G.R. No.

78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC.,
JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR.,
BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B.
MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA
C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO,
CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS,
DENNIS JEREZA, HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO
and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias,
Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN
REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY
OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND
BANK OF THE PHILIPPINES,respondents.

CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and
challenged Hercules for his life on his way to Mycenae after
performing his eleventh labor. The two wrestled mightily and
Hercules flung his adversary to the ground thinking him dead, but
Antaeus rose even stronger to resume their struggle. This happened
several times to Hercules' increasing amazement. Finally, as they
continued grappling, it dawned on Hercules that Antaeus was the son
of Gaea and could never die as long as any part of his body was
touching his Mother Earth. Thus forewarned, Hercules then held
Antaeus up in the air, beyond the reach of the sustaining soil, and
crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose
invigorating touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they
also tell of the elemental forces of life and death, of men and women
who, like Antaeus need the sustaining strength of the precious earth
to stay alive.
"Land for the Landless" is a slogan that underscores the acute
imbalance in the distribution of this precious resource among our
people. But it is more than a slogan. Through the brooding centuries,
it has become a battle-cry dramatizing the increasingly urgent
demand of the dispossessed among us for a plot of earth as their
place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy
of social justice to "insure the well-being and economic security of all
the people,"
1
especially the less privileged. In 1973, the new
Constitution affirmed this goal adding specifically that "the State shall
regulate the acquisition, ownership, use, enjoyment and disposition
of private property and equitably diffuse property ownership and
profits."
2
Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed at
emancipating the tenant from the bondage of the soil."
3

The Constitution of 1987 was not to be outdone. Besides echoing
these sentiments, it also adopted one whole and separate Article XIII
on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people.
These include a call in the following words for the adoption by the
State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are
landless, to own directly or collectively the lands they till or, in the
case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations and
subject to the payment of just compensation. In determining
retention limits, the State shall respect the right of small landowners.
The State shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural
Land Reform Code, had already been enacted by the Congress of the
Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by
P.D. No. 27, which was promulgated on October 21, 1972, along with
martial law, to provide for the compulsory acquisition of private lands
for distribution among tenant-farmers and to specify maximum
retention limits for landowners.
The people power revolution of 1986 did not change and indeed even
energized the thrust for agrarian reform. Thus, on July 17, 1987,
President Corazon C. Aquino issued E.O. No. 228, declaring full land
ownership in favor of the beneficiaries of P.D. No. 27 and providing
for the valuation of still unvalued lands covered by the decree as well
as the manner of their payment. This was followed on July 22, 1987
by Presidential Proclamation No. 131, instituting a comprehensive
agrarian reform program (CARP), and E.O. No. 229, providing the
mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of
the Philippines took over legislative power from the President and
started its own deliberations, including extensive public hearings, on
the improvement of the interests of farmers. The result, after almost
a year of spirited debate, was the enactment of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of
1988, which President Aquino signed on June 10, 1988. This law,
while considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are not
inconsistent with its provisions.
4

The above-captioned cases have been consolidated because they
involve common legal questions, including serious challenges to the
constitutionality of the several measures mentioned above. They will
be the subject of one common discussion and resolution, The
different antecedents of each case will require separate treatment,
however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27,
E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four
tenants and owned by petitioner Nicolas Manaay and his wife and a
5-hectare riceland worked by four tenants and owned by petitioner
Augustin Hermano, Jr. The tenants were declared full owners of these
lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229
on grounds inter alia of separation of powers, due process, equal
protection and the constitutional limitation that no private property
shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when
she promulgated E.O. No. 228. The said measure is invalid also for
violation of Article XIII, Section 4, of the Constitution, for failure to
provide for retention limits for small landowners. Moreover, it does
not conform to Article VI, Section 25(4) and the other requisites of a
valid appropriation.
In connection with the determination of just compensation, the
petitioners argue that the same may be made only by a court of
justice and not by the President of the Philippines. They invoke the
recent cases of EPZA v. Dulay
5
andManotok v. National Food
Authority.
6
Moreover, the just compensation contemplated by the
Bill of Rights is payable in money or in cash and not in the form of
bonds or other things of value.
In considering the rentals as advance payment on the land, the
executive order also deprives the petitioners of their property rights
as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian
problems on the owners only of agricultural lands. No similar
obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under
P.D. No. 27 to be the owners of the lands occupied by them, E.O. No.
228 ignored judicial prerogatives and so violated due process. Worse,
the measure would not solve the agrarian problem because even the
small farmers are deprived of their lands and the retention rights
guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has
already been upheld in the earlier cases ofChavez v. Zobel,
7
Gonzales
v. Estrella,
8
and Association of Rice and Corn Producers of the
Philippines, Inc. v. The National Land Reform Council.
9
The
determination of just compensation by the executive authorities
conformably to the formula prescribed under the questioned order is
at best initial or preliminary only. It does not foreclose judicial
intervention whenever sought or warranted. At any rate, the
challenge to the order is premature because no valuation of their
property has as yet been made by the Department of Agrarian
Reform. The petitioners are also not proper parties because the lands
owned by them do not exceed the maximum retention limit of 7
hectares.
Replying, the petitioners insist they are proper parties because P.D.
No. 27 does not provide for retention limits on tenanted lands and
that in any event their petition is a class suit brought in behalf of
landowners with landholdings below 24 hectares. They maintain that
the determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases invoked by the
public respondent, the constitutionality of P.D. No. 27 was merely
assumed in Chavez, while what was decided in Gonzales was the
validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended
that P.D. No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21)
have been impliedly repealed by R.A. No. 6657. Nevertheless, this
statute should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the earlier
measures.
A petition for intervention was filed with leave of court on June 1,
1988 by Vicente Cruz, owner of a 1. 83- hectare land, who complained
that the DAR was insisting on the implementation of P.D. No. 27 and
E.O. No. 228 despite a compromise agreement he had reached with
his tenant on the payment of rentals. In a subsequent motion dated
April 10, 1989, he adopted the allegations in the basic amended
petition that the above- mentioned enactments have been impliedly
repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the
Victorias Mill District, Victorias, Negros Occidental. Co-petitioner
Planters' Committee, Inc. is an organization composed of 1,400
planter-members. This petition seeks to prohibit the implementation
of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive
Agrarian Reform Program as decreed by the Constitution belongs to
Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was
convened, she could do so only to enact emergency measures during
the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No.
131 and E.O. No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due process, and
equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
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 and Receipts of sale 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 the amount appropriated is in futuro, not in esse.
The money needed to cover the cost of the contemplated
expropriation has yet to be raised and cannot be appropriated at this
time.
Furthermore, they contend that taking must be simultaneous with
payment of just compensation as it is traditionally understood, i.e.,
with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof
provides that the Land Bank of the Philippines "shall compensate the
landowner in an amount to be established by the government, which
shall be based on the owner's declaration of current fair market value
as provided in Section 4 hereof, but subject to certain controls to be
defined and promulgated by the Presidential Agrarian Reform
Council." This compensation may not be paid fully in money but in
any of several modes that may consist of part cash and part bond,
with interest, maturing periodically, or direct payment in cash or
bond as may be mutually agreed upon by the beneficiary and the
landowner or as may be prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures,
no effort was made to make a careful study of the sugar planters'
situation. There is no tenancy problem in the sugar areas that can
justify the application of the CARP to them. To the extent that the
sugar planters have been lumped in the same legislation with other
farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been
violated.
A motion for intervention was filed on August 27,1987 by the
National Federation of Sugarcane Planters (NASP) which claims a
membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention
was filed, this time by Manuel Barcelona, et al., representing coconut
and riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the
Agrarian Reform Program and that, in any event, the appropriation is
invalid because of uncertainty in the amount appropriated. Section 2
of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an
initial appropriation of fifty billion pesos and thus specifies the
minimum rather than the maximum authorized amount. This is not
allowed. Furthermore, the stated initial amount has not been
certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure
to establish by clear and convincing evidence the necessity for the
exercise of the powers of eminent domain, and the violation of the
fundamental right to own property.
The petitioners also decry the penalty for non-registration of the
lands, which is the expropriation of the said land for an amount equal
to the government assessor's valuation of the land for tax purposes.
On the other hand, if the landowner declares his own valuation he is
unjustly required to immediately pay the corresponding taxes on the
land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O.
No. 229. He also justifies the necessity for the expropriation as
explained in the "whereas" clauses of the Proclamation and submits
that, contrary to the petitioner's contention, a pilot project to
determine the feasibility of CARP and a general survey on the
people's opinion thereon are not indispensable prerequisites to its
promulgation.
On the alleged violation of the equal protection clause, the sugar
planters have failed to show that they belong to a different class and
should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and
scheduling the expropriation of private agricultural lands later. From
this viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional
prohibition is against the payment of public money without the
corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation law.
Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund,
although denominated as an initial amount, is actually the maximum
sum appropriated. The word "initial" simply means that additional
amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a
petition on his own behalf, assailing the constitutionality of E.O. No.
229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;
(3) The power of the President to legislate was terminated on July 2,
1987; and
(4) The appropriation of a P50 billion special fund from the National
Treasury did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of
Agrarian Reform, in violation of due process and the requirement for
just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were
subsequently issued to the private respondents, who then refused
payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous
inclusion of his small landholding under Operation Land transfer and
asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on
December 24, 1986, his petition was denied without hearing. On
February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued. These
orders rendered his motion moot and academic because they directly
effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the
Philippines.
(2) The said executive orders are violative of the constitutional
provision that no private property shall be taken without due process
or just compensation.
(3) The petitioner is denied the right of maximum retention provided
for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229
shortly before Congress convened is anomalous and arbitrary, besides
violating the doctrine of separation of powers. The legislative power
granted to the President under the Transitory Provisions refers only
to emergency measures that may be promulgated in the proper
exercise of the police power.
The petitioner also invokes his rights not to be deprived of his
property without due process of law and to the retention of his small
parcels of riceholding as guaranteed under Article XIII, Section 4 of
the Constitution. He likewise argues that, besides denying him just
compensation for his land, the provisions of E.O. No. 228 declaring
that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the
land.
is an unconstitutional taking of a vested property right. It is also his
contention that the inclusion of even small landowners in the
program along with other landowners with lands consisting of seven
hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is
premature because the motion for reconsideration filed with the
Minister of Agrarian Reform is still unresolved. As for the validity of
the issuance of E.O. Nos. 228 and 229, he argues that they were
enacted pursuant to Section 6, Article XVIII of the Transitory
Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers
until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No.
27 was promulgated on October 21. 1972, the tenant-farmer of
agricultural land was deemed the owner of the land he was tilling.
The leasehold rentals paid after that date should therefore be
considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that
the motion he filed was resolved on December 14, 1987. An appeal to
the Office of the President would be useless with the promulgation of
E.O. Nos. 228 and 229, which in effect sanctioned the validity of the
public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by
P.D. No. 27 to owners of rice and corn lands not exceeding seven
hectares as long as they are cultivating or intend to cultivate the
same. Their respective lands do not exceed the statutory limit but are
occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation
of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and
corn shall be ejected or removed from his farmholding until such time
as the respective rights of the tenant- farmers and the landowner
shall have been determined in accordance with the rules and
regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are
unable to enjoy their right of retention because the Department of
Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the
Court for a writ of mandamus to compel the respondent to issue the
said rules.
In his Comment, the public respondent argues that P.D. No. 27 has
been amended by LOI 474 removing any right of retention from
persons who own other agricultural lands of more than 7 hectares in
aggregate area or lands used for residential, commercial, industrial or
other purposes from which they derive adequate income for their
family. And even assuming that the petitioners do not fall under its
terms, the regulations implementing P.D. No. 27 have already been
issued, to wit, the Memorandum dated July 10, 1975 (Interim
Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21,
1978, (Implementation Guidelines of LOI No. 474), Memorandum
Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines
on Coverage of P.D. No. 27 and Retention by Small Landowners), and
DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-
off Date for Landowners to Apply for Retention and/or to Protest the
Coverage of their Landholdings under Operation Land Transfer
pursuant to P.D. No. 27). For failure to file the corresponding
applications for retention under these measures, the petitioners are
now barred from invoking this right.
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency of their
appeal to the President of the Philippines. Moreover, the issuance of
the implementing rules, assuming this has not yet been done,
involves the exercise of discretion which cannot be controlled
through the writ of mandamus. This is especially true if this function
is entrusted, as in this case, to a separate department of the
government.
In their Reply, the petitioners insist that the above-cited measures are
not applicable to them because they do not own more than seven
hectares of agricultural land. Moreover, assuming arguendo that the
rules were intended to cover them also, the said measures are
nevertheless not in force because they have not been published as
required by law and the ruling of this Court in Tanada v. Tuvera.
10
As
for LOI 474, the same is ineffective for the additional reason that a
mere letter of instruction could not have repealed the presidential
decree.
I
Although holding neither purse nor sword and so regarded as the
weakest of the three departments of the government, the judiciary is
nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the
doctrine of judicial supremacy. Even so, this power is not lightly
assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of
their functions and of their respect for the other departments, in
striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and
caution. To doubt is to sustain. The theory is that before the act was
done or the law was enacted, earnest studies were made by Congress
or the President, or both, to insure that the Constitution would not be
breached.
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence
of a majority of the members of the Supreme Court who took part in
the deliberations and voted on the issue during their session en
banc.
11
And as established by judge made doctrine, the Court will
assume jurisdiction over a constitutional question only if it is shown
that the essential requisites of a judicial inquiry into such a question
are first satisfied. Thus, there must be an actual case or controversy
involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the
question is unavoidably necessary to the decision of the case itself.
12

With particular regard to the requirement of proper party as applied
in the cases before us, we hold that the same is satisfied by the
petitioners and intervenors because each of them has sustained or is
in danger of sustaining an immediate injury as a result of the acts or
measures complained of.
13
And even if, strictly speaking, they are not
covered by the definition, it is still within the wide discretion of the
Court to waive the requirement and so remove the impediment to its
addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases,
14
ordinary citizens and
taxpayers were allowed to question the constitutionality of several
executive orders issued by President Quirino although they were
invoking only an indirect and general interest shared in common with
the public. The Court dismissed the objection that they were not
proper parties and ruled that "the transcendental importance to the
public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of procedure."
We have since then applied this exception in many other cases.
15

The other above-mentioned requisites have also been met in the
present petitions.
In must be stressed that despite the inhibitions pressing upon the
Court when confronted with constitutional issues like the ones now
before it, it will not hesitate to declare a law or act invalid when it is
convinced that this must be done. In arriving at this conclusion, its
only criterion will be the Constitution as God and its conscience give it
the light to probe its meaning and discover its purpose. Personal
motives and political considerations are irrelevancies that cannot
influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the
Court will not hesitate to "make the hammer fall, and heavily," to use
Justice Laurel's pithy language, where the acts of these departments,
or of any public official, betray the people's will as expressed in the
Constitution.
It need only be added, to borrow again the words of Justice Laurel,
that
... when the judiciary mediates to allocate constitutional boundaries,
it does not assert any superiority over the other departments; it does
not in reality nullify or invalidate an act of the Legislature, but only
asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy
the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial
supremacy" which properly is the power of judicial review under the
Constitution.
16

The cases before us categorically raise constitutional questions that
this Court must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before
resolving the more serious challenges to the constitutionality of the
several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise
of his powers under martial law has already been sustained
in Gonzales v. Estrella and we find no reason to modify or reverse it
on that issue. As for the power of President Aquino to promulgate
Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized
under Section 6 of the Transitory Provisions of the 1987 Constitution,
quoted above.
The said measures were issued by President Aquino before July 27,
1987, when the Congress of the Philippines was formally convened
and took over legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because E.O. No.
228 was issued on July 17, 1987, and the other measures, i.e., Proc.
No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither
is it correct to say that these measures ceased to be valid when she
lost her legislative power for, like any statute, they continue to be in
force unless modified or repealed by subsequent law or declared
invalid by the courts. A statute does not ipso facto become
inoperative simply because of the dissolution of the legislature that
enacted it. By the same token, President Aquino's loss of legislative
power did not have the effect of invalidating all the measures enacted
by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not
rejected but in fact substantially affirmed the challenged measures
and has specifically provided that they shall be suppletory to R.A. No.
6657 whenever not inconsistent with its provisions.
17
Indeed, some
portions of the said measures, like the creation of the P50 billion fund
in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229,
have been incorporated by reference in the CARP Law.
18

That fund, as earlier noted, is itself being questioned on the ground
that it does not conform to the requirements of a valid appropriation
as specified in the Constitution. Clearly, however, Proc. No. 131 is not
an appropriation measure even if it does provide for the creation of
said fund, for that is not its principal purpose. An appropriation law is
one the primary and specific purpose of which is to authorize the
release of public funds from the treasury.
19
The creation of the fund
is only incidental to the main objective of the proclamation, which is
agrarian reform.
It should follow that the specific constitutional provisions invoked, to
wit, Section 24 and Section 25(4) of Article VI, are not applicable.
With particular reference to Section 24, this obviously could not have
been complied with for the simple reason that the House of
Representatives, which now has the exclusive power to initiate
appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely
vested in the President of the Philippines, who embodied, as it were,
both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O.
No. 229 should be invalidated because they do not provide for
retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for such
limits now in Section 6 of the law, which in fact is one of its most
controversial provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no
person may own or retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but
in no case shall retention by the landowner exceed five (5) hectares.
Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen
(15) years of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep
the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional
requirement that a bill shall have only one subject, to be expressed in
its title, deserves only short attention. It is settled that the title of the
bill does not have to be a catalogue of its contents and will suffice if
the matters embodied in the text are relevant to each other and may
be inferred from the title.
20

The Court wryly observes that during the past dictatorship, every
presidential issuance, by whatever name it was called, had the force
and effect of law because it came from President Marcos. Such are
the ways of despots. Hence, it is futile to argue, as the petitioners do
in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27
because the former was only a letter of instruction. The important
thing is that it was issued by President Marcos, whose word was law
during that time.
But for all their peremptoriness, these issuances from the President
Marcos still had to comply with the requirement for publication as
this Court held in Tanada v. Tuvera.
21
Hence, unless published in the
Official Gazette in accordance with Article 2 of the Civil Code, they
could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was
published, though, in the Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No.
78742 that the writ of mandamus cannot issue to compel the
performance of a discretionary act, especially by a specific
department of the government. That is true as a general proposition
but is subject to one important qualification. Correctly and
categorically stated, the rule is that mandamus will lie to compel the
discharge of the discretionary duty itself but not to control the
discretion to be exercised. In other words, mandamus can issue to
require action only but not specific action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of such duty
occurs, if it is a clear duty imposed by law, the courts will intervene by
the extraordinary legal remedy of mandamus to compel action. If the
duty is purely ministerial, the courts will require specific action. If the
duty is purely discretionary, the courts by mandamus will require
action only. For example, if an inferior court, public official, or board
should, for an unreasonable length of time, fail to decide a particular
question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave
it jurisdiction mandamus will issue, in the first case to require a
decision, and in the second to require that jurisdiction be taken of the
cause.
22

