders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other business associations.—In the
case of farms owned or operated by corporations or other business associations, the
following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned
collectively by the worker beneficiaries who shall form a workers’ cooperative or
association which will deal with the corporation or business association. x x x
SEC. 31. Corporate Landowners.— x x x
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xxxx
Upon certification by the DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities, bears in
relation to the company’s total assets, under such terms and conditions as may be agreed
upon by them. In no case shall the compensation received by the workers at the time the
shares of stocks are distributed be reduced. The same principle shall be applied to
associations, with respect to their equity or participation. x x x
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and corporations or
associations under the succeeding Sec. 31, as differentiated from individual farmers, are
authorized vehicles for the collective ownership of agricultural land. Cooperatives can be
registered with the Cooperative Development Authority and acquire legal personality of
their own, while corporations are juridical persons under the Corporation Code. Thus, Sec.
31 is constitutional as it simply implements Sec. 4 of Art. XIII of the Constitution that land
can be owned COLLECTIVELY by farmers. Even the framers of the l987 Constitution are
in unison with respect to the two (2) modes of ownership of agricultural lands tilled by
farmers––DIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase ‘to own directly,’ we mean the principle
of direct ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of ‘collectively,’ we mean communal ownership,
stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’ cooperatives
owning the land, not the State.
MR. NOLLEDO. And when we talk of ‘collectively,’ referring to farmers’ cooperatives, do
the farmers own specific areas of land where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved: the
‘moshave’ type of agriculture and the ‘kibbutz.’ So are both contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa
lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na pagmamay-ari – directly – at
ang tinatawag na sama-samang gagawin ng mga magbubukid. Tulad sa Negros, ang gusto ng
mga magbubukid ay gawin nila itong ‘cooperative or collective farm.’ Ang ibig sabihin ay
sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of ‘to own directly or collectively the lands they
till,’ is this land for the tillers rather than land for the landless? Before, we used to hear ‘land
for the landless,’ but now the slogan is ‘land for the tillers.’ Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig sabihin ng
‘directly’ ay tulad sa implementasyon sa rice and corn lands kung saan inaari na ng mga
magsasaka ang lupang binubungkal nila. Ang ibig sabihin naman ng ‘collectively’ ay sama-
samang paggawa sa isang lupain o isang bukid, katulad ng sitwasyon sa Negros.
As Commissioner Tadeo explained, the farmers will work on the agricultural land ‘sama-
sama’ or collectively. Thus, the main requisite for collective ownership of land is collective
or group work by farmers of the agricultural land. Irrespective of whether the landowner is a
cooperative, association or corporation composed of farmers, as long as concerted group
work by the farmers on the land is present, then it falls within the ambit of collective
ownership scheme. (Emphasis in the original; underscoring supplied.)
As aforequoted, there is collective ownership as long as there is a concerted group work by
the farmers on the land, regardless of whether the landowner is a cooperative, association or
corporation composed of farmers. However, this definition of collective ownership should be
read in light of the clear policy of the law on agrarian reform, which is to emancipate the
tiller from the bondage of the soil and empower the common people. Worth noting too is its
noble goal of rectifying "the acute imbalance in the distribution of this precious resource
among our people." 25 Accordingly, HLI’s insistent view that control need not be in the hands
of the farmers translates to allowing it to run roughshod against the very reason for the
enactment of agrarian reform laws and leave the farmers in their shackles with sheer lip
service to look forward to.
Notably, it has been this Court’s consistent stand that control over the agricultural land must
always be in the hands of the farmers. As We wrote in Our July 5, 2011 Decision:
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural land must always be in the hands of the
farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers should
always own majority of the common shares entitled to elect the members of the board of
directors to ensure that the farmers will have a clear majority in the board. Before the SDP is
approved, strict scrutiny of the proposed SDP must always be undertaken by the DAR and
PARC, such that the value of the agricultural land contributed to the corporation must
always be more than 50% of the total assets of the corporation to ensure that the majority of
the members of the board of directors are composed of the farmers. The PARC composed of
the President of the Philippines and cabinet secretaries must see to it that control over the
board of directors rests with the farmers by rejecting the inclusion of non-agricultural assets
which will yield the majority in the board of directors to non-farmers. Any deviation,
however, by PARC or DAR from the correct application of the formula prescribed by the
second paragraph of Sec. 31 of RA 6675 does not make said provision constitutionally
infirm. Rather, it is the application of said provision that can be challenged. Ergo, Sec. 31 of
RA 6657 does not trench on the constitutional policy of ensuring control by the farmers.
(Emphasis supplied.)
There is an aphorism that "what has been done can no longer be undone." That may be true,
but not in this case. The SDP was approved by PARC even if the qualified FWBs did not
and will not have majority stockholdings in HLI, contrary to the obvious policy by the
government on agrarian reform. Such an adverse situation for the FWBs will not and should
not be permitted to stand. For this reason, We maintain Our ruling that the qualified FWBs
will no longer have the option to remain as stockholders of HLI.
FWBs Entitled
to Proceeds of Sale
HLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51 hectares
of the land as corporate owner and argues that the return of said proceeds to the FWBs is
unfair and violative of the Corporation Code.
AGRARIAN LAW
RECENT JURISPRUDENCE
This claim is bereft of merit.
