G.R. No.

171101

July 5, 2011

HACIENDA LUISITA, INCORPORATED, Petitioner, LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING CORPORATION, Petitioners-in-Intervention, vs. PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO SUNIGA 1 and his SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. and WINDSOR ANDAYA, Respondents. "Land for the landless," a shibboleth the landed gentry doubtless has received with much misgiving, if not resistance, even if only the number of agrarian suits filed serves to be the norm. Through the years, this battle cry and root of discord continues to reflect the seemingly ceaseless discourse on, and great disparity in, the distribution of land among the people, "dramatizing the increasingly urgent demand of the dispossessed x x x for a plot of earth as their place in the sun."2 As administrations and political alignments change, policies advanced, and agrarian reform laws enacted, the latest being what is considered a comprehensive piece, the face of land reform varies and is masked in myriads of ways. The stated goal, however, remains the same: clear the way for the true freedom of the farmer.3 Land reform, or the broader term "agrarian reform," has been a government policy even before the Commonwealth era. In fact, at the onset of the American regime, initial steps toward land reform were already taken to address social unrest.4 Then, under the 1935 Constitution, specific provisions on social justice and expropriation of landed estates for distribution to tenants as a solution to land ownership and tenancy issues were incorporated. In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed, setting in motion the expropriation of all tenanted estates.5 On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was enacted,6 abolishing share tenancy and converting all instances of share tenancy into leasehold tenancy.7 RA 3844 created the Land Bank of the Philippines (LBP) to provide support in all phases of agrarian reform. As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship in rice and corn, supposedly to be accomplished by expropriating lands in excess of 75 hectares for their eventual resale to tenants. The law, however, had this restricting feature: its operations were confined mainly to areas in Central Luzon, and its implementation at any level of intensity limited to the pilot project in Nueva Ecija.8 Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring the entire country a land reform area, and providing for the automatic conversion of tenancy to leasehold tenancy in all areas. From 75 hectares, the retention limit was cut down to seven hectares.9 Barely a month after declaring martial law in September 1972, then President Ferdinand Marcos issued Presidential Decree No. 27 (PD 27) for the "emancipation of the tiller from the bondage of the soil."10 Based on this issuance, tenant-farmers, depending on the size of the landholding worked on, can either purchase the land they tilled or shift from share to fixed-rent leasehold tenancy.11 While touted as "revolutionary," the scope of the agrarian reform program PD 27 enunciated covered only tenanted, privately-owned rice and corn lands.12 Then came the revolutionary government of then President Corazon C. Aquino and the drafting and eventual ratification of the 1987 Constitution. Its provisions foreshadowed the establishment of a legal framework for the formulation of an expansive approach to land reform, affecting all agricultural lands and covering both tenantfarmers and regular farmworkers.13 So it was that Proclamation No. 131, Series of 1987, was issued instituting a comprehensive agrarian reform program (CARP) to cover all agricultural lands, regardless of tenurial arrangement and commodity produced, as provided in the Constitution. On July 22, 1987, Executive Order No. 229 (EO 229) was issued providing, as its title14 indicates, the mechanisms for CARP implementation. It created the Presidential Agrarian Reform Council (PARC) as the highest policy-making body that formulates all policies, rules, and regulations necessary for the implementation of CARP.

On June 15, 1988, RA 6657 or the Comprehensive Agrarian Reform Law of 1988, also known as CARL or the CARP Law, took effect, ushering in a new process of land classification, acquisition, and distribution. As to be expected, RA 6657 met stiff opposition, its validity or some of its provisions challenged at every possible turn.Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform 15 stated the observation that the assault was inevitable, the CARP being an untried and untested project, "an experiment [even], as all life is an experiment," the Court said, borrowing from Justice Holmes. The Case In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary injunctive relief, petitioner Hacienda Luisita, Inc. (HLI) assails and seeks to set aside PARC Resolution No. 2005-32-0116 and Resolution No. 2006-34-0117 issued on December 22, 2005 and May 3, 2006, respectively, as well as the implementing Notice of Coverage dated January 2, 2006 (Notice of Coverage).18 The Facts At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once a 6,443-hectare mixed agricultural-industrial-residential expanse straddling several municipalities of Tarlac and owned by Compaia General de Tabacos de Filipinas (Tabacalera). In 1957, the Spanish owners of Tabacalera offered to sell Hacienda Luisita as well as their controlling interest in the sugar mill within the hacienda, the Central Azucarera de Tarlac (CAT), as an indivisible transaction. The Tarlac Development Corporation (Tadeco), then owned and/or controlled by the Jose Cojuangco, Sr. Group, was willing to buy. As agreed upon, Tadeco undertook to pay the purchase price for Hacienda Luisita in pesos, while that for the controlling interest in CAT, in US dollars.19 To facilitate the adverted sale-and-purchase package, the Philippine government, through the then Central Bank of the Philippines, assisted the buyer to obtain a dollar loan from a US bank.20 Also, the Government Service Insurance System (GSIS) Board of Trustees extended on November 27, 1957 a PhP 5.911 million loan in favor of Tadeco to pay the peso price component of the sale. One of the conditions contained in the approving GSIS Resolution No. 3203, as later amended by Resolution No. 356, Series of 1958, reads as follows: That the lots comprising the Hacienda Luisita shall be subdivided by the applicant-corporation and sold at cost to the tenants, should there be any, and whenever conditions should exist warranting such action under the provisions of the Land Tenure Act;21 As of March 31, 1958, Tadeco had fully paid the purchase price for the acquisition of Hacienda Luisita and Tabacaleras interest in CAT.22 The details of the events that happened next involving the hacienda and the political color some of the parties embossed are of minimal significance to this narration and need no belaboring. Suffice it to state that on May 7, 1980, the martial law administration filed a suit before the Manila Regional Trial Court (RTC) against Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR, now the Department of Agrarian Reform [DAR]) so that the land can be distributed to farmers at cost. Responding, Tadeco or its owners alleged that Hacienda Luisita does not have tenants, besides which sugar landsof which the hacienda consistedare not covered by existing agrarian reform legislations. As perceived then, the government commenced the case against Tadeco as a political message to the family of the late Benigno Aquino, Jr.23 Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the Court of Appeals (CA). On March 17, 1988, the Office of the Solicitor General (OSG) moved to withdraw the governments case against Tadeco, et al. By Resolution of May 18, 1988, the CA dismissed the case the Marcos government initially instituted and won against Tadeco, et al. The dismissal action was, however, made subject to the obtention by Tadeco of the PARCs approval of a stock distribution plan (SDP) that must initially be implemented after such approval shall have been secured.24 The appellate court wrote: The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x x governmental agencies concerned in moving for the dismissal of the case subject, however, to the following conditions embodied in the letter dated April 8, 1988 (Annex 2) of the Secretary of the [DAR] quoted, as follows:

1. Should TADECO fail to obtain approval of the stock distribution plan for failure to comply with all the requirements for corporate landowners set forth in the guidelines issued by the [PARC]: or 2. If such stock distribution plan is approved by PARC, but TADECO fails to initially implement it. xxxx WHEREFORE, the present case on appeal is hereby dismissed without prejudice, and should be revived if any of the conditions as above set forth is not duly complied with by the TADECO.25 Markedly, Section 10 of EO 22926 allows corporate landowners, as an alternative to the actual land transfer scheme of CARP, to give qualified beneficiaries the right to purchase shares of stocks of the corporation under a stock ownership arrangement and/or land-to-share ratio. Like EO 229, RA 6657, under the latters Sec. 31, also provides two (2) alternative modalities, i.e., land or stock transfer, pursuant to either of which the corporate landowner can comply with CARP, but subject to welldefined conditions and timeline requirements. Sec. 31 of RA 6657 provides: SEC. 31. Corporate Landowners.Corporate landowners may voluntarily transfer ownership over their agricultural landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to qualified beneficiaries x x x. 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 companys 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. x x x Corporations or associations which voluntarily divest a proportion of their capital stock, equity or participation in favor of their workers or other qualified beneficiaries under this section shall be deemed to have complied with the provisions of this Act: Provided, That the following conditions are complied with: (a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and other financial benefits, the books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries; (b) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured of at least one (1) representative in the board of directors, or in a management or executive committee, if one exists, of the corporation or association; (c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares; and (d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless said transaction is in favor of a qualified and registered beneficiary within the same corporation. If within two (2) years from the approval of this Act, the [voluntary] land or stock transfer envisioned above is not made or realized or the plan for such stock distribution approved by the PARC within the same period, the agricultural land of the corporate owners or corporation shall be subject to the compulsory coverage of this Act. (Emphasis added.) Vis--vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued Administrative Order No. 10, Series of 1988 (DAO 10),27 entitled Guidelines and Procedures for Corporate Landowners Desiring to Avail Themselves of the Stock Distribution Plan under Section 31 of RA 6657. From the start, the stock distribution scheme appeared to be Tadecos preferred option, for, on August 23, 1988,28 it organized a spin-off corporation, HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this purpose, Tadeco assigned and conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of Hacienda Luisita in exchange for HLI shares of stock.29 Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr., and Paz C. Teopaco were the incorporators of HLI.30

To accommodate the assets transfer from Tadeco to HLI, the latter, with the Securities and Exchange Commissions (SECs) approval, increased its capital stock on May 10, 1989 from PhP 1,500,000 divided into 1,500,000 shares with a par value of PhP 1/share to PhP 400,000,000 divided into 400,000,000 shares also with par value of PhP 1/share, 150,000,000 of which were to be issued only to qualified and registered beneficiaries of the CARP, and the remaining 250,000,000 to any stockholder of the corporation.31 As appearing in its proposed SDP, the properties and assets of Tadeco contributed to the capital stock of HLI, as appraised and approved by the SEC, have an aggregate value of PhP 590,554,220, or after deducting the total liabilities of the farm amounting to PhP 235,422,758, a net value of PhP 355,531,462. This translated to 355,531,462 shares with a par value of PhP 1/share.32 On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda Luisita signified in a referendum their acceptance of the proposed HLIs Stock Distribution Option Plan. On May 11, 1989, the Stock Distribution Option Agreement (SDOA), styled as a Memorandum of Agreement (MOA),33 was entered into by Tadeco, HLI, and the 5,848 qualified FWBs34 and attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics of the SDP, which would eventually be submitted to the PARC for approval. In the SDOA, the parties agreed to the following: 1. The percentage of the value of the agricultural land of Hacienda Luisita (P196,630,000.00) in relation to the total assets (P590,554,220.00) transferred and conveyed to the SECOND PARTY [HLI] is 33.296% that, under the law, is the proportion of the outstanding capital stock of the SECOND PARTY, which is P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per share, that has to be distributed to the THIRD PARTY [FWBs] under the stock distribution plan, the said 33.296% thereof being P118,391,976.85 or 118,391,976.85 shares. 2. The qualified beneficiaries of the stock distribution plan shall be the farmworkers who appear in the annual payroll, inclusive of the permanent and seasonal employees, who are regularly or periodically employed by the SECOND PARTY. 3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY shall arrange with the FIRST PARTY [Tadeco] the acquisition and distribution to the THIRD PARTY on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY. 4.The SECOND PARTY shall guarantee to the qualified beneficiaries of the [SDP] that every year they will receive on top of their regular compensation, an amount that approximates the equivalent of three (3%) of the total gross sales from the production of the agricultural land, whether it be in the form of cash dividends or incentive bonuses or both. 5. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from the FIRST PARTY and distributed to the THIRD PARTY, FIRST PARTY shall execute at the beginning of each fiscal year an irrevocable proxy, valid and effective for one (1) year, in favor of the farmworkers appearing as shareholders of the SECOND PARTY at the start of said year which will empower the THIRD PARTY or their representative to vote in stockholders and board of directors meetings of the SECOND PARTY convened during the year the entire 33.296% of the outstanding capital stock of the SECOND PARTY earmarked for distribution and thus be able to gain such number of seats in the board of directors of the SECOND PARTY that the whole 33.296% of the shares subject to distribution will be entitled to. 6. In addition, the SECOND PARTY shall within a reasonable time subdivide and allocate for free and without charge among the qualified family-beneficiaries residing in the place where the agricultural land is situated, 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 barangay where it actually resides on the date of the execution of this Agreement. 7. This Agreement is entered into by the parties in the spirit of the (C.A.R.P.) of the government and with the supervision of the [DAR], with the end in view of improving the lot of the qualified beneficiaries of the [SDP] and obtaining for them greater benefits. (Emphasis added.)

As may be gleaned from the SDOA, included as part of the distribution plan are: (a) production-sharing equivalent to three percent (3%) of gross sales from the production of the agricultural land payable to the FWBs in cash dividends or incentive bonus; and (b) distribution of free homelots of not more than 240 square meters each to family-beneficiaries. The production-sharing, as the SDP indicated, is payable "irrespective of whether [HLI] makes money or not," implying that the benefits do not partake the nature of dividends, as the term is ordinarily understood under corporation law. While a little bit hard to follow, given that, during the period material, the assigned value of the agricultural land in the hacienda was PhP 196.63 million, while the total assets of HLI was PhP 590.55 million with net assets of PhP 355.53 million, Tadeco/HLI would admit that the ratio of the land-to-shares of stock corresponds to 33.3% of the outstanding capital stock of the HLI equivalent to 118,391,976.85 shares of stock with a par value of PhP 1/share. Subsequently, HLI submitted to DAR its SDP, designated as "Proposal for Stock Distribution under C.A.R.P.,"35which was substantially based on the SDOA. Notably, in a follow-up referendum the DAR conducted on October 14, 1989, 5,117 FWBs, out of 5,315 who participated, opted to receive shares in HLI.36 One hundred thirty-two (132) chose actual land distribution.37 After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec. Defensor-Santiago) addressed a letter dated November 6, 198938 to Pedro S. Cojuangco (Cojuangco), then Tadeco president, proposing that the SDP be revised, along the following lines: 1. That over the implementation period of the [SDP], [Tadeco]/HLI shall ensure that there will be no dilution in the shares of stocks of individual [FWBs]; 2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of the percentage shareholdings of the [FWBs], i.e., that the 33% shareholdings of the [FWBs] will be maintained at any given time; 3. That the mechanics for distributing the stocks be explicitly stated in the [MOA] signed between the [Tadeco], HLI and its [FWBs] prior to the implementation of the stock plan; 4. That the stock distribution plan provide for clear and definite terms for determining the actual number of seats to be allocated for the [FWBs] in the HLI Board; 5. That HLI provide guidelines and a timetable for the distribution of homelots to qualified [FWBs]; and 6. That the 3% cash dividends mentioned in the [SDP] be expressly provided for [in] the MOA. In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI explained that the proposed revisions of the SDP are already embodied in both the SDP and MOA.39 Following that exchange, the PARC, under then Sec. Defensor-Santiago, by Resolution No. 89-12-240 dated November 21, 1989, approved the SDP of Tadeco/HLI.41 At the time of the SDP approval, HLI had a pool of farmworkers, numbering 6,296, more or less, composed of permanent, seasonal and casual master list/payroll and non-master list members. From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs: (a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe benefits (b) 59 million shares of stock distributed for free to the FWBs; (c) 150 million pesos (P150,000,000) representing 3% of the gross produce; (d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 hectares of converted agricultural land of Hacienda Luisita; (e) 240-square meter homelots distributed for free;

(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares at 80 million pesos (P80,000,000) for the SCTEX; (g) Social service benefits, such as but not limited to free hospitalization/medical/maternity services, old age/death benefits and no interest bearing salary/educational loans and rice sugar accounts. 42 Two separate groups subsequently contested this claim of HLI. On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to industrial use,43 pursuant to Sec. 65 of RA 6657, providing: SEC. 65. Conversion of Lands.After the lapse of five (5) years from its award, when the land ceases 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, the DAR, upon application of the beneficiary or the landowner, with due notice to the affected parties, and subject to existing laws, may authorize the reclassification, or conversion of the land and its disposition: Provided, That the beneficiary shall have fully paid its obligation. The application, according to HLI, had the backing of 5,000 or so FWBs, including respondent Rene Galang, and Jose Julio Suniga, as evidenced by the Manifesto of Support they signed and which was submitted to the DAR.44After the usual processing, the DAR, thru then Sec. Ernesto Garilao, approved the application on August 14, 1996, per DAR Conversion Order No. 030601074-764-(95), Series of 1996,45 subject to payment of three percent (3%) of the gross selling price to the FWBs and to HLIs continued compliance with its undertakings under the SDP, among other conditions. On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the converted area to the latter.46 Consequently, HLIs Transfer Certificate of Title (TCT) No. 28791047 was canceled and TCT No. 29209148 was issued in the name of Centennary. HLI transferred the remaining 200 hectares covered by TCT No. 287909 to Luisita Realty Corporation (LRC)49 in two separate transactions in 1997 and 1998, both uniformly involving 100 hectares for PhP 250 million each.50 Centennary, a corporation with an authorized capital stock of PhP 12,100,000 divided into 12,100,000 shares and wholly-owned by HLI, had the following incorporators: Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Ernesto G. Teopaco, and Bernardo R. Lahoz. Subsequently, Centennary sold51 the entire 300 hectares to Luisita Industrial Park Corporation (LIPCO) for PhP 750 million. The latter acquired it for the purpose of developing an industrial complex.52 As a result, Centennarys TCT No. 292091 was canceled to be replaced by TCT No. 31098653 in the name of LIPCO. From the area covered by TCT No. 310986 was carved out two (2) parcels, for which two (2) separate titles were issued in the name of LIPCO, specifically: (a) TCT No. 36580054 and (b) TCT No. 365801,55 covering 180 and four hectares, respectively. TCT No. 310986 was, accordingly, partially canceled. Later on, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO transferred the parcels covered by its TCT Nos. 365800 and 365801 to the Rizal Commercial Banking Corporation (RCBC) by way of dacion en pagoin payment of LIPCOs PhP 431,695,732.10 loan obligations. LIPCOs titles were canceled and new ones, TCT Nos. 391051 and 391052, were issued to RCBC. Apart from the 500 hectares alluded to, another 80.51 hectares were later detached from the area coverage of Hacienda Luisita which had been acquired by the government as part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. In absolute terms, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded to HLI.56 Such, in short, was the state of things when two separate petitions, both undated, reached the DAR in the latter part of 2003. In the first, denominated as Petition/Protest,57 respondents Jose Julio Suniga and Windsor Andaya, identifying themselves as head of the Supervisory Group of HLI (Supervisory Group), and 60 other supervisors sought to revoke the SDOA, alleging that HLI had failed to give them their dividends and the one percent (1%) share in gross sales, as well as the thirty-three percent (33%) share in the proceeds of the sale of the converted 500 hectares of land. They further claimed that their lives have not improved contrary to the promise and rationale for the adoption of the SDOA. They also cited violations by HLI of the SDOAs terms.58 They prayed for a renegotiation of the SDOA, or, in the alternative, its revocation.

Revocation and nullification of the SDOA and the distribution of the lands in the hacienda were the call in the second petition, styled as Petisyon (Petition).59 The Petisyon was ostensibly filed on December 4, 2003 by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA), where the handwritten name of respondents Rene Galang as "Pangulo AMBALA" and Noel Mallari as "Sec-Gen. AMBALA"60 appeared. As alleged, the petition was filed on behalf of AMBALAs members purportedly composing about 80% of the 5,339 FWBs of Hacienda Luisita. HLI would eventually answer61 the petition/protest of the Supervisory Group. On the other hand, HLIs answer62 to the AMBALA petition was contained in its letter dated January 21, 2005 also filed with DAR. Meanwhile, the DAR constituted a Special Task Force to attend to issues relating to the SDP of HLI. Among other duties, the Special Task Force was mandated to review the terms and conditions of the SDOA and PARC Resolution No. 89-12-2 relative to HLIs SDP; evaluate HLIs compliance reports; evaluate the merits of the petitions for the revocation of the SDP; conduct ocular inspections or field investigations; and recommend appropriate remedial measures for approval of the Secretary.63 After investigation and evaluation, the Special Task Force submitted its "Terminal Report: Hacienda Luisita, Incorporated (HLI) Stock Distribution Plan (SDP) Conflict"64 dated September 22, 2005 (Terminal Report), finding that HLI has not complied with its obligations under RA 6657 despite the implementation of the SDP.65 The Terminal Report and the Special Task Forces recommendations were adopted by then DAR Sec. Nasser Pangandaman (Sec. Pangandaman).66 Subsequently, Sec. Pangandaman recommended to the PARC Executive Committee (Excom) (a) the recall/revocation of PARC Resolution No. 89-12-2 dated November 21, 1989 approving HLIs SDP; and (b) the acquisition of Hacienda Luisita through the compulsory acquisition scheme. Following review, the PARC Validation Committee favorably endorsed the DAR Secretarys recommendation afore-stated.67 On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01, disposing as follows: NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY RESOLVED, to approve and confirm the recommendation of the PARC Executive Committee adopting in toto the report of the PARC ExCom Validation Committee affirming the recommendation of the DAR to recall/revoke the SDO plan of Tarlac Development Corporation/Hacienda Luisita Incorporated. RESOLVED, further, that the lands subject of the recalled/revoked TDC/HLI SDO plan be forthwith placed under the compulsory coverage or mandated land acquisition scheme of the [CARP]. APPROVED.68 A copy of Resolution No. 2005-32-01 was served on HLI the following day, December 23, without any copy of the documents adverted to in the resolution attached. A letter-request dated December 28, 200569 for certified copies of said documents was sent to, but was not acted upon by, the PARC secretariat. Therefrom, HLI, on January 2, 2006, sought reconsideration.70 On the same day, the DAR Tarlac provincial office issued the Notice of Coverage71 which HLI received on January 4, 2006. Its motion notwithstanding, HLI has filed the instant recourse in light of what it considers as the DARs hasty placing of Hacienda Luisita under CARP even before PARC could rule or even read the motion for reconsideration.72 As HLI later rued, it "can not know from the above-quoted resolution the facts and the law upon which it is based."73 PARC would eventually deny HLIs motion for reconsideration via Resolution No. 2006-34-01 dated May 3, 2006. By Resolution of June 14, 2006,74 the Court, acting on HLIs motion, issued a temporary restraining order,75enjoining the implementation of Resolution No. 2005-32-01 and the notice of coverage. On July 13, 2006, the OSG, for public respondents PARC and the DAR, filed its Comment76 on the petition. On December 2, 2006, Noel Mallari, impleaded by HLI as respondent in his capacity as "Sec-Gen. AMBALA," filed his Manifestation and Motion with Comment Attached dated December 4, 2006 (Manifestation and Motion).77 In it, Mallari stated that he has broken away from AMBALA with other AMBALA ex-members and

formed Farmworkers Agrarian Reform Movement, Inc. (FARM).78 Should this shift in alliance deny him standing, Mallari also prayed that FARM be allowed to intervene. As events would later develop, Mallari had a parting of ways with other FARM members, particularly would-be intervenors Renato Lalic, et al. As things stand, Mallari returned to the AMBALA fold, creating the AMBALANoel Mallari faction and leaving Renato Lalic, et al. as the remaining members of FARM who sought to intervene. On January 10, 2007, the Supervisory Group79 and the AMBALA-Rene Galang faction submitted their Comment/Opposition dated December 17, 2006.80 On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File and Admit Attached Petition-InIntervention dated October 18, 2007.81 LIPCO later followed with a similar motion.82 In both motions, RCBC and LIPCO contended that the assailed resolution effectively nullified the TCTs under their respective names as the properties covered in the TCTs were veritably included in the January 2, 2006 notice of coverage. In the main, they claimed that the revocation of the SDP cannot legally affect their rights as innocent purchasers for value. Both motions for leave to intervene were granted and the corresponding petitions-in-intervention admitted. On August 18, 2010, the Court heard the main and intervening petitioners on oral arguments. On the other hand, the Court, on August 24, 2010, heard public respondents as well as the respective counsels of the AMBALAMallari-Supervisory Group, the AMBALA-Galang faction, and the FARM and its 27 members83 argue their case. Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the Supervisory Group, represented by Suniga and Andaya; and the United Luisita Workers Union, represented by Eldifonso Pingol, filed with the Court a joint submission and motion for approval of a Compromise Agreement (English and Tagalog versions) dated August 6, 2010. On August 31, 2010, the Court, in a bid to resolve the dispute through an amicable settlement, issued a Resolution84 creating a Mediation Panel composed of then Associate Justice Ma. Alicia Austria-Martinez, as chairperson, and former CA Justices Hector Hofilea and Teresita Dy-Liacco Flores, as members. Meetings on five (5) separate dates, i.e., September 8, 9, 14, 20, and 27, 2010, were conducted. Despite persevering and painstaking efforts on the part of the panel, mediation had to be discontinued when no acceptable agreement could be reached. The Issues HLI raises the following issues for our consideration: I. WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY PANGANDAMAN HAVE JURISDICTION, POWER AND/OR AUTHORITY TO NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA. II. [IF SO], x x x CAN THEY STILL EXERCISE SUCH JURISDICTION, POWER AND/OR AUTHORITY AT THIS TIME, I.E., AFTER SIXTEEN (16) YEARS FROM THE EXECUTION OF THE SDOA AND ITS IMPLEMENTATION WITHOUT VIOLATING SECTIONS 1 AND 10 OF ARTICLE III (BILL OF RIGHTS) OF THE CONSTITUTION AGAINST DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW AND THE IMPAIRMENT OF CONTRACTUAL RIGHTS AND OBLIGATIONS? MOREOVER, ARE THERE LEGAL GROUNDS UNDER THE CIVIL CODE, viz, ARTICLE 1191 x x x, ARTICLES 1380, 1381 AND 1382 x x x ARTICLE 1390 x x x AND ARTICLE 1409 x x x THAT CAN BE INVOKED TO NULLIFY, RECALL, REVOKE, OR RESCIND THE SDOA? III.

WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA HAVE ANY LEGAL BASIS OR GROUNDS AND WHETHER THE PETITIONERS THEREIN ARE THE REAL PARTIES-IN-INTEREST TO FILE SAID PETITIONS. IV. WHETHER THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES TO THE SDOA ARE NOW GOVERNED BY THE CORPORATION CODE (BATAS PAMBANSA BLG. 68) AND NOT BY THE x x x [CARL] x x x. On the other hand, RCBC submits the following issues: I. RESPONDENT PARC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT EXCLUDE THE SUBJECT PROPERTY FROM THE COVERAGE OF THE CARP DESPITE THE FACT THAT PETITIONERINTERVENOR RCBC HAS ACQUIRED VESTED RIGHTS AND INDEFEASIBLE TITLE OVER THE SUBJECT PROPERTY AS AN INNOCENT PURCHASER FOR VALUE. A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF COVERAGE DATED 02 JANUARY 2006 HAVE THE EFFECT OF NULLIFYING TCT NOS. 391051 AND 391052 IN THE NAME OF PETITIONER-INTERVENOR RCBC. B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONER-INTERVENOR RCBC CANNOT BE PREJUDICED BY A SUBSEQUENT REVOCATION OR RESCISSION OF THE SDOA. II. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF COVERAGE DATED 02 JANUARY 2006 WERE ISSUED WITHOUT AFFORDING PETITIONER-INTERVENOR RCBC ITS RIGHT TO DUE PROCESS AS AN INNOCENT PURCHASER FOR VALUE. LIPCO, like RCBC, asserts having acquired vested and indefeasible rights over certain portions of the converted property, and, hence, would ascribe on PARC the commission of grave abuse of discretion when it included those portions in the notice of coverage. And apart from raising issues identical with those of HLI, such as but not limited to the absence of valid grounds to warrant the rescission and/or revocation of the SDP, LIPCO would allege that the assailed resolution and the notice of coverage were issued without affording it the right to due process as an innocent purchaser for value. The government, LIPCO also argues, is estopped from recovering properties which have since passed to innocent parties. Simply formulated, the principal determinative issues tendered in the main petition and to which all other related questions must yield boil down to the following: (1) matters of standing; (2) the constitutionality of Sec. 31 of RA 6657; (3) the jurisdiction of PARC to recall or revoke HLIs SDP; (4) the validity or propriety of such recall or revocatory action; and (5) corollary to (4), the validity of the terms and conditions of the SDP, as embodied in the SDOA. Our Ruling I. We first proceed to the examination of the preliminary issues before delving on the more serious challenges bearing on the validity of PARCs assailed issuance and the grounds for it. Supervisory Group, AMBALA and their respective leaders are real parties-in-interest HLI would deny real party-in-interest status to the purported leaders of the Supervisory Group and AMBALA, i.e., Julio Suniga, Windsor Andaya, and Rene Galang, who filed the revocatory petitions before the DAR. As HLI would have it, Galang, the self-styled head of AMBALA, gained HLI employment in June 1990 and, thus, could not have been a party to the SDOA executed a year earlier.85 As regards the Supervisory Group, HLI

alleges that supervisors are not regular farmworkers, but the company nonetheless considered them FWBs under the SDOA as a mere concession to enable them to enjoy the same benefits given qualified regular farmworkers. However, if the SDOA would be canceled and land distribution effected, so HLI claims, citing Fortich v. Corona,86 the supervisors would be excluded from receiving lands as farmworkers other than the regular farmworkers who are merely entitled to the "fruits of the land."87 The SDOA no less identifies "the SDP qualified beneficiaries" as "the farmworkers who appear in the annual payroll, inclusive of the permanent and seasonal employees, who are regularly or periodically employed by [HLI]."88 Galang, per HLIs own admission, is employed by HLI, and is, thus, a qualified beneficiary of the SDP; he comes within the definition of a real party-in-interest under Sec. 2, Rule 3 of the Rules of Court, meaning, one who stands to be benefited or injured by the judgment in the suit or is the party entitled to the avails of the suit. The same holds true with respect to the Supervisory Group whose members were admittedly employed by HLI and whose names and signatures even appeared in the annex of the SDOA. Being qualified beneficiaries of the SDP, Suniga and the other 61 supervisors are certainly parties who would benefit or be prejudiced by the judgment recalling the SDP or replacing it with some other modality to comply with RA 6657. Even assuming that members of the Supervisory Group are not regular farmworkers, but are in the category of "other farmworkers" mentioned in Sec. 4, Article XIII of the Constitution,89 thus only entitled to a share of the fruits of the land, as indeed Fortich teaches, this does not detract from the fact that they are still identified as being among the "SDP qualified beneficiaries." As such, they are, thus, entitled to bring an action upon the SDP.90 At any rate, the following admission made by Atty. Gener Asuncion, counsel of HLI, during the oral arguments should put to rest any lingering doubt as to the status of protesters Galang, Suniga, and Andaya: Justice Bersamin: x x x I heard you a while ago that you were conceding the qualified farmer beneficiaries of Hacienda Luisita were real parties in interest? Atty. Asuncion: Yes, Your Honor please, real party in interest which that question refers to the complaints of protest initiated before the DAR and the real party in interest there be considered as possessed by the farmer beneficiaries who initiated the protest.91 Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly allowed to represent themselves, their fellow farmers or their organizations in any proceedings before the DAR. Specifically: SEC. 50. Quasi-Judicial Powers of the DAR.x x x xxxx Responsible farmer leaders shall be allowed to represent themselves, their fellow farmers or their organizations in any proceedings before the DAR: Provided, however, that when there are two or more representatives for any individual or group, the representatives should choose only one among themselves to represent such party or group before any DAR proceedings. (Emphasis supplied.) Clearly, the respective leaders of the Supervisory Group and AMBALA are contextually real parties-in-interest allowed by law to file a petition before the DAR or PARC. This is not necessarily to say, however, that Galang represents AMBALA, for as records show and as HLI aptly noted,92 his "petisyon" filed with DAR did not carry the usual authorization of the individuals in whose behalf it was supposed to have been instituted. To date, such authorization document, which would logically include a list of the names of the authorizing FWBs, has yet to be submitted to be part of the records. PARCs Authority to Revoke a Stock Distribution Plan On the postulate that the subject jurisdiction is conferred by law, HLI maintains that PARC is without authority to revoke an SDP, for neither RA 6657 nor EO 229 expressly vests PARC with such authority. While, as HLI argued, EO 229 empowers PARC to approve the plan for stock distribution in appropriate cases, the empowerment only includes the power to disapprove, but not to recall its previous approval of the SDP after it has been implemented by the parties.93 To HLI, it is the court which has jurisdiction and authority to order the revocation or rescission of the PARC-approved SDP. We disagree.

Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan for stock distribution of the corporate landowner belongs to PARC. However, contrary to petitioner HLIs posture, PARC also has the power to revoke the SDP which it previously approved. It may be, as urged, that RA 6657 or other executive issuances on agrarian reform do not explicitly vest the PARC with the power to revoke/recall an approved SDP. Such power or authority, however, is deemed possessed by PARC under the principle of necessary implication, a basic postulate that what is implied in a statute is as much a part of it as that which is expressed.94 We have explained that "every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms."95 Further, "every statutory grant of power, right or privilege is deemed to include all incidental power, right or privilege.96 Gordon v. Veridiano II is instructive: The power to approve a license includes by implication, even if not expressly granted, the power to revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which it is derived in the first place. Thus, if the FDA grants a license upon its finding that the applicant drug store has complied with the requirements of the general laws and the implementing administrative rules and regulations, it is only for their violation that the FDA may revoke the said license. By the same token, having granted the permit upon his ascertainment that the conditions thereof as applied x x x have been complied with, it is only for the violation of such conditions that the mayor may revoke the said permit.97 (Emphasis supplied.) Following the doctrine of necessary implication, it may be stated that the conferment of express power to approve a plan for stock distribution of the agricultural land of corporate owners necessarily includes the power to revoke or recall the approval of the plan. As public respondents aptly observe, to deny PARC such revocatory power would reduce it into a toothless agency of CARP, because the very same agency tasked to ensure compliance by the corporate landowner with the approved SDP would be without authority to impose sanctions for non-compliance with it.98 With the view We take of the case, only PARC can effect such revocation. The DAR Secretary, by his own authority as such, cannot plausibly do so, as the acceptance and/or approval of the SDP sought to be taken back or undone is the act of PARC whose official composition includes, no less, the President as chair, the DAR Secretary as vicechair, and at least eleven (11) other department heads.99 On another but related issue, the HLI foists on the Court the argument that subjecting its landholdings to compulsory distribution after its approved SDP has been implemented would impair the contractual obligations created under the SDOA. The broad sweep of HLIs argument ignores certain established legal precepts and must, therefore, be rejected. A law authorizing interference, when appropriate, in the contractual relations between or among parties is deemed read into the contract and its implementation cannot successfully be resisted by force of the nonimpairment guarantee. There is, in that instance, no impingement of the impairment clause, the non-impairment protection being applicable only to laws that derogate prior acts or contracts by enlarging, abridging or in any manner changing the intention of the parties. Impairment, in fine, obtains if a subsequent law changes the terms of a contract between the parties, imposes new conditions, dispenses with those agreed upon or withdraws existing remedies for the enforcement of the rights of the parties.100 Necessarily, the constitutional proscription would not apply to laws already in effect at the time of contract execution, as in the case of RA 6657, in relation to DAO 10, vis--vis HLIs SDOA. As held in Serrano v. Gallant Maritime Services, Inc.: The prohibition [against impairment of the obligation of contracts] is aligned with the general principle that laws newly enacted have only a prospective operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II [of the Constitution] is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.101 (Emphasis supplied.) Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of issuance within the ambit of Sec. 10, Art. III of the Constitution providing that "[n]o law impairing the obligation of contracts shall be passed."