And while it is true that as a rule the writ will not be proper as long as
there is still a plain, speedy and adequate remedy available from the
administrative authorities, resort to the courts may still be permitted
if the issue raised is a question of law.
23

III
There are traditional distinctions between the police power and the
power of eminent domain that logically preclude the application of
both powers at the same time on the same subject. In the case of City
of Baguio v. NAWASA,
24
for example, where a law required the
transfer of all municipal waterworks systems to the NAWASA in
exchange for its assets of equivalent value, the Court held that the
power being exercised was eminent domain because the property
involved was wholesome and intended for a public use. Property
condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which
should be demolished for the public safety, or obscene materials,
which should be destroyed in the interest of public morals. The
confiscation of such property is not compensable, unlike the taking of
property under the power of expropriation, which requires the
payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon,
25
Justice Holmes laid
down the limits of the police power in a famous aphorism: "The
general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a
taking." The regulation that went "too far" was a law prohibiting
mining which might cause the subsidence of structures for human
habitation constructed on the land surface. This was resisted by a coal
company which had earlier granted a deed to the land over its mine
but reserved all mining rights thereunder, with the grantee assuming
all risks and waiving any damage claim. The Court held the law could
not be sustained without compensating the grantor. Justice Brandeis
filed a lone dissent in which he argued that there was a valid exercise
of the police power. He said:
Every restriction upon the use of property imposed in the exercise of
the police power deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by the State of rights in
property without making compensation. But restriction imposed to
protect the public health, safety or morals from dangers threatened is
not a taking. The restriction here in question is merely the prohibition
of a noxious use. The property so restricted remains in the possession
of its owner. The state does not appropriate it or make any use of it.
The state merely prevents the owner from making a use which
interferes with paramount rights of the public. Whenever the use
prohibited ceases to be noxious as it may because of further
changes in local or social conditions the restriction will have to be
removed and the owner will again be free to enjoy his property as
heretofore.
Recent trends, however, would indicate not a polarization but a
mingling of the police power and the power of eminent domain, with
the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police
purpose has long been accepted.
26
As for the power of expropriation,
Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US
365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located the
Police and eminent domain powers on different planets. Generally
speaking, they viewed eminent domain as encompassing public
acquisition of private property for improvements that would be
available for public use," literally construed. To the police power, on
the other hand, they assigned the less intrusive task of preventing
harmful externalities a point reflected in the Euclid opinion's reliance
on an analogy to nuisance law to bolster its support of zoning. So long
as suppression of a privately authored harm bore a plausible relation
to some legitimate "public purpose," the pertinent measure need
have afforded no compensation whatever. With the progressive
growth of government's involvement in land use, the distance
between the two powers has contracted considerably. Today
government often employs eminent domain interchangeably with or
as a useful complement to the police power-- a trend expressly
approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to
match that of the police power's standard of "public purpose."
27

The Berman case sustained a redevelopment project and the
improvement of blighted areas in the District of Columbia as a proper
exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's
Capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to
realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end.
28

In Penn Central Transportation Co. v. New York City,
29
decided by a 6-
3 vote in 1978, the U.S Supreme Court sustained the respondent's
Landmarks Preservation Law under which the owners of the Grand
Central Terminal had not been allowed to construct a multi-story
office building over the Terminal, which had been designated a
historic landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the
owners of the Terminal would be deprived of the right to use the
airspace above it although other landowners in the area could do so
over their respective properties. While insisting that there was here
no taking, the Court nonetheless recognized certain compensatory
rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair
compensation," as he called it, was explained by Prof. Costonis in this
wise:
In return for retaining the Terminal site in its pristine landmark status,
Penn Central was authorized to transfer to neighboring properties the
authorized but unused rights accruing to the site prior to the
Terminal's designation as a landmark the rights which would have
been exhausted by the 59-story building that the city refused to
countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling
Penn Central to recoup its losses at the Terminal site by constructing
or selling to others the right to construct larger, hence more
profitable buildings on the transferee sites.
30

The cases before us present no knotty complication insofar as the
question of compensable taking is concerned. To the extent that the
measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the
regulation of private property in accordance with the Constitution.
But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the
maximum area allowed, there is definitely a taking under the power
of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the
use of the land. What is required is the surrender of the title to and
the physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer-beneficiary. This is
definitely an exercise not of the police power but of the power of
eminent domain.
Whether as an exercise of the police power or of the power of
eminent domain, the several measures before us are challenged as
violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the
ground that no retention limits are prescribed has already been
discussed and dismissed. It is noted that although they excited many
bitter exchanges during the deliberation of the CARP Law in Congress,
the retention limits finally agreed upon are, curiously enough, not
being questioned in these petitions. We therefore do not discuss
them here. The Court will come to the other claimed violations of due
process in connection with our examination of the adequacy of just
compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal
protection because of the absence of retention limits has also
become academic under Section 6 of R.A. No. 6657. Significantly, they
too have not questioned the area of such limits. There is also the
complaint that they should not be made to share the burden of
agrarian reform, an objection also made by the sugar planters on the
ground that they belong to a particular class with particular interests
of their own. However, no evidence has been submitted to the Court
that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things
similar to each other in certain particulars and different from each
other in these same particulars.
31
To be valid, it must conform to the
following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it
must not be limited to existing conditions only; and (4) it must apply
equally to all the members of the class.
32
The Court finds that all
these requisites have been met by the measures here challenged as
arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly
situated must be treated alike both as to the rights conferred and the
liabilities imposed.
33
The petitioners have not shown that they
belong to a different class and entitled to a different treatment. The
argument that not only landowners but also owners of other
properties must be made to share the burden of implementing land
reform must be rejected. There is a substantial distinction between
these two classes of owners that is clearly visible except to those who
will not see. There is no need to elaborate on this matter. In any
event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the
courts of justice except only where its discretion is abused to the
detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained
under the police power only if there is a concurrence of the lawful
subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class
require the interference of the State and, no less important, the
means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon
individuals.
34
As the subject and purpose of agrarian reform have
been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the
rights of the individual are concerned, the end does not justify the
means. It is not enough that there be a valid objective; it is also
necessary that the means employed to pursue it be in keeping with
the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral
conviction or the most urgent public need, subject only to a few
notable exceptions, will excuse the bypassing of an individual's rights.
It is no exaggeration to say that a, person invoking a right guaranteed
under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right.
That right covers the person's life, his liberty and his property under
Section 1 of Article III of the Constitution. With regard to his property,
the owner enjoys the added protection of Section 9, which reaffirms
the familiar rule that private property shall not be taken for public use
without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to
forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties.
35
It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions
offered by the vendee, that the power of eminent domain will come
into play to assert the paramount authority of the State over the
interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored
justification, as in the case of the police power, that the welfare of
the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by
no means absolute (as indeed no power is absolute). The limitation is
found in the constitutional injunction that "private property shall not
be taken for public use without just compensation" and in the
abundant jurisprudence that has evolved from the interpretation of
this principle. Basically, the requirements for a proper exercise of the
power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R.
No. 79310 that the State should first distribute public agricultural
lands in the pursuit of agrarian reform instead of immediately
disturbing property rights by forcibly acquiring private agricultural
lands. Parenthetically, it is not correct to say that only public
agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event,
the decision to redistribute private agricultural lands in the manner
prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in
reviewing that discretion in the absence of a clear showing that it has
been abused.
A becoming courtesy admonishes us to respect the decisions of the
political departments when they decide what is known as the political
question. As explained by Chief Justice Concepcion in the case
of Taada v. Cuenco:
36

The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those questions
which, under the Constitution, are to be decided by the people in
their sovereign capacity; or in regard to which full discretionary
authority has been delegated to the legislative or executive branch of
the government." It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been
constricted with the enlargement of judicial power, which now
includes the authority of the courts "to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of
the Government."
37
Even so, this should not be construed as a
license for us to reverse the other departments simply because their
views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom,
to include in the CARP the redistribution of private landholdings (even
as the distribution of public agricultural lands is first provided for,
while also continuing apace under the Public Land Act and other
cognate laws). The Court sees no justification to interpose its
authority, which we may assert only if we believe that the political
decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,
38
it was held:
Congress having determined, as it did by the Act of March 3,1909 that
the entire St. Mary's river between the American bank and the
international line, as well as all of the upland north of the present
ship canal, throughout its entire length, was "necessary for the
purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there
is no room for judicial review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been
settled for us by the Constitution itself No less than the 1987 Charter
calls for agrarian reform, which is the reason why private agricultural
lands are to be taken from their owners, subject to the prescribed
maximum retention limits. The purposes specified in P.D. No. 27,
Proc. No. 131 and R.A. No. 6657 are only an elaboration of the
constitutional injunction that the State adopt the necessary measures
"to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or
collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation,
needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator.
39
It has been
repeatedly stressed by this Court that the measure is not the taker's
gain but the owner's loss.
40
The word "just" is used to intensify the
meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample.
41

It bears repeating that the measures challenged in these petitions
contemplate more than a mere regulation of the use of private lands
under the police power. We deal here with an actual taking of private
agricultural lands that has dispossessed the owners of their property
and deprived them of all its beneficial use and enjoyment, to entitle
them to the just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi,
42
there is
compensable taking when the following conditions concur: (1) the
expropriator must enter a private property; (2) the entry must be for
more than a momentary period; (3) the entry must be under warrant
or color of legal authority; (4) the property must be devoted to public
use or otherwise informally appropriated or injuriously affected; and
(5) the utilization of the property for public use must be in such a way
as to oust the owner and deprive him of beneficial enjoyment of the
property. All these requisites are envisioned in the measures before
us.
Where the State itself is the expropriator, it is not necessary for it to
make a deposit upon its taking possession of the condemned
property, as "the compensation is a public charge, the good faith of
the public is pledged for its payment, and all the resources of taxation
may be employed in raising the amount."
43
Nevertheless, Section
16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in
case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act, the
DAR shall take immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of Title (TCT)
in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified
beneficiaries.
Objection is raised, however, to the manner of fixing the just
compensation, which it is claimed is entrusted to the administrative
authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or
disregard by the owner of the offer of the government to buy his
land-
... the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the landowner,
the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt
of the notice. After the expiration of the above period, the matter is
deemed submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function
addressed to the courts of justice and may not be usurped by any
other branch or official of the government. EPZA v. Dulay
44
resolved a
challenge to several decrees promulgated by President Marcos
providing that the just compensation for property under
expropriation should be either the assessment of the property by the
government or the sworn valuation thereof by the owner, whichever
was lower. In declaring these decrees unconstitutional, the Court held
through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile in a matter which
under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for
the property, following the applicable decrees, its task would be
relegated to simply stating the lower value of the property as
declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the
need to satisfy the due process clause in the taking of private
property is seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However, the strict
application of the decrees during the proceedings would be nothing
short of a mere formality or charade as the court has only to choose
between the valuation of the owner and that of the assessor, and its
choice is always limited to the lower of the two. The court cannot
exercise its discretion or independence in determining what is just or
fair. Even a grade school pupil could substitute for the judge insofar
as the determination of constitutional just compensation is
concerned.
x x x
In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor decrees,
still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to
appoint commissioners for such purpose.
This time, we answer in the affirmative.
x x x
It is violative of due process to deny the owner the opportunity to
prove that the valuation in the tax documents is unfair or wrong. And
it is repulsive to the basic concepts of justice and fairness to allow the
haphazard work of a minor bureaucrat or clerk to absolutely prevail
over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been
judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does
not suffer from the arbitrariness that rendered the challenged
decrees constitutionally objectionable. Although the proceedings are
described as summary, the landowner and other interested parties
are nevertheless allowed an opportunity to submit evidence on the
real value of the property. But more importantly, the determination
of the just compensation by the DAR is not by any means final and
conclusive upon the landowner or any other interested party, for
Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to
the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless
accepted by all parties concerned. Otherwise, the courts of justice will
still have the right to review with finality the said determination in the
exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just
compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 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 the LBP, in accordance with the
criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as
the just compensation for the land.
The compensation shall be paid in one of the following modes, at the
option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (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 (24) 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 Asset Privatization Program and other
assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid are
situated;
(ii) Acquisition of shares of stock of government-owned or controlled
corporations or shares of 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 government: Provided, That
the use of these bonds for these purposes will be limited to a certain
percentage of the outstanding balance of the financial instruments;
Provided, further, That the PARC shall determine the 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.
The contention of the petitioners in G.R. No. 79777 is that the above
provision is unconstitutional insofar as it requires the owners of the
expropriated properties to accept just compensation therefor in less
than money, which is the only medium of payment allowed. In
support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of
the property expropriated is entitled to a just compensation, which
should be neither more nor less, whenever it is possible to make the
assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation
.
45
(Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,
46
this Court held:
It is well-settled that just compensation means the equivalent for the
value of the property at the time of its taking. Anything beyond that is
more, and anything short of that is less, than just compensation. It
means a fair and full equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain would accrue to the
expropriating entity. The market value of the land taken is the just
compensation to which the owner of condemned property is entitled,
the market value being that sum of money which a person desirous,
but not compelled to buy, and an owner, willing, but not compelled
to sell, would agree on as a price to be given and received for such
property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject
has been derived, the weight of authority is also to the effect that just
compensation for property expropriated is payable only in money and
not otherwise. Thus
The medium of payment of compensation is ready money or cash.
The condemnor cannot compel the owner to accept anything but
money, nor can the owner compel or require the condemnor to pay
him on any other basis than the value of the property in money at the
time and in the manner prescribed by the Constitution and the
statutes. When the power of eminent domain is resorted to, there
must be a standard medium of payment, binding upon both parties,
and the law has fixed that standard as money in cash.
47
(Emphasis
supplied.)
Part cash and deferred payments are not and cannot, in the nature of
things, be regarded as a reliable and constant standard of
compensation.
48

"Just compensation" for property taken by condemnation means a
fair equivalent in money, which must be paid at least within a
reasonable time after the taking, and it is not within the power of the
Legislature to substitute for such payment future obligations, bonds,
or other valuable advantage.
49
(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for
the payment of just compensation is money and no other. And so,
conformably, has just compensation been paid in the past solely in
that medium. However, we do not deal here with the traditional
excercise of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively limited area
is sought to be taken by the State from its owner for a specific and
perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands
whenever found and of whatever kind as long as they are in excess of
the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular
community or of a small segment of the population but of the entire
Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the
whole territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the vision
and the sacrifice of the present generation of Filipinos. Generations
yet to come are as involved in this program as we are today, although
hopefully only as beneficiaries of a richer and more fulfilling life we
will guarantee to them tomorrow through our thoughtfulness today.
And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms,
calling for "a just distribution" among the farmers of lands that have
heretofore been the prison of their dreams but can now become the
key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will
be tremendous. Considering the vast areas of land subject to
expropriation under the laws before us, we estimate that hundreds of
billions of pesos will be needed, far more indeed than the amount of
P50 billion initially appropriated, which is already staggering as it is by
our present standards. Such amount is in fact not even fully available
at this time.
We assume that the framers of the Constitution were aware of this
difficulty when they called for agrarian reform as a top priority
project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also
intended that the just compensation would have to be paid not in the
orthodox way but a less conventional if more practical method. There
can be no doubt that they were aware of the financial limitations of
the government and had no illusions that there would be enough
money to pay in cash and in full for the lands they wanted to be
distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided
for by the CARP Law, particularly the payment of the balance (if the
owner cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of value. We may
also suppose that what they had in mind was a similar scheme of
payment as that prescribed in P.D. No. 27, which was the law in force
at the time they deliberated on the new Charter and with which they
presumably agreed in principle.
The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just compensation
as applied to the comprehensive agrarian reform program being
contemplated. There was the suggestion to "fine tune" the
requirement to suit the demands of the project even as it was also
felt that they should "leave it to Congress" to determine how
payment should be made to the landowner and reimbursement
required from the farmer-beneficiaries. Such innovations as
"progressive compensation" and "State-subsidized compensation"
were also proposed. In the end, however, no special definition of the
just compensation for the lands to be expropriated was reached by
the Commission.
50

On the other hand, there is nothing in the records either that
militates against the assumptions we are making of the general
sentiments and intention of the members on the content and manner
of the payment to be made to the landowner in the light of the
magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content
and manner of the just compensation provided for in the afore-
quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of
pragmatism has influenced our decision on this issue, but after all this
Court is not a cloistered institution removed from the realities and
demands of society or oblivious to the need for its enhancement. The
Court is as acutely anxious as the rest of our people to see the goal of
agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these disappointing
decades. We are aware that invalidation of the said section will result
in the nullification of the entire program, killing the farmer's hopes
even as they approach realization and resurrecting the spectre of
discontent and dissent in the restless countryside. That is not in our
view the intention of the Constitution, and that is not what we shall
decree today.
Accepting the theory that payment of the just compensation is not
always required to be made fully in money, we find further that the
proportion of cash payment to the other things of value constituting
the total payment, as determined on the basis of the areas of the
lands expropriated, is not unduly oppressive upon the landowner. It is
noted that the smaller the land, the bigger the payment in money,
primarily because the small landowner will be needing it more than
the big landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at
any time." The other modes, which are likewise available to the
landowner at his option, are also not unreasonable because payment
is made in shares of stock, LBP bonds, other properties or assets, tax
credits, and other things of value equivalent to the amount of just
compensation.
Admittedly, the compensation contemplated in the law will cause the
landowners, big and small, not a little inconvenience. As already
remarked, this cannot be avoided. Nevertheless, it is devoutly hoped
that these countrymen of ours, conscious as we know they are of the
need for their forebearance and even sacrifice, will not begrudge us
their indispensable share in the attainment of the ideal of agrarian
reform. Otherwise, our pursuit of this elusive goal will be like the
quest for the Holy Grail.
The complaint against the effects of non-registration of the land
under E.O. No. 229 does not seem to be viable any more as it appears
that Section 4 of the said Order has been superseded by Section 14 of
the CARP Law. This repeats the requisites of registration as embodied
in the earlier measure but does not provide, as the latter did, that in
case of failure or refusal to register the land, the valuation thereof
shall be that given by the provincial or city assessor for tax purposes.
On the contrary, the CARP Law says that the just compensation shall
be ascertained on the basis of the factors mentioned in its Section 17
and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of
his property even before actual payment to him in full of just
compensation, in contravention of a well- accepted principle of
eminent domain.
The recognized rule, indeed, is that title to the property expropriated
shall pass from the owner to the expropriator only upon full payment
of the just compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings
does not vest the condemnor until the judgment fixing just
compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain
Act, or the commissioner's report under the Local Improvement Act,
is filed.
51