It cannot be denied that the adverted 500-hectare converted land and the SCTEX lot once
formed part of what would have been agrarian-distributable lands, in fine subject to
compulsory CARP coverage. And, as stated in our July 5, 2011 Decision, were it not for the
approval of the SDP by PARC, these large parcels of land would have been distributed and
ownership transferred to the FWBs, subject to payment of just compensation, given that, as
of 1989, the subject 4,915 hectares of Hacienda Luisita were already covered by CARP.
Accordingly, the proceeds realized from the sale and/or disposition thereof should accrue for
the benefit of the FWBs, less deductions of the 3% of the proceeds of said transfers that were
paid to the FWBs, the taxes and expenses relating to the transfer of titles to the transferees,
and the expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate corporate
purposes, as prescribed in our November 22, 2011 Resolution.
Homelots
In the present recourse, HLI also harps on the fact that since the homelots given to the FWBs
do not form part of the 4,915.75 hectares covered by the SDP, then the value of these
homelots should, with the revocation of the SDP, be paid to Tadeco as the landowner. 26
We disagree. As We have explained in Our July 5, 2011 Decision, the distribution of
homelots is required under RA 6657 only for corporations or business associations owning
or operating farms which opted for land distribution. This is provided under Sec. 30 of RA
6657. Particularly:
SEC. 30. Homelots and Farmlots for Members of Cooperatives. ¾ The individual members
of the cooperatives or corporations mentioned in the preceding section shall be provided
with homelots and small farmlots for their family use, to be taken from the land owned by
the cooperative or corporation. (Italics supplied.)
The "preceding section" referred to in the above-quoted provision is Sec. 29 of RA 6657,
which states:
SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations.¾In
the case of farms owned or operated by corporations or other business associations, the
following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned
collectively by the worker-beneficiaries who shall form a workers’ cooperative or
association which will deal with the corporation or business association. Until a new
agreement is entered into by and between the workers’ cooperative or association and the
corporation or business association, any agreement existing at the time this Act takes effect
between the former and the previous landowner shall be respected by both the workers’
cooperative or association and the corporation or business association.
Since none of the above-quoted provisions made reference to corporations which opted for
stock distribution under Sec. 31 of RA 6657, then it is apparent that said corporations are not
obliged to provide for homelots. Nonetheless, HLI undertook to "subdivide and allocate for
free and without charge among the qualified family-beneficiaries x x x residential or
homelots of not more than 240 sq. m. each, with each family beneficiary being assured of
receiving and owning a homelot in the barrio or barangay where it actually resides." In fact,
HLI was able to distribute homelots to some if not all of the FWBs. Thus, in our November
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22, 2011 Resolution, We declared that the homelots already received by the FWBs shall be
respected with no obligation to refund or to return them.
The Court, by a unanimous vote, resolved to maintain its ruling that the FWBs shall retain
ownership of the homelots given to them with no obligation to pay for the value of said lots.
However, since the SDP was already revoked with finality, the Court directs the government
through the DAR to pay HLI the just compensation for said homelots in consonance with
Sec. 4, Article XIII of the 1987 Constitution that the taking of land for use in the agrarian
reform program is "subject to the payment of just compensation." Just compensation should
be paid to HLI instead of Tadeco in view of the Deed of Assignment and Conveyance dated
March 22, 1989 executed between Tadeco and HLI, where Tadeco transferred and conveyed
to HLI the titles over the lots in question. DAR is ordered to compute the just compensation
of the homelots in accordance with existing laws, rules and regulations.
To recapitulate, the Court voted on the following issues in this manner:
1. In determining the date of "taking," the Court voted 8-6 to maintain the
ruling fixing November 21, 1989 as the date of "taking," the value of the
affected lands to be determined by the LBP and the DAR;
2. On the propriety of the revocation of the option of the FWBs to remain as
HLI stockholders, the Court, by unanimous vote, agreed to reiterate its ruling
in its November 22, 2011 Resolution that the option granted to the FWBs stays
revoked;
3. On the propriety of returning to the FWBs the proceeds of the sale of the
500-hectare converted land and of the 80.51-hectare SCTEX land, the Court
unanimously voted to maintain its ruling to order the payment of the proceeds
of the sale of the said land to the FWBs less the 3% share, taxes and expenses
specified in the fallo of the November 22, 2011 Resolution;
4. On the payment of just compensation for the homelots to HLI, the Court, by
unanimous vote, resolved to amend its July 5, 2011 Decision and November
22, 2011 Resolution by ordering the government, through the DAR, to pay to
HLI the just compensation for the homelots thus distributed to the FWBS.
WHEREFORE, the Motion to Clarify and Reconsider Resolution of November 22, 2011
dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. and the Motion for
Reconsideration/Clarification dated December 9, 2011 filed by private respondents Noel
Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya are
hereby DENIED with this qualification: the July 5, 2011 Decision, as modified by the
November 22, 2011 Resolution, is FURTHER MODIFIED in that the government, through
DAR, is ordered to pay Hacienda Luisita, Inc. the just compensation for the 240-square
meter homelots distributed to the FWBs.
The July 5, 2011 Decision, as modified by the November 22, 2011 Resolution and further
modified by this Resolution is declared FINAL and EXECUTORY. The entry of judgment
of said decision shall be made upon the time of the promulgation of this Resolution.
No further pleadings shall be entertained in this case.
SO ORDERED.