Parenthetically, HLI tags the SDOA as an ordinary civil law contract and, as such, a breach of its terms and conditions is not a PARC administrative matter, but one that gives rise to a cause of action cognizable by regular courts.102 This contention has little to commend itself. The SDOA is a special contract imbued with public interest, entered into and crafted pursuant to the provisions of RA 6657. It embodies the SDP, which requires for its validity, or at least its enforceability, PARCs approval. And the fact that the certificate of compliance103to be issued by agrarian authorities upon completion of the distribution of stocksis revocable by the same issuing authority supports the idea that everything about the implementation of the SDP is, at the first instance, subject to administrative adjudication. HLI also parlays the notion that the parties to the SDOA should now look to the Corporation Code, instead of to RA 6657, in determining their rights, obligations and remedies. The Code, it adds, should be the applicable law on the disposition of the agricultural land of HLI. Contrary to the view of HLI, the rights, obligations and remedies of the parties to the SDOA embodying the SDP are primarily governed by RA 6657. It should abundantly be made clear that HLI was precisely created in order to comply with RA 6657, which the OSG aptly described as the "mother law" of the SDOA and the SDP.104 It is, thus, paradoxical for HLI to shield itself from the coverage of CARP by invoking exclusive applicability of the Corporation Code under the guise of being a corporate entity. Without in any way minimizing the relevance of the Corporation Code since the FWBs of HLI are also stockholders, its applicability is limited as the rights of the parties arising from the SDP should not be made to supplant or circumvent the agrarian reform program. Without doubt, the Corporation Code is the general law providing for the formation, organization and regulation of private corporations. On the other hand, RA 6657 is the special law on agrarian reform. As between a general and special law, the latter shall prevailgeneralia specialibus non derogant.105 Besides, the present impasse between HLI and the private respondents is not an intra-corporate dispute which necessitates the application of the Corporation Code. What private respondents questioned before the DAR is the proper implementation of the SDP and HLIs compliance with RA 6657. Evidently, RA 6657 should be the applicable law to the instant case. HLI further contends that the inclusion of the agricultural land of Hacienda Luisita under the coverage of CARP and the eventual distribution of the land to the FWBs would amount to a disposition of all or practically all of the corporate assets of HLI. HLI would add that this contingency, if ever it comes to pass, requires the applicability of the Corporation Code provisions on corporate dissolution. We are not persuaded. Indeed, the provisions of the Corporation Code on corporate dissolution would apply insofar as the winding up of HLIs affairs or liquidation of the assets is concerned. However, the mere inclusion of the agricultural land of Hacienda Luisita under the coverage of CARP and the lands eventual distribution to the FWBs will not, without more, automatically trigger the dissolution of HLI. As stated in the SDOA itself, the percentage of the value of the agricultural land of Hacienda Luisita in relation to the total assets transferred and conveyed by Tadeco to HLI comprises only 33.296%, following this equation: value of the agricultural lands divided by total corporate assets. By no stretch of imagination would said percentage amount to a disposition of all or practically all of HLIs corporate assets should compulsory land acquisition and distribution ensue. This brings us to the validity of the revocation of the approval of the SDP sixteen (16) years after its execution pursuant to Sec. 31 of RA 6657 for the reasons set forth in the Terminal Report of the Special Task Force, as endorsed by PARC Excom. But first, the matter of the constitutionality of said section. Constitutional Issue FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the corporation, as a mode of CARP compliance, to resort to stock distribution, an arrangement which, to FARM, impairs the fundamental right of farmers and farmworkers under Sec. 4, Art. XIII of the Constitution.106 To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657 permits stock transfer in lieu of outright agricultural land transfer; in fine, there is stock certificate ownership of the farmers or farmworkers instead of them owning the land, as envisaged in the Constitution. For FARM, this modality of distribution is an anomaly to be annulled for being inconsistent with the basic concept of agrarian reform ingrained in Sec. 4, Art. XIII of the Constitution.107

Reacting, HLI insists that agrarian reform is not only about transfer of land ownership to farmers and other qualified beneficiaries. It draws attention in this regard to Sec. 3(a) of RA 6657 on the concept and scope of the term "agrarian reform." The constitutionality of a law, HLI added, cannot, as here, be attacked collaterally. The instant challenge on the constitutionality of Sec. 31 of RA 6657 and necessarily its counterpart provision in EO 229 must fail as explained below. When the Court is called upon to exercise its power of judicial review over, and pass upon the constitutionality of, acts of the executive or legislative departments, it does so only when the following essential requirements are first met, to wit: (1) there is an actual case or controversy; (2) that the constitutional question is raised at the earliest possible opportunity by a proper party or one with locus standi; and (3) the issue of constitutionality must be the very lis mota of the case.108 Not all the foregoing requirements are satisfied in the case at bar. While there is indeed an actual case or controversy, intervenor FARM, composed of a small minority of 27 farmers, has yet to explain its failure to challenge the constitutionality of Sec. 3l of RA 6657, since as early as November 21, l989 when PARC approved the SDP of Hacienda Luisita or at least within a reasonable time thereafter and why its members received benefits from the SDP without so much of a protest. It was only on December 4, 2003 or 14 years after approval of the SDP via PARC Resolution No. 89-12-2 dated November 21, 1989 that said plan and approving resolution were sought to be revoked, but not, to stress, by FARM or any of its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT question the constitutionality of Sec. 31 of RA 6657, but concentrated on the purported flaws and gaps in the subsequent implementation of the SDP. Even the public respondents, as represented by the Solicitor General, did not question the constitutionality of the provision. On the other hand, FARM, whose 27 members formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM some eighteen (18) years from November 21, 1989 before it challenged the constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept on their rights and even accepted benefits from the SDP with nary a complaint on the alleged unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot now be goaded into resolving a constitutional issue that FARM failed to assail after the lapse of a long period of time and the occurrence of numerous events and activities which resulted from the application of an alleged unconstitutional legal provision. It has been emphasized in a number of cases that the question of constitutionality will not be passed upon by the Court unless it is properly raised and presented in an appropriate case at the first opportunity.109 FARM is, therefore, remiss in belatedly questioning the constitutionality of Sec. 31 of RA 6657. The second requirement that the constitutional question should be raised at the earliest possible opportunity is clearly wanting. The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not likewise obtain. The lis mota aspect is not present, the constitutional issue tendered not being critical to the resolution of the case. The unyielding rule has been to avoid, whenever plausible, an issue assailing the constitutionality of a statute or governmental act.110 If some other grounds exist by which judgment can be made without touching the constitutionality of a law, such recourse is favored.111 Garcia v. Executive Secretary explains why: Lis Mota the fourth requirement to satisfy before this Court will undertake judicial review means that the Court will not pass upon a question of unconstitutionality, although properly presented, if the case can be disposed of on some other ground, such as the application of the statute or the general law. The petitioner must be able to show that the case cannot be legally resolved unless the constitutional question raised is determined. This requirement is based on the rule that every law has in its favor the presumption of constitutionality; to justify its nullification, there must be a clear and unequivocal breach of the Constitution, and not one that is doubtful, speculative, or argumentative.112 (Italics in the original.) The lis mota in this case, proceeding from the basic positions originally taken by AMBALA (to which the FARM members previously belonged) and the Supervisory Group, is the alleged non-compliance by HLI with the conditions of the SDP to support a plea for its revocation. And before the Court, the lis mota is whether or

not PARC acted in grave abuse of discretion when it ordered the recall of the SDP for such non-compliance and the fact that the SDP, as couched and implemented, offends certain constitutional and statutory provisions. To be sure, any of these key issues may be resolved without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into the underlying petitions of AMBALA, et al., it is not the said section per se that is invalid, but rather it is the alleged application of the said provision in the SDP that is flawed. It may be well to note at this juncture that Sec. 5 of RA 9700,113 amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis--vis the stock distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: "[T]hat after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell and compulsory acquisition." Thus, for all intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional should be a moot issue. It is true that the Court, in some cases, has proceeded to resolve constitutional issues otherwise already moot and academic114 provided the following requisites are present: x x x first, there is a grave violation of the Constitution; second, the exceptional character of the situation and the paramount public interest is involved; third, when the constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public; fourth, the case is capable of repetition yet evading review. These requisites do not obtain in the case at bar. For one, there appears to be no breach of the fundamental law. Sec. 4, Article XIII of the Constitution reads: The State shall, by law, undertake an agrarian reform program founded on the right of the 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.) The wording of the provision is unequivocalthe 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 distributiondirect 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,"115 while "collectively" is defined as "in a collective sense or manner; in a mass or body."116 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 (Emphasis supplied.) SEC. 31. Corporate Landowners. x x x 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 companys 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 (Emphasis supplied.) 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 farmersDIRECT 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.117 (Emphasis supplied.) 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. Likewise, Sec. 4, Art. XIII of the Constitution makes mention of a commitment on the part of the State to pursue, by law, an agrarian reform program founded on the policy of land for the landless, but subject to such priorities as Congress may prescribe, taking into account such abstract variable as "equity considerations." The textual reference to a law and Congress necessarily implies that the above constitutional provision is not selfexecutoryand that legislation is needed to implement the urgently needed program of agrarian reform. And RA 6657 has been enacted precisely pursuant to and as a mechanism to carry out the constitutional directives. This

piece of legislation, in fact, restates118 the agrarian reform policy established in the aforementioned provision of the Constitution of promoting the welfare of landless farmers and farmworkers. RA 6657 thus defines "agrarian reform" as "the redistribution of lands to farmers and regular farmworkers who are landless 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 stock which will allow beneficiaries to receive a just share of the fruits of the lands they work." With the view We take of this case, the stock distribution option devised under Sec. 31 of RA 6657 hews with the agrarian reform policy, as instrument of social justice under Sec. 4 of Article XIII of the Constitution. Albeit land ownership for the landless appears to be the dominant theme of that policy, We emphasize that Sec. 4, Article XIII of the Constitution, as couched, does not constrict Congress to passing an agrarian reform law planted on direct land transfer to and ownership by farmers and no other, or else the enactment suffers from the vice of unconstitutionality. If the intention were otherwise, the framers of the Constitution would have worded said section in a manner mandatory in character. For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features, is not inconsistent with the States commitment to farmers and farmworkers to advance their interests under the policy of social justice. The legislature, thru Sec. 31 of RA 6657, has chosen a modality for collective ownership by which the imperatives of social justice may, in its estimation, be approximated, if not achieved. The Court should be bound by such policy choice. FARM contends that the farmers in the stock distribution scheme under Sec. 31 do not own the agricultural land but are merely given stock certificates. Thus, the farmers lose control over the land to the board of directors and executive officials of the corporation who actually manage the land. They conclude that such arrangement runs counter to the mandate of the Constitution that any agrarian reform must preserve the control over the land in the hands of the tiller. This contention has no merit. While it is true that the farmer is issued stock certificates and does not directly own the land, still, the Corporation Code is clear that the FWB becomes a stockholder who acquires an equitable interest in the assets of the corporation, which include the agricultural lands. It was explained that the "equitable interest of the shareholder in the property of the corporation is represented by the term stock, and the extent of his interest is described by the term shares. The expression shares of stock when qualified by words indicating number and ownership expresses the extent of the owners interest in the corporate property."119 A share of stock typifies an aliquot part of the corporations property, or the right to share in its proceeds to that extent when distributed according to law and equity and that its holder is not the owner of any part of the capital of the corporation.120 However, the FWBs will ultimately own the agricultural lands owned by the corporation when the corporation is eventually dissolved and liquidated. Anent the alleged loss of control of the farmers over the agricultural land operated and managed by the corporation, a reading of the second paragraph of Sec. 31 shows otherwise. Said provision provides that qualified beneficiaries have "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 companys total assets." The wording of the formula in the computation of the number of shares that can be bought by the farmers does not mean loss of control on the part of the farmers. It must be remembered that the determination of the percentage of the capital stock that can be bought by the farmers depends on the value of the agricultural land and the value of the total assets of the corporation. 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. A view has been advanced that there can be no agrarian reform unless there is land distribution and that actual land distribution is the essential characteristic of a constitutional agrarian reform program. On the contrary, there have been so many instances where, despite actual land distribution, the implementation of agrarian reform was still unsuccessful. As a matter of fact, this Court may take judicial notice of cases where FWBs sold the awarded land even to non-qualified persons and in violation of the prohibition period provided under the law. This only proves to show that the mere fact that there is land distribution does not guarantee a successful implementation of agrarian reform. As it were, the principle of "land to the tiller" and the old pastoral model of land ownership where non-human juridical persons, such as corporations, were prohibited from owning agricultural lands are no longer realistic under existing conditions. Practically, an individual farmer will often face greater disadvantages and difficulties than those who exercise ownership in a collective manner through a cooperative or corporation. The former is too often left to his own devices when faced with failing crops and bad weather, or compelled to obtain usurious loans in order to purchase costly fertilizers or farming equipment. The experiences learned from failed land reform activities in various parts of the country are lack of financing, lack of farm equipment, lack of fertilizers, lack of guaranteed buyers of produce, lack of farm-to-market roads, among others. Thus, at the end of the day, there is still no successful implementation of agrarian reform to speak of in such a case. Although success is not guaranteed, a cooperative or a corporation stands in a better position to secure funding and competently maintain the agri-business than the individual farmer. While direct singular ownership over farmland does offer advantages, such as the ability to make quick decisions unhampered by interference from others, yet at best, these advantages only but offset the disadvantages that are often associated with such ownership arrangement. Thus, government must be flexible and creative in its mode of implementation to better its chances of success. One such option is collective ownership through juridical persons composed of farmers. Aside from the fact that there appears to be no violation of the Constitution, the requirement that the instant case be capable of repetition yet evading review is also wanting. It would be speculative for this Court to assume that the legislature will enact another law providing for a similar stock option. As a matter of sound practice, the Court will not interfere inordinately with the exercise by Congress of its official functions, the heavy presumption being that a law is the product of earnest studies by Congress to ensure that no constitutional prescription or concept is infringed.121 Corollarily, courts will not pass upon questions of wisdom, expediency and justice of legislation or its provisions. Towards this end, all reasonable doubts should be resolved in favor of the constitutionality of a law and the validity of the acts and processes taken pursuant thereof.122 Consequently, before a statute or its provisions duly challenged are voided, an unequivocal breach of, or a clear conflict with the Constitution, not merely a doubtful or argumentative one, must be demonstrated in such a manner as to leave no doubt in the mind of the Court. In other words, the grounds for nullity must be beyond reasonable doubt.123 FARM has not presented compelling arguments to overcome the presumption of constitutionality of Sec. 31 of RA 6657. The wisdom of Congress in allowing an SDP through a corporation as an alternative mode of implementing agrarian reform is not for judicial determination. Established jurisprudence tells us that it is not within the province of the Court to inquire into the wisdom of the law, for, indeed, We are bound by words of the statute.124 II. The stage is now set for the determination of the propriety under the premises of the revocation or recall of HLIs SDP. Or to be more precise, the inquiry should be: whether or not PARC gravely abused its discretion in revoking or recalling the subject SDP and placing the hacienda under CARPs compulsory acquisition and distribution scheme. The findings, analysis and recommendation of the DARs Special Task Force contained and summarized in its Terminal Report provided the bases for the assailed PARC revocatory/recalling Resolution. The findings may be grouped into two: (1) the SDP is contrary to either the policy on agrarian reform, Sec. 31 of RA 6657, or DAO 10; and (2) the alleged violation by HLI of the conditions/terms of the SDP. In more particular terms, the following are essentially the reasons underpinning PARCs revocatory or recall action:

(1) Despite the lapse of 16 years from the approval of HLIs SDP, the lives of the FWBs have hardly improved and the promised increased income has not materialized; (2) HLI has failed to keep Hacienda Luisita intact and unfragmented; (3) The issuance of HLI shares of stock on the basis of number of hours workedor the so-called "man days"is grossly onerous to the FWBs, as HLI, in the guise of rotation, can unilaterally deny work to anyone. In elaboration of this ground, PARCs Resolution No. 2006-34-01, denying HLIs motion for reconsideration of Resolution No. 2005-32-01, stated that the man days criterion worked to dilute the entitlement of the original share beneficiaries;125 (4) The distribution/transfer of shares was not in accordance with the timelines fixed by law; (5) HLI has failed to comply with its obligations to grant 3% of the gross sales every year as productionsharing benefit on top of the workers salary; and (6) Several homelot awardees have yet to receive their individual titles. Petitioner HLI claims having complied with, at least substantially, all its obligations under the SDP, as approved by PARC itself, and tags the reasons given for the revocation of the SDP as unfounded. Public respondents, on the other hand, aver that the assailed resolution rests on solid grounds set forth in the Terminal Report, a position shared by AMBALA, which, in some pleadings, is represented by the same counsel as that appearing for the Supervisory Group. FARM, for its part, posits the view that legal bases obtain for the revocation of the SDP, because it does not conform to Sec. 31 of RA 6657 and DAO 10. And training its sight on the resulting dilution of the equity of the FWBs appearing in HLIs masterlist, FARM would state that the SDP, as couched and implemented, spawned disparity when there should be none; parity when there should have been differentiation.126 The petition is not impressed with merit. In the Terminal Report adopted by PARC, it is stated that the SDP violates the agrarian reform policy under Sec. 2 of RA 6657, as the said plan failed to enhance the dignity and improve the quality of lives of the FWBs through greater productivity of agricultural lands. We disagree. Sec. 2 of RA 6657 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. (Emphasis supplied.) Paragraph 2 of the above-quoted provision specifically mentions that "a more equitable distribution and ownership of land x x x 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." Of note is the term "opportunity" which is defined as a favorable chance or opening offered by circumstances.127 Considering this, by no stretch of imagination can said provision be construed as a guarantee

in improving the lives of the FWBs. At best, it merely provides for a possibility or favorable chance of uplifting the economic status of the FWBs, which may or may not be attained. Pertinently, improving the economic status of the FWBs is neither among the legal obligations of HLI under the SDP nor an imperative imposition by RA 6657 and DAO 10, a violation of which would justify discarding the stock distribution option. Nothing in that option agreement, law or department order indicates otherwise. Significantly, HLI draws particular attention to its having paid its FWBs, during the regime of the SDP (19892005), some PhP 3 billion by way of salaries/wages and higher benefits exclusive of free hospital and medical benefits to their immediate family. And attached as Annex "G" to HLIs Memorandum is the certified true report of the finance manager of Jose Cojuangco & Sons Organizations-Tarlac Operations, captioned as "HACIENDA LUISITA, INC. Salaries, Benefits and Credit Privileges (in Thousand Pesos) Since the Stock Option was Approved by PARC/CARP," detailing what HLI gave their workers from 1989 to 2005. The sum total, as added up by the Court, yields the following numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) = PhP 2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits) = PhP 303,040. The cash out figures, as stated in the report, include the cost of homelots; the PhP 150 million or so representing 3% of the gross produce of the hacienda; and the PhP 37.5 million representing 3% from the proceeds of the sale of the 500-hectare converted lands. While not included in the report, HLI manifests having given the FWBs 3% of the PhP 80 million paid for the 80 hectares of land traversed by the SCTEX.128 On top of these, it is worth remembering that the shares of stocks were given by HLI to the FWBs for free. Verily, the FWBs have benefited from the SDP. To address urgings that the FWBs be allowed to disengage from the SDP as HLI has not anyway earned profits through the years, it cannot be over-emphasized that, as a matter of common business sense, no corporation could guarantee a profitable run all the time. As has been suggested, one of the key features of an SDP of a corporate landowner is the likelihood of the corporate vehicle not earning, or, worse still, losing money.129 The Court is fully aware that one of the criteria under DAO 10 for the PARC to consider the advisability of approving a stock distribution plan is the likelihood that the plan "would result in increased income and greater benefits to [qualified beneficiaries] than if the lands were divided and distributed to them individually."130 But as aptly noted during the oral arguments, DAO 10 ought to have not, as it cannot, actually exact assurance of success on something that is subject to the will of man, the forces of nature or the inherent risky nature of business.131 Just like in actual land distribution, an SDP cannot guarantee, as indeed the SDOA does not guarantee, a comfortable life for the FWBs. The Court can take judicial notice of the fact that there were many instances wherein after a farmworker beneficiary has been awarded with an agricultural land, he just subsequently sells it and is eventually left with nothing in the end. In all then, the onerous condition of the FWBs economic status, their life of hardship, if that really be the case, can hardly be attributed to HLI and its SDP and provide a valid ground for the plans revocation. Neither does HLIs SDP, whence the DAR-attested SDOA/MOA is based, infringe Sec. 31 of RA 6657, albeit public respondents erroneously submit otherwise. The provisions of the first paragraph of the adverted Sec. 31 are without relevance to the issue on the propriety of the assailed order revoking HLIs SDP, for the paragraph deals with the transfer of agricultural lands to the government, as a mode of CARP compliance, thus: SEC. 31. Corporate Landowners.Corporate landowners may voluntarily transfer ownership over their agricultural landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to qualified beneficiaries under such terms and conditions, consistent with this Act, as they may agree, subject to confirmation by the DAR. The second and third paragraphs, with their sub-paragraphs, of Sec. 31 provide as follows: 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 companys 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. x x x

Corporations or associations which voluntarily divest a proportion of their capital stock, equity or participation in favor of their workers or other qualified beneficiaries under this section shall be deemed to have complied with the provisions of this Act: Provided, That the following conditions are complied with: (a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and other financial benefits, the books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries; (b) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured of at least one (1) representative in the board of directors, or in a management or executive committee, if one exists, of the corporation or association; (c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares; and (d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless said transaction is in favor of a qualified and registered beneficiary within the same corporation. The mandatory minimum ratio of land-to-shares of stock supposed to be distributed or allocated to qualified beneficiaries, adverting to what Sec. 31 of RA 6657 refers to as that "proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the companys total assets" had been observed. Paragraph one (1) of the SDOA, which was based on the SDP, conforms to Sec. 31 of RA 6657. The stipulation reads: 1. The percentage of the value of the agricultural land of Hacienda Luisita (P196,630,000.00) in relation to the total assets (P590,554,220.00) transferred and conveyed to the SECOND PARTY is 33.296% that, under the law, is the proportion of the outstanding capital stock of the SECOND PARTY, which is P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per share, that has to be distributed to the THIRD PARTY under the stock distribution plan, the said 33.296% thereof being P118,391,976.85 or 118,391,976.85 shares. The appraised value of the agricultural land is PhP 196,630,000 and of HLIs other assets is PhP 393,924,220. The total value of HLIs assets is, therefore, PhP 590,554,220.132 The percentage of the value of the agricultural lands (PhP 196,630,000) in relation to the total assets (PhP 590,554,220) is 33.296%, which represents the stockholdings of the 6,296 original qualified farmworker-beneficiaries (FWBs) in HLI. The total number of shares to be distributed to said qualified FWBs is 118,391,976.85 HLI shares. This was arrived at by getting 33.296% of the 355,531,462 shares which is the outstanding capital stock of HLI with a value of PhP 355,531,462. Thus, if we divide the 118,391,976.85 HLI shares by 6,296 FWBs, then each FWB is entitled to 18,804.32 HLI shares. These shares under the SDP are to be given to FWBs for free. The Court finds that the determination of the shares to be distributed to the 6,296 FWBs strictly adheres to the formula prescribed by Sec. 31(b) of RA 6657. Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs shall be assured of at least one (1) representative in the board of directors or in a management or executive committee irrespective of the value of the equity of the FWBs in HLI, the Court finds that the SDOA contained provisions making certain the FWBs representation in HLIs governing board, thus: 5. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from the FIRST PARTY and distributed to the THIRD PARTY, FIRST PARTY shall execute at the beginning of each fiscal year an irrevocable proxy, valid and effective for one (1) year, in favor of the farmworkers appearing as shareholders of the SECOND PARTY at the start of said year which will empower the THIRD PARTY or their representative to vote in stockholders and board of directors meetings of the SECOND PARTY convened during the year the entire 33.296% of the outstanding capital stock of the SECOND PARTY earmarked for distribution and thus be able to gain such number of seats in the board of directors of the SECOND PARTY that the whole 33.296% of the shares subject to distribution will be entitled to. Also, no allegations have been made against HLI restricting the inspection of its books by accountants chosen by the FWBs; hence, the assumption may be made that there has been no violation of the statutory prescription under sub-paragraph (a) on the auditing of HLIs accounts.

Public respondents, however, submit that the distribution of the mandatory minimum ratio of land-to-shares of stock, referring to the 118,391,976.85 shares with par value of PhP 1 each, should have been made in full within two (2) years from the approval of RA 6657, in line with the last paragraph of Sec. 31 of said law.133 Public respondents submission is palpably erroneous. We have closely examined the last paragraph alluded to, with particular focus on the two-year period mentioned, and nothing in it remotely supports the public respondents posture. In its pertinent part, said Sec. 31 provides: SEC. 31. Corporate Landowners x x x If within two (2) years from the approval of this Act, the [voluntary] land or stock transfer envisioned above is not made or realized or the plan for such stock distribution approved by the PARC within the same period, the agricultural land of the corporate owners or corporation shall be subject to the compulsory coverage of this Act. (Word in bracket and emphasis added.) Properly viewed, the words "two (2) years" clearly refer to the period within which the corporate landowner, to avoid land transfer as a mode of CARP coverage under RA 6657, is to avail of the stock distribution option or to have the SDP approved. The HLI secured approval of its SDP in November 1989, well within the two-year period reckoned from June 1988 when RA 6657 took effect. Having hurdled the alleged breach of the agrarian reform policy under Sec. 2 of RA 6657 as well as the statutory issues, We shall now delve into what PARC and respondents deem to be other instances of violation of DAO 10 and the SDP. On the Conversion of Lands Contrary to the almost parallel stance of the respondents, keeping Hacienda Luisita unfragmented is also not among the imperative impositions by the SDP, RA 6657, and DAO 10. The Terminal Report states that the proposed distribution plan submitted in 1989 to the PARC effectively assured the intended stock beneficiaries that the physical integrity of the farm shall remain inviolate. Accordingly, the Terminal Report and the PARC-assailed resolution would take HLI to task for securing approval of the conversion to non-agricultural uses of 500 hectares of the hacienda. In not too many words, the Report and the resolution view the conversion as an infringement of Sec. 5(a) of DAO 10 which reads: "a. that the continued operation of the corporation with its agricultural land intact and unfragmented is viable with potential for growth and increased profitability." The PARC is wrong. In the first place, Sec. 5(a)just like the succeeding Sec. 5(b) of DAO 10 on increased income and greater benefits to qualified beneficiariesis but one of the stated criteria to guide PARC in deciding on whether or not to accept an SDP. Said Sec. 5(a) does not exact from the corporate landowner-applicant the undertaking to keep the farm intact and unfragmented ad infinitum. And there is logic to HLIs stated observation that the key phrase in the provision of Sec. 5(a) is "viability of corporate operations": "[w]hat is thus required is not the agricultural land remaining intact x x x but the viability of the corporate operations with its agricultural land being intact and unfragmented. Corporate operation may be viable even if the corporate agricultural land does not remain intact or [un]fragmented."134 It is, of course, anti-climactic to mention that DAR viewed the conversion as not violative of any issuance, let alone undermining the viability of Hacienda Luisitas operation, as the DAR Secretary approved the land conversion applied for and its disposition via his Conversion Order dated August 14, 1996 pursuant to Sec. 65 of RA 6657 which reads: Sec. 65. Conversion of Lands.After the lapse of five years from its award when the land ceases 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, the DAR upon application of the beneficiary or landowner with due notice to the affected parties, and subject to existing laws, may authorize the x x x conversion of the land and its dispositions. x x x On the 3% Production Share

On the matter of the alleged failure of HLI to comply with sharing the 3% of the gross production sales of the hacienda and pay dividends from profit, the entries in its financial books tend to indicate compliance by HLI of the profit-sharing equivalent to 3% of the gross sales from the production of the agricultural land on top of (a) the salaries and wages due FWBs as employees of the company and (b) the 3% of the gross selling price of the converted land and that portion used for the SCTEX. A plausible evidence of compliance or non-compliance, as the case may be, could be the books of account of HLI. Evidently, the cry of some groups of not having received their share from the gross production sales has not adequately been validated on the ground by the Special Task Force. Indeed, factual findings of administrative agencies are conclusive when supported by substantial evidence and are accorded due respect and weight, especially when they are affirmed by the CA.135 However, such rule is not absolute. One such exception is when the findings of an administrative agency are conclusions without citation of specific evidence on which they are based,136 such as in this particular instance. As culled from its Terminal Report, it would appear that the Special Task Force rejected HLIs claim of compliance on the basis of this ratiocination:

The Task Force position: Though, allegedly, the Supervisory Group receives the 3% gross production share and that others alleged that they received 30 million pesos still others maintain that they have not received anything yet. Item No. 4 of the MOA is clear and must be followed. There is a distinction between the total gross sales from the production of the land and the proceeds from the sale of the land. The former refers to the fruits/yield of the agricultural land while the latter is the land itself. The phrase "the beneficiaries are entitled every year to an amount approximately equivalent to 3% would only be feasible if the subject is the produce since there is at least one harvest per year, while such is not the case in the sale of the agricultural land. This negates then the claim of HLI that, all that the FWBs can be entitled to, if any, is only 3% of the purchase price of the converted land. Besides, the Conversion Order dated 14 August 1996 provides that "the benefits, wages and the like, presently received by the FWBs shall not in any way be reduced or adversely affected. Three percent of the gross selling price of the sale of the converted land shall be awarded to the beneficiaries of the SDO." The 3% gross production share then is different from the 3% proceeds of the sale of the converted land and, with more reason, the 33% share being claimed by the FWBs as part owners of the Hacienda, should have been given the FWBs, as stockholders, and to which they could have been entitled if only the land were acquired and redistributed to them under the CARP. xxxx

The FWBs do not receive any other benefits under the MOA except the aforementioned [(viz: shares of stocks (partial), 3% gross production sale (not all) and homelots (not all)].

Judging from the above statements, the Special Task Force is at best silent on whether HLI has failed to comply with the 3% production-sharing obligation or the 3% of the gross selling price of the converted land and the SCTEX lot. In fact, it admits that the FWBs, though not all, have received their share of the gross production sales and in the sale of the lot to SCTEX. At most, then, HLI had complied substantially with this SDP undertaking and the conversion order. To be sure, this slight breach would not justify the setting to naught by PARC of the approval action of the earlier PARC. Even in contract law, rescission, predicated on violation of reciprocity, will not be permitted for a slight or casual breach of contract; rescission may be had only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement.137 Despite the foregoing findings, the revocation of the approval of the SDP is not without basis as shown below. On Titles to Homelots Under RA 6657, the distribution of homelots is required only for corporations or business associations owning or operating farms which opted for land distribution. Sec. 30 of RA 6657 states: SEC. 30. Homelots and Farmlots for Members of Cooperatives.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. The "preceding section" referred to in the above-quoted provision is as follows:

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. 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. Noticeably, the foregoing provisions do not make reference to corporations which opted for stock distribution under Sec. 31 of RA 6657. Concomitantly, said corporations are not obliged to provide for it except by stipulation, as in this case. Under the SDP, 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," "within a reasonable time." More than sixteen (16) years have elapsed from the time the SDP was approved by PARC, and yet, it is still the contention of the FWBs that not all was given the 240-square meter homelots and, of those who were already given, some still do not have the corresponding titles. During the oral arguments, HLI was afforded the chance to refute the foregoing allegation by submitting proof that the FWBs were already given the said homelots: Justice Velasco: x x x There is also an allegation that the farmer beneficiaries, the qualified family beneficiaries were not given the 240 square meters each. So, can you also [prove] that the qualified family beneficiaries were already provided the 240 square meter homelots. Atty. Asuncion: We will, your Honor please.138 Other than the financial report, however, no other substantial proof showing that all the qualified beneficiaries have received homelots was submitted by HLI. Hence, this Court is constrained to rule that HLI has not yet fully complied with its undertaking to distribute homelots to the FWBs under the SDP. On "Man Days" and the Mechanics of Stock Distribution In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the SDOA states: 3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY. Based on the above-quoted provision, the distribution of the shares of stock to the FWBs, albeit not entailing a cash out from them, is contingent on the number of "man days," that is, the number of days that the FWBs have worked during the year. This formula deviates from Sec. 1 of DAO 10, which decrees the distribution of equal number of shares to the FWBs as the minimum ratio of shares of stock for purposes of compliance with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10: Section 4. Stock Distribution Plan.The [SDP] submitted by the corporate landowner-applicant shall provide for the distribution of an equal number of shares of the same class and value, with the same rights and features as all other shares, to each of the qualified beneficiaries. This distribution plan in all cases, shall be at least the minimum ratio for purposes of compliance with Section 31 of R.A. No. 6657.

On top of the minimum ratio provided under Section 3 of this Implementing Guideline, the corporate landowner-applicant may adopt additional stock distribution schemes taking into account factors such as rank, seniority, salary, position and other circumstances which may be deemed desirable as a matter of sound company policy. (Emphasis supplied.) The above proviso gives two (2) sets or categories of shares of stock which a qualified beneficiary can acquire from the corporation under the SDP. The first pertains, as earlier explained, to the mandatory minimum ratio of shares of stock to be distributed to the FWBs in compliance with Sec. 31 of RA 6657. This minimum ratio contemplates of that "proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the companys total assets."139 It is this set of shares of stock which, in line with Sec. 4 of DAO 10, is supposed to be allocated "for the distribution of an equal number of shares of stock of the same class and value, with the same rights and features as all other shares, to each of the qualified beneficiaries." On the other hand, the second set or category of shares partakes of a gratuitous extra grant, meaning that this set or category constitutes an augmentation share/s that the corporate landowner may give under an additional stock distribution scheme, taking into account such variables as rank, seniority, salary, position and like factors which the management, in the exercise of its sound discretion, may deem desirable.140 Before anything else, it should be stressed that, at the time PARC approved HLIs SDP, HLI recognized 6,296individuals as qualified FWBs. And under the 30-year stock distribution program envisaged under the plan, FWBs who came in after 1989, new FWBs in fine, may be accommodated, as they appear to have in fact been accommodated as evidenced by their receipt of HLI shares. Now then, by providing that the number of shares of the original 1989 FWBs shall depend on the number of "man days," HLI violated the afore-quoted rule on stock distribution and effectively deprived the FWBs of equal shares of stock in the corporation, for, in net effect, these 6,296 qualified FWBs, who theoretically had given up their rights to the land that could have been distributed to them, suffered a dilution of their due share entitlement. As has been observed during the oral arguments, HLI has chosen to use the shares earmarked for farmworkers as reward system chips to water down the shares of the original 6,296 FWBs.141 Particularly: Justice Abad: If the SDOA did not take place, the other thing that would have happened is that there would be CARP? Atty. Dela Merced: Yes, Your Honor. Justice Abad: Thats the only point I want to know x x x. Now, but they chose to enter SDOA instead of placing the land under CARP. And for that reason those who would have gotten their shares of the land actually gave up their rights to this land in place of the shares of the stock, is that correct? Atty. Dela Merced: It would be that way, Your Honor. Justice Abad: Right now, also the government, in a way, gave up its right to own the land because that way the government takes own [sic] the land and distribute it to the farmers and pay for the land, is that correct? Atty. Dela Merced: Yes, Your Honor. Justice Abad: And then you gave thirty-three percent (33%) of the shares of HLI to the farmers at that time that numbered x x x those who signed five thousand four hundred ninety eight (5,498) beneficiaries, is that correct? Atty. Dela Merced: Yes, Your Honor. Justice Abad: But later on, after assigning them their shares, some workers came in from 1989, 1990, 1991, 1992 and the rest of the years that you gave additional shares who were not in the original list of owners? Atty. Dela Merced: Yes, Your Honor. Justice Abad: Did those new workers give up any right that would have belong to them in 1989 when the land was supposed to have been placed under CARP? Atty. Dela Merced: If you are talking or referring (interrupted)

Justice Abad: None! You tell me. None. They gave up no rights to land? Atty. Dela Merced: They did not do the same thing as we did in 1989, Your Honor. Justice Abad: No, if they were not workers in 1989 what land did they give up? None, if they become workers later on. Atty. Dela Merced: None, Your Honor, I was referring, Your Honor, to the original (interrupted) Justice Abad: So why is it that the rights of those who gave up their lands would be diluted, because the company has chosen to use the shares as reward system for new workers who come in? It is not that the new workers, in effect, become just workers of the corporation whose stockholders were already fixed. The TADECO who has shares there about sixty six percent (66%) and the five thousand four hundred ninety eight (5,498) farmers at the time of the SDOA? Explain to me. Why, why will you x x x what right or where did you get that right to use this shares, to water down the shares of those who should have been benefited, and to use it as a reward system decided by the company?142 From the above discourse, it is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the time of the approval of the SDP, suffered from watering down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and distribution of the HLI shares were based on "man days" or "number of days worked" by the FWB in a years time. As explained by HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not get any share at year end. The number of HLI shares distributed varies depending on the number of days the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to the original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include the original 6,296 FWBs, were given shares out of the 118,931,976.85 HLI shares representing the 33.296% of the total outstanding capital stock of HLI. Clearly, the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of "man days" and the hiring of additional farmworkers. Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year timeframe for HLIto-FWBs stock transfer is an arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved stock distribution plan within three (3) months from receipt by the corporate landowner of the approval of the plan by PARC. In fact, based on the said provision, the transfer of the shares of stock in the names of the qualified FWBs should be recorded in the stock and transfer books and must be submitted to the SEC within sixty (60) days from implementation. As stated: Section 11. Implementation/Monitoring of Plan.The approved stock distribution plan shall be implemented within three (3) months from receipt by the corporate landowner-applicant of the approval thereof by the PARC, and the transfer of the shares of stocks in the names of the qualified beneficiaries shall be recorded in stock and transfer books and submitted to the Securities and Exchange Commission (SEC) within sixty (60) days from the said implementation of the stock distribution plan. (Emphasis supplied.) It is evident from the foregoing provision that the implementation, that is, the distribution of the shares of stock to the FWBs, must be made within three (3) months from receipt by HLI of the approval of the stock distribution plan by PARC. While neither of the clashing parties has made a compelling case of the thrust of this provision, the Court is of the view and so holds that the intent is to compel the corporate landowner to complete, not merely initiate, the transfer process of shares within that three-month timeframe. Reinforcing this conclusion is the 60-day stock transfer recording (with the SEC) requirement reckoned from the implementation of the SDP. To the Court, there is a purpose, which is at once discernible as it is practical, for the three-month threshold. Remove this timeline and the corporate landowner can veritably evade compliance with agrarian reform by simply deferring to absurd limits the implementation of the stock distribution scheme. The argument is urged that the thirty (30)-year distribution program is justified by the fact that, under Sec. 26 of RA 6657, payment by beneficiaries of land distribution under CARP shall be made in thirty (30) annual amortizations. To HLI, said section provides a justifying dimension to its 30-year stock distribution program.

HLIs reliance on Sec. 26 of RA 6657, quoted in part below, is obviously misplaced as the said provision clearly deals with land distribution. SEC. 26. Payment by Beneficiaries.Lands awarded pursuant to this Act shall be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations x x x. Then, too, the ones obliged to pay the LBP under the said provision are the beneficiaries. On the other hand, in the instant case, aside from the fact that what is involved is stock distribution, it is the corporate landowner who has the obligation to distribute the shares of stock among the FWBs. Evidently, the land transfer beneficiaries are given thirty (30) years within which to pay the cost of the land thus awarded them to make it less cumbersome for them to pay the government. To be sure, the reason underpinning the 30-year accommodation does not apply to corporate landowners in distributing shares of stock to the qualified beneficiaries, as the shares may be issued in a much shorter period of time. Taking into account the above discussion, the revocation of the SDP by PARC should be upheld for violating DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC and the DAR have the power to issue rules and regulations, substantive or procedural. Being a product of such rule-making power, DAO 10 has the force and effect of law and must be duly complied with.143 The PARC is, therefore, correct in revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated November 21, l989 approving the HLIs SDP is nullified and voided. III. We now resolve the petitions-in-intervention which, at bottom, uniformly pray for the exclusion from the coverage of the assailed PARC resolution those portions of the converted land within Hacienda Luisita which RCBC and LIPCO acquired by purchase. Both contend that they are innocent purchasers for value of portions of the converted farm land. Thus, their plea for the exclusion of that portion from PARC Resolution 2005-32-01, as implemented by a DAR-issued Notice of Coverage dated January 2, 2006, which called for mandatory CARP acquisition coverage of lands subject of the SDP. To restate the antecedents, after the conversion of the 500 hectares of land in Hacienda Luisita, HLI transferred the 300 hectares to Centennary, while ceding the remaining 200-hectare portion to LRC. Subsequently, LIPCO purchased the entire three hundred (300) hectares of land from Centennary for the purpose of developing the land into an industrial complex.144 Accordingly, the TCT in Centennarys name was canceled and a new one issued in LIPCOs name. Thereafter, said land was subdivided into two (2) more parcels of land. Later on, LIPCO transferred about 184 hectares to RCBC by way of dacion en pago, by virtue of which TCTs in the name of RCBC were subsequently issued. Under Sec. 44 of PD 1529 or the Property Registration Decree, "every registered owner receiving a certificate of title in pursuance of a decree of registration and every subsequent purchaser of registered land taking a certificate of title for value and in good faith shall hold the same free from all encumbrances except those noted on the certificate and enumerated therein."145 It is settled doctrine that one who deals with property registered under the Torrens system need not go beyond the four corners of, but can rely on what appears on, the title. He is charged with notice only of such burdens and claims as are annotated on the title. This principle admits of certain exceptions, such as when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry, or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation.146 A higher level of care and diligence is of course expected from banks, their business being impressed with public interest.147 Millena v. Court of Appeals describes a purchaser in good faith in this wise: x x x A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. Good faith, or the lack of it, is in the final analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. Truly, good faith is not a visible, tangible fact that can be seen or touched, but rather a

state or condition of mind which can only be judged by actual or fancied tokens or signs. Otherwise stated, good faith x x x refers to the state of mind which is manifested by the acts of the individual concerned.148 (Emphasis supplied.) In fine, there are two (2) requirements before one may be considered a purchaser in good faith, namely: (1) that the purchaser buys the property of another without notice that some other person has a right to or interest in such property; and (2) that the purchaser pays a full and fair price for the property at the time of such purchase or before he or she has notice of the claim of another. It can rightfully be said that both LIPCO and RCBC arebased on the above requirements and with respect to the adverted transactions of the converted land in questionpurchasers in good faith for value entitled to the benefits arising from such status. First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial land, there was no notice of any supposed defect in the title of its transferor, Centennary, or that any other person has a right to or interest in such property. In fact, at the time LIPCO acquired said parcels of land, only the following annotations appeared on the TCT in the name of Centennary: the Secretarys Certificate in favor of Teresita Lopa, the Secretarys Certificate in favor of Shintaro Murai, and the conversion of the property from agricultural to industrial and residential use.149 The same is true with respect to RCBC. At the time it acquired portions of Hacienda Luisita, only the following general annotations appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its use solely as an industrial estate; the Secretarys Certificate in favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP 300 million. It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that were previously covered by the SDP. Good faith "consists in the possessors belief that the person from whom he received it was the owner of the same and could convey his title. Good faith requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another."150 It is the opposite of fraud. To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan, as the DAR conversion order was annotated at the back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots were validly converted to commercial or industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural lands previously covered by CARP land acquisition "after the lapse of five (5) years from its award when the land ceases 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." Moreover, DAR notified all the affected parties, more particularly the FWBs, and gave them the opportunity to comment or oppose the proposed conversion. DAR, after going through the necessary processes, granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and its original exclusive jurisdiction over all matters involving the implementation of agrarian reform. The DAR conversion order became final and executory after none of the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO purchased the lots in question on their honest and well-founded belief that the previous registered owners could legally sell and convey the lots though these were previously subject of CARP coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject lots. And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value. Undeniably, LIPCO acquired 300 hectares of land from Centennary for the amount of PhP 750 million pursuant to a Deed of Sale dated July 30, 1998.151 On the other hand, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of PhP 431,695,732.10. As bona fide purchasers for value, both LIPCO and RCBC have acquired rights which cannot just be disregarded by DAR, PARC or even by this Court. As held in Spouses Chua v. Soriano: With the property in question having already passed to the hands of purchasers in good faith, it is now of no moment that some irregularity attended the issuance of the SPA, consistent with our pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v. Court of Appeals, to wit:

x x x the general rule that the direct result of a previous void contract cannot be valid, is inapplicable in this case as it will directly contravene the Torrens system of registration. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance as to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law. Being purchasers in good faith, the Chuas already acquired valid title to the property. A purchaser in good faith holds an indefeasible title to the property and he is entitled to the protection of the law. 152x x x (Emphasis supplied.) To be sure, the practicalities of the situation have to a point influenced Our disposition on the fate of RCBC and LIPCO. After all, the Court, to borrow from Association of Small Landowners in the Philippines, Inc.,153 is not a "cloistered institution removed" from the realities on the ground. To note, the approval and issuances of both the national and local governments showing that certain portions of Hacienda Luisita have effectively ceased, legally and physically, to be agricultural and, therefore, no longer CARPable are a matter of fact which cannot just be ignored by the Court and the DAR. Among the approving/endorsing issuances:154 (a) Resolution No. 392 dated 11 December 1996 of the Sangguniang Bayan of Tarlac favorably endorsing the 300-hectare industrial estate project of LIPCO; (b) BOI Certificate of Registration No. 96-020 dated 20 December 1996 issued in accordance with the Omnibus Investments Code of 1987; (c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June 1997, approving LIPCOs application for a mixed ecozone and proclaiming the three hundred (300) hectares of the industrial land as a Special Economic Zone; (d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan of Tarlac, approving the Final Development Permit for the Luisita Industrial Park II Project; (e) Development Permit dated 13 August 1997 for the proposed Luisita Industrial Park II Project issued by the Office of the Sangguniang Bayan of Tarlac;155 (f) DENR Environmental Compliance Certificate dated 01 October 1997 issued for the proposed project of building an industrial complex on three hundred (300) hectares of industrial land;156 (g) Certificate of Registration No. 00794 dated 26 December 1997 issued by the HLURB on the project of Luisita Industrial Park II with an area of three million (3,000,000) square meters;157 (h) License to Sell No. 0076 dated 26 December 1997 issued by the HLURB authorizing the sale of lots in the Luisita Industrial Park II; (i) Proclamation No. 1207 dated 22 April 1998 entitled "Declaring Certain Parcels of Private Land in Barangay San Miguel, Municipality of Tarlac, Province of Tarlac, as a Special Economic Zone pursuant to Republic Act No. 7916," designating the Luisita Industrial Park II consisting of three hundred hectares (300 has.) of industrial land as a Special Economic Zone; and (j) Certificate of Registration No. EZ-98-05 dated 07 May 1998 issued by the PEZA, stating that pursuant to Presidential Proclamation No. 1207 dated 22 April 1998 and Republic Act No. 7916, LIPCO has been registered as an Ecozone Developer/Operator of Luisita Industrial Park II located in San Miguel, Tarlac, Tarlac. While a mere reclassification of a covered agricultural land or its inclusion in an economic zone does not automatically allow the corporate or individual landowner to change its use,158 the reclassification process is a prima facie indicium that the land has ceased to be economically feasible and sound for agricultural uses. And if only to stress, DAR Conversion Order No. 030601074-764-(95) issued in 1996 by then DAR Secretary Garilao had effectively converted 500 hectares of hacienda land from agricultural to industrial/commercial use and authorized their disposition.