... although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in
the owner until payment is actually made.
52
(Emphasis supplied.)
In Kennedy v. Indianapolis,
53
the US Supreme Court cited several
cases holding that title to property does not pass to the condemnor
until just compensation had actually been made. In fact, the decisions
appear to be uniformly to this effect. As early as 1838, in Rubottom v.
McLure,
54
it was held that "actual payment to the owner of the
condemned property was a condition precedent to the investment of
the title to the property in the State" albeit "not to the appropriation
of it to public use." In Rexford v. Knight,
55
the Court of Appeals of
New York said that the construction upon the statutes was that the
fee did not vest in the State until the payment of the compensation
although the authority to enter upon and appropriate the land was
complete prior to the payment. Kennedy further said that "both on
principle and authority the rule is ... that the right to enter on and use
the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the
title does not pass from the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus
and Paredes,
56
that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is paid
... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of
tenant-farmer as October 21, 1972 and declared that he shall "be
deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually
issued to him unless and until he had become a full-fledged member
of a duly recognized farmers' cooperative." It was understood,
however, that full payment of the just compensation also had to be
made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the
said decree, after proof of full-fledged membership in the farmers'
cooperatives and full payment of just compensation. Hence, it was
also perfectly proper for the Order to also provide in its Section 2 that
the "lease rentals paid to the landowner by the farmer- beneficiary
after October 21, 1972 (pending transfer of ownership after full
payment of just compensation), shall be considered as advance
payment for the land."
The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the DAR
of the compensation in cash or LBP bonds with an accessible bank.
Until then, title also remains with the landowner.
57
No outright
change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process
by arbitrarily transferring title before the land is fully paid for must
also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-
farmer under P.D. No. 27, as recognized under E.O. No. 228, are
retained by him even now under R.A. No. 6657. This should counter-
balance the express provision in Section 6 of the said law that "the
landowners whose lands have been covered by Presidential Decree
No. 27 shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of
the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R.
No. 78742 that the appeal filed by the petitioners with the Office of
the President has already been resolved. Although we have said that
the doctrine of exhaustion of administrative remedies need not
preclude immediate resort to judicial action, there are factual issues
that have yet to be examined on the administrative level, especially
the claim that the petitioners are not covered by LOI 474 because
they do not own other agricultural lands than the subjects of their
petition.
Obviously, the Court cannot resolve these issues. In any event,
assuming that the petitioners have not yet exercised their retention
rights, if any, under P.D. No. 27, the Court holds that they are entitled
to the new retention rights provided for by R.A. No. 6657, which in
fact are on the whole more liberal than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases
have been the subject of bitter attack from those who point to the
shortcomings of these measures and ask that they be scrapped
entirely. To be sure, these enactments are less than perfect; indeed,
they should be continuously re-examined and rehoned, that they may
be sharper instruments for the better protection of the farmer's
rights. But we have to start somewhere. In the pursuit of agrarian
reform, we do not tread on familiar ground but grope on terrain
fraught with pitfalls and expected difficulties. This is inevitable. The
CARP Law is not a tried and tested project. On the contrary, to use
Justice Holmes's words, "it is an experiment, as all life is an
experiment," and so we learn as we venture forward, and, if
necessary, by our own mistakes. We cannot expect perfection
although we should strive for it by all means. Meantime, we struggle
as best we can in freeing the farmer from the iron shackles that have
unconscionably, and for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the
comprehensive agrarian reform program are removed, to clear the
way for the true freedom of the farmer. We may now glimpse the day
he will be released not only from want but also from the exploitation
and disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the
farm on which he toils will be his farm. It will be his portion of the
Mother Earth that will give him not only the staff of life but also the
joy of living. And where once it bred for him only deep despair, now
can he see in it the fruition of his hopes for a more fulfilling future.
Now at last can he banish from his small plot of earth his insecurities
and dark resentments and "rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and
229 are SUSTAINED against all the constitutional objections raised in
the herein petitions.
2. Title to all expropriated properties shall be transferred to the State
only upon full payment of compensation to their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D. No.
27 are retained and recognized.
4. Landowners who were unable to exercise their rights of retention
under P.D. No. 27 shall enjoy the retention rights granted by R.A. No.
6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.
[G.R. No. 127876. December 17, 1999]
ROXAS & CO., INC., petitioner, vs. THE HONORABLE COURT OF
APPEALS, DEPARTMENT OF AGRARIAN REFORM, SECRETARY OF
AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV,
MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS
and DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, respondents.
D E C I S I O N
PUNO, J.:
This case involves three (3) haciendas in Nasugbu, Batangas owned by
petitioner and the validity of the acquisition of these haciendas by the
government under Republic Act No. 6657, the Comprehensive
Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered
owner of three haciendas, namely, Haciendas Palico, Banilad and
Caylaway, all located in the Municipality of Nasugbu,
Batangas. Hacienda Palico is 1,024 hectares in area and is registered
under Transfer Certificate of Title (TCT) No. 985. This land is covered
by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and
0354. Hacienda Banilad is 1,050 hectares in area, registered under
TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and
0390. Hacienda Caylaway is 867.4571 hectares in area and is
registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency of then
President Corazon C. Aquino. In February 1986, President Aquino
issued Proclamation No. 3 promulgating a Provisional Constitution. As
head of the provisional government, the President exercised
legislative power until a legislature is elected and convened under a
new Constitution.
[1]
In the exercise of this legislative power, the
President signed on July 22, 1987, Proclamation No. 131 instituting a
Comprehensive Agrarian Reform Program and Executive Order No.
229 providing the mechanisms necessary to initially implement the
program.
On July 27, 1987, the Congress of the Philippines formally convened
and took over legislative power from the President.
[2]
This Congress
passed Republic Act No. 6657, the Comprehensive Agrarian Reform
Law (CARL) of 1988. The Act was signed by the President on June 10,
1988 and took effect on June 15, 1988.
Before the laws effectivity, on May 6, 1988, petitioner filed with
respondent DAR a voluntary offer to sell Hacienda Caylaway pursuant
to the provisions of E.O. No. 229. Haciendas Palico and Banilad were
later placed under compulsory acquisition by respondent DAR in
accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent
Municipal Agrarian Reform Officer (MARO) of Nasugbu, Batangas,
sent a notice entitled Invitation to Parties to petitioner. The
Invitation was addressed to Jaime Pimentel, Hda. Administrator,
Hda. Palico.
[3]
Therein, the MARO invited petitioner to a conference
on October 6, 1989 at the DAR office in Nasugbu to discuss the results
of the DAR investigation of Hacienda Palico, which was scheduled for
compulsory acquisition this year under the Comprehensive Agrarian
Reform Program.
[4]

On October 25, 1989, the MARO completed three (3) Investigation
Reports after investigation and ocular inspection of the Hacienda. In
the first Report, the MARO found that 270 hectares under Tax
Declaration Nos. 465, 466, 468 and 470 were flat to undulating (0-8%
slope) and actually occupied and cultivated by 34 tillers of
sugarcane.
[5]
In the second Report, the MARO identified as flat to
undulating approximately 339 hectares under Tax Declaration No.
0234 which also had several actual occupants and tillers of
sugarcane;
[6]
while in the third Report, the MARO found
approximately 75 hectares under Tax Declaration No. 0354 as flat to
undulating with 33 actual occupants and tillers also of sugarcane.
[7]

On October 27, 1989, a Summary Investigation Report was
submitted and signed jointly by the MARO, representatives of the
Barangay Agrarian Reform Committee (BARC) and Land Bank of the
Philippines (LBP), and by the Provincial Agrarian Reform Officer
(PARO). The Report recommended that 333.0800 hectares of
Hacienda Palico be subject to compulsory acquisition at a value of
P6,807,622.20.
[8]
The following day, October 28, 1989, two (2) more
Summary Investigation Reports were submitted by the same officers
and representatives. They recommended that 270.0876 hectares and
75.3800 hectares be placed under compulsory acquisition at a
compensation of P8,109,739.00 and P2,188,195.47, respectively.
[9]

On December 12, 1989, respondent DAR through then Department
Secretary Miriam D. Santiago sent a Notice of Acquisition to
petitioner. The Notice was addressed as follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.
[10]

Petitioner was informed that 1,023.999 hectares of its land in
Hacienda Palico were subject to immediate acquisition and
distribution by the government under the CARL; that based on the
DARs valuation criteria, the government was offering compensation
of P3.4 million for 333.0800 hectares; that whether this offer was to
be accepted or rejected, petitioner was to inform the Bureau of Land
Acquisition and Distribution (BLAD) of the DAR; that in case of
petitioners rejection or failure to reply within thirty days, respondent
DAR shall conduct summary administrative proceedings with notice to
petitioner to determine just compensation for the land; that if
petitioner accepts respondent DARs offer, or upon deposit of the
compensation with an accessible bank if it rejects the same, the DAR
shall take immediate possession of the land.
[11]

Almost two years later, on September 26, 1991, the DAR Regional
Director sent to the LBP Land Valuation Manager three (3) separate
Memoranda entitled Request to Open Trust Account. Each
Memoranda requested that a trust account representing the
valuation of three portions of Hacienda Palico be opened in favor of
the petitioner in view of the latters rejection of its offered value.
[12]

Meanwhile in a letter dated May 4, 1993, petitioner applied with the
DAR for conversion of Haciendas Palico and Banilad from agricultural
to non-agricultural lands under the provisions of the CARL.
[13]
On July
14, 1993, petitioner sent a letter to the DAR Regional Director
reiterating its request for conversion of the two haciendas.
[14]

Despite petitioners application for conversion, respondent DAR
proceeded with the acquisition of the two Haciendas. The LBP trust
accounts as compensation for Hacienda Palico were replaced by
respondent DAR with cash and LBP bonds.
[15]
On October 22, 1993,
from the mother title of TCT No. 985 of the Hacienda, respondent
DAR registered Certificate of Land Ownership Award (CLOA) No.
6654. On October 30, 1993, CLOAs were distributed to farmer
beneficiaries.
[16]

Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of
Nasugbu, Batangas, sent a notice to petitioner addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas
[17]

The MARO informed Pimentel that Hacienda Banilad was subject to
compulsory acquisition under the CARL; that should petitioner wish to
avail of the other schemes such as Voluntary Offer to Sell or
Voluntary Land Transfer, respondent DAR was willing to provide
assistance thereto.
[18]

On September 18, 1989, the MARO sent an Invitation to Parties
again to Pimentel inviting the latter to attend a conference on
September 21, 1989 at the MARO Office in Nasugbu to discuss the
results of the MAROs investigation over Hacienda Banilad.
[19]

On September 21, 1989, the same day the conference was held, the
MARO submitted two (2) Reports. In his first Report, he found that
approximately 709 hectares of land under Tax Declaration Nos. 0237
and 0236 were flat to undulating (0-8% slope). On this area were
discovered 162 actual occupants and tillers of sugarcane.
[20]
In the
second Report, it was found that approximately 235 hectares under
Tax Declaration No. 0390 were flat to undulating, on which were 92
actual occupants and tillers of sugarcane.
[21]

The results of these Reports were discussed at the
conference. Present in the conference were representatives of the
prospective farmer beneficiaries, the BARC, the LBP, and Jaime
Pimentel on behalf of the landowner.
[22]
After the meeting, on the
same day, September 21, 1989, a Summary Investigation Report was
submitted jointly by the MARO, representatives of the BARC, LBP, and
the PARO. They recommended that after ocular inspection of the
property, 234.6498 hectares under Tax Declaration No. 0390 be
subject to compulsory acquisition and distribution by CLOA.
[23]
The
following day, September 22, 1989, a second Summary Investigation
was submitted by the same officers. They recommended that
737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be
likewise placed under compulsory acquisition for distribution.
[24]

On December 12, 1989, respondent DAR, through the Department
Secretary, sent to petitioner two (2) separate Notices of Acquisition
over Hacienda Banilad. These Notices were sent on the same day as
the Notice of Acquisition over Hacienda Palico. Unlike the Notice
over Hacienda Palico, however, the Notices over Hacienda Banilad
were addressed to:
Roxas y Cia. Limited
7
th
Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila.
[25]

Respondent DAR offered petitioner compensation of P15,108,995.52
for 729.4190 hectares and P4,428,496.00 for 234.6498 hectares.
[26]

On September 26, 1991, the DAR Regional Director sent to the LBP
Land Valuation Manager a Request to Open Trust Account in
petitioners name as compensation for 234.6493 hectares of
Hacienda Banilad.
[27]
A second Request to Open Trust Account was
sent on November 18, 1991 over 723.4130 hectares of said
Hacienda.
[28]

On December 18, 1991, the LBP certified that the amounts
of P4,428,496.40 and P21,234,468.78 in cash and LBP bonds had been
earmarked as compensation for petitioners land in Hacienda
Banilad.
[29]

On May 4, 1993, petitioner applied for conversion of both Haciendas
Palico and Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the
government on May 6, 1988 before the effectivity of the CARL. The
Hacienda has a total area of 867.4571 hectares and is covered by four
(4) titlesTCT Nos. T-44662, T-44663, T-44664 and T-44665. On
January 12, 1989, respondent DAR, through the Regional Director for
Region IV, sent to petitioner two (2) separate Resolutions accepting
petitioners voluntary offer to sell Hacienda Caylaway, particularly
TCT Nos. T-44664 and T-44663.
[30]
The Resolutions were addressed to:
Roxas & Company, Inc.
7
th
Flr. Cacho- Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M.
[31]

On September 4, 1990, the DAR Regional Director issued two
separate Memoranda to the LBP Regional Manager requesting for the
valuation of the land under TCT Nos. T-44664 and T-44663.
[32]
On the
same day, respondent DAR, through the Regional Director, sent to
petitioner a Notice of Acquisition over 241.6777 hectares under TCT
No. T-44664 and 533.8180 hectares under TCT No. T-44663.
[33]
Like
the Resolutions of Acceptance, the Notice of Acquisition was
addressed to petitioner at its office in Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its President,
Eduardo J. Roxas, sent a letter to the Secretary of respondent DAR
withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan
of Nasugbu, Batangas allegedly authorized the reclassification of
Hacienda Caylaway from agricultural to non-agricultural. As a result,
petitioner informed respondent DAR that it was applying for
conversion of Hacienda Caylaway from agricultural to other uses.
[34]

In a letter dated September 28, 1992, respondent DAR Secretary
informed petitioner that a reclassification of the land would not
exempt it from agrarian reform. Respondent Secretary also denied
petitioners withdrawal of the VOS on the ground that withdrawal
could only be based on specific grounds such as unsuitability of the
soil for agriculture, or if the slope of the land is over 18 degrees and
that the land is undeveloped.
[35]

Despite the denial of the VOS withdrawal of Hacienda Caylaway, on
May 11, 1993, petitioner filed its application for conversion of both
Haciendas Palico and Banilad.
[36]
On July 14, 1993, petitioner, through
its President, Eduardo Roxas, reiterated its request to withdraw the
VOS over Hacienda Caylaway in light of the following:
1) Certification issued by Conrado I. Gonzales, Officer-in-
Charge, Department of Agriculture, Region 4, 4
th
Floor, ATI (BA) Bldg.,
Diliman, Quezon City dated March 1, 1993 stating that the lands
subject of referenced titles are not feasible and economically sound
for further agricultural development.
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas
approving the Zoning Ordinance reclassifying areas covered by the
referenced titles to non-agricultural which was enacted after
extensive consultation with government agencies, including [the
Department of Agrarian Reform], and the requisite public hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas
dated March 8, 1993 approving the Zoning Ordinance enacted by the
Municipality of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of
the Municipal Planning & Development, Coordinator and Deputized
Zoning Administrator addressed to Mrs. Alicia P. Logarta advising that
the Municipality of Nasugbu, Batangas has no objection to the
conversion of the lands subject of referenced titles to non-
agricultural.
[37]

On August 24, 1993, petitioner instituted Case No. N-0017-96-46 (BA)
with respondent DAR Adjudication Board (DARAB) praying for the
cancellation of the CLOAs issued by respondent DAR in the name of
several persons. Petitioner alleged that the Municipality of Nasugbu,
where the haciendas are located, had been declared a tourist zone,
that the land is not suitable for agricultural production, and that the
Sangguniang Bayan of Nasugbu had reclassified the land to non-
agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that
the case involved the prejudicial question of whether the property
was subject to agrarian reform, hence, this question should be
submitted to the Office of the Secretary of Agrarian Reform for
determination.
[38]

On October 29, 1993, petitioner filed with the Court of Appeals CA-
G.R. SP No. 32484. It questioned the expropriation of its properties
under the CARL and the denial of due process in the acquisition of its
landholdings.
Meanwhile, the petition for conversion of the three haciendas was
denied by the MARO on November 8, 1993.
Petitioners petition was dismissed by the Court of Appeals on April
28, 1994.
[39]
Petitioner moved for reconsideration but the motion was
denied on January 17, 1997 by respondent court.
[40]

Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONERS CAUSE OF ACTION IS PREMATURE FOR FAILURE
TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT
ILLEGALITY OF THE RESPONDENTS ACTS, THE IRREPARABLE DAMAGE
CAUSED BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A PLAIN,
SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF
LAWALL OF WHICH ARE EXCEPTIONS TO THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONERS LANDHOLDINGS ARE SUBJECT TO COVERAGE
UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW OF
THE UNDISPUTED FACT THAT PETITIONERS LANDHOLDINGS HAVE
BEEN CONVERTED TO NON-AGRICULTURAL USES BY PRESIDENTIAL
PROCLAMATION NO. 1520 WHICH DECLARED THE MUNICIPALITY OF
NASUGBU, BATANGAS AS A TOURIST ZONE, AND THE ZONING
ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING
CERTAIN PORTIONS OF PETITIONERS LANDHOLDINGS AS NON-
AGRICULTURAL, BOTH OF WHICH PLACE SAID LANDHOLDINGS
OUTSIDE THE SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST
ENTITLE PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY
RESPONDENT DAR.
C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR
VOID FOR FAILURE TO OBSERVE DUE PROCESS, CONSIDERING THAT
RESPONDENTS BLATANTLY DISREGARDED THE PROCEDURE FOR THE
ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE
PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE PETITIONER
AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE
ACQUIRED.
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND
ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST
COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID
JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY STRIPPED
OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOAS TO
ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A. 6657.
[41]

The assigned errors involve three (3) principal issues: (1) whether this
Court can take cognizance of this petition despite petitioners failure
to exhaust administrative remedies; (2) whether the acquisition
proceedings over the three haciendas were valid and in accordance
with law; and (3) assuming the haciendas may be reclassified from
agricultural to non-agricultural, whether this court has the power to
rule on this issue.
I. Exhaustion of Administrative Remedies.