In relying upon the above-mentioned approvals, proclamation and conversion order, both RCBC and LIPCO cannot be considered at fault for believing that certain portions of Hacienda Luisita are industrial/commercial lands and are, thus, outside the ambit of CARP. The PARC, and consequently DAR, gravely abused its discretion when it placed LIPCOs and RCBCs property which once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of Coverage. As regards the 80.51-hectare land transferred to the government for use as part of the SCTEX, this should also be excluded from the compulsory agrarian reform coverage considering that the transfer was consistent with the governments exercise of the power of eminent domain159 and none of the parties actually questioned the transfer. While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to certain "operative facts" that had occurred in the interim. Pertinently, the "operative fact" doctrine realizes that, in declaring a law or executive action null and void, or, by extension, no longer without force and effect, undue harshness and resulting unfairness must be avoided. This is as it should realistically be, since rights might have accrued in favor of natural or juridical persons and obligations justly incurred in the meantime.160 The actual existence of a statute or executive act is, prior to such a determination, an operative fact and may have consequences which cannot justly be ignored; the past cannot always be erased by a new judicial declaration.161 The oft-cited De Agbayani v. Philippine National Bank162 discussed the effect to be given to a legislative or executive act subsequently declared invalid: x x x It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the government organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication. In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of [unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects,with respect to particular relations, individual and corporate, and particular conduct, private and official." x x x Given the above perspective and considering that more than two decades had passed since the PARCs approval of the HLIs SDP, in conjunction with numerous activities performed in good faith by HLI, and the reliance by the FWBs on the legality and validity of the PARC-approved SDP, perforce, certain rights of the parties, more particularly the FWBs, have to be respected pursuant to the application in a general way of the operative fact doctrine. A view, however, has been advanced that the operative fact doctrine is of minimal or altogether without relevance to the instant case as it applies only in considering the effects of a declaration of unconstitutionality of a statute, and not of a declaration of nullity of a contract. This is incorrect, for this view failed to consider is that it is NOT the SDOA dated May 11, 1989 which was revoked in the instant case. Rather, it is PARCs approval of the HLIs Proposal for Stock Distribution under CARP which embodied the SDP that was nullified. A recall of the antecedent events would show that on May 11, 1989, Tadeco, HLI, and the qualified FWBs executed the SDOA. This agreement provided the basis and mechanics of the SDP that was subsequently proposed and submitted to DAR for approval. It was only after its review that the PARC, through then Sec. Defensor-Santiago, issued the assailed Resolution No. 89-12-2 approving the SDP. Considerably, it is not the SDOA which gave legal force and effect to the stock distribution scheme but instead, it is the approval of the SDP under the PARC Resolution No. 89-12-2 that gave it its validity. The above conclusion is bolstered by the fact that in Sec. Pangandamans recommendation to the PARC Excom, what he proposed is the recall/revocation of PARC Resolution No. 89-12-2 approving HLIs SDP, and

not the revocation of the SDOA. Sec. Pangandamans recommendation was favorably endorsed by the PARC Validation Committee to the PARC Excom, and these recommendations were referred to in the assailed Resolution No. 2005-32-01. Clearly, it is not the SDOA which was made the basis for the implementation of the stock distribution scheme. That the operative fact doctrine squarely applies to executive actsin this case, the approval by PARC of the HLI proposal for stock distributionis well-settled in our jurisprudence. In Chavez v. National Housing Authority,163We held: Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because it is an equitable doctrine which could not be used to countenance an inequitable result that is contrary to its proper office. On the other hand, the petitioner Solicitor General argues that the existence of the various agreements implementing the SMDRP is an operative fact that can no longer be disturbed or simply ignored, citing Rieta v. People of the Philippines. The argument of the Solicitor General is meritorious. The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid and must be complied with, thus: xxx xxx xxx

This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein we ruled that: Moreover, we certainly cannot nullify the City Government's order of suspension, as we have no reason to do so, much less retroactively apply such nullification to deprive private respondent of a compelling and valid reason for not filing the leave application. For as we have held, a void act though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions done in reliance thereof. Consequently, the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached. It would indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a formal leave application. (Citations omitted; Emphasis supplied.) The applicability of the operative fact doctrine to executive acts was further explicated by this Court in Rieta v. People,164 thus: Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754 was invalid, as the law upon which it was predicated General Order No. 60, issued by then President Ferdinand E. Marcos was subsequently declared by the Court, in Taada v. Tuvera, 33 to have no force and effect. Thus, he asserts, any evidence obtained pursuant thereto is inadmissible in evidence. We do not agree. In Taada, the Court addressed the possible effects of its declaration of the invalidity of various presidential issuances. Discussing therein how such a declaration might affect acts done on a presumption of their validity, the Court said: ". . .. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank to wit: The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. . . . It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to [the determination of its invalidity], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most

difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified. xxx xxx xxx

"Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration . . . that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified." The Chicot doctrine cited in Taada advocates that, prior to the nullification of a statute, there is an imperative necessity of taking into account its actual existence as an operative fact negating the acceptance of "a principle of absolute retroactive invalidity." Whatever was done while the legislative or the executive act was in operation should be duly recognized and presumed to be valid in all respects. The ASSO that was issued in 1979 under General Order No. 60 long before our Decision in Taada and the arrest of petitioner is an operative fact that can no longer be disturbed or simply ignored. (Citations omitted; Emphasis supplied.) To reiterate, although the assailed Resolution No. 2005-32-01 states that it revokes or recalls the SDP, what it actually revoked or recalled was the PARCs approval of the SDP embodied in Resolution No. 89-12-2. Consequently, what was actually declared null and void was an executive act, PARC Resolution No. 89-122,165and not a contract (SDOA). It is, therefore, wrong to say that it was the SDOA which was annulled in the instant case. Evidently, the operative fact doctrine is applicable. IV. While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld, the revocation must, by application of the operative fact principle, give way to the right of the original 6,296 qualified FWBs to choose whether they want to remain as HLI stockholders or not. The Court cannot turn a blind eye to the fact that in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP approved by PARC per its Resolution No. 89-12-2 dated November 21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI salaries and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the gross produce from agricultural lands, and 3% of the proceeds of the sale of the 500hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were distributed as of April 22, 2005.166On August 6, 20l0, HLI and private respondents submitted a Compromise Agreement, in which HLI gave the FWBs the option of acquiring a piece of agricultural land or remain as HLI stockholders, and as a matter of fact, most FWBs indicated their choice of remaining as stockholders. These facts and circumstances tend to indicate that some, if not all, of the FWBs may actually desire to continue as HLI shareholders. A matter best left to their own discretion. With respect to the other FWBs who were not listed as qualified beneficiaries as of November 21, 1989 when the SDP was approved, they are not accorded the right to acquire land but shall, however, continue as HLI stockholders. All the benefits and homelots167 received by the 10,502 FWBs (6,296 original FWBs and 4,206 non-qualified FWBs) listed as HLI stockholders as of August 2, 2010 shall be respected with no obligation to refund or return them since the benefits (except the homelots) were received by the FWBs as farmhands in the agricultural enterprise of HLI and other fringe benefits were granted to them pursuant to the existing collective bargaining agreement with Tadeco. If the number of HLI shares in the names of the original FWBs who opt to remain as HLI stockholders falls below the guaranteed allocation of 18,804.32 HLI shares per FWB, the HLI shall assign additional shares to said FWBs to complete said minimum number of shares at no cost to said FWBs. With regard to the homelots already awarded or earmarked, the FWBs are not obliged to return the same to HLI or pay for its value since this is a benefit granted under the SDP. The homelots do not form part of the 4,915.75 hectares covered by the SDP but were taken from the 120.9234 hectare residential lot owned by Tadeco. Those who did not receive the homelots as of the revocation of the SDP on December 22, 2005 when PARC Resolution No. 2005-32-01 was issued, will no longer be entitled to homelots. Thus, in the determination of the ultimate agricultural land that will be subjected to land distribution, the aggregate area of the homelots will no longer be deducted. There is a claim that, since the sale and transfer of the 500 hectares of land subject of the August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot came after compulsory coverage has taken place, the FWBs should have their corresponding share of the lands value. There is merit in the claim. Since the SDP approved by PARC Resolution No. 89-12-2 has been nullified, then all the lands subject of the SDP will automatically be

subject of compulsory coverage under Sec. 31 of RA 6657. Since the Court excluded the 500-hectare lot subject of the August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot acquired by the government from the area covered by SDP, then HLI and its subsidiary, Centennary, shall be liable to the FWBs for the price received for said lots. HLI shall be liable for the value received for the sale of the 200-hectare land to LRC in the amount of PhP 500,000,000 and the equivalent value of the 12,000,000 shares of its subsidiary, Centennary, for the 300-hectare lot sold to LIPCO for the consideration of PhP 750,000,000. Likewise, HLI shall be liable for PhP 80,511,500 as consideration for the sale of the 80.51-hectare SCTEX lot. We, however, note that HLI has allegedly paid 3% of the proceeds of the sale of the 500-hectare land and 80.51-hectare SCTEX lot to the FWBs. We also take into account the payment of taxes and expenses relating to the transfer of the land and HLIs statement that most, if not all, of the proceeds were used for legitimate corporate purposes. In order to determine once and for all whether or not all the proceeds were properly utilized by HLI and its subsidiary, Centennary, DAR will engage the services of a reputable accounting firm to be approved by the parties to audit the books of HLI to determine if the proceeds of the sale of the 500-hectare land and the 80.51-hectare SCTEX lot were actually used for legitimate corporate purposes, titling expenses and in compliance with the August 14, 1996 Conversion Order. The cost of the audit will be shouldered by HLI. If after such audit, it is determined that there remains a balance from the proceeds of the sale, then the balance shall be distributed to the qualified FWBs. A view has been advanced that HLI must pay the FWBs yearly rent for use of the land from 1989. We disagree. It should not be forgotten that the FWBs are also stockholders of HLI, and the benefits acquired by the corporation from its possession and use of the land ultimately redounded to the FWBs benefit based on its business operations in the form of salaries, and other fringe benefits under the CBA. To still require HLI to pay rent to the FWBs will result in double compensation. For sure, HLI will still exist as a corporation even after the revocation of the SDP although it will no longer be operating under the SDP, but pursuant to the Corporation Code as a private stock corporation. The nonagricultural assets amounting to PhP 393,924,220 shall remain with HLI, while the agricultural lands valued at PhP 196,630,000 with an original area of 4,915.75 hectares shall be turned over to DAR for distribution to the FWBs. To be deducted from said area are the 500-hectare lot subject of the August 14, 1996 Conversion Order, the 80.51-hectare SCTEX lot, and the total area of 6,886.5 square meters of individual lots that should have been distributed to FWBs by DAR had they not opted to stay in HLI. HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR for land distribution to the FWBs. We find that the date of the "taking" is November 21, 1989, when PARC approved HLIs SDP per PARC Resolution No. 89-12-2. DAR shall coordinate with LBP for the determination of just compensation. We cannot use May 11, 1989 when the SDOA was executed, since it was the SDP, not the SDOA, that was approved by PARC. The instant petition is treated pro hac vice in view of the peculiar facts and circumstances of the case. WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01 dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLIs SDP under compulsory coverage on mandated land acquisition scheme of the CARP, are hereby AFFIRMED with the MODIFICATION that the original 6,296 qualified FWBs shall have the option to remain as stockholders of HLI. DAR shall immediately schedule meetings with the said 6,296 FWBs and explain to them the effects, consequences and legal or practical implications of their choice, after which the FWBs will be asked to manifest, in secret voting, their choices in the ballot, signing their signatures or placing their thumbmarks, as the case may be, over their printed names. Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is entitled to 18,804.32 HLI shares, and, in case the HLI shares already given to him or her is less than 18,804.32 shares, the HLI is ordered to issue or distribute additional shares to complete said prescribed number of shares at no cost to the FWB within thirty (30) days from finality of this Decision. Other FWBs who do not belong to the original 6,296 qualified beneficiaries are not entitled to land distribution and shall remain as HLI shareholders. All salaries, benefits, 3% production share and 3% share in the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare SCTEX lot and homelots already received by the 10,502 FWBs, composed of 6,296 original FWBs and 4,206 non-qualified FWBs, shall be respected with no obligation to refund or return them. Within thirty (30) days after determining who from among the original FWBs will stay as stockholders, DAR shall segregate from the HLI agricultural land with an area of 4,915.75 hectares subject of PARCs SDPapproving Resolution No. 89-12-2 the following: (a) the 500-hectare lot subject of the August 14, l996

Conversion Order; (b) the 80.51-hectare lot sold to, or acquired by, the government as part of the SCTEX complex; and (c) the aggregate area of 6,886.5 square meters of individual lots that each FWB is entitled to under the CARP had he or she not opted to stay in HLI as a stockholder. After the segregation process, as indicated, is done, the remaining area shall be turned over to DAR for immediate land distribution to the original qualified FWBs who opted not to remain as HLI stockholders. The aforementioned area composed of 6,886.5-square meter lots allotted to the FWBs who stayed with the corporation shall form part of the HLI assets. HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000 received by it from Luisita Realty, Inc. for the sale to the latter of 200 hectares out of the 500 hectares covered by the August 14, 1996 Conversion Order, the consideration of PhP 750,000,000 received by its owned subsidiary, Centennary Holdings, Inc. for the sale of the remaining 300 hectares of the aforementioned 500-hectare lot to Luisita Industrial Park Corporation, and the price of PhP 80,511,500 paid by the government through the Bases Conversion Development Authority for the sale of the 80.51-hectare lot used for the construction of the SCTEX road network. From the total amount of PhP 1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP 1,330,511,500) shall be deducted the 3% of the total gross sales from the production of the agricultural land and 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. For this purpose, DAR is ordered to engage the services of a reputable accounting firm approved by the parties to audit the books of HLI and Centennary Holdings, Inc. to determine if the PhP 1,330,511,500 proceeds of the sale of the three (3) aforementioned lots were used or spent for legitimate corporate purposes. Any unspent or unused balance as determined by the audit shall be distributed to the 6,296 original FWBs. HLI is entitled to just compensation for the agricultural land that will be transferred to DAR to be reckoned from November 21, 1989 per PARC Resolution No. 89-12-2. DAR and LBP are ordered to determine the compensation due to HLI. DAR shall submit a compliance report after six (6) months from finality of this judgment. It shall also submit, after submission of the compliance report, quarterly reports on the execution of this judgment to be submitted within the first 15 days at the end of each quarter, until fully implemented. The temporary restraining order is lifted. SO ORDERED.

FRANCISCO SORIANO AND DALISAY SORIANO, Petitioners,

G.R. No. 184282 Present:

CORONA, C.J., Chairperson, - versus LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ.

REPUBLIC OF THEPHILIPPINES, (Represented by the Office of the Solicitor General), Respondent.

Promulgated:

April 11, 2012

Before us is a Rule 45 petition assailing the October 26, 2007 Decision[1] and July 29, 2008 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 80551. The appellate court had set aside the Order[3] of the Tagum City Regional Trial Court (RTC), Branch 2, acting as Special Agrarian Court (SAC), which denied the motion to dismiss of the Department of Agrarian Reform (DAR). The facts, as culled from the records, follow: The Spouses Francisco and Dalisay Soriano were the registered owners of two parcels of agricultural land located in Hijo, Maco, Compostela Valley Province. The first parcel had an area of 5.2723 hectares and was covered by TCT No. (T-8935) T-3120, while the second parcel had an area of 4.0887 hectares and was covered by TCT No. (T-2906) T-749.[4] In October 1999, the two parcels of land were compulsorily acquired by the government pursuant to Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law. The Land Bank of the Philippines (LBP) made a preliminary determination of the value of the subject lands in the amount of P351,169.34 for the first parcel and P70,729.28 for the second parcel. Petitioners, however, disagreed with the valuation and brought the matter before the Department of Agrarian Reform Adjudication Board (DARAB) for a summary administrative proceeding to fix the just compensation.[5] On September 30, 2000, the DARAB rendered its decisions[6] in DARAB Case No. LV-XI-0071-DN2000 (for the first parcel) and DARAB Case No. LV-XI-0073-DN-2000 (for the second parcel), affirming the LBPs preliminary determination. As evidenced by the return cards,[7] notices of the two decisions were received by counsel for petitioners on March 8, 2001 and February 22, 2001, respectively. However, it was only on April 6, 2001 that petitioners filed a petition[8] before the RTC of Tagum City, acting as SAC, for the fixing of just compensation. Thus, the DAR, through the Provincial Agrarian Reform Office (PARO) of Tagum City, filed a motion[9] to dismiss the petition. The DAR argued that the petition was filed beyond the

15-day reglementary period provided in Section 11, Rule XIII of the 1994 DARAB Rules of Procedure. [10] Section 11 reads: 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 within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration.

On June 27, 2001, the RTC denied the motion to dismiss Agrarian Case No. 64-2001 and declared that the DARAB Rules of Procedure must give way to the laws on prescription of actions as mandated by the Civil Code.[11] The DAR sought reconsideration of the order, but its motion was denied on September 24, 2001. [12] Thus, the DAR lodged a petition for certiorari with the CA, alleging grave abuse of discretion on the part of the trial court. On October 26, 2007, the CA granted the petition and dismissed Agrarian Case No. 64-2001. The CA held: Public respondent erred in denying petitioners motion to dismiss. An action to fix just compensation for lands placed under R.A. No. 6657 is outside the purview of the ordinary rules on prescription as contained in Article 1146 of the Civil Code. The rule implementing R.A. No. 6657 is clear and unequivocal that after a preliminary determination by the board of the just compensation, a petition should be filed before the SAC within 15 days from receipt of the boards decision. Considering that the petition was filed beyond the 15-day period provided by the rules, public respondent committed grave abuse of discretion amounting to lack of jurisdiction in taking cognizance of spouses Sorianos petition. The court a quo did not acquire jurisdiction over the petition which was filed out of time.[13]

Later, the CA likewise denied petitioners motion for reconsideration. Hence, petitioners filed the present petition alleging that the CA committed serious errors of law, as follows: I. THE 1994 DARAB PROCEDURAL RULES PROVIDING FOR A 15-DAY REGLEMENTARY PERIOD TO BRING THE DECISION OF THE ADJUDICATOR DIRECTLY TO THE SPECIAL AGRARIAN COURT (SAC) ARE NOT HARD AND FAST, AND ADMIT OF CERTAIN LEGALLY-RECOGNIZED EXCEPTIONS. AMONG OTHERS, STRONG COMPELLING REASONS SUCH AS SERVING THE ENDS OF JUSTICE AND PREVENTING A GRAVE MISCARRIAGE THEREOF, APART FROM STRONG CONSIDERATIONS OF SUBSTANTIAL JUSTICE, WARRANT THE SUSPENSION OF THE RULES IN THE EXERCISE BY THE COURTS OF EQUITY JURISDICTION. II. THE PROVISION IN THE 1994 DARAB RULES [OF PROCEDURE] PROVIDING FOR A MODE OF APPEAL AND A STRINGENT REGLEMENTARY PERIOD OF 15 DAYS TO BRING THE DECISION OF THE DARAB IN A PRELIMINARY DETERMINATION OF LAND VALUATION DIRECTLY TO THE SPECIAL AGRARIAN COURT (SAC) HAS NO STATUTORY BASIS. THUS, IT IS VOID FOR BEING ULTRA VIRES.[14]

Essentially, the issues for our resolution are whether the CA erred in setting aside the June 27, 2001 Order of the SAC which denied the DARs motion to dismiss, and in finding that the trial court committed grave abuse of discretion in not dismissing Agrarian Case No. 64-2001 on the ground that it was filed late. Petitioners admit that their petition was filed late but insist that there exist special and compelling reasons to relax the otherwise stringent application of the 15-day reglementary period to file the petition for the fixing of just compensation. They allege that the failure to file the petition in time was due to the fault or negligence of their former counsel, and that the unconscionably low valuation of the LBP, if not rectified, would unjustly result in the confiscatory deprivation of their lands through no fault of their own. [15] They likewise contend that there is no statutory basis for the promulgation of the DARAB procedure providing for a mode of appeal, let alone for a reglementary period to appeal. The petition lacks merit. The appellate court correctly granted the writ of certiorari and nullified the June 27, 2001 Order of the RTC acting as SAC, as the RTC gravely abused its discretion when it denied the motion to dismiss filed by the DAR. Rule XIII, Section 11 of the 1994 DARAB Rules of Procedure, which was then applicable, explicitly provides that 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 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, [16] we explained that the consequence of the said rule is that the adjudicators decision on land valuation attains finality after the lapse of the 15-day period. Considering that Agrarian Case No. 64-2001, filed with the SAC for the fixing of just compensation, was filed 29 days after petitioners receipt of the DARABs decision in DARAB Case No. LV-XI-0071-DN-2000 for the lot covered by TCT No. (T-8935) T-3120 and 43 days after petitioners receipt of the DARABs decision in DARAB Case No. LV-XI-0073-DN-2000, for the lot covered by TCT No. (T-2906) T-749, the DARABs decisions had already attained finality. Petitioners contend that there is no statutory basis for the promulgation of the DARAB procedure providing for a mode of appeal and a reglementary period to appeal. On the matter of whether the DARAB Rules of Procedure laid out an appeal process and the validity of the 15-day reglementary period has already been laid to rest, the Court, in Republic v. Court of Appeals [17] and subsequent cases[18] has 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. In Republic v. Court of Appeals, we ruled [U]nder the law, the Land Bank of the Philippines is charged with the initial responsibility of determining the value of lands placed under land reform and the compensation to be paid for their taking. Through notice sent to the landowner pursuant to 16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner rejects the offer, a summary administrative proceeding is held and afterward the provincial (PARAD), the regional (RARAD) or the central (DARAB) adjudicator as the case may be, depending on the value of the land, fixes the price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the matter

to the RTC acting as Special Agrarian Court. This in essence is the procedure for the determination of compensation cases under R.A. No. 6657. Inaccordance with it, the private respondents case was properly brought by it in the RTC, and it was error for the latter court to have dismissed the case. In the terminology of 57, the RTC, sitting as aSpecial Agrarian Court, has original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. It would subvert this original and exclusive jurisdiction of the RTC for the DAR to vest original jurisdiction in compensation cases in administrative officials and make the RTC an appellate court for the review of administrative decisions. Consequently, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from 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 57 and therefore would be void. What adjudicators are empowered to do is only to determine in a preliminary manner the reasonable compensation to be paid to landowners, leaving to the courts the ultimate power to decide this question.[19] (Emphasis supplied.)

The above ruling was reiterated in Philippine Veterans Bank v. Court of Appeals. In that case, petitioner landowner who was dissatisfied with the valuation made by LBP and DARAB, filed a petition for determination of just compensation in the RTC (SAC). However, the RTC dismissed the petition on the ground that it was filed beyond the 15-day reglementary period for filing appeals from the orders of the DARAB. On appeal, the CA upheld the order of dismissal. When the case was elevated to this Court, we likewise affirmed the CA and declared that To implement the provisions of R.A. No. 6657, particularly 50 thereof, Rule XIII, 11 of the DARAB Rules of Procedure provides: 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 within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration. As we held in Republic v. Court of Appeals, this rule is an acknowledgment by the DARAB that the power to decide just compensation cases for the taking of lands under R.A. No. 6657 is vested in the courts. It is error to think that, because of Rule XIII, 11, the original and exclusive jurisdiction given to the courts to decide petitions for determination of just compensation has thereby been transformed into an appellate jurisdiction. It only means that, in accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR as an administrative agency to determine in a preliminary manner the reasonable compensation to be paid for the lands taken under the Comprehensive Agrarian Reform Program, but such determination is subject to challenge in the courts. The jurisdiction of the Regional Trial Courts is not any less original and exclusive because the question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the administrative determination . For that matter, the law may provide that the decision of the DAR 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. Accordingly, as the petition in the Regional Trial Court was filed beyond the 15-day period provided in Rule XIII, 11 of the Rules of Procedure of the DARAB, the trial court

correctly dismissed the case and the Court of Appeals correctly affirmed the order of dismissal. [20] (Emphasis supplied.)

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,[21] 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 adjudicators decision but an original action, the same has to be filed within the 15-day period stated in the DARAB Rules; otherwise, the adjudicators decision will attain finality. Notwithstanding the foregoing rulings, we noted in Land Bank of the Philippines v. Umandap[22] that [s]ince the SAC statutorily exercises original and exclusivejurisdiction 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. [23] Thus, we allowed a petition refiled by LBP within 5 days from the denial of the motion for reconsideration of the order dismissing the original petition, during which time said dismissal could still be appealed to the CA: x x x The SAC even expressly recognized that the rules are silent as regards the period within which a complaint dismissed without prejudice may be refiled. The statutorily mandated original and exclusive jurisdiction of the SAC, as well as the above circumstances showing that LBP did not appear to have been sleeping on its rights in the allegedly belated refiling of the petition, lead us to assume a liberal construction of the pertinent rules. To be sure, LBPs intent to question the RARADs valuation of the land became evident with the filing of the first petition for determination of just compensation within the period prescribed by the DARAB Rules. Although the first petition was dismissed without prejudice on a technicality, LBPs refiling of essentially the same petition with a proper nonforum shopping certification while the earlier dismissal order had not attained finality should have been accepted by the trial court. In view of the foregoing, we rule that the RTC acted without jurisdiction in hastily dismissing said refiled Petition. Accordingly, the Petition for Certiorari before the Court of Appeals assailing the dismissal should be granted.[24] (Emphasis supplied.)

In the case at bar, petitioners argue that there exists compelling reason to relax the application of the rules because the offered compensation package by the LBP for the expropriated lands is unconscionably low. We find no merit in petitioners submission considering that in the valuation of petitioners lands in the two cases, the PARAD applied the formula laid down in DAR AO No. 06, series of 1992 as amended by DAR AO No. 11, series of 1994 and further amended by DAR AO No. 05, series of 1998. It likewise found that

petitioners computed value of their property was unsubstantiated and hence cannot prevail over LBPs valuation which was determined pursuant to the aforesaid guidelines then in force. Petitioners have not shown any exceptional circumstance warranting a relaxation of the prescribed period for the filing of a petition for judicial determination of just compensation. Their petition before the SAC assailing the separate valuations by the PARAD was filed 29 days (from receipt of the first decision) and 43 days (from receipt of the second decision) late, and without any justifiable reason given for the delay. Consequently, no grave abuse of discretion was committed by the CA in granting DARs petition for certiorari and dismissing Agrarian Case No. 64-2001. WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated October 26, 2007, and Resolution dated July 29, 2008, of the Court of Appeals in CA-G.R. SP No. 80551 are AFFIRMED and UPHELD. Costs against petitioners. SO ORDERED.

Land Bank vs Estate of Araneta

GR 161796

In these three petitions for review under Rule 45, petitioners Land Bank of the Philippines (Land Bank), Department of Agrarian Reform (DAR), and Ernesto B. Duran, et al.(Duran, et al.) separately assail and seek to nullify the Decision[2] of the Court of Appeals (CA) dated September 19, 2003 in CA-G.R. SP No. 65822 that set aside the February 7, 2001 Decision of the DAR Adjudication Board (DARAB) in DARAB Case No. 4176. Likewise sought to be annulled is the Resolution of the CA dated January 22, 2004 [3] that denied separate motions for reconsideration of the September 19, 2003 Decision. The reversed DARAB decision upheld the agrarian reform coverage of 1,266 hectares of respondent estates 1,644.55-hectare property and its award to over a thousand farmer-beneficiaries. The CAs reversing decision, on the other hand, is hinged on the illegality of the coverage and the consequent award. According to the CA, the property in question, having meanwhile ceased to be agricultural, is not amenable to land reform coverage and, hence, falls outside of DARs jurisdiction to implement agrarian enactments. In G.R. No. 161796, petitioner Land Bank faults the CA insofar as it accorded retroactive exclusionary application to Presidential Proclamation No. (Proclamation) 1283, [4]as amended by Proclamation 1637.[5] In so doing, so Land Bank claims, the appellate court effectively but illegally extended exempt-coverage status to the subject land and in the process negated the purpose behind Presidential Decree No. (PD) 27: to emancipate rice/corn land tenant-farmers from the bondage of the soil under their tillage. Pursuing cognate arguments, petitioner DAR, in G.R. No. 161830, assails the CAs holding, and the premises tying it together, on the departments jurisdiction over the property subject of the case. In G.R. No. 190456, petitioners Duran, et al. take issue at the CAs pronouncement on the validity of service of the petition for review effected by respondent upon their long-deceased counsel of record, Atty. Eduardo Soliven Lara (Atty. Lara).[6] Like Land Bank and DAR, Duran, et al. impute reversible error on the CA for holding that the concerned farmer-beneficiaries never acquired ownership over their respective portions subject of the DAR award, owing to the prior conversion of the whole property to non-agricultural uses before the completion of the land reform process. Per its Resolution of June 28, 2004, the Court ordered the consolidation of G.R. Nos. 161796 and 161830 with G.R. No. 163174 (Nell-Armin Raralio v. Estate of J. Amado Araneta ). Another Resolution issued on November 17, 2010 directed that G.R. No. 190456 be consolidated with G.R. Nos. 161796, 161830 and 163174. Due, however, to the denial, per Resolution of August 18, 2004, of the petition in G.R. No. 163174 and pursuant to entry of judgment dated December 9, 2004, the Court, by Resolution dated July 11, 2011, deconsolidated G.R. No. 163174 with the other three cases and considered it closed and terminated.[7] The Facts At the heart of the controversy is a large tract of land, denominated as Lot No. 23 of the Montalban Cadastre (Lot 23), located in Brgy. Mascap, Montalban, Rizal with an area of 1,645 hectares, more or less. Lot 23 was originally registered in the name of Alfonso Doronilla (Doronilla) under Original Certificate of Title (OCT) No. 7924 of the Rizal Registry. On June 21, 1974, then President Marcos issued Proclamation 1283, carving out a wide expanse from the Watershed Reservation in Antipolo, Rizal and reserving the segregated area for townsite purposes, subject to private rights, if any there be. In its pertinent parts, Proclamation 1283 reads:

Excluding from the Operation of Executive Order No. 33 dated July 26, 1904, as Amended by Executive Orders Nos. 14 and 16, Both Series of 1915, which Established the Watershed Reservation Situated in the Municipality of Antipolo, Province of Rizal, Island of Luzon, a Certain Portion of the Land Embraced therein and Reserving the Same, Together with the Adjacent Parcel of Land of the Public Domain, for Townsite Purposes Under the Provisions of Chapter XI of the Public Land Act Upon recommendation of the Secretary of Agriculture and Natural Resources x x x, I, FERDINAND E. MARCOS, President of the Philippines, do hereby exclude from the operation of Executive Order No. 33 dated July 26, 1904, as amended x x x, which established the Watershed Reservation situated in the Municipality of Antipolo, Province of Rizal, Island of Luzon, certain portions of land embraced therein and reserve the same, together with the adjacent parcel of land of the public domain, for townsite purposes under the provisions of Chapter XI of the Public Land Act, subject to private rights, if any there be, and to future subdivision survey in accordance with the development plan to be prepared and approved by the Department of Local Government and Community Development, which parcels are more particularly described as follows: Lot A (Part of Watershed Reservation) A parcel of land (Lot A of Proposed Poor Mans Baguio, being a portion of the Marikina Watershed, IN-2), situated in the municipality of Antipolo, Province of Rizal, Island of Luzon x x x; [technical description omitted]
Containing an area of THREE THOUSAND SEVEN HUNDRED EIGHTY (3,780) Hectares, more or less.

Lot B (Alienable and Disposable Land) A parcel of land (Lot B of Proposed Poor Mans Baguio, being a portion of alienable and disposable portion of public domain) situated in the municipality of Antipolo, Province of Rizal x x x; [technical description omitted]
Containing an area of ONE THOUSAND TWO HUNDRED TWENTY FIVE (1,225) Hectares, more or less. (Emphasis supplied.)

Then came the amendatory issuance, Proclamation 1637 dated April 18, 1977, thereby increasing the size of the reservation, designated as Lungsod Silangan Townsite (LS Townsite), by 20.312 hectares and revising its technical description so as to include, within its coverage, other lands in the municipalities of San Mateo and Montalban, Rizal to absorb the population overspill in Greater Manila Area, but again subject to private rights, if any there be, thus: Upon recommendation of the Secretary of Natural Resources x x x, I, FERDINAND E. MARCOS, President of the Philippines, do hereby amend Proclamation No. 1283, dated June 21, 1974 which established the townsite reservation in the municipalities of Antipolo and San Mateo, Province of Rizal, Island of Luzon, by increasing the area and revising the technical descriptions of the land embraced therein, subject to private rights, if any there be, which parcel of land is more particularly described as follows: (Proposed Lungsod Silangan Townsite) A PARCEL OF LAND (Proposed Lungsod Silangan Townsite Reservation amending the area under SWO-41762 establishing the Bagong Silangan Townsite Reservation) situated in the Municipalities of Antipolo, San Mateo, and Montalban, Province of Rizal, Island of Luzon. Bounded on the E., along lines x x x.

Beginning at a point marked 1 on the Topographic Maps with the Scale of 1:50,000 which is the identical corner 38 IN-12, Marikina Watershed Reservation. [technical description omitted] Containting an area of TWENTY THOUSAND THREE HUNDRED TWELVE (20,312) hectares, more or less. NOTE: all data are approximate and subject to change based on future survey. (Emphasis supplied.)

On November 9, 1977, Letter of Instructions No. (LOI) 625 addressed to several agencies was issued for the implementation of the aforementioned proclamations. The Office of the Solicitor General (OSG), in particular, was directed to initiate condemnation proceedings for the acquisition of private lands within the new townsite, among which was Lot 23 (the Doronilla property). Prior to the issuance of the LS Townsite proclamations, the following events transpired: (1) On October 21, 1972, PD 27 ( Tenants Emancipation Decree) was issued. In accordance with PD 27 in relation to LOI 474 and related issuances, the DAR undertook to place under the Operation Land Transfer (OLT) program of the government all tenanted rice/corn lands with areas of seven hectares or less belonging to landowners who own other agricultural lands of more than seven (7) hectares. In line with this program, the tenants of Doronilla tilling portions of his property, who claimed their primary crops to be rice and/or corn, organized themselves into farmers cooperatives or Samahang Nayons and applied for certificates of land transfer (CLTs); and (2) The DAR, to which the processed applications were forwarded, processed 106 CLTs involving 100 tenants-beneficiaries covering 73 hectares out of the total 1,645 hectares of Lot 23. However, out of the 106 CLTs generated, only 75 CLTs had actually been distributed. Upon the issuance of Proclamation 1637 on April 18, 1977, on-going parcellary mapping, survey and other processing activities related to the Doronilla property were stopped.[8] In 1978, the OSG, conformably with the directive embodied in LOI 625, filed with the then Court of First Instance (CFI) of Rizal an expropriation complaint against the Doronilla property. Meanwhile, on June 6, 1979, Doronilla issued a Certification, [9] copy furnished the Agrarian Reform Office, among other agencies, listing seventy-nine (79) bona fide planters he allegedly permitted to occupy a portion of his land. On September 9, 1987 or nine (9) years after it commenced expropriation proceedings, the OSG moved [10] for and secured, per the Rizal CFI Order[11] dated September 18, 1987, the dismissal of the expropriation case. Earlier, or on March 15, 1983, J. Amado Araneta, now deceased, acquired ownership of the subject Doronilla property by virtue of court litigation. A little over a week later, he had OCT No. 7924 canceled and secured the issuance of Transfer Certificate of Title (TCT) No. N-70860 in his name. On July 22, 1987, then President Corazon C. Aquino issued Proclamation No. 131 instituting the Comprehensive Agrarian Reform Program (CARP). Thereafter, then DAR Undersecretary Jose C. Medina, in a memorandum of March 10, 1988, ordered the Regional Director of DAR Region IV to proceed with the OLT coverage and final survey of the Doronilla property. [12] Republic Act No. (RA) 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL)[13] of 1988, was then enacted, and took effect on June 15, 1988.

On July 27, 1989, Jorge L. Araneta, as heir of J. Amado Araneta and administrator of his estate, wrote the DAR Secretary requesting approval, for reasons stated in the covering letter, of the conversion of Lot 23 from agricultural to commercial, industrial and other non-agricultural uses. [14] Appended to the letter were maps, location clearance and other relevant documents. Through Jorge L. Araneta, respondent Estate of J. Amado Araneta (Araneta or Araneta Estate) would, however, reiterate the conversion request owing to what it viewed as DARs inaction on said request. On December 12, 1989, DAR issued a Notice of Acquisition addressed to Doronilla, covering 7.53 hectares of the land now covered by TCT No. 216746 and offering compensation at a valuation stated in the notice.[15] Alarmed by the turn of events whereby DAR was having its property, or a portion of it, surveyed, incidental to effecting compulsory land acquisition, the Araneta Estate addressed a letter [16] to DAR dated June 27, 1990, formally protesting the series of land surveys being conducted by the Bureau of Lands on what is now its property. It claimed that the CARL does not cover the said property, being part of the LS Townsite reservation, apart from being mountainous, with a slope of more than 70 degrees and containing commercial quantities of marble deposit. The Araneta Estate followed its protest letter with two (2) more letters dated June 20, 1990 and May 28, 1991, in which it reiterated its request for conversion, citing, for the purpose, Department of Justice (DOJ) Opinion No. 181, Series of 1990.[17] On November 29, 1991, the Office of the Provincial Adjudication Board of Rizal set a hearing to determine the just compensation for the subject property, docketed as P.A. Case No. IV-Ri-0024-91. Notwithstanding Aranetas protest against the compulsory agrarian reform coverage and acquisition of the property in question, the Land Bank, nonetheless, proceeded to approve, on January 21, 1992, the land transfer claim (Claim No. EO-91-1266) covering 1,266 hectares. On February 26, 1992, Land Bank notified Araneta of its entitlement, upon its compliance with certain requirements, of the amount of PhP 3,324,412.05, representing just compensation for its covered parcels of land.[18] By September 25, 1990, some 1,200 emancipation patents (EPs) had been generated in favor of 912 farmer-beneficiaries and TCTs derived from the EPs issued.[19] It is upon the foregoing backdrop of events that Araneta, sometime in April 1992, filed with the DARAB an action against the DAR and Land Bank for Cancellation of Compulsory Coverage under PD 27 and Exemption from CARL Coverage of the erstwhile Doronilla property, docketed as DARAB Case No. DCNJC-RIV-R12-026-CO.[20] Thereafter, DARAB turned over the case folder to the Rizal Provincial Agrarian Reform Adjudicator (PARAD) where the matter was re-docketed as PARAD Case No. IV-Ri-0057-92. Before the Rizal PARAD Office and with its leave, some 1,022 individuals affiliated with different farmer groups intervened and filed an answer-in- intervention,[21]joining a group of earlier intervenors led by one Anastacia Ferrer claiming to be EP grantees. Save for Land Bank, all the parties subsequently submitted their respective position papers.

Ruling of the Regional Adjudicator By Decision dated October 17, 1994,[22] Regional Agrarian Reform Adjudicator (RARAD) Fe ArcheManalang ruled against Araneta, denying its bid to have its property excluded from OLT coverage and/or the compulsory scheme under CARL. The fallo of the RARADs Decision reads as follows: WHEREFORE, premises considered, judgment is hereby rendered: 1. Dismissing the petition for lack of merit;

2. Upholding the OLT coverage of the property described in Paragraph 1 of the Petition, pursuant to the provision of P.D. 27 as affirmed by E.O. 228 in relation to Section 7 of R.A. 6657; 3. Affirming the regularity of the OLT processing undertaken on the subject Property and sustaining the validity of the Transfer Certificates of Title emanating from the Emancipation Patents generated in favor of the Intervenors-awardees; 4. Directing the Respondent Land Bank of the Philippines to effect and release immediate payment to the Petitioner-Landowner under approved Land Transfer Claim No. EO91-1266 dated February 3, 1992; and 5. SO ORDERED. Therefrom, Araneta appealed to the DARAB proper. The appeal was docketed as DARAB Case No. 4176. In due time, the DARAB, following the RARADs line that the intervenorappellees were deemed owners of the land they tilled as of October 21, 1972, rendered a Decision dated February 7, 2001[23] affirming in toto that of the RARADs, disposing as follows: WHEREFORE, premises considered, this Board hereby AFFIRMS the appealed decision in toto without pronouncement as to costs. SO ORDERED. Just like that of the RARAD, the DARAB ruling did not name individuals in whose favor the EPs were specifically generated, albeit, 86 were, per Our count, impleaded as intervenor-appellees in DARAB Case No. 4176. Subsequently, Araneta went to the CA via a petition for review under Rule 43 of the 1997 Rules of Civil Procedure on the stated principal issue of whether or not the DARAB in its appealed decision unduly expanded the scope of coverage of PD 27. Ruling of the CA By Decision of September 19, 2003, the CA, as earlier stated, set aside the Decision of the DARAB, in effect nullifying all the individual farm lots awards thus made by the DARAB ostensibly in favor of the named intervenor-appellees and necessarily all other unnamed awardees. The decretal portion of the CA decision reads as follows: WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE. The challenged Decision of the DARAB in DARAB Case No. 4176 (Reg. Case No. IV-RI-0057-92) is hereby ANNULLED and SET ASIDE. The DARAB is hereby ordered to reconvey to petitioner [Araneta] the subject portions of petitioners property embraced in TCT No. N-70860, earlier awarded to intervenors-appellees under their individual EPs now covered by their respective certificates of title, in accordance with pertinent administrative issuances of DARAB. No pronouncement as to costs. SO ORDERED. Without pronouncement as to costs.