In its first assigned error, petitioner claims that respondent Court of
Appeals gravely erred in finding that petitioner failed to exhaust
administrative remedies. As a general rule, before a party may be
allowed to invoke the jurisdiction of the courts of justice, he is
expected to have exhausted all means of administrative redress. This
is not absolute, however. There are instances when judicial action
may be resorted to immediately. Among these exceptions are: (1)
when the question raised is purely legal; (2) when the administrative
body is in estoppel; (3) when the act complained of is patently illegal;
(4) when there is urgent need for judicial intervention; (5) when the
respondent acted in disregard of due process; (6) when the
respondent is a department secretary whose acts, as an alter ego of
the President, bear the implied or assumed approval of the latter; (7)
when irreparable damage will be suffered; (8) when there is no other
plain, speedy and adequate remedy; (9) when strong public interest is
involved; (10) when the subject of the controversy is private land; and
(11) in quo warranto proceedings.
[42]

Petitioner rightly sought immediate redress in the courts. There was
a violation of its rights and to require it to exhaust administrative
remedies before the DAR itself was not a plain, speedy and adequate
remedy.
Respondent DAR issued Certificates of Land Ownership Award
(CLOAs) to farmer beneficiaries over portions of petitioners land
without just compensation to petitioner. A Certificate of Land
Ownership Award (CLOA) is evidence of ownership of land by a
beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law
of 1988.
[43]
Before this may be awarded to a farmer beneficiary, the
land must first be acquired by the State from the landowner and
ownership transferred to the former. The transfer of possession and
ownership of the land to the government are conditioned upon
thereceipt by the landowner of the corresponding payment or
deposit by the DAR of the compensation with an accessible
bank. Until then, title remains with the landowner.
[44]
There was no
receipt by petitioner of any compensation for any of the lands
acquired by the government.
The kind of compensation to be paid the landowner is also
specific. The law provides that the deposit must be made only in
cash or LBP bonds.
[45]
Respondent DARs opening of trust account
deposits in petitioners name with the Land Bank of the Philippines
does not constitute payment under the law. Trust account deposits
are not cash or LBP bonds. The replacement of the trust account with
cash or LBP bonds did not ipso facto cure the lack of compensation;
for essentially, the determination of this compensation was marred
by lack of due process. In fact, in the entire acquisition proceedings,
respondent DAR disregarded the basic requirements of administrative
due process. Under these circumstances, the issuance of the CLOAs
to farmer beneficiaries necessitated immediate judicial action on the
part of the petitioner.
II. The Validity of the Acquisition Proceedings Over the Haciendas.

Petititioners allegation of lack of due process goes into the validity of
the acquisition proceedings themselves. Before we rule on this
matter, however, there is need to lay down the procedure in the
acquisition of private lands under the provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657

Republic Act No. 6657, the Comprehensive Agrarian Reform Law of
1988 (CARL), provides for two (2) modes of acquisition of private
land: compulsory and voluntary. The procedure for the compulsory
acquisition of private lands is set forth in Section 16 of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. --. For purposes
of acquisition of private lands, the following procedures shall be
followed:
a) After having identified the land, the landowners and the
beneficiaries, the DAR shall send its notice to acquire the land to the
owners thereof, by personal delivery or registered mail, and post
the same in a conspicuous place in the municipal building and
barangay hall of the place where the property is located. Said notice
shall contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17, 18, and other
pertinent provisions hereof.
b) Within thirty (30) days from the date of receipt of written
notice by personal delivery or registered mail, the landowner, his
administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.
c) If the landowner accepts the offer of the DAR, the LBP shall pay
the landowner the purchase price of the land within thirty (30) days
after he executes and delivers a deed of transfer in favor of the
Government and surrenders the Certificate of Title and other
muniments of title.
d) In case of rejection or failure to reply, the DAR shall conduct
summary administrative proceedings to determine the compensation
for the land requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from receipt of the notice. After the
expiration of the above period, the matter is deemed submitted for
decision. The DAR shall decide the case within thirty (30) days after it
is submitted for decision.
e) Upon receipt by the landowner of the corresponding payment,
or, in case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act, the
DAR shall take immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of Title (TCT)
in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified
beneficiaries.
f) Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just
compensation.
In the compulsory acquisition of private lands, the landholding, the
landowners and the farmer beneficiaries must first be
identified. After identification, the DAR shall send a Notice of
Acquisition to the landowner, by personal delivery or registered mail,
and post it in a conspicuous place in the municipal building and
barangay hall of the place where the property is located. Within
thirty days from receipt of the Notice of Acquisition, the landowner,
his administrator or representative shall inform the DAR of his
acceptance or rejection of the offer. If the landowner accepts, he
executes and delivers a deed of transfer in favor of the government
and surrenders the certificate of title. Within thirty days from the
execution of the deed of transfer, the Land Bank of the Philippines
(LBP) pays the owner the purchase price. If the landowner rejects the
DARs offer or fails to make a reply, the DAR conducts summary
administrative proceedings to determine just compensation for the
land. The landowner, the LBP representative and other interested
parties may submit evidence on just compensation within fifteen days
from notice. Within thirty days from submission, the DAR shall decide
the case and inform the owner of its decision and the amount of just
compensation. Upon receipt by the owner of the corresponding
payment, or, in case of rejection or lack of response from the latter,
the DAR shall deposit the compensation in cash or in LBP bonds with
an accessible bank. The DAR shall immediately take possession of the
land and cause the issuance of a transfer certificate of title in the
name of the Republic of the Philippines. The land shall then be
redistributed to the farmer beneficiaries. Any party may question the
decision of the DAR in the regular courts for final determination of
just compensation.
The DAR has made compulsory acquisition the priority mode of land
acquisition to hasten the implementation of the Comprehensive
Agrarian Reform Program (CARP).
[46]
Under Section 16 of the CARL,
the first step in compulsory acquisition is the identification of the
land, the landowners and the beneficiaries. However, the law is
silent on how the identification process must be made. To fill in this
gap, the DAR issued on July 26, 1989 Administrative Order No. 12,
Series of 1989, which set the operating procedure in the
identification of such lands. The procedure is as follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the assistance of the
pertinent Barangay Agrarian Reform Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered under the
CARP in his area of responsibility. The masterlist shall include such
information as required under the attached CARP Masterlist Form
which shall include the name of the landowner, landholding area,
TCT/OCT number, and tax declaration number.
2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title
(OCT/TCT) or landholding covered under Phase I and II of the CARP
except those for which the landowners have already filed applications
to avail of other modes of land acquisition. A case folder shall contain
the following duly accomplished forms:
a) CARP CA Form 1MARO Investigation Report
b) CARP CA Form 2-- Summary Investigation Report of Findings and
Evaluation
c) CARP CA Form 3Applicants Information Sheet
d) CARP CA Form 4Beneficiaries Undertaking
e) CARP CA Form 5Transmittal Report to the PARO
The MARO/ BARC shall certify that all information contained in the
above-mentioned forms have been examined and verified by him and
that the same are true and correct.
3. Send a Notice of Coverage and a letter of invitation to
a conference/ meeting to the landowner covered by the Compulsory
Case Acquisition Folder. Invitations to the said conference/ meeting
shall also be sent to the prospective farmer-beneficiaries, the BARC
representative(s), the Land Bank of the Philippines (LBP)
representative, and other interested parties to discuss the inputs to
the valuation of the property. He shall discuss the MARO/ BARC
investigation report and solicit the views, objection, agreements or
suggestions of the participants thereon. The landowner shall also
be asked to indicate his retention area. The minutes of the meeting
shall be signed by all participants in the conference and shall form
an integral part of the CACF.
4. Submit all completed case folders to the Provincial Agrarian
Reform Officer (PARO).
B. The PARO shall:
1. Ensure that the individual case folders are forwarded to him by his
MAROs.
2. Immediately upon receipt of a case folder, compute the valuation
of the land in accordance with A.O. No. 6, Series of 1988.
[47]
The
valuation worksheet and the related CACF valuation forms shall be
duly certified correct by the PARO and all the personnel who
participated in the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO
through ocular inspection and verification of the property. This
ocular inspection and verification shall be mandatory when the
computed value exceeds 500,000 per estate.
4. Upon determination of the valuation, forward the case folder,
together with the duly accomplished valuation forms and his
recommendations, to the Central Office. The LBP representative and
the MARO concerned shall be furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau of Land
Acquisition and Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from the PARO,
review, evaluate and determine the final land valuation of the
property covered by the case folder. A summary review and
evaluation report shall be prepared and duly certified by the BLAD
Director and the personnel directly participating in the review and
final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized
representative, a Notice of Acquisition (CARP CA Form 8) for the
subject property. Serve the Notice to the landowner personally or
through registered mail within three days from its approval. The
Notice shall include, among others, the area subject of compulsory
acquisition, and the amount of just compensation offered by DAR.
3. Should the landowner accept the DARs offered value, the BLAD
shall prepare and submit to the Secretary for approval the Order of
Acquisition. However, in case of rejection or non-reply, the DAR
Adjudication Board (DARAB) shall conduct a summary administrative
hearing to determine just compensation, in accordance with the
procedures provided under Administrative Order No. 13, Series of
1989. Immediately upon receipt of the DARABs decision on just
compensation, the BLAD shall prepare and submit to the Secretary for
approval the required Order of Acquisition.
4. Upon the landowners receipt of payment, in case of acceptance,
or upon deposit of payment in the designated bank, in case of
rejection or non-response, the Secretary shall immediately direct the
pertinent Register of Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. Once the property is transferred, the DAR, through the
PARO, shall take possession of the land for redistribution to qualified
beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the
Municipal Agrarian Reform Officer (MARO) keep an updated master
list of all agricultural lands under the CARP in his area of responsibility
containing all the required information. The MARO prepares a
Compulsory Acquisition Case Folder (CACF) for each title covered by
CARP. The MARO then sends the landowner a Notice of Coverage
and a letter of invitation to a conference/ meeting over the land
covered by the CACF. He also sends invitations to the prospective
farmer-beneficiaries, the representatives of the Barangay Agrarian
Reform Committee (BARC), the Land Bank of the Philippines (LBP) and
other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of
the parties. At the meeting, the landowner is asked to indicate his
retention area.
The MARO shall make a report of the case to the Provincial Agrarian
Reform Officer (PARO) who shall complete the valuation of the land.
Ocular inspection and verification of the property by the PARO shall
be mandatory when the computed value of the estate
exceeds P500,000.00. Upon determination of the valuation, the
PARO shall forward all papers together with his recommendation to
the Central Office of the DAR. The DAR Central Office, specifically,
the Bureau of Land Acquisition and Distribution (BLAD), shall review,
evaluate and determine the final land valuation of the property. The
BLAD shall prepare, on the signature of the Secretary or his duly
authorized representative, a Notice of Acquisition for the subject
property.
[48]
From this point, the provisions of Section 16 of R.A. 6657
then apply.
[49]

For a valid implementation of the CAR Program, two notices are
required: (1) the Notice of Coverage and letter of invitation to a
preliminary conference sent to the landowner, the representatives of
the BARC, LBP, farmer beneficiaries and other interested parties
pursuant to DAR A. O. No. 12, Series of 1989; and (2) the Notice of
Acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and
the letter of invitation to the conference, and its actual conduct
cannot be understated. They are steps designed to comply with the
requirements of administrative due process. The implementation of
the CARL is an exercise of the States police power and the power of
eminent domain. To the extent that the CARL prescribes retention
limits to the landowners, there is an exercise of police power for the
regulation of private property in accordance with the
Constitution.
[50]
But where, to carry out such regulation, the owners
are deprived of lands they own in excess of the maximum area
allowed, there is also a taking under the power of eminent
domain. The taking contemplated is not a mere limitation of the use
of the land. What is required is the surrender of the title to and
physical possession of the said excess and all beneficial rights accruing
to the owner in favor of the farmer beneficiary.
[51]
The Bill of Rights
provides that *n+o person shall be deprived of life, liberty or property
without due process of law.
[52]
The CARL was not intended to take
away property without due process of law.
[53]
The exercise of the
power of eminent domain requires that due process be observed in
the taking of private property.
DAR A. O. No. 12, Series of 1989, from whence the Notice of Coverage
first sprung, was amended in 1990 by DAR A.O. No. 9, Series of 1990
and in 1993 by DAR A.O. No. 1, Series of 1993. The Notice of
Coverage and letter of invitation to the conference meeting were
expanded and amplified in said amendments.
DAR A. O. No. 9, Series of 1990 entitled Revised Rules Governing the
Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell and
Compulsory Acquisition Pursuant to R. A. 6657, requires that:
B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including
supporting documents.
2. Gathers basic ownership documents listed under 1.a or 1.b above
and prepares corresponding VOCF/ CACF by landowner/ landholding.
3. Notifies/ invites the landowner and representatives of the LBP,
DENR, BARC and prospective beneficiaries of the schedule of ocular
inspection of the property at least one week in advance.
4. MARO/ LAND BANK FIELD OFFICE/ BARC
a) Identify the land and landowner, and determine the
suitability for agriculture and productivity of the land and jointly
prepare Field Investigation Report (CARP Form No. 2), including the
Land Use Map of the property.
b) Interview applicants and assist them in the preparation of
the Application For Potential CARP Beneficiary (CARP Form No. 3).
c) Screen prospective farmer-beneficiaries and for those found
qualified, cause the signing of the respective Application to Purchase
and Farmers Undertaking (CARP Form No. 4).
d) Complete the Field Investigation Report based on the result
of the ocular inspection/ investigation of the property and documents
submitted. See to it that Field Investigation Report is duly
accomplished and signed by all concerned.
5. MARO
a) Assists the DENR Survey Party in the conduct of a boundary/
subdivision survey delineating areas covered by OLT, retention,
subject of VOS, CA (by phases, if possible), infrastructures, etc.,
whichever is applicable.
b) Sends Notice of Coverage (CARP Form No. 5) to landowner
concerned or his duly authorized representative inviting him for a
conference.
c) Sends Invitation Letter (CARP Form No. 6) for a conference/
public hearing to prospective farmer-beneficiaries, landowner,
representatives of BARC, LBP, DENR, DA, NGOs, farmers
organizations and other interested parties to discuss the following
matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/ recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/ public
hearing to be guided by CARP Form No. 7.
e) Forwards the completed VOCF/CACF to the Provincial
Agrarian Reform Office (PARO) using CARP Form No. 8 (Transmittal
Memo to PARO).
x x x.
DAR A. O. No. 9, Series of 1990 lays down the rules on both Voluntary
Offer to Sell (VOS) and Compulsory Acquisition (CA) transactions
involving lands enumerated under Section 7 of the CARL.
[54]
In both
VOS and CA transactions, the MARO prepares the Voluntary Offer to
Sell Case Folder (VOCF) and the Compulsory Acquisition Case Folder
(CACF), as the case may be, over a particular landholding. The MARO
notifies the landowner as well as representatives of the LBP, BARC
and prospective beneficiaries of the date of the ocular inspection of
the property at least one week before the scheduled date and invites
them to attend the same. The MARO, LBP or BARC conducts the
ocular inspection and investigation by identifying the land and
landowner, determining the suitability of the land for agriculture and
productivity, interviewing and screening prospective farmer
beneficiaries. Based on its investigation, the MARO, LBP or BARC
prepares the Field Investigation Report which shall be signed by all
parties concerned. In addition to the field investigation, a boundary
or subdivision survey of the land may also be conducted by a Survey
Party of the Department of Environment and Natural Resources
(DENR) to be assisted by the MARO.
[55]
This survey shall delineate the
areas covered by Operation Land Transfer (OLT), areas retained by
the landowner, areas with infrastructure, and the areas subject to
VOS and CA. After the survey and field investigation, the MARO
sends a Notice of Coverage to the landowner or his duly authorized
representative inviting him to a conference or public hearing with the
farmer beneficiaries, representatives of the BARC, LBP, DENR,
Department of Agriculture (DA), non-government organizations,
farmers organizations and other interested parties. At the public
hearing, the parties shall discuss the results of the field investigation,
issues that may be raised in relation thereto, inputs to the valuation
of the subject landholding, and other comments and
recommendations by all parties concerned. The Minutes of the
conference/ public hearing shall form part of the VOCF or CACF which
files shall be forwarded by the MARO to the PARO. The PARO
reviews, evaluates and validates the Field Investigation Report and
other documents in the VOCF/ CACF. He then forwards the records to
the RARO for another review.
DAR A. O. No. 9, Series of 1990 was amended by DAR A. O. No. 1,
Series of 1993. DAR A. O. No. 1, Series of 1993 provided, among
others, that:
IV. OPERATING PROCEDURES:
"Steps Responsible Activity
Forms/
Agency/Unit
Document

(Requirements)
A. Identification and
Documentation
x x x
5 DARMO Issues Notice of Coverage to
LO CARP
by personal delivery
with proof of Form No.2
service, or by
registered mail with
return card, informing
him that his
property is now under
CARP cover-
age and for LO to
select his retention
area, if he desires to
avail of his right
of retention; and at
the same time in-
vites him to join the
field investigation
to be conducted on
his property which
should be scheduled
at least two weeks
in advance of said
notice.
A copy of said
Notice CARP
shall be posted for at
least Form No.17
one week on the
bulletin
board of the
municipal and barangay
halls where the
property is located.
LGU office concerned
notifies DAR
about compliance
with posting requirement
thru return
indorsement on CARP Form
No. 17.
6 DARMO Sends notice to the
LBP, CARP
BARC,
DENR Form No.3
representatives
and
prospective ARBs of
the schedule of
the field investigation
to be conducted
on the subject
property.
7 DARMO With the participation
of CARP
BARC the LO, representatives
of Form No.4
LBP the LBP, BARC,
DENR Land Use
DENR and prospective
ARBs, Map
Local Office conducts the investigation
on subject property
to identify the landholding,
determines its
suitability and productivity;
and jointly prepares
the Field Investigation
Report (FIR) and Land
Use Map. However,
the field investigation
shall proceed even if the
LO, the
representatives of the DENR and
prospective ARBs are
not available provided,
they were given due
notice of the time and date
of the investigation to
be conducted. Similarly,
if the LBP
representative is not available or could
not come on the
scheduled date, the field
investigation shall
also be conducted, after which
the duly
accomplished Part I of CARP Form No. 4
shall be forwarded to
the LBP representative for
validation. If he
agrees to the ocular inspection report
of DAR, he signs the
FIR (Part I) and accomplishes
Part II thereof.
In the event that
there is a difference or variance
between the findings
of the DAR and the LBP as
to the propriety of
covering the land under CARP,
whether in whole or
in part, on the issue of suitability
to agriculture, degree
of development or slope, and
on issues affecting
idle lands, the conflict shall be
resolved by a
composite team of DAR, LBP, DENR
and DA which shall
jointly conduct further investigation
thereon. The team
shall submit its report of findings
which shall be binding
to both DAR and LBP, pursuant
to Joint
Memorandum Circular of the DAR, LBP, DENR
and DA dated 27
January 1992.
8 DARMO Screens prospective
ARBS CARP
BARC and causes the signing
of Form No. 5
the Application
of
Purchase and
Farmers' Undertaking (APFU).
9 DARMO Furnishes a copy of
the CARP
duly accomplished FIR
to Form No.
the landowner by
personal 4
delivery with proof of
service or registered
mail with return card
and posts a copy thereof
for at least one week
on the bulletin board of the
municipal and
barangay halls where the property
is located.
LGU office
concerned CARP
Notifies DAR
about Form No.
compliance with
posting 17
requirement thru
return endorsement on
CARP Form No. 17.
B. Land Survey
10 DARMO Conducts perimeter
or Perimeter
And/or segregation
survey or
DENR delineating areas
covered Segregation
Local Office by OLT,
"uncarpable Survey Plan
areas such as 18%
slope and above,
unproductive/
unsuitable to agriculture,
retention,
infrastructure. In case of
segregation or
subdivision survey, the
plan shall be
approved by DENR-LMS.
C. Review and
Completion of Documents.
11 DARMO Forwards
VOCF/CACF CARP
to
DARPO. Form No.