In the main, the CA predicated its reversal action on the interplay of the ensuing premises, juxtaposed with the pertinent pronouncements in the cited cases of Natalia Realty, Inc. v. DAR[24] and Paris v. Alfeche, [25] among other landmark agrarian cases, thus: (1) Agricultural lands found within the boundaries of declared townsite reservations are reclassified for residential use. They ceased to be agricultural lands upon approval of their inclusion in the reservation, as in the case of agricultural lands situated within the LS Townsite reservation upon its establishment pursuant to Proclamation 1637. (2) The processing of the OLT coverage of the Doronilla property was not completed prior to the passage of CARL or RA 6657; hence, the governing law should be RA 6657, with PD 27 and Executive Order No. (EO) 228[26] only having suppletory effect. (3) Full payment of the cost of the land, inclusive of interest, is in every case considered a mandatory requirement prior to the transfer of the title to the farmer-beneficiary. Before that time, the term subject to private rights, if any found in Proclamation 1637 refers to the landowners private rights. At the time Proclamation 1637 was issued, the farmer-beneficiaries of the Doronilla property have no vested rights yet under PD 27 to their allotted lot, as erroneously ruled by the DARAB. (4) The DARAB, as the adjudicating arm of DAR, was divested of jurisdiction over the Araneta property upon its inclusion in the LS Townsite reservation by virtue of Proclamation 1637, as can be gleaned from LOI 625 which directed the implementation of Proclamation 1637. From the foregoing decision, Land Bank, DAR/DARAB and Araneta separately moved for but were denied reconsideration by the appellate court in its Resolution of January 22, 2004. In due time, Land Bank and DARAB/DAR interposed before the Court separate petitions for review. On the other hand, in December 2009, or some six (6) years after the CA rendered its appealed judgment, Duran and eight others, as self-styled petitioners-intervenors, came to this Court on a petition for review under Rule 45. In a bid to justify the six-year hiatus between the two events, Duran, et al. claimed that, through the machinations of Aranetas counsel, they have been virtually kept in the dark about CA-G.R. SP No. 65822 and consequently were deprived of their right to appeal what turned out to be an adverse CA ruling. How the supposed deprivation came about, per Duran, et al.s version, shall be explained shortly. Duran, et al. presently allege being EP holders over portions of the property in question, their rights to the patents having been decreed in the October 17, 1994 RARAD Decision, as affirmed by the DARAB.

The Issues Apart from what it considers the appellate courts misapplication of the holdings in Natalia Realty, Inc. and Paris, Land Bank, in G.R. No. 161796,[27] ascribes to the CA the commission of serious errors of law: 1) When it gave retroactive effect or application to Proclamation Nos. 1283 & 1637 resulting in the negation of full land ownership to qualified farmer-beneficiaries covered by P.D. No. 27 x x x.

2)

When it gave imprimatur to the virtual conversion through Proclamation Nos. 1283 & 1637 of erstwhile agricultural lands to residential use without the requisite expropriation/condemnation proceedings pursuant to LOI No. 625.

3)

When it upheld the nullification of the CLTs and EPs in the name of farmer-beneficiaries through a mere collateral attack which is not allowed by law.

4)

When it recognized respondents alleged private right which had been reduced into a mere claim for just compensation upon promulgation or effectivity of P.D. No. 27 on October 21, 1972.

In G.R. No. 161830,[28] the DAR raises the following issues: 1) Whether the subject agricultural landholding is exempt from CARP coverage, being nonagricultural, pursuant to Proclamation Nos. 1283, as amended, over and above the statutory emancipation of the tenants from the bondage of the soil under P.D. No. 27; 2) Whether or not DAR was no longer possessed of jurisdiction over respondent Aranetas landholding after the same was included in the LS Townsite; and 3) Whether or not DAR should reconvey to Araneta the portion of its property that was subjected to OLT under P.D. 27.

Aside from the procedural concerns articulated in their petition, the main substantive issue raised by Duran, et al. in G.R. No. 190456, [29] as outlined at the outset, revolves around the question, and its implication on their ownership rights over a portion of the subject estate, of whether or not the process of land reform was incomplete at the time of issuance of Proclamation 1637. The different but oftentimes overlapping issues tendered in this consolidated recourse boil down to this relatively simple but pregnant question: whether or not the Doronilla, now the Araneta, property, in light of the issuance of the land reclassifying Proclamation 1283, as amended, is, as held by the CA, entirely outside the ambit of PD 27 and RA 6657, and, thus, excluded from compulsory agrarian reform coverage, unfettered by the private claim of the farmer-beneficiaries.

The Courts Ruling We find the petitions partly meritorious.

Classification of the Doronilla Property Several basic premises should be made clear at the outset. Immediately prior to the promulgation of PD 27 in October 1972, the 1,645-hectare Doronilla property, or a large portion of it, was indisputably agricultural, some parts devoted to rice and/or corn production tilled by Doronillas tenants. Doronilla, in fact, provided concerned government agencies with a list of seventy-nine (79) [30] names he considered bona fide planters of his land. These planters, who may reasonably be considered tenant-farmers, had purposely, so it seems, organized themselves into Samahang Nayon(s) so that the DAR could start processing their applications under the PD 27 OLT program. CLTs were eventually generated covering 73 hectares, with about 75 CLTs actually distributed to the tenant-beneficiaries. However, upon the issuance of Proclamation 1637, all activities related to the OLT were stopped.[31]

The discontinuance of the OLT processing was obviously DARs way of acknowledging the implication of the townsite proclamation on the agricultural classification of the Doronilla property. It ought to be emphasized, as a general proposition, however, that the former agricultural lands of Doronillasituated as they were within areas duly set aside for townsite purposes, by virtue particularly of Proclamation 1637were converted for residential use. By the terms of Natalia Realty, Inc., they would be exempt from land reform and, by necessarily corollary, beyond DARs or DARABs jurisdictional reach. Excerpts from Natalia Realty, Inc.:

We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the CARL shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands. As to what constitutes agricultural land, it is referred to as land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land . The deliberations of the Constitutional Commission confirm this limitation. Agricultural lands are only those lands which are arable and suitable agricultural lands and do not include commercial, industrial and residential lands. Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivison cannot in any language be considered as agricultural lands. These lots were intended for residential use. They ceased to be agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. x x x xxxx Since the NATALIA lands were converted prior to 15, June 1988, respondent DAR is bound by such conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of CARL. [32] (Emphasis added; italics in the original.) Guided by the foregoing doctrinal pronouncement, the key date to reckon, as a preliminary matter, is the precise time when Doronillas Lot 23, now Aranetas property, ceased to be agricultural. This is the same crucial cut-off date for considering the existence of private rights of farmers, if any, to the property in question. This, in turn, means the date when Proclamation 1637 establishing LS Townsite was issued: April 18, 1977. From then on, the entire Lot 23 was, for all intents and purposes, considered residential, exempted ordinarily from land reform, albeit parts of the lot may still be actually suitable for agricultural purposes. Both the Natalia lands, as determined in Natalia Realty, Inc., and the Doronilla property are situated within the same area covered by Proclamation 1637; thus, the principles regarding the classification of the land within the Townsite stated inNatalia Realty, Inc. apply mutatis mutandis to the instant case.

Applicability of PD 27, RA 6657 and Proclamation 1637 to the Doronilla Estate From the standpoint of agrarian reform, PD 27, being in context the earliest issuance, governed at the start the disposition of the rice-and-corn land portions of the Doronilla property. And true enough, the DAR began processing land transfers through the OLT program under PD 27 and thereafter issued the corresponding CLTs. However, when Proclamation 1637 went into effect, DAR discontinued with the OLT processing. The tenants of Doronilla during that time desisted from questioning the halt in the issuance of the CLTs. It is fairly evident that DAR noted the effect of the issuance of Proclamation 1637 on the subject land and decided not to pursue its original operation, recognizing the change of classification of the property from agricultural to residential.

When it took effect on June 15, 1988, RA 6657 became the prevailing agrarian reform law. This is not to say, however, that its coming into effect necessarily impeded the operation of PD 27, which, to repeat, covers only rice and corn land. Far from it, for RA 6657, which identifies rice and corn land under PD 27 as among the properties the DAR shall acquire and distribute to the landless, [33] no less provides that PD 27 shall be of suppletory application. We stated in Land Bank of the Philippines v. Court of Appeals, We cannot see why Sec. 18 of R.A. 6657 should not apply to rice and corn lands under P.D. 27. Section 75 of R.A. 6657 clearly states that the provisions of P.D. 27 and E.O. 228 shall only have a suppletory effect.[34] All told, the primary governing agrarian law with regard to agricultural lands, be they of private or public ownership and regardless of tenurial arrangement and crops produced, is now RA 6657. Section 3(c) of RA 6657 defines agricultural lands as lands devoted to agricultural activity as defined in the Act and not classified as mineral, forest, residential, commercial or industrial land . The DAR itself refers to agricultural lands as: those devoted to agricultural activity as defined in RA 6657 and not classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use.[35] At the time of the effectivity of RA 6657 on June 15, 1998, the process of agrarian reform on the Doronilla property was, however, to reiterate, far from complete. In fact, the DAR sent out a Notice of Acquisition to Araneta only on December 12, 1989, after the lapse of around 12 years following its discontinuance of all activities incident to the OLT. Proclamation 1637, a martial law and legislative-powers issuance, partakes the nature of a law. In Natalia Realty, Inc., the Court in fact considered and categorically declared Proclamation 1637 a special law, since it referred specifically to the LS Townsite Reservation. [36] As such, Proclamation 1637 enjoys, so Natalia Realty, Inc. intones, applying basic tenets of statutory construction, primacy over general laws, like RA 6657. In light of the foregoing legal framework, the question that comes to the fore is whether or not the OLT coverage of the Doronilla property after June 15, 1988, ordered by DAR pursuant to the provisions of PD 27 and RA 6657, was still valid, given the classificatory effect of the townsite proclamation. To restate a basic postulate, the provisions of RA 6657 apply only to agricultural lands under which category the Doronilla property, during the period material, no longer falls, having been effectively classified as residential by force of Proclamation 1637. It ceased, following Natalia Realty, Inc., to be agricultural land upon approval of its inclusion in the LS Townsite Reservation pursuant to the said reclassifying presidential issuance. In this regard, the Court cites with approval the following excerpts from the appealed CA decision: The above [Natalia Realty, Inc.] ruling was reiterated in National Housing Authority vs. Allarde where the Supreme Court held that lands reserved for, converted to, non-agricultural uses by government agencies other than the [DAR], prior to the effectivity of [RA] 6657 x x x are not considered and treated as agricultural lands and therefore, outside the ambit of said law . The High Court declared that since the Tala Estate as early as April 26, 1971 was reserved, inter alia, under Presidential Proclamation No. 843, for the housing program of the [NHA], the same has been categorized as not being devoted to agricultural activity contemplated by Section 3(c) of R.A. No. 6657, and therefore outside the coverage of CARL.[37] (Emphasis supplied.)

Private Rights and Just Compensation as Payment Unlike in Natalia Realty, Inc., however, where pre-existing tenancy arrangement over the Natalia land, among other crucial considerations, was not part of the equation, this case involves farmers claiming before April 18, 1979 to be actual tenants of the rice and/or corn portion of the Doronilla property. The Court has, to be sure, taken stock of the fact that PD 27 ordains the emancipation of tenants and deems them owners of the rice and corn lands they till as of October 21, 1972. The following provisions of the decree have concretized this emancipation and ownership policy: This [decree] shall apply to tenant farmers of private agricultural lands primarily devoted to rice and corn under a system of sharecrop or lease-tenancy, whether classified as landed estate or not; The tenant farmer x x x shall be deemed owner of a portion constituting a family-size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated. (Emphasis added.)

Complementing PD 27 is EO 228, Series of 1987, Sec. 1 of which states, All qualified farmer beneficiaries are now deemed full owners as of October 21, 1972 of the land they acquired by virtue of Presidential Decree No. 27. (Emphasis supplied.)

Petitioners DAR, Land Bank and Duran, et al. uniformly maintain that the PD 27 tenant-beneficiaries have acquired vested rights over the lands they tilled as of October 21, 1972 when the decree took effect. Pursuing this point, they argue that, as of that date, the farmer-beneficiaries were deemed owners of what was to be Aranetas property, and the issuance of Proclamation 1637 did not alter the legal situation.

The CA, however, was of a different mind, predicating its stance on the following:

Since actual title remained with the landowner Alfonso Doronilla at the time Presidential Proclamation No. 1637 was issued in 1977, it follows that it is the private rights of such owner which are contemplated by the exemption declared in said proclamation . Definitely, the proviso subject to private rights could not refer to the farmer-tenants the process of land reform having just been commenced with the filing of their application with the DAR. The conclusion finds support in a similar proclamation covering the Baguio Townsite Reservation. Our Supreme Court in a case involving an application for registration of lots situated within the Baguio Townsite Reservation cited the decision dated November 13, 1922 of the Land Registration Court in Civil Reservation No. 1, GLRO Record No. 211, which held that all lands within the Baguio Townsite are public land with the exception of (1) lands reserved for specific public uses and (2) lands claimed and adjudicated as private property . It is therefore in that sense that the term private rights under the subject proviso in Presidential Proclamation No. 1637 must be understood.[38] x x x (Emphasis added.)

In fine, the CA held that the private rights referred to in the proclamation pertained to the rights of the registered owner of the property in question, meaning Doronilla or Araneta, as the case may be.

The Court cannot lend full concurrence to the above holding of the appellate court and the consequent wholesale nullification of the awards made by the DARAB.

The facts show that several farmer-beneficiaries received 75 CLTs prior to the issuance of Proclamation 1637 on June 21, 1974. The 75 CLTs seemingly represent the first batch of certificates of bona fide planting rice and corn. These certificates were processed pursuant to the OLT program under PD 27. It bears to stress, however, that the mere issuance of the CLT does not vest on the recipient-farmer-tenant ownership of the lot described in it. At best, the certificate, in the phraseology of Vinzons-Magana v. Estrella,[39] merely evidences the governments recognition of the grantee as the party qualified to avail of the statutory mechanisms for the acquisition of ownership of the land [tilled] by him as provided under [PD] 27.

The clause now deemed full owners as of October 21, 1972 could not be pure rhetoric, without any beneficial effect whatsoever descending on the actual tillers of rice and/or corn lands, as the appealed decision seems to convey. To Us, the clause in context means that, with respect to the parcel of agricultural land covered by PD 27 and which is under his or her tillage, the farmer-beneficiary ipso facto acquires, by weight of that decree, ownership rights over it. That ownership right may perhaps not be irrevocable and permanent, nay vested, until the tenant-farmer shall have complied with the amortization payments on the cost of the land and other requirements exacted in the circular promulgated to implement PD 27. Vinzons-Magana holds:

This Court has therefore clarified that it is only compliance with the prescribed conditions which entitled the farmer/grantee to an emancipation patent by which he acquires the vested right of absolute ownership in the landholdinga right which has become fixed and established and is no longer open to doubt and controversy.[40] x x x

Said ownership right is, nonetheless, a statutory right to be respected.

Plainly enough then, the farmer-beneficiaries vis--vis the PD 27 parcel they till, especially that brought within the coverage of OLT under PD 27, own in a sense the lot which they can validly set up against the original owners notwithstanding the fact that the latter have not yet been paid by Land Bank and/or even if the farmers have not yet fully paid their amortization obligation to the Land Bank, if that be the case. After all, the former landowners, by force of PD 27, is already divested of their ownership of the covered lot, their right to payment of just compensation or of the un-amortized portion payable by Land Bank [41] being assured under EO 228 and RA 6657.

If only to stress, while the PD 27 tenant-farmers are considered the owners by virtue of that decree, they cannot yet exercise all the attributes inherent in ownership, such as selling the lot, because, with respect to the government represented by DAR and LBP, they have in the meantime only inchoate rights in the lotthe being amortizing owners. This is because they must still pay all the amortizations over the lot to Land Bank before an EP is issued to them. Then and only then do they acquire, in the phraseology of Vinzons-Magana, the vested right of absolute ownership in the landholding.

This brings us to the question, to whom does private rights referred to in Proclamation 1637 pertain? Absent any agrarian relationship involving the tract of lands covered by the proclamation, We can categorically state that the reference is to the private rights of the registered lot owner, in this case Doronilla and subsequently, Araneta. But then the reality on the ground was that the Araneta property or at least a portion was placed under OLT pursuant to PD 27 and subject to compulsory acquisition by DAR prior to the issuance of Proclamation 1637 on June 21, 1974, and 75 CLTs were also issued to the farmer-beneficiaries. Stated a bit differently, before Proclamation 1637 came to be, there were already PD 27 tenant-farmers in said property. In a very real sense, the private rights belong to these tenant-farmers. Since the said farmer-beneficiaries were deemed owners of the agricultural land awarded to them as of October 21, 1972 under PD 27 and subsequently deemed full owners under EO 228, the logical conclusion is clear and simple: the township reservation established under Proclamation 1637 must yield and recognize the deemed ownership rights bestowed on the farmer-beneficiaries under PD 27. Another way of looking at the situation is that these farmerbeneficiaries are subrogated in the place of Doronilla and eventual transferee Araneta.

To Us, the private rights referred to in Proclamation 1637 means those of the farmer-beneficiaries who were issued the 75 CLTs. As to them, farm lots are EXCLUDED from the coverage of Proclamation 1637 and are governed by PD 27 and subsequently RA 6657.

With respect to the 912 farmer-beneficiaries who were issued around 1,200 EPs as a result of the DAR Notice of Acquisition dated December 12, 1989, We are constrained to affirm the CA ruling invalidating the individual lot awarded to them. Obviously, they are not rice/corn land tenant-farmers contemplated in PD 27. They do not possess the rights flowing from the phrase deemed owner as of October 21, 1972. In this regard, the Court notes only too distinctly that Doronilla no less only named some 79 individuals as coming close to being legitimate PD 27 tenant-farmers of Lot 23. We reiterate the ensuing pronouncement in Natalia Realty, Inc., as cited by the CA, that agricultural lands reclassified as a residential land are outside the ambit of compulsory acquisition under RA 6657 ought to be brought to bear against the 912 farmer-beneficiaries adverted to:

The issue of whether such lands of the Lungsod Silangan Townsite are covered by the Comprehensive Agrarian Reform Law of 1988, the Supreme Court categorically declared, viz:

We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that CARL shall cover, regardless of tenurial agreement and commodity produced, all public and private agricultural lands. As to what constitutes agricultural land, it is referred to as land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land. The deliberations of the Constitutional Commission confirm this limitation. Agricultural lands are only those lands which are arable and suitable agricultural lands and do not include commercial, industrial and residential lands.

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any language be considered as agricultural lands. These lots were intended for residential use. They ceased to be agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation . Even today, the areas in question continued to be developed as a low-cost housing subdivision, albeit at a snails pace. x x x

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

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

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

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform noted in an Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are part, having been reserved for townsite purposes to be developed as human settlements by the proper land and housing agency, are not deemed agricultural lands within the meaning and intent of Section 3 (c) of R.A. No. 6657. Not being deemed agricultural lands, they are outside the coverage of CARL.[42]

Summarizing, the farmer-beneficiaries who were given the 75 CLTs prior to the issuance of Proclamation 1283, as amended by Proclamation 1637, are deemed full owners of the lots covered by 75 CLTs vis--vis the real registered owner. The farmer-beneficiaries have private rights over said lots as they were deemed owners prior to the establishment of the LS Townsite reservation or at least are subrogated to the rights of the registered lot owner. Those farmer-beneficiaries who were issued CLTs or EPs after June 21, 1974 when Proclamation 1283, as amended, became effective do not acquire rights over the lots they were claiming under PD 27 or RA 6657, because the lots have already been reclassified as residential and are beyond the compulsory coverage for agrarian reform under RA 6657. Perforce, the said CLTs or EPs issued after June 21, 1974 have to be annulled and invalidated for want of legal basis, since the lots in question are no longer subject to agrarian reform due to the reclassification of the erstwhile Doronilla estate to non-agricultural purposes.

Power of Reclassification of Land

Petitioners DAR and Land Bank ascribe error on the CA in giving Proclamation 1637, an administrative issuance, preference and weight over PD 27, a law. As argued, it is basic that, in the hierarchy of issuances, a law has greater weight than and takes precedence over a mere administrative issuance.

Petitioners contention may be accorded some measure of plausibility, except for the fact that it ignores a basic legal principle: that the power to classify or reclassify lands is essentially an executive prerogative, [43] albeit local government units, thru zoning ordinances, may, subject to certain conditions, very well effect reclassification of land use within their respective territorial jurisdiction. [44] Reclassification decrees issued by the executive department, through its appropriate agencies, carry the same force and effect as any statute. As it were, PD 27 and Proclamation 1637 are both presidential issuances, each forming, by virtue of Sec. 3(2), Article XVII of the 1973 Constitution, a part of the law of the land. Sec. 3(2), Art. XVII of the 1973 Constitution provides that:

[A]ll proclamations, orders, decrees, instructions, and acts promulgated, issued or done by the incumbent President shall be part of the law of the land, and shall remain valid, legal, binding and effective even after the lifting of Martial Law or the ratification of this Constitution unless modified, revoked, or superseded by subsequent proclamations, orders, decrees, instructions or unless expressly or impliedly modified or repealed by the regular Batasang Pambansa. (Emphasis supplied.)

While not determinative of the outcome of this dispute, the Court has, in Agrarian Reform Beneficiaries Association (ARBA) v. Nicolas,[45] held that the principles enunciated in Natalia Realty, Inc. hold sway regardless of what non-agricultural use to which an agricultural land is converted. ARBA, in fine, declares that the Natalia Realty, Inc.ruling is not confined solely to agricultural lands located within the townsite reservations; it is also applicable to other agricultural lands converted to non-agricultural uses prior to the effectivity of the CARL. The land classifying medium that ARBA teaches is not limited solely to a proclamation, but may also involve a city ordinance. Jurisdiction of DAR and its Adjudicating Arm

The DARAB has been created and designed to exercise the DARs adjudicating functions. [46] And just like any quasi-judicial body, DARAB derives its jurisdiction from law, specifically RA 6657, which invested it with adjudicatory powers over agrarian reform disputes[47] and matters related to the implementation of CARL. We need not belabor that DARABs jurisdiction over the subject matter, the Doronilla property, cannot be conferred by the main parties, let alone the intervening farmer-beneficiaries claiming to have vested rights under PD 27. As earlier discussed, the process of land reform covering the 1,266 hectares of the Araneta estate was not completed prior to the issuance of Proclamation 1637. So the intervenors, with the exception of the 79 tenant-beneficiaries who were granted CLTs, failed to acquire private rights of ownership under PD 27 before the effective conversion of the Doronilla property to non-agricultural uses. Hence, the Doronilla property, being outside of CARP coverage, is also beyond DARABs jurisdiction.

The OSGs withdrawal of the expropriation suit on September 9, 1987 did not, as Land Bank posits, automatically restore the Doronilla property to its original classification nor did it grant DAR or DARAB the power or jurisdiction to order the compulsory acquisition of the property and to place it under CARP. And, as the CA aptly noted, the DOJ Secretary, through Opinion No. 181, [48] even advised the DAR Secretary that lands covered by Proclamation 1637, having been reserved for townsite purposes, are not deemed agricultural lands within the meaning and intent of Sec. 3(c) of RA 6657 and, hence, outside the coverage of CARL . [49] The Secretary of Justice further stated that RA 6657 did not supersede or repeal Proclamations 1283 and 1637 and they remain operative until now; their being townsite reservations still remain valid and subsisting. To clarify, a DOJ opinion carries only a persuasive weight upon the courts. However since this Court, in Natalia Realty, Inc., cited with approval DOJ Opinion No. 181, such citation carries weight and importance as jurisprudence. Be that as it may, We recognize and apply the principles found in Natalia Realty, Inc. regarding the character of the Doronilla property being converted to a townsite and, thus, non-agricultural in character.

Worth mentioning at this juncture is the fact that DAR itself issued administrative circulars governing lands exempted from CARP. For instance, Administrative No. (AO) 3, Series of 1996, declares in its policy statement what categories of lands are outside CARP coverage and unequivocally states that properties not covered by CARP shall be reconveyed to the original transferors or owners. Significantly, AO 3 defines lands not so covered as property determined to be exempted from CARP coverage pursuant to [DOJ] Opinion Nos. 44 and 181 and where Presidential Proclamation has been issued declaring the subject property for certain uses other than agricultural . Said policy of the DAR, as explained in the CA Decision, [50] should be applied and upheld in cases where the DAR had erroneously ordered the compulsory acquisition of the lands found outside CARP coverage. This is true with the case at bar due to the fact that Proclamation 1283, as amended by Proclamation 1637, had effectively reclassified respondents land as residential.

To address erroneous compulsory coverage or acquisition of non-agricultural lands or agricultural lands subject of retention, especially where Certificates of Land Ownership Award (CLOAs) or EPs have been generated, the said AO itself provides the mechanism/remedy for the reconveyance of lots thus covered or acquired, viz:

1.

The Emancipation Patents (EPs) or Certificate of Land Ownership Awards (CLOAs) already generated for landholdings to be reconveyed shall have to be cancelled first pursuant to Administrative Order No. 02, Series of 1994 prior to the actual reconveyance. The cancellation shall either be through administrative proceedings in cases where the EP/CLOA has not yet been registered with the ROD or through quasi-judicial proceedings in cases where the said EP/CLOA has already been registered.[51]

Given the foregoing perspective, private petitioners lament about the injustice done to them due to the cancellation of their EPs or CLOAs, as the case may be, is specious at best, for those EPs or CLOAs were generated or granted based on the invalid order by DAR for the inclusion of the bulk of the Doronilla property under PD 27 and CARP.

With Respect to Petitioners-Intervenors Duran, et al.

In their petition for intervention filed before Us on December 17, 2009, Duran, et al. claim that Atty. Lara, the counsel who won their case before the DARAB, passed away on March 6, 1995. [52] They bemoan the fact that due to his death, which was unbeknownst to them at that time, they were not able to receive a copy of, thus are not bound by, the CA Decision dated September 19, 2003. They blame Araneta for this unfortunate incident, alleging, [S]ix years after Atty. Lara died, the Estate of J. Amado Araneta x x x filed a Petition for Review [of the DARABs decision] before the Court of Appeals. x x x The Araneta estate faked and feigned the service of its Petition upon Atty. Lara and the farmers by registered mail with the Explanation unavailability of messenger. [53] On the basis of the foregoing premises, Duran, et al. pray to be allowed to intervene in the instant case and admit their petition for review.

In its Comment (with motion to exclude) on intervenors petition for review, Araneta stated the observation that if a handling lawyer dies, it is the that lawyers client who is in the better position to know about the formers death, not his adversary or the court. Assuming that court notices and pleadings continued to be sent and delivered to Atty. Lara even after his death, at his given address, the comment added, it was intervenors fault.[54] And in support of the motion to exclude, Araneta draws attention to the rule governing how intervention is done, i.e., via a motion with a pleading-in- intervention attached to it. Exclusion is also sought on the ground that the petition includes individuals who are long dead and parties who are not parties below.

We resolve to deny due course to the plea for intervention of Duran, et al.

As the records would show, the DARAB promulgated its Decision on February 7, 2001 or six (6) years after Atty. Lara died. Yet, intervening petitioners opted to make an issue only with respect about their inability, due to Atty. Laras death, to receive the adverse CA Decision, but curiously not about the DARAB judgment favorable to them. Noticeably, in the instant petition, they only focused on questioning what they termed as the malicious failure of the Estate of Araneta to individually inform them of the filing of its petition for review with the CA. Nowhere can it be gleaned that they are questioning the failure of the CA and the DARAB to send copies of their respective decisions to them. Thus, the Court is at a loss to understand how Duran, et al. can insinuate malice on the part of the Estate of Aranetas for its alleged failure to provide them with a copy of the CA decision and yet not have any problem with respect to the DARAB decision which they also failed to personally receive due to their counsels demise.

While the fault clearly lies with Duran, et al. themselves, they found it convenient to point fingers. To be sure, they were remiss in their duty of coordinating with their counsel on the progress of their pending case. The constant communication link needed to be established between diligent clients and their attorney did not obtain in this case. It is not surprising, therefore, that Duran and his group only filed their instant petition 14 years after the death of their counsel, Atty. Lara. Parties cannot blame their counsel for negligence when they themselves were guilty of neglect.[55] Relief cannot be granted to parties who seek to be relieved from the effects of a judgment when the loss of the remedy was due to their own negligence. [56] Equity serves the vigilant and not those who slumber on their rights. [57] Duran, et al., as are expected of prudent men concerned with their ordinary affairs, should have had periodically touched base at least to be apprised with the status of

their case. Judiciousness in this regard would have alerted them about their counsels death, thus enabling them to take the necessary steps to protect their claimed right and interest in the case.

As Araneta aptly suggested in its Comment on the petition for review-in-intervention, it is Duran, et al., as clients, not the court or their adversary, who are in a better position or at least expected to know about their lawyers death due to the nature of a client-lawyer relationship. And knowing, fair play demands that the client accordingly advises the court and the adverse party about the fact of death. It is not for the appellate court or respondent Araneta to inquire why service of court processes or pleadings seemingly remained unacted by Atty. De Lara and/or his clients.

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

Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it. There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according to its particular circumstances, with the question of laches addressed to the sound discretion of the court. Because laches is an equitable doctrine, its application is controlled by equitable considerations and should not be used to defeat justice or to perpetuate fraud or injustice.

There can be little quibble about Duran, et al. being guilty of laches. They failed and neglected to keep track of their case with their lawyer for 14 long years. As discussed above, Atty. Lara died even prior to the promulgation of the DARAB Decision. Even then, they failed to notify the DARAB and the other parties of the case regarding the demise of Atty. Lara and even a change of counsel. It certainly strains credulity to think that literally no one, among those constituting the petitioning-intervenors, had the characteristic good sense of following up the case with their legal counsel. Only now, 14 years after, did some think of fighting for the right they slept on. Thus, as to them, the CA Decision is deemed final and executory based on the principle of laches.

Agrarian reform finds context in social justice in tandem with the police power of the State. But social justice itself is not merely granted to the marginalized and the underprivileged. But while the concept of social justice is intended to favor those who have less in life, it should never be taken as a toll to justify let alone commit an injustice. To borrow from Justice Isagani A. Cruz:

[S]ocial justiceor any justice for that matteris for the deserving whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in a case of reasonable doubt, we are called upon to tilt the balance in favor of the poor simply because they are poor, to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to prefer the poor simply because they are poor, or to eject the rich simply because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the law.[59]

At any rate, all is not lost on the part of Duran and the other petitioners-intervenors. In the event that they belong to the group of 75 PD 27 tenant-farmers who, as earlier adverted, were awarded individual CLT covering parcels of lands described in the CLT, then it is just but fair and in keeping with the imperatives of social justice that their rights to the covered lots should be recognized and respected.

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

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

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

No pronouncement as to cost.

SO ORDERED.

JUAN GALOPE, Petitioner, G.R. No. 185669 Present:

- versus -

CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ.

CRESENCIA BUGARIN, Represented by CELSO RABANG, Respondent.

Promulgated:

February 1, 2012

Petitioner Juan Galope appeals the Decision [1] dated September 26, 2008 and [2] Resolution dated December 12, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 97143. The CA ruled that there is no tenancy relationship between petitioner and respondent Cresencia Bugarin. The facts and antecedent proceedings are as follows: Respondent owns a parcel of land located in Sto. Domingo, Nueva Ecija, covered by Transfer Certificate of Title No. NT-229582.[3] Petitioner farms the land.[4] In Barangay Case No. 99-6, respondent complained that she lent the land to petitioner in 1992 without an agreement, that what she receives in return from petitioner is insignificant, and that she wants to recover the land to farm it on her own. Petitioner countered that respondent cannot recover the land yet for he had been farming it for a long time and that he pays rent ranging from P4,000 to P6,000 or 15 cavans of palay per harvest. The case was not settled.[5] Represented by Celso Rabang, respondent filed a petition for recovery of possession, ejectment and payment of rentals before the Department of Agrarian Reform Adjudication Board (DARAB), docketed as DARAB Case No. 9378. Rabang claimed that respondent lent the land to petitioner in 1991 and that the latter gave nothing in return as a sign of gratitude or monetary consideration for the use of the land. Rabang also claimed that petitioner mortgaged the land to Jose Allingag who allegedly possesses the land.[6] After due proceedings, the Provincial Adjudicator dismissed the petition and ruled that petitioner is a tenant entitled to security of tenure. The Adjudicator said substantial evidence prove the tenancy relationship between petitioner and respondent. The Adjudicator noted the certification of the Department of Agrarian

Reform (DAR) that petitioner is the registered farmer of the land; that Barangay Tanods said that petitioner is the tenant of the land; that Jose Allingag affirmed petitioners possession and cultivation of the land; that Allingag also stated that petitioner hired him only as farm helper; and that respondents own witness, Cesar Andres, said that petitioner is a farmer of the land.[7] On appeal, the DARAB disagreed with the Adjudicator and ruled that petitioner is not a de jure tenant. The DARAB ordered petitioner to pay rentals and vacate the land, and the Municipal Agrarian Reform Officer to assist in computing the rentals. The DARAB found no tenancy relationship between the parties and stressed that the elements of consent and sharing are not present. The DARAB noted petitioners failure to prove his payment of rentals by appropriate receipts, and said that the affidavits of Allingag, Rolando Alejo and Angelito dela Cruz are selfserving and are not concrete proof to rebut the allegation of nonpayment of rentals. The DARAB added that respondents intention to lend her land to petitioner cannot be taken as implied tenancy for such lending was without consideration.[8] Petitioner appealed, but the CA affirmed DARABs ruling that no tenancy relationship exists; that the elements of consent and sharing are not present; that respondents act of lending her land without consideration cannot be taken as implied tenancy; and that no receipts prove petitioners payment of rentals.[9] Aggrieved, petitioner filed the instant petition. Petitioner alleges that the CA erred [I.]

x x x IN AFFIRMING IN TOTO THE DECISION OF THE DARAB AND IN FAILING TO CONSIDER THE TOTALITY OF THE EVIDENCE OF THE PETITIONER THAT HE IS INDEED A TENANT[;]

[II.]

x x x IN RELYING MAINLY ON THE ABSENCE OF RECEIPTS OF THE PAYMENTS OF LEASE RENTALS IN DECLARING THE ABSENCE OF CONSENT AND SHARING TO ESTABLISH A TENANCY RELATIONSHIP BETWEEN THE PETITIONER AND THE RESPONDENT[; AND]

[III.]

x x x WHEN IT FOUND THAT THE PETITIONER HAS NOT DISCHARGED THE BURDEN [OF] PROVING BY WAY OF SUBSTANTIAL EVIDENCE HIS ALLEGATIONS OF TENANCY RELATIONSHIP WITH THE RESPONDENT.[10]

The main issue to be resolved is whether there exists a tenancy relationship between the parties.

Petitioner submits that substantial evidence proves the tenancy relationship between him and respondent. Specifically, he points out that (1) his possession of the land is undisputed; (2) the DAR certified that he is the registered farmer of the land; and (3) receipts prove his payment of irrigation fees. On the absence of receipts as proof of rental payments, he urges us to take judicial notice of an alleged practice in the provinces that payments between relatives are not supported by receipts. He also calls our attention to the affidavits of Jose Allingag, Rolando Alejo and Angelito dela Cruz attesting that he pays 15 cavans of palay to respondent.[11] In her comment, respondent says that no new issues and substantial matters are raised in the petition. She thus prays that we deny the petition for lack of merit.[12] We find the petition impressed with merit and we hold that the CA and DARAB erred in ruling that there is no tenancy relationship between the parties. The essential elements of an agricultural tenancy relationship are: (1) the parties are the landowner and the tenant or agricultural lessee; (2) the subject matter of the relationship is 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.[13] The CA and DARAB ruling that there is no sharing of harvest is based on the absence of receipts to show petitioners payment of rentals. We are constrained to reverse them on this point. The matter of rental receipts is not an issue given respondents admission that she receives rentals from petitioner. To recall, respondents complaint inBarangay Case No. 99-6 was that the rental or the amount she receives from petitioner is not much. [14] This fact is evident on the record[15] of said case which is signed by respondent and was even attached as Annex D of her DARAB petition. Consequently, we are thus unable to agree with DARABs ruling that the affidavits[16] of witnesses that petitioner pays 15 cavans of palay or the equivalent thereof in pesos as rent are not concrete proof to rebut the allegation of nonpayment of rentals. Indeed, respondents admission confirms their statement that rentals are in fact being paid. Such admission belies the claim of respondents representative, Celso Rabang, that petitioner paid nothing for the use of the land. Contrary also to the CA and DARAB pronouncement, respondents act of allowing the petitioner to cultivate her land and receiving rentals therefor indubitably show her consent to an unwritten tenancy agreement. An agricultural leasehold relation is not determined by the explicit provisions of a written contract alone.[17] Section 5[18] of Republic Act (R.A.) No. 3844, otherwise known as the Agricultural Land Reform Code, recognizes that an agricultural leasehold relation may exist upon an oral agreement. Thus, all the elements of an agricultural tenancy relationship are present. Respondent is the landowner; petitioner is her tenant. The subject matter of their relationship is agricultural land, a farm land. [19] They mutually agreed to the cultivation of the land by petitioner and share in the harvest. The purpose of their relationship is clearly to bring about agricultural production. After the harvest, petitioner pays rental consisting of palay or its equivalent in cash. Respondents motion[20] to supervise harvesting and threshing, processes in palay farming, further confirms the purpose of their agreement. Lastly, petitioners personal cultivation of the land[21] is conceded by respondent who likewise never denied the fact that they share in the harvest. Petitioners status as a de jure tenant having been established, we now address the issue of whether there is a valid ground to eject petitioner from the land.

Respondent, as landowner/agricultural lessor, has the burden to prove the existence of a lawful cause for the ejectment of petitioner, the tenant/agricultural lessee. [22] This rule proceeds from the principle that a tenancy relationship, once established, entitles the tenant to a security of tenure. [23] The tenant can only be ejected from the agricultural landholding on grounds provided by law.[24] Section 36 of R.A. No. 3844 enumerates these grounds, to wit: SEC. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to the period or future surrender of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is shown that: (1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding or will convert the landholding, if suitably located, into residential, factory, hospital or school site or other useful non-agricultural purposes: Provided; That the agricultural lessee shall be entitled to disturbance compensation equivalent to five years rental on his landholding in addition to his rights under Sections [25] and [34], except when the land owned and leased by the agricultural lessor is not more than five hectares, in which case instead of disturbance compensation the lessee may be entitled to an advance notice of at least one agricultural year before ejectment proceedings are filed against him: Provided, further, That should the landholder not cultivate the land himself for three years or fail to substantially carry out such conversion within one year after the dispossession of the tenant, it shall be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the land and recover damages for any loss incurred by him because of said dispossession; (2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any of the provisions of this Code unless his failure is caused by fortuitous event orforce majeure; (3) The agricultural lessee planted crops or used the landholding for a purpose other than what had been previously agreed upon; (4) The agricultural lessee failed to adopt proven farm practices as determined under paragraph 3 of Section [29]; (5) The land or other substantial permanent improvement thereon is substantially damaged or destroyed or has unreasonably deteriorated through the fault or negligence of the agricultural lessee; (6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the non-payment of the rental shall be due to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, the non-payment shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished; or (7) The lessee employed a sub-lessee on his landholding in violation of the terms of paragraph 2 of Section [27].

Through Rabang, respondent alleged (1) nonpayment of any consideration, (2) lack of tenancy relationship, (3) petitioner mortgaged the land to Allingag who allegedly possesses the land, and (4) she will manage/cultivate the land.[25] None of these grounds were proven by the respondent. As aforesaid, respondent herself admitted petitioners payment of rentals. We also found that a tenancy relationship exists between the parties.

On the supposed mortgage, Allingag himself denied it in his affidavit. [26] No such a deed of mortgage was submitted in evidence. Rabangs claim is based on a hearsay statement of Cesar Andres that he came to know the mortgage from residents of the place where the land is located.[27] That Allingag possesses the land is also based on Andress hearsay statement. On the contrary, Allingag stated in his affidavit that he is merely petitioners farm helper. [28] We have held that the employment of farm laborers to perform some aspects of work does not preclude the existence of an agricultural leasehold relationship, provided that an agricultural lessee does not leave the entire process of cultivation in the hands of hired helpers. Indeed, while the law explicitly requires the agricultural lessee and his immediate family to work on the land, we have nevertheless declared that the hiring of farm laborers by the tenant on a temporary, occasional, or emergency basis does not negate the existence of the element of personal cultivation essential in a tenancy or agricultural leasehold relationship.[29] There is no showing that petitioner has left the entire process of cultivating the land to Allingag. In fact, respondent has admitted that petitioner still farms the land.
[30]

On respondents claim that she will cultivate the land, it is no longer a valid ground to eject petitioner. The original provision of Section 36 (1) of R.A. No. 3844 has been removed from the statute books[31] after its amendment by Section 7 of R.A. No. 6389[32] on September 10, 1971, to wit: SEC. 7. Section 36 (1) of the same Code is hereby amended to read as follows: (1) The landholding is declared by the department head upon recommendation of the National Planning Commission to be suited for residential, commercial, industrial or some other urban purposes:Provided, That the agricultural lessee shall be entitled to disturbance compensation equivalent to five times the average of the gross harvests on his landholding during the last five preceding calendar years.