6
x x x."
DAR A. O. No. 1, Series of 1993, modified the identification process
and increased the number of government agencies involved in the
identification and delineation of the land subject to
acquisition.
[56]
This time, the Notice of Coverage is sent to the
landowner before the conduct of the field investigation and the
sending must comply with specific requirements. Representatives of
the DAR Municipal Office (DARMO) must send the Notice of Coverage
to the landowner by personal delivery with proof of service, or by
registered mail with return card, informing him that his property is
under CARP coverage and that if he desires to avail of his right of
retention, he may choose which area he shall retain. The Notice of
Coverage shall also invite the landowner to attend the field
investigation to be scheduled at least two weeks from notice. The
field investigation is for the purpose of identifying the landholding
and determining its suitability for agriculture and its productivity. A
copy of the Notice of Coverage shall be posted for at least one week
on the bulletin board of the municipal and barangay halls where the
property is located. The date of the field investigation shall also be
sent by the DAR Municipal Office to representatives of the LBP, BARC,
DENR and prospective farmer beneficiaries. The field investigation
shall be conducted on the date set with the participation of the
landowner and the various representatives. If the landowner and
other representatives are absent, the field investigation shall
proceed, provided they were duly notified thereof. Should there be a
variance between the findings of the DAR and the LBP as to whether
the land be placed under agrarian reform, the lands suitability to
agriculture, the degree or development of the slope, etc., the conflict
shall be resolved by a composite team of the DAR, LBP, DENR and DA
which shall jointly conduct further investigation. The teams findings
shall be binding on both DAR and LBP. After the field investigation,
the DAR Municipal Office shall prepare the Field Investigation Report
and Land Use Map, a copy of which shall be furnished the landowner
by personal delivery with proof of service or registered mail with
return card. Another copy of the Report and Map shall likewise be
posted for at least one week in the municipal or barangay halls where
the property is located.
Clearly then, the notice requirements under the CARL are not
confined to the Notice of Acquisition set forth in Section 16 of the
law. They also include the Notice of Coverage first laid down in DAR
A. O. No. 12, Series of 1989 and subsequently amended in DAR A. O.
No. 9, Series of 1990 and DAR A. O. No. 1, Series of 1993. This Notice
of Coverage does not merely notify the landowner that his property
shall be placed under CARP and that he is entitled to exercise his
retention right; it also notifies him, pursuant to DAR A. O. No. 9,
Series of 1990, that a public hearing shall be conducted where he and
representatives of the concerned sectors of society may attend to
discuss the results of the field investigation, the land valuation and
other pertinent matters. Under DAR A. O. No. 1, Series of 1993, the
Notice of Coverage also informs the landowner that a field
investigation of his landholding shall be conducted where he and the
other representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and Banilad

In the case at bar, respondent DAR claims that it, through MARO
Leopoldo C. Lejano, sent a letter of invitation entitled Invitation to
Parties dated September 29, 1989 to petitioner corporation, through
Jaime Pimentel, the administrator of Hacienda Palico.
[57]
The
invitation was received on the same day it was sent as indicated by a
signature and the date received at the bottom left corner of said
invitation. With regard to Hacienda Banilad, respondent DAR claims
that Jaime Pimentel, administrator also of Hacienda Banilad, was
notified and sent an invitation to the conference. Pimentel actually
attended the conference on September 21, 1989 and signed the
Minutes of the meeting on behalf of petitioner corporation.
[58]
The
Minutes was also signed by the representatives of the BARC, the LBP
and farmer beneficiaries.
[59]
No letter of invitation was sent or
conference meeting held with respect to Hacienda Caylaway because
it was subject to a Voluntary Offer to Sell to respondent DAR.
[60]

When respondent DAR, through the Municipal Agrarian Reform
Officer (MARO), sent to the various parties the Notice of Coverage
and invitation to the conference, DAR A. O. No. 12, Series of 1989 was
already in effect more than a month earlier. The Operating
Procedure in DAR Administrative Order No. 12 does not specify how
notices or letters of invitation shall be sent to the landowner, the
representatives of the BARC, the LBP, the farmer beneficiaries and
other interested parties. The procedure in the sending of these
notices is important to comply with the requisites of due process
especially when the owner, as in this case, is a juridical
entity. Petitioner is a domestic corporation,
[61]
and therefore, has a
personality separate and distinct from its shareholders, officers and
employees.
The Notice of Acquisition in Section 16 of the CARL is required to be
sent to the landowner by personal delivery or registered
mail. Whether the landowner be a natural or juridical person to
whose address the Notice may be sent by personal delivery or
registered mail, the law does not distinguish. The DAR
Administrative Orders also do not distinguish. In the proceedings
before the DAR, the distinction between natural and juridical persons
in the sending of notices may be found in the Revised Rules of
Procedure of the DAR Adjudication Board (DARAB). Service of
pleadings before the DARAB is governed by Section 6, Rule V of the
DARAB Revised Rules of Procedure. Notices and pleadings are served
on private domestic corporations or partnerships in the following
manner:
Sec. 6. Service upon Private Domestic Corporation or Partnership.-- If
the defendant is a corporation organized under the laws of the
Philippines or a partnership duly registered, service may be made on
the president, manager, secretary, cashier, agent, or any of its
directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in Section 13,
Rule 14 provides:
Sec. 13. Service upon private domestic corporation or partnership.
If the defendant is a corporation organized under the laws of the
Philippines or a partnership duly registered, service may be made on
the president, manager, secretary, cashier, agent, or any of its
directors.
Summonses, pleadings and notices in cases against a private domestic
corporation before the DARAB and the regular courts are served on
the president, manager, secretary, cashier, agent or any of its
directors. These persons are those through whom the private
domestic corporation or partnership is capable of action.
[62]

Jaime Pimentel is not the president, manager, secretary, cashier or
director of petitioner corporation. Is he, as administrator of the two
Haciendas, considered an agent of the corporation?
The purpose of all rules for service of process on a corporation is to
make it reasonably certain that the corporation will receive prompt
and proper notice in an action against it.
[63]
Service must be made on
a representative so integrated with the corporation as to make it a
priori supposable that he will realize his responsibilities and know
what he should do with any legal papers served on him,
[64]
and bring
home to the corporation notice of the filing of the
action.
[65]
Petitioners evidence does not show the official duties of
Jaime Pimentel as administrator of petitioners haciendas. The
evidence does not indicate whether Pimentels duties is so integrated
with the corporation that he would immediately realize his
responsibilities and know what he should do with any legal papers
served on him. At the time the notices were sent and the preliminary
conference conducted, petitioners principal place of business was
listed in respondent DARs records as Soriano Bldg., Plaza Cervantes,
Manila,
[66]
and 7
th
Flr. Cacho-Gonzales Bldg., 101 Aguirre St.,
Makati, Metro Manila.
[67]
Pimentel did not hold office at the
principal place of business of petitioner. Neither did he exercise his
functions in Plaza Cervantes, Manila nor in Cacho-Gonzales Bldg.,
Makati, Metro Manila. He performed his official functions and
actually resided in the haciendas in Nasugbu, Batangas, a place over
two hundred kilometers away from Metro Manila.
Curiously, respondent DAR had information of the address of
petitioners principal place of business. The Notices of Acquisition
over Haciendas Palico and Banilad were addressed to petitioner at its
offices in Manila and Makati. These Notices were sent barely three to
four months after Pimentel was notified of the preliminary
conference.
[68]
Why respondent DAR chose to notify Pimentel instead
of the officers of the corporation was not explained by the said
respondent.
Nevertheless, assuming that Pimentel was an agent of petitioner
corporation, and the notices and letters of invitation were validly
served on petitioner through him, there is no showing that Pimentel
himself was duly authorized to attend the conference meeting with
the MARO, BARC and LBP representatives and farmer beneficiaries
for purposes of compulsory acquisition of petitioners
landholdings. Even respondent DARs evidence does not indicate this
authority. On the contrary, petitioner claims that it had no
knowledge of the letter-invitation, hence, could not have given
Pimentel the authority to bind it to whatever matters were discussed
or agreed upon by the parties at the preliminary conference or public
hearing. Notably, one year after Pimentel was informed of the
preliminary conference, DAR A.O. No. 9, Series of 1990 was issued
and this required that the Notice of Coverage must be sent to the
landowner concerned or his duly authorized representative.
[69]

Assuming further that petitioner was duly notified of the CARP
coverage of its haciendas, the areas found actually subject to CARP
were not properly identified before they were taken over by
respondent DAR. Respondents insist that the lands were identified
because they are all registered property and the technical description
in their respective titles specifies their metes and
bounds. Respondents admit at the same time, however, that not all
areas in the haciendas were placed under the comprehensive
agrarian reform program invariably by reason of elevation or
character or use of the land.
[70]
The acquisition of the landholdings did
not cover the entire expanse of the two haciendas, but only portions
thereof. Hacienda Palico has an area of 1,024 hectares and only
688.7576 hectares were targetted for acquisition. Hacienda Banilad
has an area of 1,050 hectares but only 964.0688 hectares were
subject to CARP. The haciendas are not entirely agricultural lands. In
fact, the various tax declarations over the haciendas describe the
landholdings as sugarland, and forest, sugarland, pasture land,
horticulture and woodland.
[71]

Under Section 16 of the CARL, the sending of the Notice of
Acquisition specifically requires that the land subject to land reform
be first identified. The two haciendas in the instant case cover vast
tracts of land. Before Notices of Acquisition were sent to petitioner,
however, the exact areas of the landholdings were not properly
segregated and delineated. Upon receipt of this notice, therefore,
petitioner corporation had no idea which portions of its estate were
subject to compulsory acquisition, which portions it could rightfully
retain, whether these retained portions were compact or
contiguous, and which portions were excluded from CARP
coverage. Even respondent DARs evidence does not show that
petitioner, through its duly authorized representative, was notified of
any ocular inspection and investigation that was to be conducted by
respondent DAR. Neither is there proof that petitioner was given the
opportunity to at least choose and identify its retention area in those
portions to be acquired compulsorily. The right of retention and how
this right is exercised, is guaranteed in Section 6 of the CARL, viz:
Section 6. Retention Limits.x x x.
The right to choose the area to be retained, which shall be compact
or contiguous, shall pertain to the landowner; Provided, however,
That in case the area selected for retention by the landowner is
tenanted, the tenant shall have the option to choose whether to
remain therein or be a beneficiary in the same or another agricultural
land with similar or comparable features. In case the tenant chooses
to remain in the retained area, he shall be considered a leaseholder
and shall lose his right to be a beneficiary under this Act. In case the
tenant chooses to be a beneficiary in another agricultural land, he
loses his right as a leaseholder to the land retained by the
landowner. The tenant must exercise this option within a period of
one (1) year from the time the landowner manifests his choice of the
area for retention.
Under the law, a landowner may retain not more than five hectares
out of the total area of his agricultural land subject to CARP. The right
to choose the area to be retained, which shall be compact or
contiguous, pertains to the landowner. If the area chosen for
retention is tenanted, the tenant shall have the option to choose
whether to remain on the portion or be a beneficiary in the same or
another agricultural land with similar or comparable features.
C. The Voluntary Acquisition of Hacienda Caylaway

Petitioner was also left in the dark with respect to Hacienda
Caylaway, which was the subject of a Voluntary Offer to Sell
(VOS). The VOS in the instant case was made on May 6,
1988,
[72]
before the effectivity of R.A. 6657 on June 15, 1988. VOS
transactions were first governed by DAR Administrative Order No. 19,
series of 1989,
[73]
and under this order, all VOS filed before June 15,
1988 shall be heard and processed in accordance with the procedure
provided for in Executive Order No. 229, thus:
III. All VOS transactions which are now pending before the DAR
and for which no payment has been made shall be subject to the
notice and hearing requirements provided in Administrative Order
No. 12, Series of 1989, dated 26 July 1989, Section II, Subsection A,
paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL,
shall be heard and processed in accordance with the procedure
provided for in Executive Order No. 229.
"x x x."
Section 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. The government shall purchase all
agricultural lands it deems productive and suitable to farmer
cultivation voluntarily offered for sale to it at a valuation determined
in accordance with Section 6. Such transaction shall be exempt from
the payment of capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the
identification of private land as set forth in DAR A. O. No. 12, Series of
1989. Section 5 of E.O. 229 merely reiterates the procedure
of acquisition in Section 16, R.A. 6657. In other words, the E.O. is
silent as to the procedure for the identification of the land, the notice
of coverage and the preliminary conference with the landowner,
representatives of the BARC, the LBP and farmer beneficiaries. Does
this mean that these requirements may be dispensed with regard to
VOS filed before June 15, 1988? The answer is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires
that the land, landowner and beneficiaries of the land subject to
agrarian reform be identified before the notice of acquisition should
be issued.
[74]
Hacienda Caylaway was voluntarily offered for sale in
1989. The Hacienda has a total area of 867.4571 hectares and is
covered by four (4) titles. In two separate Resolutions both dated
January 12, 1989, respondent DAR, through the Regional Director,
formally accepted the VOS over two of these four titles.
[75]
The land
covered by the two titles has an area of 855.5257 hectares, but only
648.8544 hectares thereof fell within the coverage of R.A.
6657.
[76]
Petitioner claims it does not know where these portions are
located.
Respondent DAR, on the other hand, avers that surveys on the land
covered by the four titles were conducted in 1989, and that
petitioner, as landowner, was not denied participation therein. The
results of the survey and the land valuation summary report,
however, do not indicate whether notices to attend the same were
actually sent to and received by petitioner or its duly authorized
representative.
[77]
To reiterate, Executive Order No. 229 does not lay
down the operating procedure, much less the notice requirements,
before the VOS is accepted by respondent DAR. Notice to the
landowner, however, cannot be dispensed with. It is part of
administrative due process and is an essential requisite to enable the
landowner himself to exercise, at the very least, his right of retention
guaranteed under the CARL.
III. The Conversion of the three Haciendas.

It is petitioners claim that the three haciendas are not subject to
agrarian reform because they have been declared for tourism, not
agricultural purposes.
[78]
In 1975, then President Marcos issued
Proclamation No. 1520 declaring the municipality of Nasugbu,
Batangas a tourist zone. Lands in Nasugbu, including the subject
haciendas, were allegedly reclassified as non-agricultural 13 years
before the effectivity of R. A. No. 6657.
[79]
In 1993, the Regional
Director for Region IV of the Department of Agriculture certified that
the haciendas are not feasible and sound for agricultural
development.
[80]
On March 20, 1992, pursuant to Proclamation No.
1520, the Sangguniang Bayan of Nasugbu, Batangas adopted
Resolution No. 19 reclassifying certain areas of Nasugbu as non-
agricultural.
[81]
This Resolution approved Municipal Ordinance No. 19,
Series of 1992, the Revised Zoning Ordinance of Nasugbu
[82]
which
zoning ordinance was based on a Land Use Plan for Planning Areas for
New Development allegedly prepared by the University of the
Philippines.
[83]
Resolution No. 19 of the Sangguniang Bayan was
approved by the Sangguniang Panlalawigan of Batangas on March 8,
1993.
[84]

Petitioner claims that Proclamation No. 1520 was also upheld by
respondent DAR in 1991 when it approved conversion of 1,827
hectares in Nasugbu into a tourist area known as the Batulao Resort
Complex, and 13.52 hectares in Barangay Caylaway as within the
potential tourist belt.
[85]
Petitioner presents evidence before us that
these areas are adjacent to the haciendas subject of this petition,
hence, the haciendas should likewise be converted. Petitioner urges
this Court to take cognizance of the conversion proceedings and rule
accordingly.
[86]

We do not agree. Respondent DARs failure to observe due process
in the acquisition of petitioners landholdings does not ipso
facto give this Court the power to adjudicate over petitioners
application for conversion of its haciendas from agricultural to non-
agricultural. The agency charged with the mandate of approving or
disapproving applications for conversion is the DAR.
At the time petitioner filed its application for conversion, the Rules of
Procedure governing the processing and approval of applications for
land use conversion was the DAR A. O. No. 2, Series of 1990. Under
this A. O., the application for conversion is filed with the MARO where
the property is located. The MARO reviews the application and its
supporting documents and conducts field investigation and ocular
inspection of the property. The findings of the MARO are subject to
review and evaluation by the Provincial Agrarian Reform Officer
(PARO). The PARO may conduct further field investigation and submit
a supplemental report together with his recommendation to the
Regional Agrarian Reform Officer (RARO) who shall review the
same. For lands less than five hectares, the RARO shall approve or
disapprove applications for conversion. For lands exceeding five
hectares, the RARO shall evaluate the PARO Report and forward the
records and his report to the Undersecretary for Legal
Affairs. Applications over areas exceeding fifty hectares are approved
or disapproved by the Secretary of Agrarian Reform.
The DARs mandate over applications for conversion was first laid
down in Section 4 (j) and Section 5 (1) of Executive Order No. 129-A,
Series of 1987 and reiterated in the CARL and Memorandum Circular
No. 54, Series of 1993 of the Office of the President. The DARs
jurisdiction over applications for conversion is provided as follows:
"A. The Department of Agrarian Reform (DAR) is mandated to
approve or disapprove applications for conversion, restructuring or
readjustment of agricultural lands into non-agricultural uses,
pursuant to Section 4 (j) of Executive Order No. 129-A, Series of 1987.
"B. Section 5 (1) of E.O. 129-A, Series of 1987, vests in the DAR,
exclusive authority to approve or disapprove applications for
conversion of agricultural lands for residential, commercial, industrial
and other land uses.
"C Section 65 of R. A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, likewise empowers the
DAR to authorize under certain conditions, the conversion of
agricultural lands.
"D. Section 4 of Memorandum Circular No. 54, Series of 1993 of
the Office of the President, provides that action on applications for
land use conversion on individual landholdings shall remain as the
responsibility of the DAR, which shall utilize as its primary reference,
documents on the comprehensive land use plans and accompanying
ordinances passed upon and approved by the local government units
concerned, together with the National Land Use Policy, pursuant to R.
A. No. 6657 and E. O. No. 129-A.
[87]

Applications for conversion were initially governed by DAR A. O. No.
1, Series of 1990 entitled Revised Rules and Regulations Governing
Conversion of Private Agricultural Lands and Non-Agricultural Uses,
and DAR A. O. No. 2, Series of 1990 entitled Rules of Procedure
Governing the Processing and Approval of Applications for Land Use
Conversion. These A.O.s and other implementing guidelines,
including Presidential issuances and national policies related to land
use conversion have been consolidated in DAR A. O. No. 07, Series of
1997. Under this recent issuance, the guiding principle in land use
conversion is:
to preserve prime agricultural lands for food production while, at the
same time, recognizing the need of the other sectors of society
(housing, industry and commerce) for land, when coinciding with the
objectives of the Comprehensive Agrarian Reform Law to promote
social justice, industrialization and the optimum use of land as a
national resource for public welfare.
[88]

Land Use refers to the manner of utilization of land, including its
allocation, development and management. Land Use Conversion
refers to the act or process of changing the current use of a piece of
agricultural land into some other use as approved by the DAR.
[89]
The
conversion of agricultural land to uses other than agricultural requires
field investigation and conferences with the occupants of the
land. They involve factual findings and highly technical matters
within the special training and expertise of the DAR. DAR A. O. No. 7,
Series of 1997 lays down with specificity how the DAR must go about
its task. This time, the field investigation is not conducted by the
MARO but by a special task force, known as the Center for Land Use
Policy Planning and Implementation (CLUPPI- DAR Central
Office). The procedure is that once an application for conversion is
filed, the CLUPPI prepares the Notice of Posting. The MARO only
posts the notice and thereafter issues a certificate to the fact of
posting. The CLUPPI conducts the field investigation and dialogues
with the applicants and the farmer beneficiaries to ascertain the
information necessary for the processing of the application. The
Chairman of the CLUPPI deliberates on the merits of the investigation
report and recommends the appropriate action. This
recommendation is transmitted to the Regional Director, thru the
Undersecretary, or Secretary of Agrarian Reform. Applications
involving more than fifty hectares are approved or disapproved by
the Secretary. The procedure does not end with the Secretary,
however. The Order provides that the decision of the Secretary may
be appealed to the Office of the President or the Court of Appeals, as
the case may be, viz:
Appeal from the decision of the Undersecretary shall be made to the
Secretary, and from the Secretary to the Office of the President or
the Court of Appeals as the case may be. The mode of appeal/
motion for reconsideration, and the appeal fee, from Undersecretary
to the Office of the Secretary shall be the same as that of the Regional
Director to the Office of the Secretary.
[90]

Indeed, the doctrine of primary jurisdiction does not warrant a court
to arrogate unto itself authority to resolve a controversy the
jurisdiction over which is initially lodged with an administrative
body of special competence.
[91]
Respondent DAR is in a better
position to resolve petitioners application for conversion, being
primarily the agency possessing the necessary expertise on the
matter. The power to determine whether Haciendas Palico, Banilad
and Caylaway are non-agricultural, hence, exempt from the
coverage of the CARL lies with the DAR, not with this Court.
Finally, we stress that the failure of respondent DAR to comply with
the requisites of due process in the acquisition proceedings does not
give this Court the power to nullify the CLOAs already issued to the
farmer beneficiaries. To assume the power is to short-circuit the
administrative process, which has yet to run its regular
course. Respondent DAR must be given the chance to correct its
procedural lapses in the acquisition proceedings. In Hacienda Palico
alone, CLOA's were issued to 177 farmer beneficiaries in
1993.
[92]
Since then until the present, these farmers have been
cultivating their lands.
[93]
It goes against the basic precepts of
justice, fairness and equity to deprive these people, through no fault
of their own, of the land they till. Anyhow, the farmer beneficiaries
hold the property in trust for the rightful owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the acquisition
proceedings over the three haciendas are nullified for respondent
DAR's failure to observe due process therein. In accordance with the
guidelines set forth in this decision and the applicable administrative
procedure, the case is hereby remanded to respondent DAR for
proper acquisition proceedings and determination of petitioner's
application for conversion.
SO ORDERED.
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.
D E C I S I O N
VELASCO, JR., J.:
"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 tenant-
farmers 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 title
14
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-
01
16
and Resolution No. 2006-34-01
17
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.
x x x x
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 229
26
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 well-defined 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 FWBs
34
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 or118,391,976.85 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.,"
35
which 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, 1989
38
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. 89-12-2
40
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.
44
After 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.
287910
47
was canceled and TCT No. 292091
48
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 sold
51
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. 310986
53
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. 365800
54
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 pago in 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 answer
61
the petition/protest of the Supervisory
Group. On the other hand, HLIs answer
62
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,
2005
69
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
Coverage
71
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,
75
enjoining 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 Comment
76
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 AMBALA-Noel Mallari faction and leaving Renato Lalic, et al. as
the remaining members of FARM who sought to intervene.
On January 10, 2007, the Supervisory Group
79
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-In-Intervention 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 AMBALA-Mallari-Supervisory Group, the AMBALA-
Galang faction, and the FARM and its 27 members
83
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 Resolution
84
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 PETITIONER-INTERVENOR 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
x x x x
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 vice-chair, 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
non-impairment 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
compliance
103
to 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
academic
114
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
x 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. 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.
x x x x
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 self-executoryand 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, restates
118
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 production-sharing 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 (1989-2005), 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.
x x x x
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 itviolates 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 HLI-to-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.
152
x 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 domain
159
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 Bank
162
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 acts
in this case, the approval by PARC of the HLI proposal for stock
distributionis well-settled in our jurisprudence. In Chavez v.
National Housing Authority,
163
We 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:
x x x x x x x x x
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.
x x x x x x x x x
"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. 89-12-2,
165
and 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 500-hectare 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.
166
On 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
homelots
167
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
non-agricultural 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 SDP-approving 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.
LUZ FARMS, petitioner, vs. THE HONORABLE SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, respondent.

Enrique M. Belo for petitioner.

D E C I S I O N

PARAS, J p:
This is a petition for prohibition with prayer for restraining order
and/or preliminary and permanent injunction against the Honorable
Secretary of the Department of Agrarian Reform for acting without
jurisdiction in enforcing the assailed provisions of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988
and in promulgating the Guidelines and Procedure Implementing
Production and Profit Sharing under R.A. No. 6657, insofar as the
same apply to herein petitioner, and further from performing an act
in violation of the constitutional rights of the petitioner.
As gathered from the records, the factual background of this
case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A.
No. 6657, which includes the raising of livestock, poultry and swine in
its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform
promulgated the Guidelines and Procedures Implementing
Production and Profit Sharing as embodied in Sections 13 and 32 of
R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform
promulgated its Rules and Regulations implementing Section 11 of
R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the
livestock and poultry business and together with others in the same
business allegedly stands to be adversely affected by the
enforcement of Section 3(b), Section 11, Section 13, Section 16(d) and
17 and Section 32 of R.A. No. 6657 otherwise known as
Comprehensive Agrarian Reform Law and of the Guidelines and
Procedures Implementing Production and Profit Sharing under R.A.
No. 6657 promulgated on January 2, 1989 and the Rules and
Regulations Implementing Section 11 thereof as promulgated by the
DAR on January 9, 1989 (Rollo, pp. 2-36).
Hence, this petition praying that aforesaid laws, guidelines and
rules be declared unconstitutional. Meanwhile, it is also prayed that a
writ of preliminary injunction or restraining order be issued enjoining
public respondents from enforcing the same, insofar as they are
made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny,
among others, Luz Farms' prayer for the issuance of a preliminary
injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p.
98).
Later, however, this Court in its Resolution dated August 24, 1989
resolved to grant said Motion for Reconsideration regarding the
injunctive relief, after the filing and approval by this Court of an
injunction bond in the amount of P100,000.00. This Court also gave
due course to the petition and required the parties to file their
respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989
(Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his
Comment to the petition as his Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar
as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and
poultry)" in the definition of "Agricultural, Agricultural Enterprise or
Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private
agricultural lands devoted to commercial, livestock, poultry and swine
raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-
sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian
Reform the authority to summarily determine the just compensation
to be paid for lands covered by the Comprehensive Agrarian Reform
Law.
(e) Section 32 which spells out the production-sharing plan
mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from the
production of such lands are distributed within sixty (60) days of the
end of the fiscal year as compensation to regular and other
farmworkers in such lands over and above the compensation they
currently receive: Provided, That these individuals or entities realize
gross sales in excess of five million pesos per annum unless the DAR,
upon proper application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be distributed to
said regular and other farmworkers within ninety (90) days of the end
of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections
3(b), 11, 13 and 32 of R.A. No. 6657 (the Comprehensive Agrarian
Reform Law of 1988), insofar as the said law includes the raising of
livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance
therewith.
The constitutional provision under consideration reads as
follows:
ARTICLE XIII
xxx xxx xxx
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers,
who are landless, to own directly or collectively the lands they till or,
in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In determining
retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary
land-sharing.
xxx xxx xxx"
Luz Farms contended that it does not seek the nullification of
R.A. 6657 in its entirety. In fact, it acknowledges the correctness of
the decision of this Court in the case of the Association of Small
Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform
(G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that
Congress in enacting the said law has transcended the mandate of the
Constitution, in including land devoted to the raising of livestock,
poultry and swine in its coverage (Rollo, p. 131). Livestock or poultry
raising is not similar to crop or tree farming. Land is not the primary
resource in this undertaking and represents no more than five
percent (5%) of the total investment of commercial livestock and
poultry raisers. Indeed, there are many owners of residential lands all
over the country who use available space in their residence for
commercial livestock and raising purposes, under "contract-growing
arrangements," whereby processing corporations and other
commercial livestock and poultry raisers (Rollo, p. 10). Lands support
the buildings and other amenities attendant to the raising of animals
and birds. The use of land is incidental to but not the principal factor
or consideration in productivity in this industry. Including backyard
raisers, about 80% of those in commercial livestock and poultry
production occupy five hectares or less. The remaining 20% are
mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock
and poultry raising is embraced in the term "agriculture" and the
inclusion of such enterprise under Section 3(b) of R.A. 6657 is proper.
He cited that Webster's International Dictionary, Second Edition
(1954), defines the following words:
"Agriculture the art or science of cultivating the ground and raising
and harvesting crops, often, including also, feeding, breeding and
management of livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially for
profit.
Farm a plot or tract of land devoted to the raising of domestic or
other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The
primary task in constitutional construction is to ascertain and
thereafter assure the realization of the purpose of the framers in the
adoption of the Constitution (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
Ascertainment of the meaning of the provision of Constitution
begins with the language of the document itself. The words used in
the Constitution are to be given their ordinary meaning except where
technical terms are employed in which case the significance thus
attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions
which are ambiguous or of doubtful meaning, the courts may
consider the debates in the constitutional convention as throwing
light on the intent of the framers of the Constitution. It is true that
the intent of the convention is not controlling by itself, but as its
proceeding was preliminary to the adoption by the people of the
Constitution the understanding of the convention as to what was
meant by the terms of the constitutional provision which was the
subject of the deliberation, goes a long way toward explaining the
understanding of the people when they ratified it (Aquino, Jr. v.
Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional
Commission of 1986 on the meaning of the word "agricultural,"
clearly show that it was never the intention of the framers of the
Constitution to include livestock and poultry industry in the coverage
of the constitutionally-mandated agrarian reform program of the
Government.
The Committee adopted the definition of "agricultural land" as
defined under Section 166 of R.A. 3844, as laud devoted to any
growth, including but not limited to crop lands, saltbeds, fishponds,
idle and abandoned land (Record, CONCOM, August 7, 1986, Vol. III,
p. 11).
The intention of the Committee is to limit the application of the
word "agriculture." Commissioner Jamir proposed to insert the word
"ARABLE" to distinguish this kind of agricultural land from such lands
as commercial and industrial lands and residential properties because
all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because
the Committee contemplated that agricultural lands are limited to
arable and suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record, CONCOM,
August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a
Supreme Court Justice), posed several questions, among others,
quoted as follows:
xxx xxx xxx
"Line 19 refers to genuine reform program founded on the primary
right of farmers and farmworkers. I wonder if it means that leasehold
tenancy is thereby proscribed under this provision because it speaks
of the primary right of farmers and farmworkers to own directly or
collectively the lands they till. As also mentioned by Commissioner
Tadeo, farmworkers include those who work in piggeries and poultry
projects.
I was wondering whether I am wrong in my appreciation that if
somebody puts up a piggery or a poultry project and for that purpose
hires farmworkers therein, these farmworkers will automatically have
the right to own eventually, directly or ultimately or collectively, the
land on which the piggeries and poultry projects were constructed.
(Record, CONCOM, August 2, 1986, p. 618).
xxx xxx xxx
The questions were answered and explained in the statement of
then Commissioner Tadeo, quoted as follows:
xxx xxx xxx
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami
nagkaunawaan. Ipinaaalam ko kay Commissioner Regalado na hindi
namin inilagay ang agricultural worker sa kadahilanang kasama rito
ang piggery, poultry at livestock workers. Ang inilagay namin dito ay
farm worker kaya hindi kasama ang piggery, poultry at livestock
workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A.
6657 which includes "private agricultural lands devoted to
commercial livestock, poultry and swine raising" in the definition of
"commercial farms" is invalid, to the extent that the aforecited agro-
industrial activities are made to be covered by the agrarian reform
program of the State. There is simply no reason to include livestock
and poultry lands in the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the
requirement in Sections 13 and 32 of R.A. 6657 directing "corporate
farms" which include livestock and poultry raisers to execute and
implement "production-sharing plans" (pending final redistribution of
their landholdings) whereby they are called upon to distribute from
three percent (3%) of their gross sales and ten percent (10%) of their
net profits to their workers as additional compensation is
unreasonable for being confiscatory, and therefore violative of due
process (Rollo, p. 21).
It has been established that this Court will assume jurisdiction
over a constitutional question only if it is shown that the essential
requisites of a judicial inquiry into such a question are first satisfied.
Thus, there must be an actual case or controversy involving a conflict
of legal rights susceptible of judicial determination, the constitutional
question must have been opportunely raised by the proper party, and
the resolution of the question is unavoidably necessary to the
decision of the case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v.
Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R.
79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when
confronted with constitutional issues, it will not hesitate to declare a
law or act invalid when it is convinced that this must be done. In
arriving at this conclusion, its only criterion will be the Constitution
and God as its conscience gives it in the light to probe its meaning and
discover its purpose. Personal motives and political considerations
are irrelevancies that cannot influence its decisions. Blandishment is
as ineffectual as intimidation, for all the awesome power of the
Congress and Executive, the Court will not hesitate "to make the
hammer fall heavily," where the acts of these departments, or of any
official, betray the people's will as expressed in the Constitution
(Association of Small Landowners of the Philippines, Inc. v. Secretary
of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico
v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of
its constitutional powers, it becomes the duty of the judiciary to
declare what the other branches of the government had assumed to
do, as void. This is the essence of judicial power conferred by the
Constitution "(I)n one Supreme Court and in such lower courts as may
be established by law" (Art. VIII, Section 1 of the 1935 Constitution;
Article X, Section I of the 1973 Constitution and which was adopted as
part of the Freedom Constitution, and Article VIII, Section 1 of the
1987 Constitution) and which power this Court has exercised in many
instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED.
Sections 3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion
of the raising of livestock, poultry and swine in its coverage as well as
the Implementing Rules and Guidelines promulgated in accordance
therewith, are hereby DECLARED null and void for being
unconstitutional and the writ of preliminary injunction issued is
hereby MADE permanent.
SO ORDERED.
G.R. No. 78517 February 27, 1989
GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO
RICALDE, VICENTE RICALDE and ROLANDO SALAMAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M.
REYES and FE M. REYES,respondents.
Bureau of Agrarian Legal Assistance for petitioners.
Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for
private respondents.