Since respondent failed to prove nonpayment of rentals, petitioner may not be ejected from the landholding. We emphasize, however, that as long as the tenancy relationship subsists, petitioner must continue paying rentals. For the law provides that nonpayment of lease rental, if proven, is a valid ground to dispossess him of respondents land. Henceforth, petitioner should see to it that his rental payments are properly covered by receipts. Finally, the records show that Allingag, petitioners co-respondent in DARAB Case No. 9378, did not join petitioners appeal to the CA. If Allingag did not file a separate appeal, the DARAB decision had become final as to him. We cannot grant him any relief. WHEREFORE, we GRANT the petition and REVERSE the Decision dated September 26, 2008 and Resolution dated December 12, 2008 of the Court of Appeals in CA-G.R. SP No. 97143. The petition filed by respondent Cresencia Bugarin hereby DISMISSED insofar as petitioner Juan Galope is concerned. No pronouncement as to costs. SO ORDERED. in DARAB Case No. 9378 is

LAND BANK OF THE PHILIPPINES, Petitioner,

G.R. No. 188376

Present:

CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, - versus BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ. FEDERICO SUNTAY, as represented by his Assignee, JOSEFINA LUBRICA, Respondent.

Promulgated:

December 14, 2011

In Land Bank v. Suntay,[1] the Court has declared that the original and exclusive jurisdiction to determine just compensation under Republic Act No. 6657 (Comprehensive Agrarian Reform Law, or CARL) pertains to the Regional Trial Court (RTC) as a Special Agrarian Court; that any effort to transfer such jurisdiction to the adjudicators of the Department of Agrarian Reform Adjudication Board (DARAB) and to convert the original jurisdiction of the RTC into appellate jurisdiction is void for being contrary to the CARL; and that what DARAB adjudicators are empowered to do is only to determine in a preliminary manner the reasonable compensation to be paid to the landowners, leaving to the courts the ultimate power to decide this question.

Bearing this pronouncement in mind, we grant the petition for review on certiorari and reverse the decision promulgated on June 5, 2009 by the Court of Appeals (CA) in CA-G.R. SP No. 106104 entitled Land Bank of the Philippines v. Hon. Conchita C. Mias, Regional Agrarian Adjudicaor of Region IV, and Federico Suntay, as represented by his Assignee, Josefina Lubrica , dismissing the petition for certiorari of Land Bank of the Philippines (Land Bank) on the ground of its being moot and academic.

ANTECEDENTS

Respondent Federico Suntay (Suntay) owned land situated in Sta. Lucia, Sablayan, Occidental Mindoro with a total area of 3,682.0285 hectares. In 1972, the Department of Agrarian Reform (DAR) expropriated 948.1911 hectares of Suntays land pursuant to Presidential Decree No. 27. [2] Petitioner Land Bank and DAR fixed the value of the expropriated portion at P4,497.50/hectare, for a total valuation of P4,251,141.68. [3] Rejecting the valuation, however, Suntay filed a petition for determination of just compensation in the Office of the Regional Agrarian Reform Adjudicator (RARAD) of Region IV, DARAB, docketed as DARAB Case No. V-0405-0001-00; his petition was assigned to RARAD Conchita Mias (RARAD Mias).[4]

On January 24, 2001, after summary administrative proceeding in DARAB Case No. V-0405-0001-00, RARAD Mias rendered a decision fixing the total just compensation for the expropriated portion at P157,541,951.30. Land Bank moved for a reconsideration, but RARAD Mias denied its motion on March 14, 2001. It received the denial onMarch 26, 2001.[5]

On April 20, 2001, Land Bank brought a petition for the judicial determination of just compensation in the RTC (Branch 46) in San Jose, Occidental Mindoro as a Special Agrarian Court, impleading Suntay and RARAD Mias. The petition, docketed as Agrarian Case No. R-1241, essentially prayed that the total just compensation for the expropriated portion be fixed at only P4,251,141.67.[6]

G.R. No. 159145 DARAB v. Lubrica

On May 22, 2001, despite the pendency of Agrarian Case No. R-1241 in the RTC, RARAD Mias issued an order in DARAB Case No. V-0405-0001-00, declaring that herdecision of January 24, 2001 had become final and executory. Land Bank contested the order through a motion for reconsideration, but RARAD Mias denied the motion for reconsideration on July 10, 2001.

On July 18, 2001, RARAD Mias issued a writ of execution directing the Regional Sheriff of DARAB Region IV to implement the decision of January 24, 2001.[7]

On September 12, 2001, Land Bank filed in DARAB a petition for certiorari (with prayer for the issuance of temporary restraining order (TRO)/preliminary injunction), docketed as DSCA No. 0252, seeking to nullify the following issuances of RARAD Mias, to wit:

(a) The decision of January 24, 2001 directing Land Bank to pay Suntay just compensation of P147,541,951.30;

(b) The order dated May 22, 2001 declaring the decision of January 24, 2001 as final and executory;

(c) The order dated July 10, 2001 denying Land Banks motion for reconsideration; and

(d) The writ of execution dated July 18, 2001 directing the sheriff to enforce the decision of January 24, 2001.

On September 12, 2001, DARAB enjoined RARAD Mias from proceeding with the implementation of the decision of January 24, 2001, and directed the parties to attend the hearing to determine the propriety of issuing a preliminary or permanent injunction.[8]

On September 20, 2001, Josefina Lubrica (Lubrica), the assignee of Suntay, filed a petition for prohibition in the CA (CA-G.R. SP No. 66710) to prevent DARAB from proceeding in DSCA No. 0252 by mainly contending that the CARL did not grant to DARAB jurisdiction over special civil actions for certiorari. On the same day, the CA granted the prayer for TRO.

On October 3, 2001, DARAB issued a writ of preliminary injunction enjoining RARAD Mias from implementing the January 24, 2001 decision and the orders incidental to said decision.[9]

DARAB submitted its own comment to the CA, arguing that it had issued the writ of injunction under its power of supervision over its subordinates, like the PARADs and the RARADs.

Land Bank also submitted its own comment, citing the prematurity of the petition for prohibition.[10]

On August 22, 2002, the CA promulgated its decision in CA-G.R. SP No. 66710, holding that DARAB, being a mere formal party, had no personality to file a comment vis--vis the petition for prohibition; and that DARAB had no jurisdiction to take cognizance of DSCA No. 1252, considering that its exercise of jurisdiction over a special civil action for certiorari had no constitutional or statutory basis. Accordingly, the CA granted the petition for prohibition and perpetually enjoined DARAB from proceeding in DSCA No. 1252, which the CA ordered dismissed.[11]

Thence, DARAB appealed the adverse CA decision to this Court via petition for review on certiorari, docketed as G.R. No. 159145 entitled Department of Agrarian Reform Adjudication Board of the Department of Agrarian Reform, Represented by DAR Secretary Roberto M. Pagdanganan v. Josefina S. Lubrica, in her capacity as Assignee of the rights and interest of Federico Suntay (DARAB v. Lubrica), insisting that the CA erred in declaring that DARAB had no personality to file a comment; in holding that DARAB had no jurisdiction over DSCA No. 0252; and in nullifying the writ of preliminary injunction issued by DARAB in DSCA No. 0252 for having been issued in violation of the CAs TRO.

On April 29, 2005, the Court promulgated its decision in DARAB v. Lubrica (G.R. No. 159145), [12] denying the petition for review. The Court opined that DARABs limited jurisdiction as a quasi-judicial body did not include the authority to take cognizance of petitions for certiorari, in the absence of an express grant in R.A. No. 6657, Executive Order (E.O.) No. 229, and E.O. No. 129-A.

G.R. No. 157903 Land Bank v. Suntay

In the meanwhile, in Agrarian Case No. R-1241, Suntay filed a motion to dismiss, claiming that Land Banks petition for judicial determination of just compensation had been filed beyond the 15-day reglementary period prescribed in Section 11, Rule XIII of the New Rules of Procedure of DARAB; and that, by virtue of such tardiness, RARAD Mias decision had become final and executory.[13] The RTC granted Suntays motion to dismiss on August 6, 2001 on that ground.

Land Bank sought reconsideration, maintaining that its petition for judicial determination of just compensation was a separate action that did not emanate from the case in the RARAD.

Nonetheless, the RTC denied Land Banks motion for reconsideration on August 31, 2001.[14]

On September 10, 2001, Land Bank filed a notice of appeal in Agrarian Case No. R-1241, but the RTC denied due course to the notice of appeal on January 18, 2002, pointing out that the proper mode of appeal was by petition for review pursuant to Section 60 of the CARL.

The RTC denied Land Banks motion for reconsideration on March 8, 2002.[15]

Thereupon, Land Bank assailed in the CA the RTCs orders dated January 18, 2002 and March 8, 2002 via a special civil action certiorari (CA-G.R. SP No. 70015), alleging that the RTC thereby committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying due course to its notice of appeal; and contending that decisions or final orders of the RTCs, acting as Special Agrarian Courts, were not appealable to the CA through a petition for review but through a notice of appeal.

On July 19, 2002, the CA promulgated its decision in CA-G.R. SP No. 70015, granting Land Banks petition for certiorari; nullifying the RTCs orders dated January 18, 2002 and March 8, 2002; allowing due course to Land Banks notice of appeal; and permanently enjoining the RTC from enforcing the nullified orders, and the RARAD from enforcing the writ of execution issued in DARAB Case No. V-0405-0001-00.[16]

Thereafter, upon Suntays motion for reconsideration , the CA reversed itself through the amended decision dated February 5, 2003,[17] and dismissed Land Banks petition for certiorari, thuswise:

WHEREFORE, premises considered, the present Motion for Reconsideration is hereby GRANTED. Consequently, the present petition is hereby DISMISSED.

The injunction issued by this Court enjoining (a) respondent Executive Judge from enforcing his Orders dated January 18, 2002 and March 8, 2002 in Agrarian Case No. R-1241; and (b) respondent Regional Agrarian Reform Adjudicator Conchita S. Mias from enforcing the Writ of Execution dated July 18, 2001 issued in DARAB Case No. V-0405-0001-00, are hereby REVOKED and SET ASIDE.

SO ORDERED.

On April 10, 2003, the CA denied the Land Banks motion for reconsideration.[18]

On May 6, 2003, Land Bank appealed to the Court, docketed as G.R. No. 157903, entitled Land Bank of the Philippines v. Federico Suntay, Represented by his Assignee, Josefina Lubrica (Land Bank v. Suntay).[19]

On October 12, 2005, the Court issued a TRO upon Land Banks urgent motion to stop the implementation of RARAD Mias decision dated January 24, 2001 pending the final resolution of G.R. No. 157903.[20]

[21]

On October 11, 2007, this Court promulgated its decision in Land Bank v. Suntay (G.R. No. 157903), viz:

The crucial issue for our resolution is whether the RTC erred in dismissing the Land Banks petition for the determination of just compensation.

It is clear that the RTC treated the petition for the determination of just compensation as an appeal from the RARAD Decision in DARAB Case No. V-0405-0001-00. In dismissing the petition for being filed out of time, the RTC relied on Section 11, Rule XIII of the DARAB New Rules of Procedure which 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 [Department of Agrarian Reform Adjudication Board (DARAB)] 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.

The RTC erred in dismissing the Land Banks petition. It bears stressing that the petition is not an appeal from the RARAD final Decision but an original action for the determination of the just compensation for respondents expropriated property, over which the RTC has original and exclusive jurisdiction. This is clear from Section 57 of R.A. No. 6657 which provides:

Section 57. Special Jurisdiction. The Special Agrarian Courts [the designated Regional Trial 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. (Underscoring supplied)

Parenthetically, the above provision is not in conflict with Section 50 of the same R.A. No. 6657 which states:

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) x x x.

In Republic of the Philippines v. Court of Appeals , we held that Section 50 must be construed in harmony with Section 57 by considering cases involving the determination of just compensation and criminal cases for violations of R.A. No. 6657 as excepted from the plenitude of power conferred upon the DAR. Indeed, there is a reason for this distinction. The DAR is an administrative agency which cannot be granted jurisdiction over cases of eminent domain (such as taking of land under R.A. No. 6657) and over criminal cases. Thus, in Land Bank of the Philippines v. Celada, Export Processing Zone Authority v. Dulay and Sumulong v. Guerrero, we held that the valuation of property in eminent domain is essentially a judicial function which cannot be vested in administrative agencies. Also, in Scotys Department Store, et al. v. Micaller, we struck down a law granting the then Court of Industrial Relations jurisdiction to try criminal cases for violations of the Industrial Peace Act.

The procedure for the determination of just compensation cases under R.A. No. 6657, as summarized in Landbank of the Philippines v. Banal, is that initially, the Land Bank is charged with the responsibility of determining the value of lands placed under land reform and the compensation to be paid for their taking under the voluntary offer to sell or compulsory acquisition arrangement. The DAR, relying on the Land Banks determination of the land valuation and compensation, then makes an offer through a notice sent to the landowner. If the landowner accepts the offer, the Land Bank shall pay him the purchase price of the land after he executes and delivers a deed of transfer and surrenders the certificate of title in favor of the

government. In case the landowner rejects the offer or fails to reply thereto, the DAR adjudicator conducts summary administrative proceedings to determine the compensation for the land by requiring the landowner, the Land Bank and other interested parties to submit evidence as to the just compensation for the land. A party who disagrees with the Decision of the DAR adjudicator may bring the matter to the RTC designated as a Special Agrarian Court for the determination of just compensation. In determining just compensation, the RTC is required to consider several factors enumerated in Section 17 of R.A. No. 6657. These factors have been translated into a basic formula in DAR Administrative Order (A.O.) No. 6, Series of 1992, as amended by DAR A.O. No. 11, Series of 1994, issued pursuant to the DARs rule-making power to carry out the object and purposes of R.A. No. 6657. xxx Obviously, these factors involve factual matters which can be established only during a hearing wherein the contending parties present their respective evidence. In fact, to underscore the intricate nature of determining the valuation of the land, Section 58 of the same law even authorizes the Special Agrarian Courts to appoint commissioners for such purpose.

In the instant case, the Land Bank properly instituted its petition for the determination of just compensation before the RTC in accordance with R.A. No. 6657. The RTC erred in dismissing the petition. To repeat, Section 57 of R.A. No. 6657 is explicit in vesting the RTC, acting as a Special Agrarian Court, original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. As we held in Republic of the Philippines v. Court of Appeals:

xxx. It would subvert this original and exclusive jurisdiction of the RTC for the DAR to vest original jurisdiction in compensation cases in administrative officials and make the RTC an appellate court for the review of administrative decisions.

Consequently, although the new rules [Section 11, Rule XIII of the DARAB New Rules of Procedure] 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 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 Section 57 and therefore would be void. What adjudicators are empowered to do is only to determine in a preliminary manner the reasonable compensation to be paid to landowners, leaving to the courts the ultimate power to decide this question. (Underscoring supplied)

WHEREFORE, we GRANT the instant Petition for Review on Certiorari. The assailed Amended Decision dated February 5, 2003 and Resolution dated April 10, 2003 of the Court of Appeals in CA-G.R. SP No. 70015 are REVERSED. The Orders dated January 18, 2002 and March 8, 2002 issued by the RTC in Agrarian Case No. R-1241 are NULLIFIED. The RTC isORDERED to conduct further proceedings to determine the just compensation of respondents expropriated property in accordance with the guidelines set by this Court in Landbank of the Philippines v. Banal.

No pronouncement as to costs.

SO ORDERED.[22]

Suntay sought reconsideration, invoking the pronouncement in DARAB v. Lubrica (G.R. No. 159145) to the effect that the RARAD Decision had already attained finality in accordance with the above-quoted rule, notwithstanding Land Banks recourse to the special agrarian court.[23]

On January 30, 2008, however, the Court denied Suntays motion for reconsideration. [24] Accordingly, the decision in Land Bank v. Suntay became final and executory.

Second Execution in DARAB Case No. V-0405-0001-00

On September 14, 2005, notwithstanding the pendency of Land Bank v. Suntay (G.R. No. 157903) in this Court, RARAD Mias granted Suntays ex parte motion for the issuance of an alias writ of execution by citing the pronouncement in DARAB v. Lubrica (G.R. No. 159145) to the effect that her decision dated January 24, 2001 had attained finality in accordance with DARABs rules of procedure.[25]

Acting pursuant to the alias writ of execution, the DARAB sheriffs issued and served the following notices on the dates indicated herein, to wit:

(a) A notice of demand to Land Bank on September 15, 2005;[26]

(b) A notice of levy to Land Bank on September 21, 2005;[27]

(c) A notice of levy to Bank of the Philippine Islands[28] and to Hongkong Shanghai Bank Corporation both on September 28, 2005;[29] and

(d) An order to deliver so much of the funds in its custody sufficient to satisfy the final judgment to Land Bank on October 5, 2005.[30]

The moves of the sheriffs compelled Land Bank to file an urgent verified motion for the issuance of a TRO or writ of preliminary injunction in Land Bank v. Suntay (G.R. No. 157903).

On October 12, 2005, acting on Land Banks urgent motion, the Court resolved in Land Bank v. Suntay (G.R. No. 157903), viz:

(a)

to issue a TEMPORARY RESTRAINING ORDER prayed for, effective immediately, enjoining and restraining Hon. Conchita C. Mias or the Regional Agrarian Reform Adjudicator (RARAD) concerned, from issuing an alias writ of execution implementing the RARAD decision dated January 24, 2000, until further orders from this court; and

(b)

to require the petitioner to POST a CASH BOND or a SURETY BOND from a reputable bonding company of indubitable solvency in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00), within five (5) days from notice, otherwise, the temporary restraining order herein issued shall AUTOMATICALLY be lifted. Unless and until the Court directs otherwise, the bond shall be effective from its approval by the Court until this case is finally decided, resolved or terminated. [31]

On October 24, 2005, the Court directed the parties in Land Bank v. Suntay (G.R. No. 157903) to maintain the status quo ante,[32] thus:

G.R. No. 157903 xxx - Acting on the petitioners very urgent manifestation and omnibus motion dated October 21, 2005, the Court Resolves to DIRECT the parties to maintain the STATUS QUOprior to the issuance of the Alias Writ of Execution dated September 14, 2005. All actions done in compliance or in connection with the said Writ issued by Hon. Conchita C. Mias, Regional Agrarian Reform Adjudicator (RARAD), are hereby DEEMED QUASHED, and therefore, of no force and effect.

On the same day of October 24, 2005, however, the sheriffs held a public auction of Land Banks levied shares of stock in the Philippine Long Distance Telephone Company (PLDT) and Manila Electric Company (MERALCO) at the Office of the DARAB Regional Clerk in Mandaluyong City. In that public auction, Lubrica, the lone bidder, was declared the highest bidder.[33]

On October 25, 2005, the same sheriffs resumed the public auction of Land Banks remaining PLDT shares of stock and First Gen Corporation bonds. Lubrica was again declared the highest bidder. [34] The sheriffs then issued two certificates of sale in favor of Lubrica.

On October 25, 2005, RARAD Mias reversed herself and quashed all acts done pursuant to the writ of execution,[35] viz:

This refers to the Resolution of the Third Division of the Supreme Court dated October 24, 2005 in G.R. No. 157903 (Land Bank of the Philippines vs. Federico Suntay, Represented by His Assignee, Josefina Lubrica) directing the parties to maintain the STATUS QUO prior to the issuance of the Alias Writ of Execution dated September 14, 2005; and that all actions done in compliance or in connection with said Writ issued by Hon. Conchita C. Mias, Regional Agrarian Reform Adjudicator (RARAD) are hereby DEEMED QUASHED, and therefore, of no force and effect.

The Sheriffs and all parties in this case are ordered to strictly comply with this Order immediately.

SO ORDERED.

As earlier stated, on October 11, 2007, the Court resolved Land Bank v. Suntay (G.R. No. 157903) in favor of Land Bank.[36]

This Case (G.R. No. 188376)

On October 29, 2008, Suntay presented to RARAD Mias in DARAB Case No. V-0405-0001-00 his urgent ex parte manifestation and motion to resume interrupted execution,[37] citing Land Bank v. Martinez (G.R. No. 169008, July 31, 2008, 560 SCRA 776).

Immediately, on October 30, 2008, RARAD Mias granted Suntays urgent ex parte manifestation and motion, and ordered the DARAB sheriffs to resume their implementation of the alias writ of execution issued in DARAB Case No. V-0405-0001-00, stating:

The basis of the motion, the case of Land Bank vs. Raymunda Martinez (supra) indubitably clarified that the adjudicators decision on land valuation attained finality after the lapse of the 15-day period citing the case of Department of Agrarian Reform Adjudication Board vs. Lubrica in GR No. 159145 promulgated on April 29, 2005. Movant in this case therefore is correct that the Decision in the Land Bank case of the Philippines vs. Raymunda Martinez resolved the conflict by rendering a Decision upholding the rulings of the Second Division of the Supreme Court in GR No. 159145 entitled Department of Agrarian Reform Adjudication Board (DARAB) of the Department of Agrarian Reform (DAR) represented by DAR Secretary, Roberto M. Pagdanganan vs.

Josefina Lubrica in her capacity as Assignee of rights and interest of Federico Suntay and striking down as erroneous the rulings of the Third Division in GR No. 157903 entitled Land Bank of the Philippines vs. Federico Suntay, et. al.

The ruling in the case of Land Bank of the Philippines vs. Raymunda Martinez which upheld the Decision in Lubrica having attained finality, the Status Quo Order issued by the Third Division in GR No. 157903 is now rendered ineffective.

WHEREFORE, premises considered, the instant motion is hereby GRANTED.

Sheriffs Maximo Elejerio and Juanita Baylon are hereby ordered to resume the interrupted execution of the Alias Writ issued in this case on September 14, 2005.

SO ORDERED.[38]

The DARAB sheriffs forthwith served a demand to comply dated October 30, 2008 on the Philippine Depository and Trust Corporation (PDTC) and Securities Transfer Services, Inc. (STSI).[39]

By letter dated October 31, 2008, PDTC notified Land Bank about its being served with the demand to comply and about its action thereon, including an implied request for Land Bank to uplift the securities.[40]

Also on October 31, 2008, PDTC filed a manifestation and compliance in the office of the RARAD, Region IV, stating that it had already issued a written notice to Land Bank to uplift the assets involved and that it ha(d) caused the subject assets to be outside the disposition of Land Bank.[41]

In response, Land Bank wrote back on November 3, 2008 to request PDTC to disregard the DARAB sheriffs demand to comply.[42]

PDTC responded to Land Bank that it was not in the position to determine the legality of the demand to comply, and that it was taking the necessary legal action.[43]

On November 10, 2008, PDTC sent a supplemental letter to Land Bank reiterating its previous letter.[44]

Given the foregoing, Land Bank commenced on November 12, 2008 a special civil action for certiorari in the CA (CA-G.R. SP No. 106104), alleging that RARAD Mias had committed grave abuse of discretion amounting to lack or in excess of jurisdiction in rendering ex parte the assailed Order dated October 30, 2008 as it varies, modifies or alters the Supreme Court Decision dated October 11, 2007, which had

become final and executory; and that the DARAB sheriffs had committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing to, and serving on, the Philippine Depository and Trust Corporation, a copy of the Demand to Comply dated October 30, 2008 notwithstanding the unquestioned finality of the Supreme Courts decision dated October 11, 2007.[45]

Suntay submitted a comment and opposed the issuance of a TRO.[46]

On November 28, 2008, before the CA could act on Land Banks application for TRO, MERALCO cancelled Land Banks 42,002,750 shares of stock and issued new stock certificates in the name of Lubrica. MERALCO recorded the transfer of ownership of the affected stocks in its stock and transfer book. All such acts of MERALCO were done in compliance with the demand to comply by the DARAB sheriffs pursuant to the certificate of sheriffs sale dated October 24, 2005 and the certificate authorizing registration dated November 20, 2008 (respecting Land Banks MERALCO shares) issued in favor of Lubrica.[47]

Without yet being aware of the transfers, the CA issued a TRO on December 4, 2008 to prevent the implementation of RARAD Mias order dated October 30, 2008.[48] Land Bank then sought the approval of its bond for that purpose.[49]

On December 4, 2008, MERALCO communicated to the CA its cancellation of Land Banks certificates of MERALCO stocks on November 28, 2008 and its issuance of new stock certificates in the name of Lubrica.
[50]

Learning of the cancellation of its stock certificates and the transfer of its MERALCO shares in the name of Lubrica, Land Bank filed on December 12, 2008 its very urgent manifestation and omnibus motion, praying that the CAs TRO issued on December 4, 2008 be made to cover any and all acts done pursuant to the assailed order dated October 30, 2008 and the demand to comply dated October 30, 2008. Land Bank further prayed that the cancellation of its certificates of MERALCO shares be invalidated and the transfer of the shares in favor of Lubrica be quashed, and that the parties be directed to maintain the status quo ante.[51]

On December 17, 2008, Land Bank presented a very urgent motion to resolve and supplemental motion, seeking to expand the scope of the TRO earlier issued; to restrain the Philippine Stock Exchange (PSE) from allowing the trading of its (Land Bank) entire MERALCO shares, and the Corporate Secretary of MERALCO from recording or registering the transfer of ownership of Land Banks MERALCO shares to other parties in MERALCOs stock and transfer book; to invalidate the cancellation of the certificates of MERALCO shares and to quash the transfer in favor of Lubrica and all subsequent transfers to other parties; to direct the parties and all concerned persons and entities to maintain the status quo; and to declare all acts done pursuant to the assailed order and the demand to comply null and void and of no force and effect.[52]

On December 24, 2008, the CA denied Land Banks very urgent motion to resolve and supplemental motion.[53]

In the meantime, DAR administratively charged and preventively suspended RARAD Mias for issuing the October 30, 2008 order, and replaced her with RARAD Marivic Casabar (RARAD Casabar) in RARAD Region IV.[54]

On December 15, 2008, RARAD Casabar recalled RARAD Mias order dated October 30, 2008.[55]

On December 17, 2008, RARAD Casabar directed:

(a) MERALCO to cancel the stock certificates issued to Lubrica and to any of her transferees or assignees, and to restore the ownership of the shares to Land Bank and to record the restoration in MERALCOs stock and transfer book; and

(b) PSE, PDTC, STSI, the Philippine Dealing System Holdings Corporation and Subsidiaries (PDS Group), and any stockbroker, dealer, or agent of MERALCO shares to stop trading or dealing on the shares.[56]

On June 5, 2009, the CA promulgated a resolution in CA-G.R. SP No. 106104, dismissing Land Banks petition for certiorari for being moot and academic,[57] citing the recall by RARAD Casabar of RARAD Miass order of October 30, 2008.

On June 23, 2009, Land Bank, through the Office of the Government Corporate Attorney, filed in this Court a motion for extension of time to file petition for review on certiorari, seeking additional time of 30 days within which to file its petition for review on certiorari.[58]

On July 24, 2009, before the Court could take any action on its motion for extension of time to file petition for review, Land Bank moved to withdraw the motion, allegedly because the CA still retained jurisdiction over CA-G.R. SP No. 106104 due to Lubricas having meanwhile filed the following motions and papers in CA-G.R. SP No. 106104, namely:

(a) Motion for reconsideration or for clarificatory ruling dated June 23, 2009, a copy of which Land Bank received on July 2, 2009;

(b)Additional arguments in support of the motion for reconsideration and for clarificatory ruling dated July 1, 2009, a copy of which Land Bank received on July 8, 2009;

(c) Motion for leave of court to file the attached manifestation dated July 8, 2009, a copy of which Land Bank received on July 13, 2009;

(d) Manifestation dated July 8, 2009, a copy of which Land Bank received on July 13, 2009; and

(e) Motion to direct RARAD Casabar to explain why she had issued her orders of December 15, 2008 and December 17, 2008, a copy of which Land Bank received on July 20, 2009.[59]

On July 31, 2009, Land Bank filed a very urgent ex parte motion for execution dated July 30, 2009 in DARAB, seeking the execution of RARAD Casabars orders ofDecember 15, 2008 and December 17, 2008.[60]

On August 7, 2009, Land Bank filed in this Court: (a) a motion to withdraw its motion to withdraw motion for extension of time to file petition for review on certiorari; and (b) a motion for leave to file and to admit[61] the attached petition for review on certiorari.[62]

On September 9, 2009, the Court denied Land Banks motion to withdraw its motion to withdraw motion for extension of time to file petition for review on certiorari, but granted Land Banks motion for leave to file and to admit the attached petition for review on certiorari. The Court required Lubrica to comment on the petition for review, and Land Bank to comply with A.M. No. 07-6-5-SC dated July 10, 2007.[63]

On September 30, 2009, the CA denied Lubricas motion to direct RARAD Casabar to explain why she had issued her orders of December 15, 2008 and December 17, 2008, among others.[64]

On October 14, 2009, Lubrica filed a motion for leave to file motion to dismiss,[65] stating that Land Banks petition for certiorari had been filed out of time and that the assailed order of RARAD Mias had been affirmed by the final judgment in DARAB v. Lubrica (G.R. No. 159145), and had been supported by the ruling in Land Bank v. Martinez, G.R. No. 169008, July 31, 2008, 560 SCRA 776.

On May 5, 2010, Land Bank filed an urgent verified motion for the issuance of a TRO or writ of preliminary injunction, seeking thereby to enjoin MERALCO, its Corporate Secretary, and its Assistant Corporate Secretary, pending the proceedings and until the resolution of the case, from releasing on May 11, 2010 and thereafter the cash dividends pertaining to the disputed shares in favor of Lubrica or any person acting on her behalf.[66]

Lubrica opposed Land Banks motion.[67]

Todate, the Court has taken no action on Land Banks urgent verified motion.

ISSUES

Land Bank contends that:

The Court of Appeals acted not in accord with law and with the applicable jurisprudence when it dismissed the petition a quo on purely technical grounds.

A. Contrary to the findings of the Court of Appeals, DARAB v. Lubrica is not the law of the case insofar as the issue on the proper procedure to follow in the determination of the just compensation is concerned.

B. The issue before the Court of Appeals, whether the order dated 30 October 2008 was issued with grave abuse of discretion, has not been rendered moot and academic with the subsequent issuance of the order dated December 15, 2008.

C. The Court of Appeals erred when in gave its implicit imprimatur to the irregular procedure for execution, which the RARAD and the DARAB sheriffs adopted, in gross violation of Republic Act No. 6657 and the DARAB Rules of Procedure.[68]

On the other hand, Lubrica proposes as issue:

Is the January 24, 2001 Decision of RARAD Conchita Mias final and executory?[69]

As we see it, then, the Court has to resolve the following, to wit:

1.

Whether or not RARAD Casabars orders dated December 15, 2008 and December 18, 2008 rendered Land Banks petition for certiorari moot and academic;

2.

Whether or not RARAD Mias order dated October 30, 2008 was valid; and

3.

Whether or not the manner of execution of RARAD Mias order dated October 30, 2008 was lawful.

RULING

The appeal has merit.

I. Whether or not RARAD Casabars orders dated December 15, 2008 and December 18, 2008 rendered Land Banks petition for certiorari moot and academic

The CA rationalized its dismissal of Land Banks petition for certiorari in the following manner:

It must be stressed that this Court is dismissing the instant petition not because it has lost jurisdiction over the case but because the case has already become moot and academic. In other words, this Court is dismissing the case out of practicality because proceeding with the merit of the case would only be an exercise in futility. This is because whichever way this Court would later decide the case would only be rendered immaterial and ineffectual by the foregoing new Orders of the RARAD. To elaborate, a denial of the instant petition would mean that We are sustaining the Mias Order dated October 30, 2008 which, as matters stand right now, had been superseded by the two new orders of the RARAD. Will sustaining RARAD Mias Order have the effect of nullifying the two new orders of RARAD Casabar? The answer is still in the negative. On the other hand, the ultimate result of granting this petition would be that the two new Orders would still govern, which is already the prevailing situation at this point. Indeed, the dismissal of the case on this ground is in itself an exercise by the Court of its jurisdiction over the case.[70]

We cannot uphold the CA.

To the extent that it nullified and recalled RARAD Mias October 30, 2008 order, RARAD Casabars December 15, 2008 order seemingly mooted Land Banks petition for certiorari (whereby Land Bank contended that RARAD Mias, through her order dated October 30, 2008, could not disregard or invalidate the decision promulgated on October 11, 2007 in G.R. No. 157903, and that the monies, funds, shares of stocks, and accounts of Land Bank, which did not form part of the Agrarian Reform Fund (ARF), could not be levied upon, garnished, or transferred to Lubrica in satisfaction of RARAD Mias January 24, 2000 decision).[71]

At first glance, indeed, RARAD Casabars December 15, 2008 order seemingly rendered the reliefs prayed for by the petition for certiorari unnecessary and moot. An issue is said to become moot and academic when it ceases to present a justiciable controversy, so that a declaration on the issue would be of no practical use or value.[72]

However, the application of the moot-and-academic principle is subject to several exceptions already recognized in this jurisdiction. In David v. Macapagal-Arroyo,[73] the Court has declared that the moot-andacademic principle is not a magical formula that automatically dissuades courts from resolving cases, because they will decide cases, otherwise moot and academic, if they find that:

(a) There is a grave violation of the Constitution;

(b) The situation is of exceptional character, and paramount public interest is involved;

(a) The constitutional issue raised requires formulation of controlling principles to guide the Bench, the Bar, and the public; or

(b) A case is capable of repetition yet evading review.

In addition, in Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on Ancestral Domain (GRP),[74] the Court has come to consider a voluntary cessation by the defendant or the doer of the activity complained of as another exception to the moot-and-academic principle, the explanation for the exception being that:

xxx once a suit is filed and the doer voluntarily ceases the challenged conduct, it does not automatically deprive the tribunal of power to hear and determine the case and does not render the case moot especially when the plaintiff seeks damages or prays for injunctive relief against the possible recurrence of the violation.

The exception of voluntary cessation of the activity without assuring the non-recurrence of the violation squarely covers this case. Hence, the CAs dismissal of CA-G.R. SP No. 106104 on the ground of mootness must be undone.

Yet another reason why the Court should still resolve derives from the fact that the supervening RARAD Casabars recall order did not at all resolve and terminate the controversy between the parties. The CA itself conceded that Lubrica could still assail the validity of RARAD Casabars recall order. [75] That possibility underscores the need to definitely resolve the controversy between the parties to avoid further delay. As herein shown, this appeal is the third time that the intervention of the Court has been invoked regarding the

controversy, the earlier ones being DARAB v. Lubrica (G.R. No. 159145) and Land Bank v. Suntay (G.R. No. 157903). The need to put an end to the controversy thus becomes all the more pressing and practical.

We further discern that the parties have heretofore acted to advance their respective interests and claims against each other by relying on seemingly conflicting pronouncements made in DARAB v. Lubrica (G.R. No. 159145) and Land Bank v. Suntay (G.R. No. 157903). Their reliance has unavoidably spawned and will continue to spawn confusion about their rights and can occasion more delays in the settlement of their claims.

The Court does not surely desire confusion and delay to intervene in any litigation, because the Court only aims to ensure to litigants a just, speedy, and inexpensive administration of justice. Thus, the Court feels bound to undo the CAs deeming Land Banks petition for certiorari mooted by RARAD Casabars recall order. Verily, RARAD Mias assailed order, until and unless its legality is declared and settled by final judgment, may yet be revived, and the judicial dispute between the parties herein may then still resurrect itself.

II. Whether or not RARAD Mias order dated October 30, 2008 was valid

The controversy is traceable to the October 30, 2005 Order of RARAD Mias directing the DARAB sheriffs to resume the implementation of the alias writ of execution she had issued in DARAB Case No. V0405-0001-00. She predicated her order on the following pronouncement made in Land Bank v. Martinez, [76] viz:

To resolve the conflict in the rulings of the Court, we now declare herein, for the guidance of the bench and the bar, that the better rule is that stated in Philippine Veterans Bank, reiterated in Lubricaand in the August 14, 2007 Decision in this case. Thus, while a petition for the fixing of just compensation with the SAC is not an appeal from the agrarian reform adjudicators decision but an original action, the same has to be filed within the 15-day period stated in the DARAB Rules; otherwise, the adjudicators decision will attain finality . This rule is not only in accord with law and settled jurisprudence but also with the principles of justice and equity. Verily, a belated petition before the SAC, e.g., one filed a month, or a year, or even a decade after the land valuation of the DAR adjudicator, must not leave the dispossessed landowner in a state of uncertainty as to the true value of his property.[77]

Land Bank contends, however, that Land Bank v. Martinez did not vary, alter, or disregard the judgment in Land Bank v. Suntay (G.R. No. 157903).

Lubrica counters that instead of Land Bank v. Suntay (G.R. No. 157903) being applicable, it was DARAB v. Lubrica (G.R. No. 159145) that had become immutable and unalterable.

Lubrica is grossly mistaken.

Through the resolution promulgated on January 30, 2008 in Land Bank v. Suntay (G.R. No. 157903), the Court denied with finality Suntays motion for reconsideration filed against the October 11, 2007 decision. The decrees in Land Bank v. Suntay (G.R. No. 157903) were to nullify the order dated January 18, 2002 (denying due course to Land Banks notice of appeal of the dismissal of its petition for determination of just compensation upon Suntays motion to dismiss) and the order dated March 8, 2002 (denying Land Banks motion for reconsideration), both issued by the RTC in Agrarian Case No. R-1241; and to order the RTC to conduct further proceedings to determine the just compensation of (Suntay)s expropriated property in accordance with the guidelines set by this Court in Landbank of the Philippines v. Banal.

In effect, Land Bank v. Suntay (G.R. No. 157903) set aside the decision of RARAD Mias dated January 24, 2000 fixing the just compensation. The finality of the judgment in Land Bank v. Suntay (G.R. No. 157903) meant that the decrees thereof could no longer be altered, modified, or reversed even by the Court en banc. Nothing is more settled in law than that a judgment, once it attains finality, becomes immutable and unalterable, and can no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land. [78] This rule rests on the principle that all litigation must come to an end, however unjust the result of error may appear; otherwise, litigation will become even more intolerable than the wrong or injustice it is designed to correct.[79]

Resultantly, Lubrica cannot invoke the pronouncement in Land Bank v. Martinez in order to bar the conclusive effects of the judicial result reached in Land Bank v. Suntay(G.R. No. 157903).

II.a. Land Bank v. Suntay (G.R. No. 157903) is now the law of the case

We underscore that Land Bank v. Suntay (G.R. No. 157903) was the appropriate case for the determination of the issue of the finality of the assailed RARAD Decision by virtue of its originating from Land Banks filing on April 20, 2001 of its petition for judicial determination of just compensation against Suntay and RARAD Mias in the RTC sitting as a Special Agrarian Court. Therein, Suntay filed a motion to dismiss mainly on the ground that the petition had been filed beyond the 15-day reglementary period as required by Section 11, Rule XIII of the Rules of Procedure of DARAB. After the RTC granted the motion to dismiss, Land Bank appealed to the CA, which sustained the dismissal. As a result, Land Bank came to the Court (G.R. No. 157903), and the Court then defined the decisive issue to be: whether the RTC erred in dismissing the Land Banks petition for the determination of just compensation.[80]

The Court ruled in favor of Land Bank. For both Land Bank and Suntay (including his assignee Lubrica), the holding in Land Bank v. Suntay (G.R. No. 157903) became the law of the case that now controlled the course of subsequent proceedings in the RTC as a Special Agrarian Court. In Cucueco v. Court of Appeals, [81] the Court defined law of the case as the opinion delivered on a former appeal. Law of the case is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.[82] With the pronouncement in G.R. No. 157903 having undeniably become the law of the case between the parties, we cannot pass upon and rule again on the same legal issue between the same parties.

II.b. Land Bank v. Martinez is neither applicable nor binding on the parties herein

Suntays reliance on Land Bank v. Martinez (G.R. No. 169008, July 31, 2008, 560 SCRA 776) is unavailing for the simple reason that the pronouncement was absolutely unrelated to the present controversy.

Land Bank v. Martinez concerned a different set of facts, a different set of parties, and a different subject matter; it was extraneous to the present matter, or to DARAB v. Lubrica (G.R. No. 159145) and Land Bank v. Suntay (G.R. No. 157903). Land Bank and Suntay (and his assignee Josefina Lubrica) were not parties in Land Bank v. Martinez, rendering the pronouncement inapplicable to them now.

At best, Land Bank v. Martinez may only guide the resolution of similar controversies, but only prospectively. We note that Land Bank v. Suntay (G.R. No. 157903) was promulgated in October 11, 2007, while Land Bank v. Martinez was promulgated on July 31, 2008. The rule followed in this jurisdiction is that a judicial interpretation that varies from or reverses another is applied prospectively and should not apply to parties who relied on the old doctrine and acted in good faith. To hold otherwise is to deprive the law of its quality of fairness and justice, for, then, there is no recognition of what had transpired prior to such adjudication.[83]

Accordingly, if posterior changes in doctrines of the Court cannot retroactively be applied to nullify a prior final ruling in the same proceeding where the prior adjudication was had, [84] we have stronger reasons to hold that such changes could not apply to a different proceeding with a different set of parties and facts.