PARAS, J.:
Before us is a petition seeking the reversal of the decision rendered
by the respondent Court of Appeals**on March 3, 1987 affirming the
judgment of the court a quo dated April 29, 1986, the dispositive
portion of the trial court's decision reading as follows;
WHEREFORE, the decision rendered by this Court on November 5,
1982 is hereby reconsidered and a new judgment is hereby rendered:
1. Declaring that Presidential Decree No. 27 is inapplicable to lands
obtained thru the homestead law,
2. Declaring that the four registered co-owners will cultivate and
operate the farmholding themselves as owners thereof; and
3. Ejecting from the land the so-called tenants, namely; Gabino Alita,
Jesus Julian, Sr., Jesus Julian, Jr., Pedro Ricalde, Vicente Ricalde and
Rolando Salamar, as the owners would want to cultivate the
farmholding themselves.
No pronouncement as to costs.
SO ORDERED. (p. 31, Rollo)
The facts are undisputed. The subject matter of the case consists of
two (2) parcels of land, acquired by private respondents'
predecessors-in-interest through homestead patent under the
provisions of Commonwealth Act No. 141. Said lands are situated at
Guilinan, Tungawan, Zamboanga del Sur.
Private respondents herein are desirous of personally cultivating
these lands, but petitioners refuse to vacate, relying on the provisions
of P.D. 27 and P.D. 316 and appurtenant regulations issued by the
then Ministry of Agrarian Reform (DAR for short), now Department of
Agrarian Reform (MAR for short).
On June 18, 1981, private respondents (then plaintiffs), instituted a
complaint against Hon. Conrado Estrella as then Minister of Agrarian
Reform, P.D. Macarambon as Regional Director of MAR Region IX, and
herein petitioners (then defendants) for the declaration of P.D. 27
and all other Decrees, Letters of Instructions and General Orders
issued in connection therewith as inapplicable to homestead lands.
Defendants filed their answer with special and affirmative defenses of
July 8, 1981.
Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to
enjoin the defendants from declaring the lands in litigation under
Operation Land Transfer and from being issued land transfer
certificates to which the defendants filed their opposition dated
August 4, 1982.
On November 5, 1982, the then Court of Agrarian Relations 16th
Regional District, Branch IV, Pagadian City (now Regional Trial Court,
9th Judicial Region, Branch XVIII) rendered its decision dismissing the
said complaint and the motion to enjoin the defendants was denied.
On January 4, 1983, plaintiffs moved to reconsider the Order of
dismissal, to which defendants filed their opposition on January 10,
1983.
Thus, on April 29, 1986, the Regional Trial Court issued the
aforequoted decision prompting defendants to move for a
reconsideration but the same was denied in its Order dated June 6,
1986.
On appeal to the respondent Court of Appeals, the same was
sustained in its judgment rendered on March 3, 1987, thus:
WHEREFORE, finding no reversible error thereof, the decision
appealed from is hereby AFFIRMED.
SO ORDERED. (p. 34, Rollo)
Hence, the present petition for review on certiorari.
The pivotal issue is whether or not lands obtained through
homestead patent are covered by the Agrarian Reform under P.D. 27.
The question certainly calls for a negative answer.
We agree with the petitioners in saying that P.D. 27 decreeing the
emancipation of tenants from the bondage of the soil and
transferring to them ownership of the land they till is a sweeping
social legislation, a remedial measure promulgated pursuant to the
social justice precepts of the Constitution. However, such contention
cannot be invoked to defeat the very purpose of the enactment of
the Public Land Act or Commonwealth Act No. 141. Thus,
The Homestead Act has been enacted for the welfare and protection
of the poor. The law gives a needy citizen a piece of land where he
may build a modest house for himself and family and plant what is
necessary for subsistence and for the satisfaction of life's other
needs. The right of the citizens to their homes and to the things
necessary for their subsistence is as vital as the right to life itself. They
have a right to live with a certain degree of comfort as become
human beings, and the State which looks after the welfare of the
people's happiness is under a duty to safeguard the satisfaction of
this vital right. (Patricio v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the
superiority of the homesteaders' rights over the rights of the tenants
guaranteed by the Agrarian Reform statute. In point is Section 6 of
Article XIII of the 1987 Philippine Constitution which provides:
Section 6. The State shall apply the principles of agrarian reform or
stewardship, whenever applicable in accordance with law, in the
disposition or utilization of other natural resources, including lands of
public domain under lease or concession suitable to agriculture,
subject to prior rights, homestead rights of small settlers, and the
rights of indigenous communities to their ancestral lands.
Additionally, it is worthy of note that the newly promulgated
Comprehensive Agrarian Reform Law of 1988 or Republic Act No.
6657 likewise contains a proviso supporting the inapplicability of P.D.
27 to lands covered by homestead patents like those of the property
in question, reading,
Section 6. Retention Limits. ...
... Provided further, That original homestead grantees or their direct
compulsory heirs who still own the original homestead at the time of
the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead.'
WHEREFORE, premises considered, the decision of the respondent
Court of Appeals sustaining the decision of the Regional Trial Court is
hereby AFFIRMED.
[G.R. No. 103302. August 12, 1993.]

NATALIA REALTY, INC., and ESTATE DEVELOPERS AND INVESTORS
CORP., petitioners, vs. DEPARTMENT OF AGRARIAN REFORM, SEC.
BENJAMIN T. LEONG and DIR. WILFREDO LEANO, DAR-REGION
IV, respondents.

Loni M. Patajo for petitioners.
The Solicitor General for respondents.

SYLLABUS

1. POLITICAL LAW; STATUTORY CONSTRUCTION; A SPECIAL LAW
PREVAILS OVER A GENERAL LAW. The implementing Standards,
Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential
Proclamation No. 1637 referred only to the Lungsod Silangan
Reservation, which makes it a special law. It is a basic tenet in
statutory construction that between a general law and a special law,
the latter prevails (National Power Corporation v. Presiding Judge,
RTC, Br. XXV, G.R. No. 72477, 16 October 1990, 190 SCRA 477).
2. ID.; ADMINISTRATIVE LAW; NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES, JUSTIFIED IN THE CASE AT BAR. Anent
the argument that there was failure to exhaust administrative
remedies in the instant petition, suffice it to say that the issues raised
in the case filed by SAMBA members differ from those of petitioners.
The former involve possession; the latter, the propriety of including
under the operation of CARL lands already converted for residential
use prior to its effectivity. Besides, petitioners were not supposed to
wait until public respondents acted on their letter-protests, this after
sitting it out for almost a year. Given the official indifference, which
under the circumstances could have continued forever, petitioners
had to act to assert and protect their interests. (Rocamora v. RTC-
Cebu, Br. VIII, G.R. No. 65037, 23 November 1988, 167 SCRA 615).
3. CIVIL LAW; LAND REGISTRATION; AGRICULTURAL LAND,
DEFINED; LANDS NOT DEVOTED TO AGRICULTURAL ACTIVITY,
OUTSIDE THE COVERAGE OF 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." (Sec. 3 (c),
R.A. 6657) 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." (Luz Farms v. Secretary
of the Department of Agrarian Reform, G.R. No. 86889, 4 December
1990, 192 SCRA 51, citing Record, CONCOM, 7 August 1986, Vol. III, p.
30) Indeed, lands not devoted to agricultural activity are outside the
coverage of CARL. These include lands previously converted to non-
agricultural uses prior to the effectivity of CARL by government
agencies other than respondent DAR. In its Revised Rules and
Regulations Governing Conversion of Private Agricultural Lands to
Non-Agricultural Uses, (DAR Administrative Order No. 1, Series of
1990), DAR itself defined "agricultural land" thus ". . . Agricultural
land refers to those devoted to agricultural activity as defined in R.A.
6657 and not classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its predecessor
agencies, and not classified in town plans and zoning ordinances as
approved by the Housing and Land Use Regulatory Board (HLURB) and
its preceding competent authorities prior to 15 June 1988 for
residential,commercial or industrial use." 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.

D E C I S I O N

BELLOSILLO, J p:
Are lands already classified for residential, commercial or
industrial use, as approved by the Housing and Land Use Regulatory
Board and its precursor agencies
1
prior to 15 June 1988,
2
covered by
R.A. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1988? This is the pivotal issue in this petition for certiorari
assailing the Notice of Coverage
3
of the Department of Agrarian
Reform over parcels of land already reserved as townsite areas before
the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner
of three (3) contiguous parcels of land located in Banaba, Antipolo,
Rizal, with areas of 120.9793 hectares, 1.3205 hectares and 2.7080
hectares, or a total of 125.0078 hectares, and embraced in Transfer
Certificate of Title No. 31527 of the Register of Deeds of the Province
of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside
20,312 hectares of land located in the Municipalities of Antipolo, San
Mateo and Montalban as townsite areas to absorb the population
overspill in the metropolis which were designated as the Lungsod
Silangan Townsite. The NATALIA properties are situated within the
areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their
properties into low-cost housing subdivisions within the reservation,
petitioner Estate Developers and Investors Corporation (EDIC, for
brevity), as developer of NATALIA properties, applied for and was
granted preliminary approval and locational clearances by the Human
Settlements Regulatory Commission. The necessary permit for Phase I
of the subdivision project, which consisted of 13.2371 hectares, was
issued sometime in 1982;
4
for Phase II, with an area of 80.0000
hectares, on 13 October 1983;
5
and for Phase III, which consisted of
the remaining 31.7707 hectares, on 25 April 1986.
6
Petitioners were
likewise issued development permits
7
after complying with the
requirements. Thus the NATALIA properties later became the
Antipolo Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the
"Comprehensive Agrarian Reform Law of 1988" (CARL, for brevity),
went into effect. Conformably therewith, respondent Department of
Agrarian Reform (DAR, for brevity), through its Municipal Agrarian
Reform Officer, issued on 22 November 1990 a Notice of Coverage on
the undeveloped portions of the Antipolo Hills Subdivision which
consisted of roughly 90.3307 hectares. NATALIA immediately
registered its objection to the Notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the
DAR Region IV Office and twice wrote him requesting the cancellation
of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa
Bundok Antipolo, Inc. (SAMBA, for brevity), filed a complaint against
NATALIA and EDIC before the DAR Regional Adjudicator to restrain
petitioners from developing areas under cultivation by SAMBA
members.
8
The Regional Adjudicator temporarily restrained
petitioners from proceeding with the development of the subdivision.
Petitioners then moved to dismiss the complaint; it was denied.
Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of
Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR
Adjudication Board (DARAB); however, on 16 December 1991 the
DARAB merely remanded the case to the Regional Adjudicator for
further proceedings.
9

In the interim, NATALIA wrote respondent Secretary of Agrarian
Reform reiterating its request to set aside the Notice of Coverage.
Neither respondent Secretary nor respondent Director took action on
the protest-letters, thus compelling petitioners to institute this
proceeding more than a year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to
respondent DAR for including undeveloped portions of the Antipolo
Hills Subdivision within the coverage of the CARL. They argue that
NATALIA properties already ceased to be agricultural lands when they
were included in the areas reserved by presidential fiat for townsite
reservation.
Public respondents through the Office of the Solicitor General
dispute this contention. They maintain that the permits granted
petitioners were not valid and binding because they did not comply
with the implementing Standards, Rules and Regulations of P.D. 957,
otherwise known as "The Subdivision and Condominium Buyers'
Protective Decree," in that no application for conversion of the
NATALIA lands from agricultural to residential was ever filed with the
DAR. In other words, there was no valid conversion. Moreover, public
respondents allege that the instant petition was prematurely filed
because the case instituted by SAMBA against petitioners before the
DAR Regional Adjudicator has not yet terminated. Respondents
conclude, as a consequence, that petitioners failed to fully exhaust
administrative remedies available to them before coming to court.
The petition is impressed with merit. A cursory reading of the
Preliminary Approval and Locational Clearances as well as the
Development Permits granted petitioners for Phases I, II and III of the
Antipolo Hills Subdivision reveals that contrary to the claim of public
respondents, petitioners NATALIA and EDIC did in fact comply with all
the requirements of law.
Petitioners first secured favorable recommendations from the
Lungsod Silangan Development Corporation, the agency tasked to
oversee the implementation of the development of the townsite
reservation, before applying for the necessary permits from the
Human Settlements Regulatory Commission.
10
And, in all permits
granted to petitioners, the Commission stated invariably therein that
the applications were in "conformance"
11
or "conformity"
12
or
"conforming"
13
with the implementing Standards, Rules and
Regulations of P.D. 957. Hence, the argument of public respondents
that not all of the requirements were complied with cannot be
sustained. llcd
As a matter of fact, there was even no need for petitioners to
secure a clearance or prior approval from DAR. The NATALIA
properties were within the areas set aside for the Lungsod Silangan
Reservation. Since Presidential Proclamation No. 1637 created the
townsite reservation for the purpose of providing additional housing
to the burgeoning population of Metro Manila, it in effect converted
for residential use what were erstwhile agricultural lands provided all
requisites were met. And, in the case at bar, there was compliance
with all relevant rules and requirements. Even in their applications for
the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied
with all the requirements prescribed by P.D. 957
The implementing Standards, Rules and Regulations of P.D. 957
applied to all subdivisions and condominiums in general. On the other
hand, Presidential Proclamation No. 1637 referred only to the
Lungsod Silangan Reservation, which makes it a special law. It is a
basic tenet in statutory construction that between a general law and
a special law, the latter prevails.
14

Interestingly, the Office of the Solicitor General does not contest
the conversion of portions of the Antipolo Hills Subdivision which
have already been developed.
15
Of course, this is contrary to its
earlier position that there was no valid conversion. The applications
for the developed and undeveloped portions of subject subdivision
were similarly situated. Consequently, both did not need prior DAR
approval.
We now determine whether such lands are covered by the CARL.
Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless
of tenurial arrangement and commodity produced, all public and
private agricultural lands." As to what constitutes "agricultural land,"
it is referred to as "land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial
or industrial land.
16
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."
17

Based on the foregoing, it is clear that the undeveloped portions
of the Antipolo Hills Subdivision cannot in any language be considered
as "agricultural lands." These lots were intended for residential use.
They ceased to be agricultural lands upon approval of their inclusion
in the Lungsod Silangan Reservation. Even today, the areas in
question continue to be developed as a low-cost housing subdivision,
albeit at a snail's pace. This can readily be gleaned from the fact that
SAMBA members even instituted an action to restrain petitioners
from continuing with such development. The enormity of the
resources needed for developing a subdivision may have delayed its
completion but this does not detract from the fact that these lands
are still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the
coverage of CARL. These include lands previously converted to non-
agricultural uses prior to the effectivity of CARL by government
agencies other than respondent DAR. In its Revised Rules and
Regulations Governing Conversion of Private Agricultural Lands to
Non-Agricultural Uses,
18
DAR itself defined "agricultural land" thus
". . . Agricultural land refers to those devoted to agricultural activity
as defined in R.A. 6657 and not classified as mineral or forest by the
Department of Environment and Natural Resources (DENR) and its
predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory
Board (HLURB) and its preceding competent authorities prior to 15
June 1988 for residential, commercial or industrial use."
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
19
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.
Anent the argument that there was failure to exhaust
administrative remedies in the instant petition, suffice it to say that
the issues raised in the case filed by SAMBA members differ from
those of petitioners. The former involve possession; the latter, the
propriety of including under the operation of CARL lands already
converted for residential use prior to its effectivity.
Besides, petitioners were not supposed to wait until public
respondents acted on their letter-protests, this after sitting it out for
almost a year. Given the official indifference, which under the
circumstances could have continued forever, petitioners had to act to
assert and protect their interests.
20

In fine, we rule for petitioners and hold that public respondents
gravely abused their discretion in issuing the assailed Notice of
Coverage dated 22 November 1990 of lands over which they no
longer have jurisdiction.
WHEREFORE, the Petition for Certiorari is GRANTED. The Notice
of Coverage of 22 November 1990 by virtue of which undeveloped
portions of the Antipolo Hills Subdivision were placed under CARL
coverage is hereby SET ASIDE.
SO ORDERED.
DEPARTMENT OF AGRARIAN G.R. No. 162070
REFORM, represented by SECRETARY
JOSE MARI B. PONCE (OIC), Present:
Petitioner, Davide, C.J.,
Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
- versus - Austria-Martinez,
Corona,
Carpio Morales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario and
Garcia, JJ.
DELIA T. SUTTON, ELLA T.
SUTTON-SOLIMAN and Promulgated:
HARRY T. SUTTON,
Respondents. October 19, 2005
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


DECISION


PUNO, J.:


This is a petition for review filed by the Department of Agrarian
Reform (DAR) of the Decision and Resolution of the Court of Appeals,
dated September 19, 2003 and February 4, 2004, respectively, which
declared DAR Administrative Order (A.O.) No. 9, series of 1993, null
and void for being violative of the Constitution.

The case at bar involves a land in Aroroy, Masbate, inherited by
respondents which has been devoted exclusively to cow and calf
breeding. On October 26, 1987, pursuant to the then existing
agrarian reform program of the government, respondents made a
voluntary offer to sell (VOS)
[1]
their landholdings to petitioner DAR to
avail of certain incentives under the law.

On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657,
also known as the Comprehensive Agrarian Reform Law (CARL) of
1988, took effect. It included in its coverage farms used for raising
livestock, poultry and swine.

On December 4, 1990, in an en banc decision in the case of Luz Farms
v. Secretary of DAR,
[2]
this Court ruled that lands devoted to
livestock and poultry-raising are not included in the definition of
agricultural land. Hence, we declared as unconstitutional certain
provisions of the CARL insofar as they included livestock farms in the
coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR
a formal request to withdraw their VOS as their landholding was
devoted exclusively to cattle-raising and thus exempted from the
coverage of the CARL.
[3]


On December 21, 1992, the Municipal Agrarian Reform Officer of
Aroroy, Masbate, inspected respondents land and found that it was
devoted solely to cattle-raising and breeding. He recommended to
the DAR Secretary that it be exempted from the coverage of the
CARL.

On April 27, 1993, respondents reiterated to petitioner DAR the
withdrawal of their VOS and requested the return of the supporting
papers they submitted in connection therewith.
[4]
Petitioner ignored
their request.

On December 27, 1993, DAR issued A.O. No. 9, series of
1993,
[5]
which provided that only portions of private agricultural lands
used for the raising of livestock, poultry and swine as of June 15, 1988
shall be excluded from the coverage of the CARL. In determining the
area of land to be excluded, the A.O. fixed the following retention
limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of land per 1 head of
animal shall be retained by the landowner), and a ratio of 1.7815
hectares for livestock infrastructure for every 21 heads of cattle shall
likewise be excluded from the operations of the CARL.

On February 4, 1994, respondents wrote the DAR Secretary and
advised him to consider as final and irrevocable the withdrawal of
their VOS as, under the Luz Farms doctrine, their entire landholding is
exempted from the CARL.
[6]


On September 14, 1995, then DAR Secretary Ernesto D. Garilao
issued an Order
[7]
partially granting the application of respondents for
exemption from the coverage of CARL. Applying the retention limits
outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of
respondents land for grazing purposes, and a maximum of 102.5635
hectares for infrastructure. Petitioner ordered the rest of
respondents landholding to be segregated and placed under
Compulsory Acquisition.

Respondents moved for reconsideration. They contend that their
entire landholding should be exempted as it is devoted exclusively to
cattle-raising. Their motion was denied.
[8]
They filed a notice of
appeal
[9]
with the Office of the President assailing: (1) the
reasonableness and validity of DAR A.O. No. 9, s. 1993, which
provided for a ratio between land and livestock in determining the
land area qualified for exclusion from the CARL, and (2) the
constitutionality of DAR A.O. No. 9, s. 1993, in view of the Luz Farms
case which declared cattle-raising lands excluded from the coverage
of agrarian reform.