Suntay is also incorrect to insinuate that a modification or reversal of a final and executory decision rendered by a division of the Court would be valid only if done by the Court en banc.[85] Such insinuation runs afoul of the well settled doctrine of immutability of judgments. Moreover, although Article VIII, Section 4 (1)

of the Constitution gives the Court the discretion to sit either en banc or in divisions of three, five, or seven Members,[86] the divisions are not considered separate and distinct courts. Nor is a hierarchy of courts thereby established within the Supreme Court, which remains a unit notwithstanding that it also works in divisions. The actions taken and the decisions rendered by any of the divisions are those of the Court itself, considering that the divisions are not considered separate and distinct courts but as divisions of one and the same court. [87] Lastly, the only thing that the Constitution allows the banc to do in this regard is to reverse a doctrine or principle of law laid down by the Court en banc or in division.[88]

II.c. Pronouncement in DARAB v. Lubrica (G.R. No. 159145) was a mere obiter dictum

In Department of Agrarian Reform Adjudication Board (DARAB) v. Lubrica (G.R. No. 159145), the DARAB assigned as erroneous in its petition the following rulings of the CA: ( a) that DARAB, being a formal party, should not have filed a comment to the petition, for, instead, the comment should have been filed by corespondent Land Bank as the financial intermediary of CARP; ( b) that DARAB had no jurisdiction over DSCA 0252, a special civil action for certiorari; and (c) that the writ of preliminary injunctionDARAB had issued in DSCA 0252 was null and void for having been in violation of the TRO of the CA.[89]

It is evident that the only issues considered and resolved in DARAB v. Lubrica (G.R. No. 159145) were: (a) the personality of DARAB to participate and file comment; (b) the jurisdiction of DARAB over petitions for certiorari; and (c) the validity of the preliminary injunction it issued. It is equally evident that at no time in DARAB v. Lubrica (G.R. No. 159145) did the finality of RARAD Mias decision become the issue, precisely because the finality of RARAD Mias decision had been put in issue instead in Land Bank v. Suntay (G.R. No. 157903), a suit filed ahead of DARAB v. Lubrica (G.R. No. 159145). In short, the question about the finality of RARAD Mias decision was itself the lis motain Land Bank v. Suntay (G.R. No. 157903).

In view of the foregoing, Suntays invocation of the pronouncement in DARAB v. Lubrica (G.R. No. 159145), to the effect that RARAD Mias decision had attained finality upon the failure of Land Bank to appeal within the 15-day reglementary period, was unfounded and ineffectual because the pronouncement was a mere obiter dictum.

An obiter dictum has been defined as an opinion expressed by a court upon some question of law that is not necessary in the determination of the case before the court. It is a remark made, or opinion expressed, by a judge, in his decision upon a cause by the way, that is, incidentally or collaterally, and not directly upon the question before him, or upon a point not necessarily involved in the determination of the cause, or introduced by way of illustration, or analogy or argument.[90] It does not embody the resolution or determination of the court, and is made without argument, or full consideration of the point.[91] It lacks the force of an adjudication, being a mere expression of an opinion with no binding force for purposes of res judicata.[92]

II.d.

Suntay was estopped from denying being aware of existence of the judgment in Land Bank v. Suntay (G.R. No. 157903)

Suntay cannot deny or evade the adverse effect and conclusiveness of the adverse decision in Land Bank v. Suntay (G.R. No. 157903). He was aware of it due to his having actively participated therein. In the RTC, he had filed the motion to dismiss against Land Banks petition for determination of just compensation. In the CA, he filed amotion for reconsideration against the adverse decision of the CA, which ultimately favored him by reconsidering the adverse decision. In this Court, he actively defended the CAs self-reversal, including filing an omnibus motion for partial reconsideration/clarification after the Court rendered its decision dated October 11, 2007. In view of his active participation in various stages, he cannot now turn his back on the judgment in Land Bank v. Suntay (G.R. No. 157903) simply because it was adverse to him in order to invoke instead the favorable ruling in DARAB v. Lubrica (G.R. No. 159145).

III. Whether or not the manner of execution of RARAD Mias order dated October 30, 2008 was lawful

The writs of execution issued by RARAD Mias and the manner of their enforcement by the DARAB sheriffs did not accord with the applicable law and the rules of DARAB; hence, they were invalid and ineffectual.

III.a. Order of October 30, 2008 to resume execution was invalid because there was nothing to resume

In Land Bank v. Suntay (G.R. No. 157903), the Court directed the parties on October 24, 2005 to maintain the status quo prior to the issuance of the alias writ of execution, holding that all actions done in compliance or in connection with the alias writ of execution were DEEMED QUASHED, and therefore, of no force and effect.[93]

On October 25, 2005, RARAD Mias herself quashed the acts done pursuant to her writ of execution, declaring that all actions done in compliance or in connection with the xxx Writ issued by her are DEEMED QUASHED, and therefore, of no force and effect.[94]

As a result, the following acts done in compliance with or pursuant to the writ of execution issued ex parte by RARAD Mias on September 14, 2005 were expresslyquashed and rendered of no force and effect, to wit:

1.

The DARAB sheriffs issuance on September 15, 2005 of (a) the notice of demand against Land Bank; (b) the notice of levy on September 21, 2005 to Land Bank; (c) the notice of levy on September 28, 20005 to Bank of the Philippine Islands and to Hongkong Shanghai Bank Corporation; and (d) an order to deliver on October 5, 2005, addressed to Land Bank, so much of the funds in its custody sufficient to satisfy the final judgment;

2. The holding by the DARAB sheriffs of the public auction sale on October 24, 2005 involving the levied PLDT and MERALCO shares of stock of Land Bank at the Office of the Regional Clerk of DARAB in Mandaluyong City, wherein Lubrica was the highest bidder;

3. The resumption on October 25, 2005 by the DARAB sheriffs of the public auction sale of some of Land Banks remaining PLDT shares and First Gen Corp. bonds, wherein Lubrica was also declared the highest bidder; and

4. The issuance on October 25, 2005 by the DARAB sheriffs of two certificates of sale in favor of Lubrica as the highest bidder.

In view of the foregoing, the order issued on October 30, 2008 by RARAD Mias directing the DARAB sheriffs to resume the interrupted executions of the Alias Writ issued xxx on September 14, 2005 [95] was not legally effective and valid because there was no longer any existing valid prior acts or proceedings to resume enforcement or execution of.

Consequently, the following acts done by virtue of RARAD Mias October 30, 2008 order to resume the implementation of the September 15, 2005 writ of execution were bereft of factual and legal bases, to wit:

1. The DARAB sheriffs service on PDTC and STSI of a demand to comply dated October 30, 2008;

2. Letter of PDTC dated October 31, 2008 informing Land Bank of the demand to comply and the action it had taken, and requesting Land Bank to uplift the securities;

3. PDTCs manifestation and compliance dated October 31, 2008 filed in the office of the RARAD, Region IV, stating, among others, that PDTC had already issued a written notice to Land Bank to uplift the assets involved and that PDTC has caused the subject assets to be outside the disposition of Land Bank; and

4.

MERALCOs cancellation on November 28, 2008 of Land Banks 42,002,750 shares, its issuance of new stock certificates in the name of Lubrica, and its subsequent recording of the transfer of ownership of the stocks in the companys stock and transfer book.

III.b. Levy of Land Banks MERALCO shares was void and ineffectual

A further cause that invalidated the execution effected against Land Banks MERALCO shares derived from the statutory and reglementary provisions governing the payment of any award for just compensation. At the outset, we hold that Land Banks liability under the CARP was to be satisfied only from the ARF.

The ARF was first envisioned in Proclamation No. 131 issued on July 22, 1987 by President Aquino to institute the Governments centerpiece Comprehensive Agrarian Reform Program, to wit:

Section 2. Agrarian Reform Fund. - There is hereby created a special fund, to be known as the Agrarian Reform fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the receipts of the sale of the assets of the Asset Privatization Trust receipts of ill-gotten wealth received through the Presidential Commission on Good Government and such other sources as government may deem appropriate. The amounts collected and accruing to this special fund shall be considered automatically appropriated for the purpose authorized in this proclamation.

Executive Order No. 229 implemented the creation of the ARF, viz:

Section 20. Agrarian Reform Fund. - As provided in Proclamation No. 131 dated July 22, 1987, a special fund is created, known as The Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS (P50 billion) to cover the estimated cost of the CARP from 1987 to 1992 which shall be sourced from the receipts of the sale of the assets of the Asset Privatization Trust (APT) and receipts of the sale of ill-gotten wealth recovered through the Presidential Commission on Good Government and such other sources as government may deem appropriate. The amount collected and accruing to this special fund shall be considered automatically appropriated for the purpose authorized in this Order.

In enacting the CARL, Congress adopted and expanded the ARF, providing in its Section 63, as follows:

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. Additional amounts are hereby authorized to be appropriated as and when needed to augment the Agrarian Reform Fund in order to fully implement the provisions of this Act.

Sources of funding or appropriations shall include the following:

(a) Proceeds of the sales of the Assets Privatization Trust;

(b) All receipts from assets recovered and from sale of ill-gotten wealth recovered through the Presidential Commission on Good Government;

(c) Proceeds of the disposition of the properties of the Government in foreign countries;

(d) Portion of amounts accruing to the Philippines from all sources or official foreign aid grants and concessional financing from all countries, to be used for the specific purposes of financing production credits, infrastructures, and other support services required by this Act;

(e) Other government funds not otherwise appropriated.

All funds appropriated to implement the provisions of this Act shall be considered continuing appropriations during the period of its implementation. (emphases supplied)

Subsequently, Republic Act No. 9700 amended the CARL in order to strengthen and extend the CARP. It is notable that Section 21 of Republic Act No. 9700 expressly provided that all just compensation payments to landowners, including execution of judgments therefore, shall only be sourced from the Agrarian Reform Fund; and that just compensation payments that cannot be covered within the approved annual budget of the program shall be chargeable against the debt service program of the national government, or any unprogrammed item in the General Appropriations Act. The enactments of the Legislature decreed that the money to be paid to the landowner as just compensation for the taking of his land is to be taken only from the ARF. As such, the liability is not the personal liability of Land Bank, but its liability only as the administrator of the ARF. In fact, Section 10, Rule 19 of the 2003 DARAB Rules of Procedure, reiterates that the satisfaction of a judgment for just compensation by writ of execution should be from the ARF in the custody of Land Bank, to wit:

Section 10. Execution of judgments for Just Compensation which have become Final and Executory. The Sheriff shall enforce a writ of execution of a final judgment for compensation by demanding for the payment of the amount stated in the writ of execution in cash and bonds against the Agrarian Reform Fund in the custody of LBP [Land Bank of the Philippines] in accordance with RA 6657 xxx. (Emphases supplied)

Consequently, the immediate and indiscriminate levy by the DARAB sheriffs of Land Banks MERALCO shares, without first determining whether or not such assets formed part of the ARF, disregarded Land Banks proprietary rights in its own funds and properties.

The prior determination of whether the asset of Land Bank sought to be levied to respond to a judgment liability under the CARP in favor of the landowner was demanded by its being a banking institution created by law,[96] possessed with universal or expanded commercial banking powers [97] by virtue of Presidential Decree No. 251.[98] As a regular bank, Land Bank is under the supervision and regulation of the Bangko Sentral ng Pilipinas.[99] Being the official depository of Government funds, Land Bank is also invested with duties and responsibilities related to the implementation of the CARP, mainly as the administrator of the ARF.[100] Given its discrete functions and capacities under the laws, Land Banks assets and properties must necessarily come under segregation, namely: ( a) those arising from its proprietary functions as a regular banking or financial institution; and ( b) those arising from its being the administrator of the ARF. Indeed, Executive Order No. 267 has required Land Bank to segregate accounts, [101] to wit: (a) corporate funds, which are derived from its banking operations and are essentially moneys held in trust for its depositors as a financial banking institution; and ( b) ARF, which comprise funds and assets expressly earmarked for or appropriated under the CARL to pay final awards of just compensation under the CARP.[102]

Suntay argues that the MERALCO shares of Land Bank were part of the ARF, submitting photocopied documents showing Land Bank to be one of the top stockholders of MERALCO under Land Banks account number 1100052533.[103]

Land Bank disputes Suntays argument, positing that its levied MERALCO shares, particularly those covered by Stock Certificate No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447 and Stock Certificate No. 0707448 that were cancelled and transferred in favor of Lubrica, did not form part of the ARF. It explains that there are three different accounts relative to its MERALCO shares, to wit: ( a) Trust Account No. 03-141, which was the subject of a Custodianship Agreement it had with the Asset Privatization Trust (APT); (b) Account titled FAO PCGG ITF MFI, which was the subject of a Custodial Safekeeping Agreement between Land Bank and the Three-Man Board for the MERALCO Privatization (c/o PCGG); and (c) LBP Proprietary Account with PCD Nominee Corporation involving Stock Certificate No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447 and Stock Certificate No. 0707448. It insists that the LBP Proprietary Account was not part of the ARF, and that its shares covered by Stock Certificate No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447, and Stock Certificate No. 0707448 had been acquired or obtained in the exercise of its proprietary function as a universal bank.[104]

Land Bank presented copies of the Custodianship Agreement with the APT, the Custodial Safekeeping Agreement with the Three-Man Board for the MERALCO Privatization (c/o PCGG), and the joint affidavit of Land Banks officers.

In light of the clarifications by Land Bank, the Court concludes that the procedure of execution adopted by the DARAB sheriffs thoroughly disregarded the existence of Land Banks proprietary account separate and distinct from the ARF. The procedure thereby contravened the various pertinent laws and rules earlier adverted to and which the DARAB sheriffs were presumed to be much aware of, denying to the DARAB sheriffs any presumption in the regularity of their performance of their duties. Also significant is that Section 20 of Executive Order No. 229 has mandated that the ARF shall be sourced from the receipts of the sale of the assets of the APT andreceipts of the sale of ill-gotten wealth recovered through the PCGG and such other sources as government may deem appropriate; and that Section 63 of the CARL has authorized that additional amounts be appropriated as and when needed to augment the ARF.

It should not be difficult to see the marked distinction between proceeds or receipts, on one hand, and asset or wealth derived from such proceeds or receipts, on the other hand. The term proceeds refers to the amount proceeding or accruing from some possession or transaction, [105] and is synonymous to product, income, yield, receipts, or returns.[106] Clearly, therefore, the ARF was sourced from the money or cash realized either from the sale of or as income from the assets or properties held by the APT or the PCGG. The levied MERALCO shares were neither proceeds nor receipts. Thus, the DARAB sheriffs had no authority to indiscriminately levy such shares because they were clearly not part of the ARF.

Moreover, the DARAB sheriffs did not strictly comply with the rule in force at the time of their execution of the writ of execution and the alias writ of execution, which was Section 10, Rule 19 of the 2003 DARAB Rules of Procedure, viz:

Section 10. Execution of judgments for Just Compensation Which Have Become Final and Executory. The Sheriff shall enforce a writ of execution of a final judgment for compensation by demanding for the payment of the amount stated in the writ of execution in cash and bonds against the Agrarian Reform Fund in the custody of LBP [Land Bank of the Philippines] in accordance with RA 6657, and the LBP shall pay the same in accordance with the final judgment and the writ of execution within five (5) days from the time the landowner accordingly executes and submits to the LBP the corresponding deed/s of transfer in favor of the government and surrenders the muniments of title to the property in accordance with Section 15 (c) of RA 6657. (Emphasis supplied)

As the rule reveals, a condition was imposed before Land Bank could be made to pay the landowner by the sheriff. The condition was for Suntay as the landowner to first submit to Land Bank the corresponding deed of transfer in favor of the Government and to surrender the muniments of the title to his affected property. Yet, by immediately and directly levying on the shares of stocks of Land Bank and forthwith selling them at a public auction to satisfy the amounts stated in the assailed writs without first requiring Suntay to comply with the condition, the DARAB sheriffs unmitigatedly violated the 2003 DARAB Rules of Procedure.

Relevantly, Section 18 of the CARL, which Section 10 of the 2003 DARAB Rules of Procedure implements, has expressly listed the modes by which the landowner may choose to be paid his just compensation, thus:

Section 18. Valuation and Mode of Compensation. - The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner and the DAR and LBP or as may be finally determined by the court as just compensation for the land. The compensation shall be paid in one of the following modes at the option of the landowner: (1) Cash payment, under the following terms and conditions: (a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned Twenty-five percent (25%) cash, the balance to be paid in government financial instruments negotiable at any time.

(b) For lands above twenty-four hectares and up to fifty (50) hectares - Thirty percent (30%) cash, the balance to be paid in government financial instruments negotiable at any time.

(c) For lands twenty-four (24) hectares and below - Thirty-five percent (35%) cash, the balance to be paid in government financial instruments negotiable at any time.

(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets or other qualified investments in accordance with guidelines set by the PARC; (3) Tax credits which can be used against any tax liability; (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 Assets Privatization Program and other assets foreclosed by government financial institution 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 or stock owned by the government in private corporations;

(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or for performance bonds;

(iv) Security for loans with any government financial institution, provided the proceeds of the loans shall be invested in an economic enterprise, preferably in a small and medium-scale industry, in the same province or region as the land for which the bonds are paid;

(v) Payment for various taxes and fees to the 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 instrument: Provided, further, That the PARC shall determine the percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of the original bondholder in government universities, colleges, trade schools and other institutions;

(vii) Payment for fees of the immediate family of the original bondholder in government hospitals; and

(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. (Emphases supplied)

We note that the DARAB sheriffs method of execution did not adhere to any of the legally-authorized modes, to the extreme detriment of Land Bank.

Still, Suntay proposes that the resort to levying on the MERALCO shares of Land Bank was necessary, considering that it was Land Bank alone that had the control of the ARF.

The proposition is not only incorrect but also dangerous.

To start with, Land Bank could not simply shirk from or evade discharging its obligations under the CARP because the law mandated Land Bank with a positive duty. [107]The performance of its ministerial duty to fully pay a landowner the just compensation could subject its officials responsible for the non-performance to punishment for contempt of court.

And, secondly, tolerating the irregular execution carried out by the DARAB sheriffs would be dangerous to the viability of Land Bank as a regular banking institution as well as the administrator of the ARF. The total claim of Suntay under the assailed RARAD decision was only P157.5 million, but the worth of Land Banks 53,557,257 MERALCO shares, 912,230 PLDT shares and First Gen Corporation bonds auctioned off by the DARAB sheriffs at P1.00 /share for the total of only P53,557,257.00 was probably aboutP841 million. If that probable worth was true, the levy and execution were patently unconscionable and definitely worked against the interest of the Government represented by Land Bank.

Further, Suntay complains of the delay in the payment of just compensation due to him.

The Court finds that Suntay has only himself to blame. As early as in 2005 Land Bank v. Suntay (G.R. No. 157903) already opened the way for the RTC to determine the just compensation in Agrarian Case No. R1241. Had he ensured the speedy disposition of Agrarian Case No. R-1241 in the RTC, he would not now be complaining.

IV. Land Bank is entitled to all dividends pertaining to the invalidly levied shares of MERALCO

As earlier mentioned, Land Bank filed on May 5, 2010 an urgent verified motion for the issuance of a TRO or writ of preliminary injunction to enjoin MERALCO, its Corporate Secretary, and its Assistant Corporate Secretary, pending the proceedings and until the resolution of the case, from releasing the cash dividends pertaining to the disputed shares in favor of Lubrica or any person acting on her behalf.

Although the Court did not resolve the motion, it is time to look into the matter in light of the foregoing conclusions.

The Court has to declare as a necessary consequence of the foregoing conclusions that Land Bank remained fully entitled to all the cash and other dividends accruing to the MERALCO shares levied and sold by the DARAB sheriffs pursuant to the orders issued on September 14, 2005 and October 30, 2008 by RARAD Mias, as if no levy and sale of them were made. In this connection, the Court affirms and reiterates the order issued on October 25, 2005 by RARAD Mias (deeming to be quashed and of no force and effect all actions done in compliance or in connection with the writ of execution issued by her), [108] and the order issued on December 17, 2008 by RARAD Casabar directing:

(c)

MERALCO to cancel the stock certificates issued to Lubrica and to any of her transferees or assignees, and to restore the ownership of the shares to Land Bank and to record the restoration in MERALCOs stock and transfer book; and

(d)

PSE, PDTC, STSI, the Philippine Dealing System Holdings Corporation and Subsidiaries (PDS Group), and any stockbroker, dealer, or agent of MERALCO shares to stop trading or dealing on the shares.[109]

WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the Decision promulgated June 5, 2009 in CA-G.R. SP No. 106104.

ACCORDINGLY, the Court:

(a) DIRECTS the Regional Trial Court, Branch 46, in San Jose, Occidental Mindoro to continue the proceedings for the determination of the just compensation of Federico Suntays expropriated property in Agrarian Case No. R-1241;

(b) QUASHES and NULLIFIES the orders issued in DARAB Case No. V-0405-0001-00 on September 14, 2005 (granting Suntays ex parte motion for the issuance of an alias writ of execution) and October 30, 2008 by RARAD Conchita C. Mias (directing the DARAB sheriffs to resume the interrupted execution of the Alias Writ in this case on September 14, 2005), and all acts performed pursuant thereto; (c) AFFIRMS and REITERATES the order issued on October 25, 2005 by RARAD Mias (deeming to be quashed and of no force and effect all actions done in compliance or in connection with the writ of execution issued by her), and the order issued on December 17, 2008 by RARAD Marivic Casabar (directing MERALCO to cancel the stock certificates issued to Josefina Lubrica and to any of her transferees or assignees, and to restore the ownership of the shares to Land Bank and to record the restoration in MERALCOs stock and transfer book; and the Philippine Stock Exchange, Philippine Depository and Trust Corporation, Securities Transfer Services, Inc., and the Philippine Dealing System Holdings Corporation and Subsidiaries (PDS Group), and any stockbroker, dealer, or agent of MERALCO shares to stop trading or dealing on the shares);

(d) DECLARES Land Bank fully entitled to all the dividends accruing to its levied MERALCO shares of stocks as if no levy on execution and auction were made involving such shares of stocks;

(e) COMMANDS the Integrated Bar of the Philippines to investigate the actuations of Atty. Conchita C. Mias in DARAB Case No. V-0405-0001-00, and to determine if she was administratively liable as a member of the Philippine Bar; and

(f) ORDERS the Department of Agrarian Reform Adjudication Board to conduct a thorough investigation of the sheriffs who participated in the irregularities noted in this Decision, and to proceed against them if warranted.

Costs against the respondent.

SO ORDERED.

AGAPITO ROM, PASTORA P. ROSEL, VALENTINO R. ANILA, JUANITO P. ROSEL, VIRGILIO R. CASAL, LUIS H. BAUTISTA, CRESENCIANO M. ARGENTE, ANA M. ARGENTE, GIL B. CUENO, ENGRACIO B. BELTRAN, ANGELITO B. AURE, ESTEBAN C. BENDO, MARIA ALBAO, GILBERT H. DEL MUNDO, EUFRONIO H. DEL MUNDO, PASTOR H. DEL MUNDO, ANTONIO H. DEL MUNDO, ALBERTA H. DEL MUNDO, PEDRO H. DEL MUNDO, ROLANDO B. ATIE,

G.R. No. 169331

Present:

CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, DEL CASTILLO, VILLARAMA, JR., and SERENO, JJ. Petitioners,

- versus-

ROXAS & COMPANY, INC., Respondent.

Promulgated: September 5, 2011

Justifying their resort to a petition for certiorari before the appellate court and insisting that the Department of Agrarian Reform (DAR) Orders they assailed therein were issued without jurisdiction, petitioners are now before this Court for recourse.

This Petition for Review on Certiorari assails the Decision[1] dated April 29, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 82709 dismissing the Petition forCertiorari which assailed the DAR Orders[2] dated November 6, 2002 and December 12, 2003 in ADM Case No. A-9999-014-98. Said DAR November 6, 2002 Order granted respondent Roxas & Company, Inc.s Application for Exemption from the Comprehensive Agrarian Reform Programs (CARP) coverage while the December 12, 2003 Order denied petitioners Motion for Reconsideration thereto. Likewise assailed herein is the CA Resolution[3] dated August 11, 2005 denying the Motion for Reconsideration of its April 29, 2005 Decision.

Factual Antecedents

On September 30, 1997, respondent sought the exemption of 27 parcels of land located in Barangay Aga, Nasugbu, Batangas, having an aggregate area of 21.1236 hectares and constituting portions of the land covered by Transfer Certificate of Title (TCT) No. T-44664 from the coverage of CARP, pursuant to DAR Administrative Order (AO) No. 6, Series of 1994.[4] The application was docketed as DAR ADM Case No. A-9999-014-98.

Respondent asserted that Comprehensive Agrarian Reform Law (CARL) covers only agricultural land [5] which is defined under Section 3(c) thereof as land devoted to agricultural activity x x x and not classified as mineral, forest, residential, commercial or industrial land. Respondent claimed that prior to the effectivity of the CARL on June 15, 1988, the lands subject of its application were already re-classified as part of the Residential Cluster Area specified in Zone A VII of the Nasugbu Municipal Zoning Ordinance No. 4, Series of 1982, which zoning ordinance was approved by the Human Settlement Regulatory Commission (HSRC [now the Housing and Land Use Regulatory Board (HLURB)]) under HSRC Resolution No. 123, Series of 1983. Respondent cited DOJ Opinion No. 44 (1990) which provides that lands already classified by a valid zoning ordinance for commercial, industrial or residential use, which ordinance was approved prior to the effectivity of the CARL, no longer need conversion clearance from the DAR.[6]

In support of its application for exemption, respondent submitted, among others, the following documents:

1.

Letter-application dated 29 September 1997 signed by Elino SJ. Napigkit, for and on behalf of Roxas & Company, Inc., seeking exemption from CARP coverage of subject landholdings;

xxxx

3.

Photocopy of TCT No. T-44664 and the corresponding Declaration of Real Property No. 024-17013-01-001;

4.

Location and vicinity maps of subject landholdings;

5.

Certification dated 10 July 1997 issued by Administrator Reynaldo Garcia [Administrator Garcia], Municipal Planning and Development Coordinator (MPDC) and Zoning Administrator of Nasugbu, Batangas, stating that the subject parcels of land are within the Residential Cluster Area as specified in Zone VII of Municipal Zoning Ordinance No. 4, series of 1982, approved by the Human Settlements Regulatory Commission (HSRC), now the Housing and Land Use Regulatory Board (HLURB), thru Resolution No. 123, Series of 1983, dated 4 May 1983;

6.

Certification dated 31 August 1998 issued by Engr. Alfredo M. Tan II [Engr. Tan], Regional Director, HLURB, Region IV, stating that the subject parcels of land appear to be within the Residential Cluster Area as specified in Zone VII of Municipal Zoning Ordinance No. 4, Series of 1982, as approved under HSRC Resolution No. 123, Series of 1983, dated 4 May 1983;

7.

Three (3) Certifications all dated 8 September 1997 issued by Administrator Rolando T. Bonrostro, Regional Irrigation Manager, National Irrigation Administration (NIA), Region IV; stating that the subject parcels of land are not irrigated, not irrigable lands and not covered by irrigation projects with firm funding commitment; and,

8.

Certification dated 18 January 1999, issued by Manuel J. Limjoco, Jr., Municipal Agrarian Reform Officer of Nasugbu, Batangas, stating that the subject parcels of land are not covered by Operation Land Transfer (OLT) but covered by a collective Certificate of Land Ownership Award (CLOA) No. 6653 issued to twenty-seven (27) farmer-beneficiaries.

x x x x[7]

Ruling of the Department of Agrarian Reform

Considering that the application for exemption was not accompanied by proof of disturbance compensation,[8] the DAR, through its Center for Land Use Policy, Planning and Implementation (CLUPPI-II), directed respondent to submit proof of payment of disturbance compensation and/or waiver of rights of bona fide occupants.[9]

To comply with the directive, respondent offered payment of disturbance compensation and attempted to obtain the required waivers from herein petitioners who are the farmer-beneficiaries of the subject parcels of land as identified by the DAR. However, the parties failed to reach an agreement as regards the amount of disturbance compensation, hence, respondent filed on September 28, 2001 a Petition [10] to fix disturbance compensation before the Provincial Agrarian Reform Adjudication Board (PARAD) of Batangas.

In its Order[11] of November 6, 2002, the DAR granted the application in this wise:

WHEREFORE, premises considered, the Application for Exemption Clearance from CARP coverage filed by Roxas & Company, Inc., involving twenty-seven (27) parcels of land, specifically described in pages 1 and 2 of this Order,[[12]] being portions of TCT No. T-44664, with an aggregate area of 21.1236 hectares located [in] Barangay Aga, Nasugbu, Batangas is hereby GRANTED, subject to the following conditions:

1.

The farmer-occupants within subject parcels of land shall be maintained in their peaceful possession and cultivation of their respective areas of tillage until a final determination has been made on the amount of disturbance compensation due and entitlement of such farmer-occupants thereto by the PARAD of Batangas.

2.

No development shall be undertaken within the subject parcels of land until the appropriate disturbance compensation has been paid to the farmer-occupants who are

determined by the PARAD to be entitled thereto. Proof of payment of disturbance compensation shall be submitted to this Office within ten (10) days from such payment; and 3. The cancellation of the CLOA issued to the farmer beneficiaries shall be subject of a separate proceeding before the PARAD of Batangas.

SO ORDERED.[13]

From this Order, petitioners filed a Motion for Reconsideration, [14] Supplemental Motion for Reconsideration[15] and Second Supplemental Motion for Reconsideration. [16] They averred that the bases of the DAR in granting respondents application for exemption were the Certification[17] dated July 10, 1997 of Administrator Garcia and the Certification[18] dated August 31, 1998 issued by Engr. Tan of the HLURB, Region IV, both of which stated that the subject lands are within the residential cluster area as specified in Zone VII of the (Nasugbu) Municipal Zoning Ordinance No. 4, series of 1982, as approved under HSRC Resolution No. 123, Series of 1983, dated May 4, 1983. However, they claimed that these certifications have already been superseded by Sangguniang Bayan Resolution No. 30, Series of 1993,[19] which classified the area ofBarangay Aga as an agricultural zone except for the 50-meter strip from both sides of the National Road with existing roads, which was classified as residential zone. Petitioners also alleged that the application for exemption is already barred by laches or estoppel considering that Certificates of Land Ownership Award (CLOAs) have been issued to petitioners way back in 1991 and that since then, they have been occupying the subject parcels of land in the concept of an owner. Finally, they claimed that they were never notified of the proceedings in the said application despite their being parties-in-interest thereto. Said motions, however, were dismissed by the DAR in an Order[20] dated December 12, 2003.

Aggrieved, petitioners filed a Petition for Certiorari[21] before the CA.

Ruling of the Court of Appeals

Petitioners averred that Sec. III (B) of DAR AO No. 06, Series of 1994 requires that an application for exemption must be accompanied by certain documents[22] before DAR acquires jurisdiction over the application. And since respondent failed to attach to its application the required proof of disturbance compensation, petitioners claimed that the DAR has no jurisdiction to act on the same. Moreover, petitioners alleged that the payment of disturbance compensation is a condition sine qua non to the grant of exemption and since no disturbance compensation was paid to them, then the DAR gravely abused its discretion amounting to lack or excess of jurisdiction in issuing its assailed Orders.

Petitioners reiterated their argument that the Certifications dated July 10, 1997 and August 31, 1998, respectively issued by the MPDC and HLURB, and used as bases for DARs assailed Orders granting the application for exemption, have already been superseded by Sangguniang Bayan Resolution No. 30, Series of 1993. This fact was affirmed by the Certification dated January 29, 2003 likewise issued by Administrator Garcia of the MPDC. Also, petitioners argued that since respondent had previously voluntarily offered to sell the subject land to the DAR, then they (petitioners) have already acquired a vested right over the subject properties.

In a Decision[23] dated April 29, 2005, the CA dismissed the petition for certiorari it being an improper remedy. The CA held that petitioners should have filed a petition for review under Section 1, Rule 43 of the Rules of Court.[24] Even if the certiorari petition is considered as properly filed, the CA ruled that it would still dismiss the same as there was no grave abuse of discretion on the part of the DAR in issuing the assailed Orders.

Petitioners filed a Motion for Reconsideration [25] and a Supplemental Motion for Reconsideration [26] but both were denied in a Resolution[27] dated August 11, 2005.

Hence, this Petition for Review on Certiorari.

Issues

Petitioners raise the following issues:

i.

WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OR GRAVE ABUSE OF DISCRETION IN AFFIRMING THE GRANT OF RESPONDENT ROXAS APPLICATION FOR EXEMPTION FROM COVERAGE OF THE CARL DESPITE THE FACT THAT THE PROPERTY [HAS BEEN THE SUBJECT OF RESPONDENTS VOLUNTARY OFFER TO SELL TO THE DAR]

ii.

WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OR GRAVE ABUSE OF DISCRETION IN AFFIRMING THE GRANT OF RESPONDENT ROXAS APPLICATION FOR EXEMPTION FROM COVERAGE OF THE CARL WITHOUT THE REQUIRED PAYMENT OF DISTURBANCE COMPENSATION, WITHOUT ANY UNDERTAKING TO PAY THE SAID COMPENSATION AND WITHOUT ANY BOND BEING POSTED BY THE LANDOWNER TO SECURE PAYMENT OF SAID COMPENSATION WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OR GRAVE ABUSE OF DISCRETION IN RULING THAT THE REMEDY OF APPEAL IS NOT AVAILABLE IN THIS CASE[28]

iii.

The Parties Arguments Petitioners insist that a certiorari petition, instead of a petition for review under Rule 43 of the Rules of Court, is the proper remedy since what they principally questioned before the CA was the jurisdiction of the DAR to take cognizance of the application. Even assuming that a petition for review is the proper mode of appeal, petitioners contend that they can still resort to the remedy of certiorari pursuant to settled jurisprudence[29] that the Court, in exceptional cases, may consider certiorari as the appropriate remedy.[30] [T]he writ [may] be granted where necessary to prevent a substantial wrong or to do substantial justice.[31] Since in this case, petitioners stand to lose the land they are tilling

without receiving the appropriate disturbance compensation, the ends of justice dictate that they be entitled to the writ of certiorari. Petitioners likewise aver that since respondent had previously voluntarily offered to sell the subject parcels of land to the DAR, it can no longer withdraw the same from the CARPs coverage. Under DAR Memorandum Circular No. 02, Series of 1998,[32] a landowner who voluntarily offers to sell his property but failed to submit the required documents shall be notified that the property offered for sale shall be acquired by compulsory acquisition. This means that once a landowner has voluntarily offered to sell his property, he can no longer withdraw it from the coverage of the land reform law as the DAR will nevertheless acquire it through compulsory acquisition even if he fails to submit the documents required. Moreover, petitioners claim that estoppel has already set in considering that respondent filed its application only after eight years from the time it voluntarily offered to sell the property. Petitioners also cite Section III (B), paragraph 8 of DAR AO No. 06, Series of 1994 which provides that an application for exemption should be accompanied by proof of payment of disturbance compensation, if the area is occupied by farmers, or waiver/undertaking by the occupants that they will vacate the area whenever required. There being no payment of disturbance compensation here, respondent should have submitted such a waiver/undertaking. Also, when respondent was granted exemption, conditional as it is since same is subject to the payment of disturbance compensation, it should have posted a bond in an amount to be determined by the adjudicator pursuant to paragraphs 4.4 and 4.5 of DAR AO No. 4, Series of 2003[33] viz: 4.4. Whenever there is a dispute on the fixing of disturbance compensation or entitlement to disturbance compensation, the Regional Director shall refer the matter to the Adjudicator who shall be bound to take cognizance of and resolve the case despite the non-finality of the issue on whether or not the subject land is exempt from CARP. 4.5. The Approving Authority may grant a conditional exemption order, despite non-payment of disturbance compensation or while awaiting determination of entitlement thereto, subject however to the condition that the applicant and/or landowner shall post a bond in an amount to be determined by the Adjudicator. Notwithstanding the posting of such bond, the property applied for exemption shall not be developed for non-agricultural purposes and the farmers, agricultural lessees, share tenants, farmworkers, and actual tillers thereof cannot be ejected therefrom until the finality of the exemption order.

In contravention of the above-quoted provisions, however, no bond was posted in this case. Lastly, petitioners cite Section VIII of said DAR AO No. 04, Series of 2003 which provides that: VIII. EFFECT ON PRE-EXISTING CARP COVERAGE

When the filing of an application for exemption clearance is in response to a notice of CARP coverage, the DAR shall deny due course to the application if it was filed after sixty (60) days from the date the landowner received a notice of CARP Coverage.

Petitioners allege that here, respondent filed its application for exemption more than eight years from its receipt of the notice of CARP coverage on August 23, 1989. While conceding that said administrative order was issued only in 2003, petitioners argue that same is applicable to respondent as this merely interpreted both Sec. 3 of R.A. No. 6657 and DOJ Opinion No. 44, Series of 1990, which were already in effect long before respondent filed its application. Respondent, for its part, emphasizes that petitioners resorted to a wrong mode of appeal. For this alone, it contends that the CA correctly dismissed petitioners petition for certiorari.

As regards petitioners other arguments, respondent addresses them point by point. Respondent refutes petitioners contention that a landowner can no longer withdraw his property from the coverage of CARP once he has voluntarily offered to sell the same to the DAR by invoking this Courts ruling in the related case of Roxas & Company, Inc. v. Court of Appeals. [34] There it was held that as part of administrative due process, the DAR must first comply with the notice requirement before a Voluntary Offer to Sell (VOS) is accepted. For failure of the DAR to send notices to Roxas to attend the survey and the land valuation meeting before accepting the VOS, the acceptance of the VOS and the entire acquisition proceedings over three haciendas, including HaciendaCaylaway, where the parcels of land subject of this case are located, were nullified. Moreover, respondent stresses that DAR Memorandum Circular No. 02 Series of 1998 upon which petitioners anchor their assertion that a VOS cannot be withdrawn was issued 10 years after the VOS in this case was made in 1988. Aside from arguing that the circular cannot be applied retroactively, respondent asserts that there is nothing in such circular which prohibits, either expressly or impliedly, a landowner from withdrawing a VOS. If at all, said circular merely serves as guide to be followed by the concerned DAR officials in cases where landowners have voluntarily offered to sell their land to the government. Anent the claim that payment of disturbance compensation is a condition sine qua non to the grant of an application for exemption, respondent invokes the Courts ruling inBacaling v. Muya[35] that farmer-beneficiaries are not entitled to disturbance compensation because the lots subject thereof never became available for agrarian reform. This was because said lots were already classified as residential prior to the effectivity of Presidential Decree No. 27 and R.A. No. 6657. Similarly in this case, respondent contends that petitioners are not entitled to disturbance compensation because the subject landholdings are not and have never been available for agrarian reform as they have been classified as residential properties prior to the effectivity of the CARL. However, believing in good faith that it has the legal obligation to pay disturbance compensation, respondent still filed a Petition to fix disturbance compensation before the PARAD after petitioners refused to accept respondents offer of disturbance compensation or to execute a waiver/undertaking that they will vacate the area whenever required. With respect to the requirement of bond under paragraph 4.5 of DAR AO No. 4, Series of 2003, respondent counter-argues that such was not a requirement at the time of the filing of its application. It asserts that said administrative order cannot be retroactively applied to its application which was filed prior to said administrative orders issuance. Finally, respondent avers that petitioners invocation of Section VIII of DAR AO No. 04, Series of 2003 is downright illogical. It points out that it received a notice of compulsory acquisition way back in 1989 while said AO was issued only in 2003. Respondent asserts that this provision cannot be given retroactive application; otherwise, it would prejudice its vested right to file an application, which at that time, was not yet subject to the 60-day period. More importantly, there was no valid notice of coverage to speak of as held in Roxas & Company, Inc. v. Court of Appeals. Our Ruling There is no merit in the petition. We note at the outset that this case is intimately related to Roxas & Company, Inc. v. Court of Appeals [36] and Roxas & Company, Inc. v. DAMBA-NFSW,[37] earlier resolved by this Court on December 17, 1999 and December 4, 2009, respectively. In fact, the present case is similar to one[38] of the seven consolidated petitions in Roxas & Company, Inc. v. DAMBA-NFSW, except that the parcels of land involved therein are located in Hacienda Palico, while here, they are situated in Hacienda Caylaway.[39] For purposes of discussion, a brief overview of said two cases is proper.

Roxas & Company, Inc. v. Court of Appeals involves three haciendas in Nasugbu, Batangas, namely, Palico, Banilad and Caylaway, owned by herein respondent Roxas & Company, Inc. At issue there was the validity of the haciendas coverage under the CARP as well as Roxas application for their conversion from agricultural to nonagricultural use. For failure to observe due process, the acquisition proceedings over the haciendas were nullified. With respect, however, to the application for conversion, the Court held that DAR is in a better position to resolve the same, it being the primary agency possessing the necessary expertise on the matter. In its Decision dated December 17, 1999, this Court ordered the remand of the case to the DAR for proper acquisition proceedings and determination of Roxass application for conversion. Roxas & Company, Inc. v. DAMBA-NFSW, on the other hand, involved seven consolidated petitions,[40] the main subjects of which were Roxas application for conversion from agricultural to non-agricultural use of said three haciendas and exemption from CARP coverage. Apparently, after the remand of the case to the DAR in Roxas & Company, Inc. v. Court of Appeals and during the pendency of Roxas application for conversion, it likewise filed an application for exemption of the haciendas from the CARPs coverage on the basis of Presidential Proclamation No. 1520[41] and DAR AO No. 6, Series of 1994.[42] Two of the seven consolidated petitions relevant to the present case are G.R. Nos. 167505[43] and 179650.[44] Both petitions revolved around Roxas application for exemption under DAR AO No. 6, Series of 1994 invoking as basis the same (Nasugbu) Municipal Zoning Ordinance No. 4 earlier alluded to. In resolving them, the Court recognized the power of a local government unit to classify and convert land from agricultural to non-agricultural prior to the effectivity of the CARL and thus upheld the validity of said zoning ordinance. However, in G.R. No. 179650, the Court found that the DAR acted with grave abuse of discretion when it granted the application for exemption considering that there exist uncertainties on the location and identities of the properties being applied for exemption. It stated that Roxas should have submitted the comprehensive land use plan and pinpointed therein the location of the properties to prove that they are indeed within the area of coverage of the subject (Nasugbu) Municipal Zoning Ordinance No. 4. With respect to G.R. No. 167505, we quote the pertinent portions of the Courts December 4, 2009 Decision: In its application, Roxas & Co. submitted the following documents: 1. Letter-application dated 29 September 1997 signed by Elino SJ. Napigkit, for and on behalf of Roxas & Company, Inc., seeking exemption from CARP coverage of subject landholdings; 2. Secretarys Certificate dated September 2002 executed by Mariano M. Ampil III, Corporate Secretary of Roxas & Company, Inc., indicating a Board Resolution authorizing him to represent the corporation in its application for exemption with the DAR. The same Board Resolution revoked the authorization previously granted to the Sierra Management & Resources Corporation; 3. 4. Photocopy of TCT No. 985 and its corresponding Tax Declaration No. 0401; Location and vicinity maps of subject landholdings;

5. Certification dated 10 July 1997 issued by Reynaldo Garcia, Municipal Planning and Development Coordinator (MPDC) and Zoning Administrtor of Nasugbu, Batangas, stating that the subject parcels of land are within the Urban Core Zone as specified in Zone A. VII of Municipal Zoning Ordinance No. 4, Series of 1982, approved by the Human Settlements Regulatory Commission (HSRC), now the Housing and Land Use Regulatory Board (HLURB), under Resolution No. 123, Series of 1983, dated 4 May 1983; 6. Two (2) Certifications both dated 31 August 1998, issued by Alfredo Tan II, Director, HLURB, Region IV, stating that the subject parcels of land appear to be within the

Residential cluster Area as specified in Zone VII of Municipal Zoning Ordinance No. 4, Series of 1982, approved under HSRC Resolution No. 123, Series of 1983, dated 4 May, 1983 xxxx By Order of November 6, 2002, the DAR Secretary granted the application for exemption but issued the following conditions: 1. The farmer-occupants within subject parcels of land shall be maintained in their peaceful possession and cultivation of their respective areas of tillage until a final determination has been made on the amount of disturbance compensation due and entitlement of such farmer-occupants thereto by the PARAD of Batangas; 2. No development shall be undertaken within the subject parcels of land until the appropriate disturbance compensation has been paid to the farmer-occupants who are determined by the PARAD to be entitled thereto. Proof of payment of disturbance compensation shall be submitted to this Office within ten (10) days from such payment; and 3. The cancellation of the CLOA issued to the farmer-beneficiaries shall be subject of a separate proceeding before the PARAD of Batangas. DAMBA-NSFW moved for reconsideration but the DAR Secretary denied the same x x x x. xxxx On DAMBA-NSFWs petition for certiorari, the Court of Appeals, x x x x sustained, by Decision of December 20, 1994 and Resolution of May 7, 2007, the DAR Secretarys finding that Roxas & Co. had substantially complied with the prerequisites of DAR AO 6, Series of 1994. Hence, DAMBA-NFSWs petition in G.R. No. 167505. The Court finds no reversible error in the Court of Appeals assailed issuances, the orders of the DAR Secretary which it sustained being amply supported by evidence.[45] (Emphasis and underscoring in the original.)

In view of this, the Court ordered the cancellation of the CLOAs issued to farmer-beneficiaries of the nine parcels of land in DAR Administrative Case No. A-9999-008-98subject of G.R. No. 167505, conditioned, however, on the satisfaction of the disturbance compensation of said farmer-beneficiaries pursuant to R. A. No. 3844, as amended [46]and DAR AO No. 6, Series of 1994.[47] Remarkably, in its application for exemption in DAR ADM Case No. A-9999-014-98 subject of this case, respondent submitted documents in support of its application for exemption similar to those submitted by it in DAR Administrative Case No. A-9999-008-98 subject of G.R. No. 167505. And, having established through said documents that the 27 parcels of land are within the coverage of the said (Nasugbu) Municipal Zoning Ordinance No. 4, the DAR declared as well that respondent substantially complied with the requirements of DAR AO No. 6, series of 1994 in DAR ADM Case No. A-9999-014-98. The DAR thus granted the application in an Order of the same date and of exactly the same tenor as that issued in DAR Administrative Case No. A-9999-008-98. Given this backdrop, we are inclined to uphold the DARs November 6, 2002 Order which granted respondents application for exemption in DAR Administrative Case No. A-9999-014-98 subject of this case. Aside from the fact that this Court in Roxas & Company, Inc. v. DAMBA-NFSW has already upheld the grant of a similar application which, notably, was supported by the same documents submitted in support of the application herein, our own review of the records of this case reveals that there was indeed no error on the part of the DAR in issuing said Order. The documents submitted by respondent to support its application for exemption as well as the Investigation Report of CLUPPIII[48]clearly show that the 27 parcels of land, specifically identified, were already re-classified as residential prior to the effectivity of the CARL. Well-settled is the rule that findings of fact of x x x quasi-judicial bodies (like the DAR) which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great

respect but even finality. They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record.[49] On this ground alone we can already deny the petition. Nonetheless, we shall proceed to discuss the issues raised by petitioners. Petitioners resorted to a wrong mode of appeal.

Section 61[50] of R.A. No. 6657 clearly mandates that judicial review of DAR orders or decisions are governed by the Rules of Court. The Rules direct that it is Rule 43 that governs the procedure for judicial review of decisions, orders, or resolutions of the DAR Secretary.[51] Hence here, petitioners should have assailed before the CA theNovember 6, 2002 and December 12, 2003 Orders of the DAR through a Petition for Review under Rule 43. By pursuing a special civil action for certiorari under Rule 65 rather than the mandatory petition for review under Rule 43, petitioners opted for the wrong mode of appeal.[52] Petitioners assert that a certiorari petition is the proper mode since what they principally questioned before the CA was the jurisdiction of the DAR to take cognizance of respondents application for exemption. We are not persuaded. It bears stressing that it is the law which confers upon the DAR the jurisdiction over applications for exemption.[53] And, [w]hen a court, tribunal or officer has jurisdiction over the person and the subject matter of the dispute, the decision on all other questions arising in the case is an exercise of that jurisdiction. Consequently, all errors committed in the exercise of said jurisdiction are merely errors of judgment. Under prevailing procedural rules and jurisprudence, errors of judgment are not proper subjects of a special civil action for certiorari.[54] Besides, petitioners basis in claiming that the DAR has no jurisdiction to take cognizance of respondents application for exemption is gravely flawed. The submission of proof of payment of disturbance compensation is not jurisdictional as to deprive the DAR of the power to act on an application for exemption. To reiterate, jurisdiction over the subject of a case is conferred by law.[55] Also untenable is petitioners assertion that even assuming that a petition for review under Rule 43 is the proper remedy, they are still entitled to the writ of certiorari. Petitioners posit that an exceptional circumstance in this case calls for the issuance of the writ, i.e., they stand to lose the land they till without receiving the appropriate disturbance compensation. It is well to remind petitioners, however, that the assailed November 6, 2002 Order of the DAR granting respondents application for exemption is subject to the payment of disturbance compensation to the farmer-beneficiaries of the subject parcels of land. Hence, petitioners fear that they will be deprived of the land they till without payment of disturbance compensation is totally without basis. There being no substantial wrong or substantial injustice to be prevented here, petitioners cannot therefore invoke the exception to the general rule that a petition for certiorari will not lie if an appeal is the proper remedy. Thus, we are totally in accord with the CAs finding that petitioners resorted to a wrong remedy. The fact that respondent had previously voluntarily offered to sell the subject properties to the DAR is immaterial in this case.

Indeed, respondent had previously voluntarily offered to sell to the DAR Hacienda Caylaway, where the properties subject of this case are located. However, this offer to sell became irrelevant because respondent was later able to establish before the DAR that the subject 27 parcels of land were reclassified as non-agricultural (residential) by virtue of (Nasugbu) Municipal Zoning Ordinance No. 4 prior to the effectivity of the CARL on June 15, 1988. In Natalia

Realty, Inc. vs. Department of Agrarian Reform,[56] 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 the DAR.[57] This being the case, respondent is not bound by its previous voluntary offer to sell because the subject properties cannot be the subject of a VOS, they being clearly beyond the CARPs coverage. Respondent substantially complied with the requirements of DAR AO No. 6, Series of 1990. Indeed, respondents application for exemption was not accompanied by proof of disturbance compensation or by petitioners waiver/undertaking that they will vacate the subject parcels of land whenever required. However, this Court finds that respondent has substantially complied with this requirement found under Section III (B) of DAR AO No. 6, Series of 1990. Records show that upon being required by CLUPPI-II to submit proof of payment of disturbance compensation and/or waiver of rights of bona fide occupants after an evaluation of its application for exemption revealed that it was not accompanied by the same,[58] respondent exerted efforts to comply with the said requirement. It offered to pay petitioners their disturbance compensation but they failed to agree on the price. Petitioners also refused to execute a waiver/ undertaking. Respondent thus filed a Petition to fix disturbance compensation before the PARAD. To prove these, it submitted to the DAR a (1) Certification dated September 10, 2001, issued by Manuel J. Limjoco, Jr., MARO of Nasugbu, Batangas, stating that there was failure to reach an amicable settlement on the matter of disturbance compensation between the parties; and (2) copy of the Petition to fix disturbance compensation duly received by the PARAD on September 28, 2001.[59] To us, these constitute substantial compliance with the said particular requirement of Section III (B), DAR AO No. 6, Series of 2002. At any rate, the lack of proof of such payment later proved to be of no consequence since the assailed November 6, 2002 Order of the DAR was nevertheless made subject to the condition of payment of disturbance compensation to petitioners. In fact, the Order likewise states that 10 days from such payment, proof of payment of disturbance compensation must be submitted to the DAR. The issues regarding respondents non-posting of bond pursuant to Section IV, paragraph 4.5 of DAR AO No. 4, Series of 2003 and its noncompliance with Section VIII thereof were belatedly raised.

A careful review of the records reveals that petitioners raised the issues of respondents non-posting of bond pursuant to Section IV, paragraph 4.5 of DAR AO No. 4, Series of 2003 and its non-compliance with Section VIII thereof only in their Motion for Reconsideration of the CAs assailed Decision. While petitioners themselves alleged that DAR AO No. 4, Series of 2003 was already in effect during the pendency of their Motions for Reconsideration before the DAR, there is no showing that they raised these points therein. It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body, need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by estoppel.[60] Thus, petitioners cannot now be allowed to challenge the assailed Orders of the DAR on grounds of technicalities belatedly raised as an afterthought. WHEREFORE, this petition is DENIED. The assailed Decision dated April 29, 2005 and Resolution dated August 11, 2005 of the Court of Appeals in CA-G.R. SP No. 82709 are AFFIRMED. SO ORDERED.

RENE ANTONIO, Petitioner,

G.R. No. 176091

Present: CARPIO, J., Chairperson, VELASCO, JR.,* BRION, - versus PEREZ, and MENDOZA,** JJ.

Promulgated: August 24, 2011

GREGORIO MANAHAN, Respondent.

Assailed in this petition for review on certiorari filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure is the Decision dated 31 October 2006 rendered by the then Fourteenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 88319, dismissing the Rule 65 petition for certiorari filed by petitioner Rene Antonio (Antonio).[1]

The Facts

The suit concerns two (2) parcels of agricultural land situated at Gitnang Bayan I, San Mateo, Rizal, with an aggregate area of 30,906 square meters, and registered in the name of private respondent Gregorio Manahan (Manahan) under Original Certificate of Title Nos. 9200 and 9150 of the Rizal Provincial Registry. On 16 November 1993, Manahan and Antonio entered into a Kasunduang Buwisan sa Sakahan (Leasehold Agreement) whereby the latter undertook to cultivate the subject parcels for an annual rental of 70 cavans of dried, cleaned and good quality palay, each weighing 44 kilos. Subject to the provisions of Republic Act No. 6389,[2] the Leasehold Agreement provided, among other terms and conditions, that the land shall be exclusively planted to rice; that Antonio shall neither expand the 12x12 square meter portion on which his house stands nor allow others to construct their homes on the lands in litigation; that the planting and harvest on both parcels shall be simultaneously accomplished by Antonio; and, that Manahan shall be entitled to a three-day prior notice of the harvests done on the property.[3]

In 1994, 1996 and 1997, Manahan filed complaints before the Municipal Agrarian Reform Officer (MARO) against Antonio, for such violations of the Leasehold Agreement as non-payment/remittance of the stipulated rentals despite demands, impairment of the fertility of the subject parcels by planting kangkong thereon and failure to synchronize the planting and harvest on both parcels as well as to give a three-day prior notice for harvests, as agreed upon.[4] On the ground that Antonio persisted with the foregoing violations of the Leasehold Agreement, Manahan filed the 16 September 1997 Complaint for Ejectment which was docketed as PARAD Case No. IV-Ri-0583-97 before the Rizal Provincial Agrarian Reform Adjudication Board (PARAD). In addition to Antonios peaceful surrender of said parcels, Manahan sought indemnities for accrued lease rentals in the sum ofP30,000.00 and the costs of the suit.[5]

Specifically denying the material allegations of the foregoing complaint in his 1 December 1997 answer, Antonio averred that he remitted the stipulated rentals regularly, except for the year 1993 when Manahan refused to accept the same; that his failure to notify Manahan of impending plantings and harvests is not an authorized cause for the dispossession of a tenant under Republic Act No. 6389; that the kangkong plants on Manahans property were not deliberately introduced to impair its fertility but, rather, grew naturally without any effort exerted on his part; that even assuming that they were introduced by him, said plants merely affected a very insignificant portion of the subject parcels and were intended as supplement to his daily subsistence; and, that the plants existence cannot, by any stretch of the imagination, be considered as violation of proven farm practices which connotes major agricultural improvements affecting the productivity of the land as a whole. Alongside the dismissal of the complaint, Antonio prayed for the grant of his counterclaims for moral and exemplary damages.[6]

The issues having been fully joined with the filing of the reply and rejoinder, [7] the parties filed their respective position papers, together with the pieces of documentary evidence in support of their respective causes[8] after the possibility of amicable settlement was foreclosed during the pre-trial conferences held in the case. On 4 October 1999, Provincial Adjudicator Rosalina Amonoy-Vergel de Dios rendered a decision for Manahan based on the following ascertained violations of the Leasehold Agreement committed by Antonio: (a) failure to pay the stipulated rental in full from 1993 to 1998; (b) failure to give Manahan prior notification of impending harvests; and (c) utilization of 3,000 square meters of the property to the planting of kangkong, despite Manahans objections.[9] As a consequence of the foregoing findings, the PARAD disposed of the case in the following wise:

WHEREFORE, IN VIEW OF THE FOREGOING, judgment is hereby rendered:

a). Declaring defendant [Antonio] to have violated the terms and conditions of th(e) agricultural leasehold contract with [Manahan];

b).

Ordering the ejectment of [Antonio] from the landholding in question;

c).

Ordering [Antonio] to pay plaintiff the amount of P30,000.00 as payment for the unpaid lease rental;

d).

Ordering [Antonio] to surrender to [Manahan] the possession of the subject land.

No pronouncement as to costs and damages.

SO ORDERED.[10]

On appeal, the foregoing decision was initially reversed and set-aside in the 8 January 2004 decision rendered by the Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No. 8969. Finding that Antonios shortages did not amount to a deliberate intent to evade payment of the stipulated rentals and that the kangkongsimply grew naturally and sporadically on the property, the DARAB ordered Manahan to respect said tenants peaceful possession and cultivation of the land and the dismissal of his claim for unpaid rentals.[11] Aggrieved, Manahan moved for the reconsideration of the DARABs 8 January 2004 Decision on the ground, among other matters, that not being attributable to fortuitous event or force majeure, Antonios failure to pay the rentals in full constituted sufficient ground for his dispossession under Section 36 of Republic Act No. 3844; and, that the established utilization of a substantial portion of the property for the planting of kangkong debunked Antonios claim that the same grew naturally on the land. Contending that Antonio committed further violations of the Leasehold Agreement by planting string beans and building a second house and three (3) pig pens on the property,[12] Manahan further moved that an ocular inspection of the premises be conducted by the DARAB.[13]

On 14 April 2004, Manahan filed a manifestation calling the DARABs attention to the fact that the ocular inspection it caused to be conducted confirmed Antonios further contractual violations which included the planting of tomatoes, squash, eggplants and other root crops on the property. [14] In opposition, Antonio argued that the string beans he planted were momentary cash crops which did not alter the agricultural condition of the property; that the other vegetables and root crops complained against were planted within the perimeter boundary of the adjoining residential subdivision, on the other side of the water canal which serves as an embankment for the property; and, that the second house adverted to by Manahan was meant for the storage of harvested palay and, like the three (3) pig pens, were already standing on the land at the time Manahan filed the complaint from which the suit stemmed.[15] Finding merit in Manahans motion as aforesaid, the DARAB issued the 28 December 2004 Resolution which reconsidered its 8 January 2004 Decision and reinstated the PARADs 4 October 1999 Decision.[16]

On 10 February 2005, Antonio filed the petition for review docketed before the CA as CA-G.R. SP No. 88319, arguing that the DARAB gravely erred in finding that he violated the Leasehold Agreement and in interpreting laws and jurisprudence applicable to tenancy relationships. [17] Concluding that Antonios failure to pay the rentals in full over the years and his planting of kangkong on the property were violations of the Leasehold Agreement which justified his dispossession under Section 36 of Republic Act No. 3844, the CA rendered the herein assailed 31 October 2006 Decision, dismissing the petition and affirming the DARABs 28 December 2004 Resolution.[18] Antonios motion for reconsideration of said decision was denied for lack of merit in the CAs 4 January 2007 resolution,[19] hence, this petition.

The Issues

Antonio urges the reversal of the assailed 31 October 2006 Decision and 4 January 2007 Resolution on the ground that the CA erred

1. WHEN IT DECLARED THAT [HE] IS GUILTY OF NON-PAYMENT OF LEASE RENTALS DUE TO SHORTAGE OF LEASE RENTALS DELIVERED ON CERTAIN AGRICULTURAL CROP YEARS.

2. WHEN IT DECLARED THAT [HE] VIOLATED THE TERMS AND CONDITIONS OF THE LEASEHOLD CONTRACT DUE TO ALLEGED PLANTING OF KANGKONG ON (A) SINGLE OCCASION.

3. WHEN IT APPLIED SECTION 36 (PARAGRAPHS 3 AND 4) OF RA 3844 AS AUTHORIZED CAUSES FOR DISPOSSESSION OF PETITIONER.[20]

The Courts Ruling

We find the affirmance of the assailed decision in order, despite the partial merit in the petition.

An agricultural leasehold relationship is said to exist upon the concurrence of the following essential requisites: (1) the parties are the landowner and the tenant or agricultural lessee; (2) the subject matter of the relationship is 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.[21] Once the tenancy relationship is established, the tenant is entitled to security of tenure and cannot be ejected by the landlord unless ordered by the court for causes provided by law. [22] In recognition and protection of the tenants right to security of tenure, the burden of proof is upon the agricultural lessor to show the existence of the lawful causes for ejectment [23] or dispossession under Section 36 of Republic Act No. 3844 which provides as follows: Section 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to the period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is shown that: (1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding or will convert the landholding, if suitably located, into residential, factory, hospital or school site or other useful non-agricultural purposes: Provided; That the agricultural lessee shall be entitled to disturbance compensation

equivalent to five years rental on his landholding in addition to his rights under Sections twenty-five and thirty-four, except when the land owned and leased by the agricultural lessor, is not more than five hectares, in which case instead of disturbance compensation the lessee may be entitled to an advanced notice of at least one agricultural year before ejectment proceedings are filed against him: Provided, further, That should the landholder not cultivate the land himself for three years or fail to substantially carry out such conversion within one year after the dispossession of the tenant, it shall be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the land and recover damages for any loss incurred by him because of said dispossessions. HSD (2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any of the provisions of this Code unless his failure is caused by fortuitous event orforce majeure; (3) The agricultural lessee planted crops or used the landholding for a purpose other than what had been previously agreed upon; (4) The agricultural lessee failed to adopt proven farm practices as determined under paragraph 3 of Section twenty-nine; (5) The land or other substantial permanent improvement thereon is substantially damaged or destroyed or has unreasonably deteriorated through the fault or negligence of the agricultural lessee; (6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the non-payment of the rental shall be due to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, the non-payment shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished; or (7) The lessee employed a sub-lessee on his landholding in violation of the terms of paragraph 2 of Section twenty-seven.

As agricultural tenant, Antonio was ordered dispossessed of Manahans landholding by the CA, the DARAB and the PARAD, on the ground that he failed to remit the stipulated rentals and violated the terms and conditions of the Leasehold Agreement. In taking exception to the findings of said court and tribunals, Antonio insists that he had religiously delivered the sacks of palay agreed upon as rentals, except for the years 1993 and 2001, when Manahan rejected the same due to poor quality. Maintaining that his arrearages/shortages in earlier years were paid/settled from subsequent harvests, Antonio argues that Manahans continued acceptance of his deliveries over the years indicates that he had religiously complied with his obligation to pay the stipulated rentals. Absent a deliberate intent to pay, moreover, Antonio claims that arrears in lease rentals are considered as debts, which the tenant is simply obliged to repay during the ensuing years until the same is fully paid.[24]

The rule is settled that failure to pay the lease rentals must be willful and deliberate in order to be considered as ground for dispossession of an agricultural tenant.[25] While the term deliberate is characterized by or results from slow, careful, thorough calculation and consideration of effects and consequences, the term "willful" has been defined as one governed by will without yielding to reason or without regard to reason.[26] Despite the complaints Manahan filed with the MARO in 1994 and 1996, [27] our perusal of the record shows that Antonios failure to pay and/or incurrence of shortages from the stipulated annual lease rentals of 70 Cavans of palay weighing 40 Kilos cannot be considered willful and deliberate. Even with Manahans rejection of the rentals tendered by Antonio in 1993 and 2001 for supposed poor quality, [28] the receipts on record show that the latter was able to remit the following rentals which were duly received by the former, viz.: (a) 1994 87 cavans and 32 kilos; [29] (b) 1995 65 cavans and 36 kilos; [30](c) 1996 74 cavans

and 4.5 kilos;[31] (d) 1997 103 cavans and 27 kilos;[32] (e) 1998 72 cavans and 38 kilos;[33] (f) 1999 82 cavans and 14 kilos;[34] (g) 2000 69 cavans and 26 kilos;[35] (h) 2002 69 cavans and 37 kilos;[36] and (i) 2003 86 cavans and 40 kilos.[37]

Evident from the foregoing rental remittances is the fact that Antonio exerted effort to make up for the shortages which resulted from Manahans rejection of the rentals he tendered for the years 1993 and 2001. Having already compensated for the 1993 deficiency, Antonio appears to have started making up for his 2001 shortage. Manahans claim that Antonio had consistently failed to remit the stipulated rentals for the past thirteen years (13)[38] ignores the clear showing in the receipts evidencing payment of said rentals that the rejected rentals tendered for the years 1993 and 2001 were simply carried over to and accordingly compensated by the yields from the subsequent years. Even in the absence of showing that Antonios shortages were attributable to fortuitous event or force majeure, we consequently find that Manahan failed to discharge the onus of proving that said shortages were willful and deliberate. Hence, the CA reversibly erred in upholding the DARABs ruling that Antonios dispossession of the subject parcels is justified by his non-payment of the stipulated rentals. The foregoing disquisition notwithstanding, we find that Antonios dispossession is, however, still warranted by his repeated violations of the terms of the Leasehold Agreement which prohibited, among other matters, the cultivation of other plants on Manahans properties, the expansion of the tenants dwelling as well as the non-synchronized plantings and harvests thereon.[39] Granted that paragraph III (G)[40] of DAR Administrative Order No. 5, Series of 1993 allows the tenant to plant secondary crop on the land provided he shoulders the expenses thereof, Antonios planting of kangkong directly flies in the face of the categorical prohibition in the Leasehold Agreement against the planting of other plants on the land and Manahans objections/complaints against the same as early as 24 November 1994. [41] Antonios claim that that kangkong grew naturally on the property is belied by the pictures submitted by Manahan [42]and the PARADs finding that a 3,000 square meter portion of the property was devoted to said plant. [43] To our mind, the legitimacy of Manahans complaint is borne out by the 7 October 1998 certification issued by the Bureau of Soils and Water Management (BSWM) that kangkongdeprives rice plants of essential plant foods, overcrowds them and generally reduces the yield.[44]

In addition, it was likewise established that Antonio planted other vegetable crops like string beans, tomatoes, squash and eggplant,[45] built three pigpens and another residential structure on the land[46] and resorted to rice planting in three phases,[47] in violation of the express prohibitions in the Leasehold Agreement. While it may be conceded that these added violations were not included in the 16 September 1997 complaint from which the ejectment suit stemmed, the record shows that, upon Manahans motion, an ocular inspection was ordered by the DARAB on 9 March 2004, with due notice to both parties. [48] Under Section 3, Rule I of its 2003 Rules of Procedure, moreover, the DARAB, and its Regional and Provincial Adjudicators shall not be bound by technical rules of procedure and evidence and 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.

Fealty to the fact that R.A. No. 3844 does not operate to take away completely every landowners rights to his land or authorize the agricultural lessee to act in an abusive or excessive manner in derogation of the landowners rights[49] impels us to uphold Antonios dispossession as ordered by the PARAD, the DARAB

and the CA. Although the agrarian laws afford the opportunity for the landless to break away from the vicious cycle of having to perpetually rely on the kindness of others, a becoming modesty demands that this kindness should at least be reciprocated, in whatever small way, by those benefited by them. [50] In Perez-Rosario vs. Court of Appeals,[51] this Court laid down the following precepts regarding the resolution of agrarian disputes:

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. [52]

A repetition in this case of these past precepts is timely and appropriate.

WHEREFORE, the petition is DENIED and the appealed decision is, accordingly, AFFIRMED.

SO ORDERED.

CASIMIRO DEVELOPMENT CORPORATION, Petitioner,

G.R. No. 175485

Present:

CORONA, C.J, Chairperson, LEONARDO-DE CASTRO, BERSAMIN, - versus DEL CASTILLO, and VILLARAMA, JR., JJ.

Promulgated:

RENATO L. MATEO, Respondent.

July 27, 2011

The focus of this appeal is the faith that should be accorded to the Torrens title that the seller holds at the time of the sale.

In its decision promulgated on August 31, 2006, [1] the Court of Appeals (CA) declared that the respondent and his three brothers were the rightful owners of the land in litis, and directed the Office of the Register of Deeds of Las Pias City to cancel the transfer certificate of title (TCT) registered under the name of petitioner Casimiro Development Corporation (CDC) and to issue in its place another TCT in favor of the respondent and his three brothers. Thereby, the CA reversed the judgment of the Regional Trial Court (RTC) rendered on May 9, 2000 (dismissing the respondents complaint for quieting of title and reconveyance upon a finding that CDC had been a buyer in good faith of the land in litis and that the respondents suit had already been time-barred).

Aggrieved, CDC brought its petition for review on certiorari.

Antecedents

The subject of this case is a registered parcel of land (property) with an area of 6,693 square meters, more or less, located in Barrio Pulang Lupa, Las Pias City, that was originally owned by Isaias Lara, [2] the respondents maternal grandfather. Upon the death of Isaias Lara in 1930, the property passed on to his children, namely: Miguela, Perfecta and Felicidad, and a grandson, Rosauro (son of Perfecta who had predeceased Isaias in 1920). In 1962, the co-heirs effected the transfer of the full and exclusive ownership to Felicidad (whose married surname was Lara-Mateo) under an agreement denominated as Pagaayos Na Gawa Sa Labas Ng Hukuman.

Felicidad Lara-Mateo had five children, namely: Laura, respondent Renato, Cesar, Candido, Jr. and Leonardo. With the agreement of the entire Lara-Mateo family, a deed of sale covering the property was executed in favor of Laura, who, in 1967, applied for land registration. After the application was granted, Original Certificate of Title (OCT) No. 6386 was issued in Lauras sole name.

In due course, the property now covered by OCT No. 6386 was used as collateral to secure a succession of loans. The first loan was obtained from Bacoor Rural Bank (Bacoor Bank). To repay the loan to Bacoor Bank and secure the release of the mortgage, Laura borrowed funds from Parmenas Perez (Perez), who, however, required that the title be meanwhile transferred to his name. Thus, OCT No. 6386 was cancelled and Transfer Certificate of Title (TCT) No. 438959 was issued in the name of Perez. Subsequently, Laura recovered the property by repaying the obligation with the proceeds of another loan obtained from Rodolfo Pe (Pe), resulting in the cancellation of TCT No. 438595, and in the issuance of TCT No. S-91595 in Lauras name. She later executed a deed of sale in favor of Pe, leading to the issuance of TCT No. S-91738 in the name of Pe, who in turn constituted a mortgage on the property in favor of China Banking Corporation (China Bank) as security for a loan. In the end, China Bank foreclosed the mortgage, and consolidated its ownership of the property in 1985 after Pe failed to redeem. Thus, TCT No. (99527) T-11749-A was issued in the name of China Bank.

In 1988, CDC and China Bank negotiated and eventually came to terms on the purchase of the property, with China Bank executing a deed of conditional sale for the purpose. On March 4, 1993, CDC and China Bank executed a deed of absolute sale over the property. Resultantly, on March 29, 1993, CDC was issued TCT No. T-34640 in its own name.

In the meanwhile, on February 28, 1991, Felicidad died intestate.

On June 6, 1991, CDC brought an action for unlawful detainer in the Metropolitan Trial Court (MeTC) in Las Pias City against the respondents siblings, namely: Cesar, Candido, Jr., and Leonardo, and the other occupants of the property. Therein, the defendants maintained that the MeTC did not have jurisdiction over the action because the land was classified as agricultural; that the jurisdiction belonged to the Department of Agrarian Reform Adjudication Board (DARAB); that they had been in continuous and open possession of the land even before World War II and had presumed themselves entitled to a government grant of the land; and that CDCs title was invalid, considering that the land had been registered before its being declared alienable.
[3]

On October 19, 1992, the MeTC ruled in favor of CDC, viz:

The Court, after careful consideration of the facts and the laws applicable to this case[,] hereby resolves:

1. On the issue of jurisdiction.

The defendants alleged that the land in question is an agricultural land by presenting a Tax Declaration Certificate classifying the land as FISHPOND. The classification of the land in a tax declaration certificate as a fishpond merely refers to the use of the land in question for the purpose of real property taxation. This alone would not be sufficient to bring the land in question under the operation of the Comprehensive Agrarian Reform Law.

2. On the issue of open and adverse possession by the defendants.

It should be noted that the subject land is covered by a Transfer Certificate of Title in the name of plaintiffs predecessor-in-interest China Banking Corporation. Certificates of Title under the Torrens System is indefeasible and imprescriptible. As between two persons claiming possession, one having a [T]orrens title and the other has none, the former has a better right.

3. On the issue of the nullity of the Certificate of Title.

The defense of the defendants that the subject property was a forest land when the same was originally registered in 1967 and hence, the registration is void[,] is not for this Court to decide[,] for lack of jurisdiction. The certificate of title over the property must be respected by this Court until it has been nullified by a competent Court.

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff[,] ordering the defendants

1. [sic] and all persons claiming right[s] under it to vacate the subject premises located at Pulang Lupa I, Las Pias, Metro Manila and surrender the possession of the same to herein plaintiff;

2. to pay the plaintiff reasonable compensation for the use and occupation of the subject premises hereby fixed at (P100.00) one hundred pesos a month starting November 22, 1990 (the time when the demand letter to vacate was given) until defendants actually vacate the property;

No pronouncement as to costs and attorneys fees.

SO ORDERED.[4]

The decision of the MeTC was assailed in the RTC via petition for certiorari and prohibition. The RTC resolved against CDC, and held that the MeTC had acted without jurisdiction because the land, being a fishpond, was agricultural; hence, the dispute was within the exclusive jurisdiction of the DARAB pursuant to Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988).[5]

CDC appealed to the CA, which, on January 25, 1996, found in favor of CDC, declaring that the MeTC had jurisdiction. As a result, the CA reinstated the decision of the MeTC.[6]

On appeal (G.R. No. 128392), the Court affirmed the CAs decision in favor of CDC, ruling thusly:

WHEREFORE, the petition is DENIED and the Court of Appeals Decision and Resolution in CA- G.R. SP No. 34039, dated January 25, 1996 and February 21, 1997 respectively, are AFFIRMED. No costs.

SO ORDERED.[7]

The decision in G.R. No. 128392 became final.

Nonetheless, on June 29, 1994, the respondent brought an action for quieting of title, reconveyance of four-fifths of the land, and damages against CDC and Laura in the RTC in Las Pias City entitled Renato L. Mateo v. Casimiro Development Corporation and Laura Mateo de Castro. In paragraph 4 of his complaint, he stated that he was bringing this action to quiet title on behalf of himself and of his three (3) brothers Cesar, Leonardo, and Candido, Jr., all surnamed MATEO in his capacity as one of the co-owners of a parcel of land situated at Barrio Pulang Lupa, Municipality of Las Pias, Metro Manila.

On May 9, 2001, the RTC held in favor of CDC, disposing:

WHEREFORE, and by strong preponderance of evidence, judgment is hereby rendered in favor of the defendant Casimiro Development Corporation and against the plaintiff Renato L. Mateo by (1) Dismissing the complaint, and upholding the validity and indefeasibility of Transfer Certificate of Title No. T-34640 in the name of Casimiro Development Corporation; (2) Ordering the plaintiff Renato Mateo to pay defendant Casimiro Development Corporation the

sum of [a] P200,000.00 as compensatory damages; [b] P200,000.00 as attorneys fees; and [c] to pay the costs.

SO ORDERED.[8]

On appeal (C.A.-G.R. CV No. 71696), the CA promulgated its decision on August 31, 2006, reversing the RTC and declaring CDC to be not a buyer in good faith due to its being charged with notice of the defects and flaws of the title at the time it acquired the property from China Bank, and decreeing:

WHEREFORE, the Decision dated May 9, 2001 of Branch 225, Regional Trial Court, Las Pias City in Civil Case No. 94-2045 is hereby REVERSED and SET ASIDE and a new one rendered:

(1) Declaring appellant Renato Mateo and his brothers and co-owners Cesar, Candido, Jr., and Leonardo, all surnamed Mateo as well as his sister, Laura Mateo de Castro as the rightful owners of the parcel of land, subject of this case; and

(2) Ordering the Register of Deeds of Las Pias City, Metro-Manila to cancel Transfer Certificate of Title No. T-34640 under the name of appellee Casimiro Development Corporation, and that a new one be issued in favor of the appellant and his co-heirs and siblings, mentioned above as coowners pro indiviso of the said parcel. (3) No pronouncement as to cost.

SO ORDERED.[9]

The CA denied CDCs motion for reconsideration.

Hence, this appeal, in which CDC urges that the CA committed serious errors of law,[10] as follows:

(A) xxx in failing to rule that the decree of registration over the Subject Property is incontrovertible and no longer open to review or attack after the lapse of one (1) year from entry of such decree of registration in favor of Laura Mateo de Castro.

(B) xxx in failing to rule that the present action is likewise barred by res judicata. (C) xxx in failing to rule that the instant action for quieting of title and reconveyance under PD No. 1529 cannot prosper because the Subject Property had already been conveyed and transferred to third parties who claimed adverse title for themselves.

(D) xxx in failing to rule that the action of respondent for quieting of title, reconveyance and damages is barred by laches. (E) xxx in ruling that the Subject Property must be reconveyed to respondent because petitioner Casimiro Development Corporation is not a purchaser in good faith.

CDC argues that it was a buyer in good faith; and that the CA did not rule on matters that fortified its title in the property, namely: (a) the incontrovertibility of the title of Laura; ( b) the action being barred by laches and res judicata; and (c) the property having been conveyed to third parties who had then claimed adverse title.

The respondent counters that CDC acquired the property from China Bank in bad faith, because it had actual knowledge of the possession of the property by the respondent and his siblings; that CDC did not actually accept delivery of the possession of the property from China Bank; and that CDC ignored the failure of China Bank to warrant its title.

Ruling

We grant the petition.

1. Indefeasibility of title in the name of Laura

As basis for recovering the possession of the property, the respondent has assailed the title of Laura.

We cannot sustain the respondent.

There is no doubt that the land in question, although once a part of the public domain, has already been placed under the Torrens system of land registration. The Government is required under the Torrens system of registration to issue an official certificate of title to attest to the fact that the person named in the certificate is the owner of the property therein described, subject to such liens and encumbrances as thereon noted or what the law warrants or reserves.[11] The objective is to obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and to dispense, as a rule, with the necessity of inquiring further. The Torrens system gives the registered owner complete peace of mind, in order that he will be secured in his ownership as long as he has not voluntarily disposed of any right over the covered land.[12]

The Government has adopted the Torrens system due to its being the most effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the sellers title thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after all, which will not only be unfair to him as the purchaser, but will also erode public confidence in the system and will force land transactions to be attended by complicated and not necessarily conclusive investigations and proof of ownership. The further consequence will be that land conflicts can be even more abrasive, if not even violent. The Government, recognizing the worthy purposes of the Torrens system, should be the first to accept the validity of titles issued thereunder once the conditions laid down by the law are satisfied.[13]

Yet, registration under the Torrens system, not being a mode of acquiring ownership, does not create or vest title.[14] The Torrens certificate of title is merely an evidence of ownership or title in the particular property described therein.[15] In that sense, the issuance of the certificate of title to a particular person does not preclude the possibility that persons not named in the certificate may be co-owners of the real property therein described with the person named therein, or that the registered owner may be holding the property in trust for another person.[16]

Nonetheless, it is essential that title registered under the Torrens system becomes indefeasible and incontrovertible.[17]

The land in question has been covered by a Torrens certificate of title (OCT No. 6386 in the name of Laura, and its derivative certificates) before CDC became the registered owner by purchase from China Bank. In all that time, neither the respondent nor his siblings opposed the transactions causing the various transfers. In fact, the respondent admitted in his complaint that the registration of the land in the name of Laura alone had been with the knowledge and upon the agreement of the entire Lara-Mateo family. It is unthinkable, therefore, that the respondent, fully aware of the exclusive registration in her sister Lauras name, allowed more than 20 years to pass before asserting his claim of ownership for the first time through this case in mid-1994. Making it worse for him is that he did so only after CDC had commenced the ejectment case against his own siblings.

Worthy of mention is that Candido, Jr., Leonardo, and Cesars defense in the ejectment case brought by CDC against them was not predicated on a claim of their ownership of the property, but on their being agricultural lessees or tenants of CDC. Even that defense was ultimately rejected by this Court by observing in G.R. No. 128392 as follows: With regard to the first element, the petitioners have tried to prove that they are tenants or agricultural lessees of the respondent corporation, CDC, by showing that the land was originally owned by their grandfather, Isaias Lara, who gave them permission to work the land, and that CDC is merely a successor-in-interest of their grandfather. It must be noted that the petitioners failed to adequately prove their grandfathers ownership of the land. They merely showed six tax declarations. It has been held by this Court that, as against a transfer certificate of title, tax declarations or receipts are not adequate proofs of ownership. Granting arguendo that the land was really owned by the petitioners grandfather, petitioners did not even attempt to show how the land went from the patrimony of their grandfather to that of CDC. Furthermore, petitioners did not prove, but relied on mere allegation, that they indeed had an agreement with their grandfather to use the land.

As for the third element, there is apparently no consent between the parties. Petitioners were unable to show any proof of consent from CDC to work the land. For the sake of argument, if petitioners were able to prove that their grandfather owned the land, they nonetheless failed to show any proof of consent from their grandfather to work the land. Since the third element was not proven, the fourth element cannot be present since there can be no purpose to a relationship to which the parties have not consented.[18]

The respondents attack against the title of CDC is likewise anchored on his assertion that the only purpose for having OCT No. 6386 issued in the sole name of Laura was for Laura to hold the title in trust for their mother. This assertion cannot stand, however, inasmuch as Lauras title had long ago become indefeasible.

Moreover, the respondents suit is exposed as being, in reality, a collateral attack on the title in the name of Laura, and for that reason should not prosper. Registration of land under the Torrens System, aside from perfecting the title and rendering it indefeasible after the lapse of the period allowed by law, also renders the title immune from collateral attack.[19] A collateral attack occurs when, in another action to obtain a different relief and as an incident of the present action, an attack is made against the judgment granting the title. This manner of attack is to be distinguished from a direct attack against a judgment granting the title, through an action whose main objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if the property titled under the judgment had been disposed of.[20]

2. CDC was an innocent purchaser for value

The CA found that CDC acquired the property in bad faith because CDC had knowledge of defects in the title of China Bank, including the adverse possession of the respondents siblings and the supposed failure of China Bank to warrant its title by inserting an as-is, where-is clause in its contract of sale with CDC.

The CA plainly erred in so finding against CDC.

To start with, one who deals with property registered under the Torrens system need not go beyond the certificate of title, but only has to rely on the certificate of title. [21]He is charged with notice only of such burdens and claims as are annotated on the title. [22] The pertinent law on the matter of burdens and claims is Section 44 of the Property Registration Decree,[23] which provides:

Section 44. Statutory liens affecting title. Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be subsisting, namely:

First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrances of record.

Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of the government to collect taxes payable before that period from the delinquent taxpayer alone.

Third. Any public highway or private way established or recognized by law, or any government irrigation canal or lateral thereof, if the certificate of title does not state that the boundaries of such highway or irrigation canal or lateral thereof have been determined.

Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian reform.

In short, considering that China Banks TCT No. 99527 was a clean title, that is, it was free from any lien or encumbrance, CDC had the right to rely, when it purchased the property, solely upon the face of the certificate of title in the name of China Bank.[24]

The CAs ascribing of bad faith to CDC based on its knowledge of the adverse possession of the respondents siblings at the time it acquired the property from China Bank was absolutely unfounded and unwarranted. That possession did not translate to an adverse claim of ownership that should have put CDC on actual notice of a defect or flaw in the China Banks title, for the respondents siblings themselves, far from asserting ownership in their own right, even characterized their possession only as that of mere agricultural tenants. Under no law was possession grounded on tenancy a status that might create a defect or inflict a flaw in the title of the owner. Consequently, due to his own admission in his complaint that the respondents own possession was not any different from that of his siblings, there was really nothing factually or legally speaking that ought to have alerted CDC or, for that matter, China Bank and its predecessors-in-interest, about any defect or flaw in the title.

The vendees notice of a defect or flaw in the title of the vendor, in order for it to amount to bad faith, should encompass facts and circumstances that would impel a reasonably cautious person to make further inquiry into the vendors title, [25] or facts and circumstances that would induce a reasonably prudent man to inquire into the status of the title of the property in litigation. [26] In other words, the presence of anything that excites or arouses suspicion should then prompt the vendee to look beyond the certificate and to investigate the title of the vendor appearing on the face of said certificate.[27]

And, secondly, the CA grossly erred in construing the as-is, where-is clause contained in the deed of sale between CDC (as vendee) and China Bank (as vendor) as proof or manifestation of any bad faith on the part

of CDC. On the contrary, the as-is, where-is clause did not affect the title of China Bank because it related only to the physical condition of the property upon its purchase by CDC. The clause only placed on CDC the burden of having the occupants removed from the property. In a sale made on an as-is, where-isbasis, the buyer agrees to take possession of the things sold in the condition where they are found and from the place where they are located, because the phrase as-is, where-ispertains solely to the physical condition of the thing sold, not to its legal situation and is merely descriptive of the state of the thing sold without altering the sellers responsibility to deliver the property sold to the buyer.[28]

What the foregoing circumstances ineluctably indicate is that CDC, having paid the full and fair price of the land, was an innocent purchaser for value, for, according toSandoval v. Court of Appeals:[29] A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and still claim he acted in good faith.

WHEREFORE, we grant the petition for review on certiorari; set aside the decision of the Court of Appeals in CA-GR. CV No. 71696; dismiss the complaint in Civil Case No. 94-2045; and declare Transfer Certificate of Title No. T-34640 in the name of Casimiro Development Corporation valid and subsisting.

The respondent shall pay the costs of suit.

SO ORDERED.

LAND BANK OF THE PHILIPPINES, Petitioner,

G.R. No. 168105

Present:

CORONA, C.J., - versus Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ.

SEVERINO LISTANA, Respondent.

Promulgated:

July 27, 2011 Before us is a petition for review on certiorari under Rule 45 which seeks to set aside the Decision[1] dated November 12, 2004 and Resolution[2] dated May 11, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 70979. The CA affirmed the Order[3] dated October 25, 2000 of the Regional Trial Court (RTC) of Sorsogon, Sorsogon, Branch 52, sitting as a Special Agrarian Court, in Civil Case No. 99-6639 dismissing the petition for determination of just compensation on the ground of late filing. Respondent Severino Listana is the owner of a 246.0561-hectare land located at Inlagadian, Casiguran, Sorsogon and covered by Transfer Certificate of Title (TCT) No. T-20193. The land was voluntarily offered for sale to the government under the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act (R.A.) No. 6657. Petitioner Land Bank of the Philippines (LBP) valued the 240.9066 hectares for acquisition at P5,871,689.03. Since the respondent rejected the said amount, a summary proceeding for determination of just compensation was conducted by the Department of Agrarian Reform (DAR). On May 2, 1996, respondent wrote LBP Department Manager III, Engr. Alex A. Lorayes, requesting the release of payment of the cash portion of the accepted x x x 151.1419 has. with an equivalent valuation of P5,607,874.69. Consequently, on May 7, 1996, a Deed of Transfer was executed by respondent over the said portion of his landholding in consideration of payment received from the transferee Republic of the Philippines consisting of cash (P1,078,877.54) and LBP bonds (P2,747,858.60).[4] On October 14, 1998, DAR Provincial Adjudicator Manuel M. Capellan rendered a decision [5] fixing the amount of just compensation at P10,956,963.25 for the entire acquired area of 240.9066 hectares. Copy of the said decision was received by petitioner on October 27, 1998. Almost a year later, or on September 6, 1999, petitioner filed before the RTC of Sorsogon, Sorsogon, Branch 52, a petition [6] for judicial determination of just compensation (Civil Case No. 99-6639). Petitioner argued that the PARADs valuation is unacceptable and that the initial valuation of P5,871,689.03 for the

240.9066 hectares is in accordance with Section 17 of R.A. No. 6657 and DAR Administrative Order No. 11, series of 1994, as amended by DAR AO No. 5, series of 1998. Respondent filed a motion to dismiss [7] contending that the landowners acceptance of the DARs valuation resulted in a binding contract and therefore constitutes res judicata as it is in the nature of a compromise agreement that has attained finality. Respondent also cited the contempt proceedings against the LBP for its refusal to comply with the writ of execution issued by the Provincial Agrarian Reform Adjudicators (PARADs) Office on June 18, 1999. The matter of contempt proceedings was the subject of G.R. No. 152611 (Land Bank of the Philippines v. Listana, Sr.). The PARAD had issued on August 20, 2000 an order granting respondents motion for contempt and LBP Manager Alex A. Lorayes was cited for indirect contempt and ordered to be imprisoned until he complied with the PARADs October 14, 1998 decision. After its motion for reconsideration was denied, petitioner filed a Notice of Appeal which was likewise denied due course by PARAD Capellan who also ordered the issuance of an alias Writ of Execution for the payment of the adjudged amount of just compensation and subsequently directed the issuance of an arrest order against Lorayes. Petitioner then filed with the RTC a petition for injunction with application for the issuance of a writ of preliminary injunction to restrain PARAD Capellan from issuing the order of arrest. A writ of preliminary injunction was eventually issued by the trial court and LBP posted a P5,644,773.02 cash bond. Respondent went to the CA and challenged said writ via a special civil action for certiorari (CA-G.R. SP No. 65276). On December 11, 2001, the CA rendered its decision nullifying the trial courts orders. In our Decision dated August 5, 2003, we granted the petition filed by LBP and reinstated the January 29, 2001 Order of the RTC of Sorsogon, Sorsogon, Branch 51 which enjoined the PARAD from enforcing its order of arrest against Lorayes pending the final termination of Civil Case No. 99-6639 of RTC Branch 52.[8] Petitioner filed its opposition to the motion to dismiss,[9] arguing that the filing of petition with SAC is not an appeal from the decision of the PARAD which is deemed vacated upon filing of the case before the SAC; hence res judicata cannot be applied. It stressed that the determination of just compensation is inherently judicial in nature. There being no speedy and adequate remedy in the ordinary course of law, petitioner averred that unless it is authorized to file this case it cannot protect the interest of the government who is the owner of the Agrarian Reform Fund. In an Amended Petition,[10] petitioner additionally alleged the fact that respondent had already accepted the valuation of the cocoland portion (151.1419 hectares) in the amount of P5,312,190.23; that payment therefor had been received by respondent; and that a Deed of Transfer of the said portion had been executed in favor of the government which was notarized on May 7, 1996 and registered with the Registry of Deeds. Petitioner thus asserted that the valuation and compensation process insofar as the 151.1419-hectare portion, should now be considered terminated. Respondent, on his part, contended that by bringing the question of valuation before the court, petitioner is estopped from asserting that such issue had already been laid to rest with the alleged acceptance by respondent of the prior valuation.[11] On April 28, 2000, the trial court denied the motion to dismiss. In his Answer,[12] the respondent asserted that petitioner, being part of the administrative machinery charged under the law to determine the government land valuation/compensation offer is bound by the compensation fixed by the DARAB. Hence, respondents acceptance of such offered compensation resulted in a binding contract, especially under the Voluntary Offer to Sell (VOS) scheme. The PARADs decision therefore constitutes res judicata as it is, in effect, a judgment upon a compromise. Respondent also filed a motion for reconsideration of the order denying his motion to dismiss. On October 25, 2000, the trial court issued the order [13] granting respondents motion for reconsideration and dismissing the petition for having been filed almost one year from receipt of the copy of the PARADs decision. Petitioner filed a motion for reconsideration[14] alleging that it had filed a motion for reconsideration from the PARADs decision dated October 14, 1998 but the order denying said motion was received only on May 12, 1999. It further averred that the cause of delay was not solely attributable to it but also to the respondent through his counsel because there was a manifestation on their part to settle this case amicably. Petitioner

stressed that while there was really a late filing, it was done in good faith and without any intent to prejudice any person. Invoking a liberal construction of procedural rules, petitioner argued that it is without any speedy and adequate remedy in this case, which is necessary for the protection of the governments interest. In its Order dated March 27, 2001, the trial court denied petitioners motion for reconsideration. Copy of the said order was received by petitioner on April 6, 2001 and on the same date it filed a notice of appeal.[15] In its memorandum, petitioner argued that on the matter of its late filing of the petition for judicial determination of just compensation, the trial court should have given primacy to the very clear demands of substantial justice over the rigid application of technicalities. It cited Section 57 of R.A. No. 6657 allowing a party to bring the issue of valuation of lands acquired by virtue of CARP to the Special Agrarian Courts, which should be liberally construed to afford LBP the amplest opportunity to prove that its valuation pertaining to the remaining portion of 89.1419 hectares of the subject landholding is in accordance with the legally prescribed formula spelled out in DAR AO No. 5, series of 1998. Moreover, the government has not acceded to the alteration of the valuation pertaining to the 151.1419 hectares, to which both the landowner and government gave their consent, which had become a perfected contract having the force of law between the parties.[16] In the meantime, following this Courts ruling in Land Bank of the Philippines v. Listana, Sr. (supra) which voided all contempt proceedings against LBP Manager Lorayes, petitioner filed with the RTC a motion to withdraw the P5,644,773.02 cash bond. The RTC denied the motion and petitioners motion for reconsideration was likewise denied. Petitioner challenged the trial courts order before the CA which eventually dismissed the petition. When the case was elevated to this Court, we affirmed the CA and sustained the RTCs orders denying LBPs motion to withdraw the cash bond. By Decision dated May 30, 2011, we ruled that LBP cannot withdraw the P5,644,773.02 cash bond which is a condition for the issuance of the writ of preliminary injunction issued by the RTC enjoining the PARAD from implementing the warrant of arrest against Manager Lorayes pending final determination of the amount of just compensation for the property.[17] By Decision dated November 12, 2004, the CA dismissed petitioners appeal from the SACs dismissal of its petition for judicial determination of just compensation. The CA said that petitioner failed to adequately explain its failure to abide by the rules and its loss of appellate recourse cannot be revived by invoking the mantra of liberality. We quote the pertinent portion of the appellate courts ruling: The argument of Listana that he rejected the pricing for the entire area and that the Request to Open a Trust Fund x x x is proof of his refusal, is unmeritorious. If indeed Listana rejected the entire valuation then he would not have executed a Deed of Transfer of Unsegregated Portion of a Parcel of Land x x x covering the 51.1419 [sic] hectares. Said document is not only valid and binding but also reflects the true intention of the parties and is athwart the claim of Listana that he rejected the valuation of this portion of the property. The PARAB in the summary proceeding it conducted to determine the land valuation, should not have included in its determination of just compensation the accepted portion but should have limited the scope to only the rejected portion of 89.7647 hectares. While there is thus good cause to seek recourse against the PARAB ruling, Land Bank took this appeal 117 days later and thus beyond the fifteen (15) day period provided by Rule XIII Sec. 11 of the DARAB Rules of Procedure . Land Bank claims the court a quo was wrong in saying that it was late for less than one year for it was tardy only for 120 days by its reckoning. But whether it is one or the other, the fact is it was late for a considerable time and cannot be absolved by the poor excuse that there was a prospect for an amicable settlement. Rudimentary prudence dictated that appellate recourse should have been timely taken instead of just relying with crossed fingers that settlement would come about. [18] (Emphasis supplied.) Petitioners motion for reconsideration was likewise denied by the CA.

Hence, this petition alleging that the CA committed serious errors of law, as follows: A. THE DARAB ORDER DATED 14 OCTOBER 1998 WHICH ALLEGEDLY BECAME FINAL AND EXECUTORY CANNOT ABROGATE OR RENDER WITHOUT EFFECT A CONSUMMATED CONTRACT INVOLVING THE GOVERNMENT AND RESPONDENT LISTANA RELATIVE TO 151.1419 HECTARES OF SUBJECT PROPERTY. BEING IMMUTABLE, THE CONSUMMATED CONTRACT CAN NO LONGER BE DISTURBED OR ABROGATED BY THE DARAB ORDER DATED 14 OCTOBER 1998, WHICH THE COURT A QUO AND THE COURT OF APPEALS ERRONEOUSLY AFFIRMED. THE CHALLENGED DECISION AND THE QUESTIONED RESOLUTION PLACE SO MUCH PREMIUM ON A PROCEDURAL RULE AT THE EXPENSE OF SUBSTANTIAL JUSTICE, A CIRCUMSTANCE THAT HAS UNNECESSARILY PUT A COLOR OF VALIDITY TO THE DARAB ORDER WHICH IS VOID AB INITIO AS IT UTTERLY DISREGARDED SECTION 17 OF R.A. NO. 6657 AND THE SUPREME COURT RULING IN LBP vs. SPOUSES BANAL, (G.R. NO. 143276, 20 JULY 2004).[19]

B.

The sole issue to be resolved is whether the SAC may take cognizance of the petition for determination of just compensation which is filed beyond the prescribed 15-day period or more than 100 days after the PARAD rendered its valuation in a summary administrative proceeding. The valuation of property in expropriation cases pursuant to R.A. No. 6657 or the Comprehensive Agrarian Reform Law, is essentially a judicial function which is vested in the RTC acting as Special Agrarian Court and cannot be lodged with administrative agencies such as the DAR. [20] Section 57 of said law explicitly states that: 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 Court shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision. The CA affirmed the SACs order of dismissal applying Section 11, Rule XIII of the 1994 DARAB Rules of Procedure which provides that: 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 within fifteen (15) days from notice thereof. Any party shall be entitled to only one motion for reconsideration. (Emphasis supplied.) Petitioner admits the late filing of an action with the SAC but nonetheless argue that the serious errors committed by the PARAD when it included the 151.1419 hectares -- despite the initial valuation offered by LBP having been already accepted by respondent who already conveyed said portion to the government -- in its decision fixing just compensation, and non-application of the formula provided in Section 17 of R.A. No. 6657 and DAR AO No. 11, series of 1994, as amended by DAR AO No. 5, series of 1998 on the remaining 89.1419 hectares, warrants a review by this Court. It contends that this case deserves a relaxation of the procedural rule governing finality of judgments, adding that its thoughtlessness should not be deemed fatal to the instant petition for at stake is an OVERPAYMENT amounting to more than SEVEN MILLION PESOS, which is GREATLY PREJUDICIAL to public interest, as the said amount shall be debited from the Agrarian Reform Fund (ARF). The petition is unmeritorious.

In Republic v. Court of Appeals,[21] private respondent landowner rejected the governments offer of its lands based on LBPs valuation and the case was brought before the PARAD which sustained LBPs valuation. Private respondent then filed a Petition for Just Compensation in the RTC sitting as Special Agrarian Court. However, the RTC dismissed its petition on the ground that private respondent should have appealed to the DARAB, in accordance with the then DARAB Rules of Procedure. Additionally, the RTC found that the petition had been filed more than fifteen days after notice of the PARAD decision. Private respondent then filed a petition for certiorari in the CA which reversed the order of dismissal of RTC and remanded the case to the RTC for further proceedings. The government challenged the CA ruling before this Court via a petition for review on certiorari. This Court, affirming the CA, ruled as follows: Thus, under the law, the Land Bank of the Philippines is charged with the initial responsibility of determining the value of lands placed under land reform and the compensation to be paid for their taking. Through notice sent to the landowner pursuant to 16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner rejects the offer, a summary administrative proceeding is held and afterward the provincial (PARAD), the regional (RARAD) or the central (DARAB) adjudicator as the case may be, depending on the value of the land, fixes the price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the matter to the RTC acting as Special Agrarian Court. This in essence is the procedure for the determination of compensation cases under R.A. No. 6657. In accordance with it, the private respondents case was properly brought by it in the RTC, and it was error for the latter court to have dismissed the case. In the terminology of 57, the RTC, sitting as Special Agrarian Court, has original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. It would subvert this original and exclusive jurisdiction of the RTC for the DAR to vest original jurisdiction in compensation cases in administrative officials and make the RTC an appellate court for the review of administrative decisions. Consequently, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from 57 that the original and exclusivejurisdiction 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 57 and therefore would be void. What adjudicators are empowered to do is only to determine in a preliminary manner the reasonable compensation to be paid to landowners, leaving to the courts the ultimate power to decide this question.[22] (Emphasis supplied.) The above ruling was reiterated in Philippine Veterans Bank v. Court of Appeals.[23] In that case, petitioner landowner who was dissatisfied with the valuation made by LBP and DARAB, filed a petition for determination of just compensation in the RTC (SAC). However, the RTC dismissed the petition on the ground that it was filed beyond the 15-day reglementary period for filing appeals from the orders of the DARAB. On appeal, the CA upheld the order of dismissal. When the case was elevated to this Court, we likewise affirmed the CA and declared that: To implement the provisions of R.A. No. 6657, particularly 50 thereof, Rule XIII, 11 of the DARAB Rules of Procedure provides: 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 within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration. As we held in Republic v. Court of Appeals, this rule is an acknowledgment by the DARAB that the power to decide just compensation cases for the taking of lands under R.A. No. 6657 is vested in the courts. It is error to think that, because of Rule XIII, 11, the original and exclusive jurisdiction given to the courts to decide petitions for determination of just

compensation has thereby been transformed into an appellate jurisdiction. It only means that, in accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR as an administrative agency to determine in a preliminary manner the reasonable compensation to be paid for the lands taken under the Comprehensive Agrarian Reform Program, but such determination is subject to challenge in the courts. The jurisdiction of the Regional Trial Courts is not any less original and exclusive because the question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the administrative determination . For that matter, the law may provide that the decision of the DAR is final and unappealable. Nevertheless, resort to the courts cannot be foreclosed on the theory that courts are the guarantors of the legality of the administrative action. Accordingly, as the petition in the Regional Trial Court was filed beyond the 15-day period provided in Rule XIII, 11 of the Rules of Procedure of the DARAB, the trial court correctly dismissed the case and the Court of Appeals correctly affirmed the order of dismissal. [24] (Emphasis supplied.) The Court noted that Republic v. Court of Appeals does not serve as authority for disregarding the 15day period to bring an action for judicial determination of just compensation as there was no pronouncement therein invalidating Rule XIII, Section 11 of the New Rules of Procedure of the DARAB. Moreover, we stated that any speculation as to the applicability of said provision was foreclosed by our subsequent ruling in Philippine Veterans Bank (supra) where we affirmed the order of dismissal of a petition for determination of just compensation for having been filed beyond the fifteen-day period under Section 11.[25] However, in the 2007 case of Land Bank of the Philippines v. Suntay,[26] the Court ruled that the RTC erred in dismissing LBPs petition for determination of just compensation on the ground that it was filed beyond the fifteen-day period provided in Section 11, Rule XIII of the DARAB New Rules of Procedure. Citing Republic v. Court of Appeals (supra), we stressed therein the original and exclusive -- not appellate -- jurisdiction of the SAC over all petitions for the determination of just compensation to landowners.
[27]

To foreclose any uncertainty brought by the Suntay ruling, this Court in its July 31, 2008 Resolution denying LBPs motion for reconsideration of the August 14, 2007 Decision in the case of Land Bank of the Philippines v. Martinez[28] held: On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling in this case that the agrarian reform adjudicators decision on land valuation attains finality after the lapse of the 15-day period stated in the DARAB Rules. The petition for the fixing of just compensation should therefore, following the law and settled jurisprudence, be filed with the SAC within the said period. This conclusion, as already explained in the assailed decision, is based on the doctrines laid down in Philippine Veterans Bank v. Court of Appeals and Department of Agrarian Reform Adjudication Board v. Lubrica. xxxx The Court notes that the Suntay ruling is based on Republic of the Philippines v. Court of Appeals, decided in 1996 also through the pen of Justice Vicente V. Mendoza. In that case, the Court emphasized that the jurisdiction of the SAC is original and exclusive, not appellate. Republic, however, was decided at a time when Rule XIII, Section 11 was not yet present in the DARAB Rules. Further,Republic 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. To resolve the conflict in the rulings of the Court, we now declare herein, for the guidance of the bench and the bar, that the better rule is that stated in Philippine Veterans Bank,

reiterated inLubrica and in the August 14, 2007 Decision in this case. Thus, while a petition for the fixing of just compensation with the SAC is not an appeal from the agrarian reform adjudicators decision but an original action, the same has to be filed within the 15-day period stated in the DARAB Rules; otherwise, the adjudicators decision will attain finality. This rule is not only in accord with law and settled jurisprudence but also with the principles of justice and equity. Verily, a belated petition before the SAC, e.g., one filed a month, or a year, or even a decade after the land valuation of the DAR adjudicator, must not leave the dispossessed landowner in a state of uncertainty as to the true value of his property. [29] (Emphasis supplied.) Petitioners action before the SAC having been filed, by its own reckoning, 117 days after notice of the PARADs denial of its motion for reconsideration of the decision fixing the just compensation for respondents landholding, the same has attained finality. Anent petitioners plea of liberality and relaxation of procedural rules, it is contended that in the interest of substantial justice, the matter of overpayment which is greatly prejudicial to the agrarian reform fund must be addressed by this Court notwithstanding petitioners thoughtlessness in the tardy filing of its case before the RTC. In the more recent case of Land Bank of the Philippines v. Umandap,[30] the Court, in a decision penned by Associate Justice Teresita Leonardo-De Castro, set aside the CAs amended decision affirming the RTCs order dismissing the petition for judicial determination of just compensation which was re-filed beyond the 15-day period provided in Section 11, Rule XIII of the 1994 DARAB Rules of Procedure. After LBPs initial valuation of the landowners property was rejected, a summary administrative proceeding was conducted by the DARs Regional Agrarian Reform Adjudicator (RARAD). Dissatisfied with the valuation fixed by the RARAD, LBP timely filed a petition for judicial determination of just compensation before the RTC. The RTC dismissed the petition on the ground that LBP failed to submit a proper certification against forum shopping. LBP immediately filed a motion for reconsideration attaching thereto a certification signed by its LBP President confirming the authority of its regional operation manager to sign the verification and certification against forum shopping. The RTC, however, denied the motion for reconsideration, and the order of denial was received by LBP on May 29, 2003. On June 3, 2003, LBP re-filed the petition attaching more documents showing the authority of its regional operation manager to sign the verification and certification against forum shopping. The RTC still dismissed the petition, ruling that even though the previous dismissal was without prejudice, LBP nevertheless failed to re-file the petition within the period allowed by the DARAB Rules of Procedure, and thus, the Adjudicators decision fixing the just compensation of the subject property attained finality. LBP filed a petition for certiorari in the CA which initially reversed and nullified the RTCs orders. Respondent landowners filed a motion for reconsideration and subsequently the CA rendered an Amended Decision dismissing LBPs petition and holding that certiorari is not the proper remedy since the RTC order dismissing the re-filed petition was a final order and based on res judicata, hence certiorari is not the proper remedy. In a petition for review on certiorari, LBP assailed the CAs amended decision dismissing its petition for certiorari. The Court noted that at the core of the controversy is a jurisdictional issue, that is, whether the SAC acted without jurisdiction in outrightly dismissing the petition for the determination of just compensation. The Court declared that since the SAC statutorily exercises original and exclusive jurisdiction over all petitions for 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. Citing Philippine Veterans Bank v. Court of Appeals (supra) which affirmed the order of dismissal of a petition for determination of just compensation for having been filed beyond the said period and explained that Section 11 is not incompatible with the original and exclusive jurisdiction of the SAC, we held: Notwithstanding this pronouncement, however, the statutorily mandated original and exclusive jurisdiction of the SAC led this Court to adopt, over the years, 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:

1. In the 1999 case of Land Bank of the Philippines v. Court of Appeals , we held that the SAC properly acquired jurisdiction over the petition to determine just compensation filed by the landowner without waiting for the completion of DARABs re-evaluation of the land. 2. In the 2004 case of Land Bank of the Philippines v. Wycoco, we allowed a direct resort to the SAC even where no summary administrative proceedings have been held before the DARAB. 3. In the 2006 case of Land Bank of the Philippines v. Celada, this Court upheld the jurisdiction of the SAC despite the pendency of administrative proceedings before the DARAB. We held:

It would be well to emphasize that the taking of property under RA 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. Consequently, the SAC properly took cognizance of respondents petition for determination of just compensation. 4. In the 2009 case of Land Bank of the Philippines v. Belista, this Court permitted a direct recourse to the SAC without an intermediate appeal to the DARAB as mandated under the new provision in the 2003 DARAB Rules of Procedure. We ruled: Although Section 5, Rule XIX of the 2003 DARAB Rules of Procedure provides that the land valuation cases decided by the adjudicator are now appealable to the Board, such rule could not change the clear import of Section 57 of RA No. 6657 that the original and exclusive jurisdiction to determine just compensation is in the RTC. Thus, Section 57 authorizes direct resort to the SAC in cases involving petitions for the determination of just compensation. In accordance with the said Section 57, petitioner properly filed the petition before the RTC and, hence, the RTC erred in dismissing the case. Jurisdiction over the subject matter is conferred by law. Only a statute can confer jurisdiction on courts and administrative agencies while rules of procedure cannot. In the case at bar, the refiling of the Petition for Judicial Determination of Just Compensation was done within five days from the denial of the Motion for Reconsideration of the order dismissing the original petition, during which time said dismissal could still be appealed to the Court of Appeals. The SAC even expressly recognized that the rules are silent as regards the period within which a complaint dismissed without prejudice may be refiled. The statutorily mandated original and exclusive jurisdiction of the SAC, as well as the above circumstances showing that LBP did not appear to have been sleeping on its rights in the allegedly belated refiling of the petition, lead us to assume a liberal construction of the pertinent rules. To be sure, LBPs intent to question the RARADs valuation of the land became evident with the filing of the first petition for determination of just compensation within the period prescribed by the DARAB Rules. Although the first petition was dismissed without prejudice on a technicality, LBPs refiling of essentially the same petition with a proper non-forum shopping certification while the earlier dismissal order had not attained finality should have been accepted by the trial court. In view of the foregoing, we rule that the RTC acted without jurisdiction in hastily dismissing said refiled Petition. Accordingly, the Petition for Certiorari before the Court of Appeals assailing this dismissal should be granted.[31] (Emphasis supplied.)

In contrast to the diligence showed by LBP in the above-cited case, herein petitioner LBP admitted its thoughtless filing of the petition before the SAC more than 100 days after notice of the denial of its motion for reconsideration of the PARADs decision fixing the just compensation for the subject property. Petitioner did not offer any explanation for its tardiness and neglect, and simply reiterated the great prejudice to the agrarian reform fund with the erroneous inclusion in the PARADs valuation of the 151.1419 hectares already conveyed to the government. As to the remaining 89.1419 hectares, petitioner asserts that the PARADs valuation failed to apply the computation provided in Sec. 17 of R.A. No. 6657 as translated in DAR AO No. 5, series of 1998. Petitioner clearly slept on its rights by not filing the petition in the SAC within the prescribed fifteen-day period or a reasonable time after notice of the denial of its motion for reconsideration. Even assuming there was already a consummated sale with respect to the 151.1419 hectares and LBPs valuation thereof had been fully paid to the respondent, the amount already paid by LBP shall be deducted from the total compensation as determined by the PARAD. Notably, LBP exhibited lack of interest in the discharge of its statutory functions as it failed to actively participate in the summary administrative proceeding despite due notice of the hearings. Clearly, there exists no compelling reason to justify relaxation of the rule on the timely availment of judicial action for the determination of just compensation. It is a fundamental legal principle that a decision that has acquired finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law, and whether it be made by the court that rendered it or by the highest court of the land. The only exceptions to the general rule on finality of judgments are the so-called nunc pro tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances transpire after the finality of the decision which render its execution unjust and inequitable.[32] Indeed, litigation must end and terminate sometime and somewhere, even at the risk of occasional errors.[33] WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated November 12, 2004 and Resolution dated May 11, 2005 of the Court of Appeals in CA-G.R. CV No. 70979 are AFFIRMED. No costs. SO ORDERED.

G.R. No. 152640

June 15, 2006

DEPARTMENT OF AGRARIAN REFORM, rep. by SECRETARY HERNANI A. BRAGANZA, Petitioner, vs. PHILIPPINE COMMUNICATIONS SATELLITE CORP., Respondent. DECISION AZCUNA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court by the Department of Agrarian Reform (DAR) seeking the nullification of the Decision and Resolution, dated November 23, 2001 and March 7, 2002, respectively, of the Court of Appeals in CA-G.R. SP No. 57435, entitled "Philippine Communications Satellite Corporation (PHILCOMSAT) v. DAR." The controversy involves a parcel of land owned by respondent PHILCOMSAT situated within the area which had been declared a security zone under Presidential Decree (P.D.) No. 1845, as amended by P.D. No. 1848, entitled "Declaring the Area within a Radius of Three Kilometers surrounding the Satellite Earth Station in Baras, Rizal, a Security Zone." The facts of the case are as follows: PHILCOMSAT is the owner of a parcel of land situated in Pinugay, Baras, Rizal, where its Philippine Space Communications Center (PSCC) is located. The PSCC, which principally consists of herein respondents satellite earth station, serves as the communications gateway of the Philippines to more than two-thirds of the world. Incidentally, the property had been planted with fruit trees, rice and corn by farmers occupying the surrounding areas of the PSCC. On April 30, 1982, P.D. No. 1845 was promulgated. This decree was amended on July 29, 1982 by P.D. No. 1848, Section 1 of which states: Section 1. Declaration of Security Zone. The entire area surrounding the satellite earth station in Sitio San Miguel, Barrio Pinugay, Municipality of Baras, Province of Rizal, Island of Luzon, within a radius of three kilometers, more or less, from the main satellite earth station, the metes and bounds of such area to be determined by the Minister of National Defense, is hereby declared a security zone. For this purpose, and in the interest of national security, ingress to and egress from the security zone as well as occupancy of portions thereof shall be controlled and regulated, without prejudice to the payments of just compensation to persons whose rights of ownership may be injuriously affected thereby x x x. The three-kilometer security zone covers an area of 5,654 hectares, which includes the 700 hectares owned by PHILCOMSAT that is being subjected to the Comprehensive Agrarian Reform Program (CARP)1 of the government. Also included within this three-kilometer radius is the 1.5 kilometers radius from the antenna wherein local harmful Radio Frequency Interference resulting from ignition systems, motor starters, high voltage discharges, and the like, is captured and amplified which can hamper telecommunications services.2 Pursuant to the decree, the Ministry of National Defense promulgated the Revised Rules and Regulations to Implement P.D. No. 1845 dated 30 April 1982, as amended, Declaring the Philippine Earth Station (PES) Security Zone. In view of this, the metes and bounds of PHILCOMSATs satellite earth station in Baras, Rizal, were delineated.

In 1992, a Notice of Coverage was sent to PHILCOMSAT by petitioner DAR informing the former that the land in question shall be placed under CARPs compulsory acquisition scheme. On January 28, 1994, PHILCOMSAT wrote to DAR seeking an exemption of the subject property from CARP coverage, insisting that the land will be utilized for the expansion of its operations, and for the following reasons:3 1) The land is being used for national defense in accordance with Section 10 of Republic Act (R.A.) No. 6657 which provides: "Section 10. Exemptions and Exclusions. -- Lands actually, directly and exclusively used and found necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves, national defense x x x, shall be exempt from the coverage of this Act." 2) The company should be free from harmful Radio Frequency Interference (RFI) to maintain highest service reliability; 3) Compliance with the provisions of P.D. No. 1845, as amended by P.D.1848, stating the vitality of the PSCC in the security system within the purview of national defense; and, 4) The development of the area, in response to the Philippines plan to launch its own national satellite and to address the massive telecommunications build-up in the Asia-Pacific Region.4 Respondents application for exemption from CARP coverage was evaluated by DAR. During the pendency of the application, then DAR Secretary Ernesto D. Garilao, in a letter dated March 21, 1994, suggested that respondent enter into a usufructuary agreement with the occupants of the subject property until such time that it will have to use the property for its planned expansion. The occupants, however, refused to enter into such an agreement.5 Meanwhile, the Sangguniang Bayan of Tanay, Rizal, in its Resolution No. 65-94 that was endorsed to DAR, moved for the coverage of the 700-hectare PHILCOMSAT property within the security zone under CARP. The Provincial Agrarian Reform Officer of Teresa, Rizal further opined that subjecting the surrounding agricultural area within the security zone under CARP will not be detrimental to the operations of PHILCOMSAT.6 On May 25, 1998, an Order was issued by then Secretary Garilao rejecting PHILCOMSATs application for exemption from CARP, citing three main reasons: 1) The occupants in the area can be considered as bona fide tenants of the registered owner before PHILCOMSAT acquired the same for its projected expansion of operations as they have been tilling said area for several years; 2) Said occupants had been identified by the Municipal Agrarian Reform Officer (MARO) as potential CARP beneficiaries when the land was placed under the compulsory acquisition scheme; and, 3) The term "security zone" is not embraced within the definition of lands used for national defense under Section 10 of R. A. No. 6657.7 Its motion for reconsideration of the aforesaid Order having been denied, PHILCOMSAT filed a Petition for Review with the Court of Appeals. Granting said petition, the Court of Appeals held: WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Order dated 25 May 1998 issued by respondent Department of Agrarian Reform as well as the Resolution dated 31 January 2000 denying petitioners motion for reconsideration of the said Order are hereby NULLIFIED and SET ASIDE and a new one is entered, declaring the subject landholdings of petitioner situated at Pinugay, Baras, Rizal, exempted from the CARP coverage, considering that it was declared a security zone under P.D. [No.] 1845, as revised by P.D. [No.] 1848. SO ORDERED.8

A motion for reconsideration of the above decision was filed by DAR but the same was denied by the Court of Appeals in its Resolution, dated March 7, 2002.9 Hence, this petition with the following assignment of errors: I THE HONORABLE COURT OF APPEALS ERRED WHEN IT DECLARED THAT R.A. NO. 6657 (COMPREHENSIVE AGRARIAN REFORM LAW OF 1988) AND P.D. NO. 1848, WHICH DECLARED THE SUBJECT LANDHOLDING AS A SECURITY ZONE, CANNOT, IN EFFECT, CO-EXIST WITH EACH OTHER; II THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE STATUTORY RULE GENERALIA SPECIALIBUS NON DEROGANT; AND, III THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE SUBJECT PROPERTY IS EXEMPT FROM THE COVERAGE OF CARP. Thus, the main issue in this case is whether or not the subject property of PHILCOMSAT which had been declared a security zone under P.D. No. 1845, as amended by P.D. No. 1848, can be subjected to CARP. P.D. No. 1845, as amended by P.D. No. 1848, was issued way before the effectivity of the Comprehensive Agrarian Reform Law of 1988. The same was issued in 1982 pursuant to an exigency to create a security zone in the surrounding areas of PHILCOMSATs satellite earth station in order to ensure its security and uninterrupted operation considering the vital role of the earth station in the countrys telecommunications and national development. Thus, P.D. No. 1845 provides: WHEREAS, the only earth station in the Philippines for world satellite telecommunications is located in a remote and sparsely populated place in sitio San Miguel, Barrio Pinugay, Municipality of Baras, Province of Rizal; WHEREAS, the said earth station is vital to the existence and maintenance of satellite telecommunications between the Philippines and most countries of the world and plays an invaluable role in the sustenance and development of our political, economic, commercial, and social life; WHEREAS, in view of its location, it would be easy for saboteurs or criminal elements to destroy or cause damage to the said earth station thereby paralyzing the system and curtailing momentous public service; and WHEREAS, to protect and insure the safety and uninterrupted operation of this modern media of international communications, it is necessary to establish a security zone all around the said earth station. P.D. No. 1848, amending P.D. No. 1845, subjected the security zone to the authority of the Ministry of National Defense, consequently conferring on the Minister of National Defense the power and authority to determine who can occupy the areas within the security zone, and how the lands shall be utilized, to wit: SEC. 3. -- Occupation by Owner. Owners of land within the security zone and/or their bona fide tenants, lessees, or agents can occupy or continue to occupy their respective lands or areas therein subject to prior written permission or authority of the Minister of National Defense. SEC 4. -- In cases where an owner or a bona fide occupant is, in the determination of the Minister of National Defense, not entitled to an occupancy permit, he shall have the option of demanding payment of just compensation for his property rights, or to sell such rights to any person qualified to own or occupy such property. SEC. 5. -- The Armed Forces of the Philippines may, thru negotiation or expropriation, acquire ownership of any land or area located or situated within the zone.

The law, in effect, by declaring the area a security zone, has granted to the Ministry of National Defense the control and administration of the same. As a rule, where a general power is conferred or duty enjoined, every particular power necessary for the exercise of one or the performance of the other is also conferred.10 Upon the passage of the Comprehensive Agrarian Reform Law which became effective on July 15, 1988, all public and private agricultural lands,11 and other lands of public domain suitable for agriculture, regardless of tenurial arrangement and commodity produced, were declared subject to its coverage.12 The area in question which is included within the security zone is agricultural. It has been planted with different crops and fruit trees by its occupants, and has been found by DAR to be suitable for agriculture. The area, however, should be exempt from CARP coverage by virtue of P.D. No. 1845, as amended, which, as stated earlier, declared the area to be a security zone under the jurisdiction of the Ministry of National Defense. It is evident from the very wording of the law that the government recognized the crucial role of PHILCOMSATs operations to national security, thereby necessitating the protection of its operations from unnecessary and even anticipated disruption. Thus, every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms.13 In this regard, the Court agrees with the Court of Appeals when it stated that: The subject property is clearly within the scope of the Comprehensive Agrarian Reform Law, in accordance with Chapter II, section 4(d) thereof, had it not been decreed by P.D. No. 1845 that it is a security zone. The very purpose by which P.D. No. 1845 was passed declaring the area within a radius of three kilometers surrounding the satellite earth station in Baras, Rizal a security zone is to protect and insure the safety and uninterrupted operation of the modern media of international communications in the said property, as indicated in the whereas clause of said law. Thus, to subject said security zone to the Comprehensive Agrarian Reform Program of the government would negate the very purpose by which P.D. 1845, as revised by P.D. 1848, was decreed. These laws have never been repealed. P.D. 1848 is also specific in that occupation of the area, either by the owners or their bona fide tenants, require a prior written permission or authority from the Ministry of the National Defense, now Department of National Defense. It is therefore the Department of National Defense which will determine [x x x] who can occupy the subject property, and not the Department of Agrarian Reform. To subject the property in question to agrarian reform is indirectly giving the Department of Agrarian Reform authority to determine [x x x] who can occupy the property, in violation of the mandate of P.D. 1848. 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 (Lapid v. Court of Appeals, 334 SCRA 738).14 Section 10 of the Comprehensive Agrarian Reform Law or R.A. No. 6657,15 as amended, provides that lands actually, directly and exclusively used and found to be necessary for national defense shall be exempt from the coverage of the Act. The 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.16 Suffice it to state, however, that as a matter of principle, it cannot seriously be denied that the act of securing a 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. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 57435, dated November 23, 2001 and March 7, 2002, respectively, are hereby AFFIRMED. No costs. SO ORDERED.