On October 9, 2001, the Office of the President affirmed the
impugned Order of petitioner DAR.
[10]
It ruled that DAR A.O. No. 9, s.
1993, does not run counter to the Luz Farms case as the A.O.
provided the guidelines to determine whether a certain parcel of land
is being used for cattle-raising. However, the issue on the
constitutionality of the assailed A.O. was left for the determination
of the courts as the sole arbiters of such issue.

On appeal, the Court of Appeals ruled in favor of the
respondents. It declared DAR A.O. No. 9, s. 1993, void for being
contrary to the intent of the 1987 Constitutional Commission to
exclude livestock farms from the land reform program of the
government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order
No. 09, Series of 1993 is herebyDECLARED null and void. The assailed
order of the Office of the President dated 09 October 2001 in so far as
it affirmed the Department of Agrarian Reforms ruling that
petitioners landholding is covered by the agrarian reform program of
the government is REVERSED and SET ASIDE.

SO ORDERED.
[11]

Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR
A.O. No. 9, series of 1993, which prescribes a maximum retention
limit for owners of lands devoted to livestock raising.

Invoking its rule-making power under Section 49 of the CARL,
petitioner submits that it issued DAR A.O. No. 9 to limit the area of
livestock farm that may be retained by a landowner pursuant to its
mandate to place all public and private agricultural lands under the
coverage of agrarian reform. Petitioner also contends that the A.O.
seeks to remedy reports that some unscrupulous landowners have
converted their agricultural farms to livestock farms in order to evade
their coverage in the agrarian reform program.

Petitioners arguments fail to impress.

Administrative agencies are endowed with powers legislative in
nature, i.e., the power to make rules and regulations. They have been
granted by Congress with the authority to issue rules to regulate the
implementation of a law entrusted to them. Delegated rule-making
has become a practical necessity in modern governance due to the
increasing complexity and variety of public functions. However, while
administrative rules and regulations have the force and effect of law,
they are not immune from judicial review.
[12]
They may be properly
challenged before the courts to ensure that they do not violate the
Constitution and no grave abuse of administrative discretion is
committed by the administrative body concerned.

The fundamental rule in administrative law is that, to be valid,
administrative rules and regulations must be issued by authority of a
law and must not contravene the provisions of the
Constitution.
[13]
The rule-making power of an administrative agency
may not be used to abridge the authority given to it by Congress or by
the Constitution. Nor can it be used to enlarge the power of the
administrative agency beyond the scope intended. Constitutional
and statutory provisions control with respect to what rules and
regulations may be promulgated by administrative agencies and the
scope of their regulations.
[14]


In the case at bar, we find that the impugned A.O. is invalid as it
contravenes the Constitution. The A.O. sought to regulate livestock
farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership.
However, the deliberations of the 1987 Constitutional Commission
show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry- raising. The Court clarified
in the Luz Farms case that livestock, swine and poultry-raising are
industrial activities and do not fall within the definition of
agriculture or agricultural activity. The raising of livestock, swine
and poultry is different from crop or tree farming. It is an industrial,
not an agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal
housing structures and facilities, drainage, waterers and blowers,
feedmill with grinders, mixers, conveyors, exhausts and generators,
extensive warehousing facilities for feeds and other supplies, anti-
pollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.
[15]


Clearly, petitioner DAR has no power to regulate livestock farms
which have been exempted by the Constitution from the coverage
of agrarian reform. It has exceeded its power in issuing the assailed
A.O.

The subsequent case of Natalia Realty, Inc. v. DAR
[16]
reiterated our
ruling in the Luz Farms case. In Natalia Realty, the Court held that
industrial, commercial and residential lands are not covered by the
CARL.
[17]
We stressed anew that while Section 4 of R.A. No. 6657
provides that the CARL shall cover all public and private agricultural
lands, the term agricultural land does not include lands classified
as mineral, forest, residential, commercial or industrial. Thus,
in Natalia Realty, even portions of the Antipolo Hills Subdivision,
which are arable yet still undeveloped, could not be considered as
agricultural lands subject to agrarian reform as these lots were
already classified as residential lands.

A similar logical deduction should be followed in the case at
bar. Lands devoted to raising of livestock, poultry and swine have
been classified as industrial, not agricultural, lands and thus exempt
from agrarian reform. Petitioner DAR argues that, in issuing the
impugned A.O., it was seeking to address the reports it has received
that some unscrupulous landowners have been converting their
agricultural lands to livestock farms to avoid their coverage by the
agrarian reform. Again, we find neither merit nor logic in this
contention. The undesirable scenario which petitioner seeks to
prevent with the issuance of the A.O. clearly does not apply in this
case. Respondents family acquired their landholdings as early as
1948. They have long been in the business of breeding cattle in
Masbate which is popularly known as the cattle-breeding capital of
the Philippines.
[18]
Petitioner DAR does not dispute this fact. Indeed,
there is no evidence on record that respondents have just recently
engaged in or converted to the business of breeding cattle after the
enactment of the CARL that may lead one to suspect that
respondents intended to evade its coverage. It must be stressed that
what the CARL prohibits is the conversion of agricultural lands for
non-agricultural purposes after the effectivity of the CARL. There has
been no change of business interest in the case of respondents.

Moreover, it is a fundamental rule of statutory construction that the
reenactment of a statute by Congress without substantial change is
an implied legislative approval and adoption of the previous law. On
the other hand, by making a new law, Congress seeks to supersede an
earlier one.
[19]
In the case at bar, after the passage of the 1988 CARL,
Congress enacted R.A. No. 7881
[20]
which amended certain provisions
of the CARL. Specifically, the new law changed the definition of the
terms agricultural activity and commercial farming by dropping
from its coverage lands that are devoted to commercial livestock,
poultry and swine-raising.
[21]
With this significant modification,
Congress clearly sought to align the provisions of our agrarian laws
with the intent of the 1987 Constitutional Commission to exclude
livestock farms from the coverage of agrarian reform.

In sum, it is doctrinal that rules of administrative bodies must be in
harmony with the provisions of the Constitution. They cannot amend
or extend the Constitution. To be valid, they must conform to and be
consistent with the Constitution. In case of conflict between an
administrative order and the provisions of the Constitution, the latter
prevails.
[22]
The assailed A.O. of petitioner DAR was properly stricken
down as unconstitutional as it enlarges the coverage of agrarian
reform beyond the scope intended by the 1987 Constitution.

IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision
and Resolution of the Court of Appeals, dated September 19, 2003
and February 4, 2004, respectively, are AFFIRMED. No
pronouncement as to costs.

SO ORDERED.
MILESTONE FARMS, INC.,
Petitioner,




- versus -





OFFICE OF THE PRESIDENT,
Respondent.
G.R. No. 182332

Present:

CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
VILLARAMA, JR.,
*
JJ.

Promulgated:

February 23, 2011
x-----------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before this Court is a Petition for Review on Certiorari
[1]
under Rule 45
of the Rules of Civil Procedure, seeking the reversal of the Court of
Appeals (CA) Amended Decision
[2]
dated October 4, 2006 and its
Resolution
[3]
dated March 27, 2008.

The Facts


Petitioner Milestone Farms, Inc. (petitioner) was incorporated with
the Securities and Exchange Commission on January 8,
1960.
[4]
Among its pertinent secondary purposes are: (1) to engage
in the raising of cattle, pigs, and other livestock; to acquire lands by
purchase or lease, which may be needed for this purpose; and to sell
and otherwise dispose of said cattle, pigs, and other livestock and
their produce when advisable and beneficial to the
corporation; (2) to breed, raise, and sell poultry; to purchase or
acquire and sell, or otherwise dispose of the supplies, stocks,
equipment, accessories, appurtenances, products, and by-products of
said business; and (3) to import cattle, pigs, and other livestock, and
animal food necessary for the raising of said cattle, pigs, and other
livestock as may be authorized by law.
[5]


On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No.
6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL), took effect, which included the raising of livestock, poultry,
and swine in its coverage. However, on December 4, 1990, this Court,
sitting en banc, ruled in Luz Farms v. Secretary of the Department of
Agrarian Reform
[6]
that agricultural lands devoted to livestock,
poultry, and/or swine raising are excluded from the Comprehensive
Agrarian Reform Program (CARP).

Thus, in May 1993, petitioner applied for the
exemption/exclusion of its 316.0422-hectare property, covered by
Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M-
7307, (T-486102) M-7308, (T-274129) M-15751, (T-486103) M-7309,
(T-486104) M-7310, (T-332694) M-15755, (T-486105) M-7311, (T-
486106) M-7312, M-8791, (T-486107) M-7313, (T-486108) M-7314,
M-8796, (T-486109) M-7315, (T-486110) M-9508, and M-6013, and
located in Pinugay, Baras, Rizal, from the coverage of the CARL,
pursuant to the aforementioned ruling of this Court in Luz Farms.

Meanwhile, on December 27, 1993, the Department of Agrarian
Reform (DAR) issued Administrative Order No. 9, Series of 1993 (DAR
A.O. No. 9), setting forth rules and regulations to govern the exclusion
of agricultural lands used for livestock, poultry, and swine raising
from CARP coverage. Thus, on January 10, 1994, petitioner re-
documented its application pursuant to DAR A.O. No. 9.
[7]


Acting on the said application, the DARs Land Use Conversion
and Exemption Committee (LUCEC) of Region IV conducted an ocular
inspection on petitioners property and arrived at the following
findings:


[T]he actual land utilization for livestock, swine and poultry is
258.8422 hectares; the area which served as infrastructure is 42.0000
hectares; ten (10) hectares are planted to corn and the remaining five
(5) hectares are devoted to fish culture; that the livestock population
are 371 heads of cow, 20 heads of horses, 5,678 heads of swine and
788 heads of cocks; that the area being applied for exclusion is far
below the required or ideal area which is 563 hectares for the total
livestock population; that the approximate area not directly used for
livestock purposes with an area of 15 hectares, more or less, is
likewise far below the allowable 10% variance; and, though not
directly used for livestock purposes, the ten (10) hectares planted to
sweet corn and the five (5) hectares devoted to fishpond could be
considered supportive to livestock production.


The LUCEC, thus, recommended the exemption of petitioners
316.0422-hectare property from the coverage of CARP. Adopting the
LUCECs findings and recommendation, DAR Regional Director
Percival Dalugdug (Director Dalugdug) issued an Order dated June 27,
1994, exempting petitioners 316.0422-hectare property from
CARP.
[8]

The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc.
(Pinugay Farmers), represented by Timiano Balajadia, Sr. (Balajadia),
moved for the reconsideration of the said Order, but the same was
denied by Director Dalugdug in his Order dated November 24,
1994.
[9]
Subsequently, the Pinugay Farmers filed a letter-appeal with
the DAR Secretary.

Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible
Entry against Balajadia and company before the Municipal Circuit
Trial Court (MCTC) of Teresa-Baras, Rizal, docketed as Civil Case No.
781-T.
[10]
The MCTC ruled in favor of petitioner, but the decision was
later reversed by the Regional Trial Court, Branch 80, of Tanay, Rizal.
Ultimately, the case reached the CA, which, in its Decision
[11]
dated
October 8, 1999, reinstated the MCTCs ruling, ordering Balajadia and
all defendants therein to vacate portions of the property covered by
TCT Nos. M-6013, M-8796, and M-8791. In its Resolution
[12]
dated July
31, 2000, the CA held that the defendants therein failed to timely file
a motion for reconsideration, given the fact that their counsel of
record received its October 8, 1999 Decision; hence, the same
became final and executory.

In the meantime, R.A. No. 6657 was amended by R.A. No.
7881,
[13]
which was approved on February 20, 1995. Private
agricultural lands devoted to livestock, poultry, and swine raising
were excluded from the coverage of the CARL. On October 22, 1996,
the fact-finding team formed by the DAR Undersecretary for Field
Operations and Support Services conducted an actual headcount of
the livestock population on the property. The headcount showed
that there were 448 heads of cattle and more than 5,000 heads of
swine.

The DAR Secretarys Ruling


On January 21, 1997, then DAR Secretary Ernesto D. Garilao
(Secretary Garilao) issued an Order exempting from CARP only
240.9776 hectares of the 316.0422 hectares previously exempted by
Director Dalugdug, and declaring 75.0646 hectares of the property to
be covered by CARP.
[14]


Secretary Garilao opined that, for private agricultural lands to be
excluded from CARP, they must already be devoted to livestock,
poultry, and swine raising as of June 15, 1988, when the CARL took
effect. He found that the Certificates of Ownership of Large Cattle
submitted by petitioner showed that only 86 heads of cattle were
registered in the name of petitioners president, Misael Vera, Jr., prior
to June 15, 1988; 133 were subsequently bought in 1990, while 204
were registered from 1992 to 1995. Secretary Garilao gave more
weight to the certificates rather than to the headcount because the
same explicitly provide for the number of cattle owned by petitioner
as of June 15, 1988.

Applying the animal-land ratio (1 hectare for grazing for every head of
cattle/carabao/horse) and the infrastructure-animal ratio (1.7815
hectares for 21 heads of cattle/carabao/horse, and 0.5126 hectare for
21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted
240.9776 hectares of the property, as follows:

1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;

2. 8 hectares for infrastructure following the ratio of 1.7815 hectares
for every 21 heads of cattle;

3. 8 hectares for the 8 horses;

4. 0.3809 square meters of infrastructure for the 8 horses; [and]

5. 138.5967 hectares for the 5,678 heads of swine.
[15]



Petitioner filed a Motion for Reconsideration,
[16]
submitting therewith
copies of Certificates of Transfer of Large Cattle and additional
Certificates of Ownership of Large Cattle issued to petitioner prior to
June 15, 1988, as additional proof that it had met the required
animal-land ratio. Petitioner also submitted a copy of a Disbursement
Voucher dated December 17, 1986, showing the purchase of 100
heads of cattle by the Bureau of Animal Industry from petitioner, as
further proof that it had been actively operating a livestock farm even
before June 15, 1988. However, in his Order dated April 15, 1997,
Secretary Garilao denied petitioners Motion for Reconsideration.
[17]


Aggrieved, petitioner filed its Memorandum on Appeal
[18]
before the
Office of the President (OP).

The OPs Ruling

On February 4, 2000, the OP rendered a decision
[19]
reinstating
Director Dalugdugs Order dated June 27, 1994 and declared the
entire 316.0422-hectare property exempt from the coverage of CARP.

However, on separate motions for reconsideration of the aforesaid
decision filed by farmer-groups Samahang Anak-Pawis ng Lagundi
(SAPLAG) and Pinugay Farmers, and the Bureau of Agrarian Legal
Assistance of DAR, the OP issued a resolution
[20]
dated September 16,
2002, setting aside its previous decision. The dispositive portion of
the OP resolution reads:


WHEREFORE, the Decision subject of the instant separate motions for
reconsideration is hereby SET ASIDE and a new one entered
REINSTATING the Order dated 21 January 1997 of then DAR Secretary
Ernesto D. Garilao, as reiterated in another Order of 15 April 1997,
without prejudice to the outcome of the continuing review and
verification proceedings that DAR, thru the appropriate Municipal
Agrarian Reform Officer, may undertake pursuant to Rule III (D) of
DAR Administrative Order No. 09, series of 1993.

SO ORDERED.
[21]



The OP held that, when it comes to proof of ownership, the reference
is the Certificate of Ownership of Large Cattle. Certificates of cattle
ownership, which are readily available being issued by the
appropriate government office ought to match the number of heads
of cattle counted as existing during the actual headcount. The
presence of large cattle on the land, without sufficient proof of
ownership thereof, only proves such presence.

Taking note of Secretary Garilaos observations, the OP also held that,
before an ocular investigation is conducted on the property, the
landowners are notified in advance; hence, mere reliance on the
physical headcount is dangerous because there is a possibility that
the landowners would increase the number of their cattle for
headcount purposes only. The OP observed that there was a big
variance between the actual headcount of 448 heads of cattle and
only 86 certificates of ownership of large cattle.

Consequently, petitioner sought recourse from the CA.
[22]



The Proceedings Before the CA and Its Rulings


On April 29, 2005, the CA found that, based on the documentary
evidence presented, the property subject of the application for
exclusion had more than satisfied the animal-land and infrastructure-
animal ratios under DAR A.O. No. 9. The CA also found that petitioner
applied for exclusion long before the effectivity of DAR A.O. No. 9,
thus, negating the claim that petitioner merely converted the
property for livestock, poultry, and swine raising in order to exclude it
from CARP coverage. Petitioner was held to have actually engaged in
the said business on the property even before June 15, 1988. The CA
disposed of the case in this wise:

WHEREFORE, the instant petition is hereby GRANTED. The
assailed Resolution of the Office of the President dated September
16, 2002 is hereby SET ASIDE, and its Decision dated February 4, 2000
declaring the entire 316.0422 hectares exempt from the coverage of
the Comprehensive Agrarian Reform Program is
hereby REINSTATED without prejudice to the outcome of the
continuing review and verification proceedings which the Department
of Agrarian Reform, through the proper Municipal Agrarian Reform
Officer, may undertake pursuant to Policy Statement (D) of DAR
Administrative Order No. 9, Series of 1993.

SO ORDERED.
[23]



Meanwhile, six months earlier, or on November 4, 2004, without the
knowledge of the CA as the parties did not inform the appellate
court then DAR Secretary Rene C. Villa (Secretary Villa) issued DAR
Conversion Order No. CON-0410-0016
[24]
(Conversion Order), granting
petitioners application to convert portions of the 316.0422-hectare
property from agricultural to residential and golf courses use. The
portions converted with a total area of 153.3049 hectares were
covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and
M-15750 (T-410434). With this Conversion Order, the area of the
property subject of the controversy was effectively reduced to
162.7373 hectares.
On the CAs decision of April 29, 2005, Motions for Reconsideration
were filed by farmer-groups, namely: the farmers represented by
Miguel Espinas
[25]
(Espinas group), the Pinugay Farmers,
[26]
and the
SAPLAG.
[27]
The farmer-groups all claimed that the CA should have
accorded respect to the factual findings of the OP. Moreover, the
farmer-groups unanimously intimated that petitioner already
converted and developed a portion of the property into a leisure-
residential-commercial estate known as the Palo Alto Leisure and
Sports Complex (Palo Alto).

Subsequently, in a Supplement to the Motion for Reconsideration on
Newly Secured Evidence pursuant to DAR Administrative Order No. 9,
Series of 1993
[28]
(Supplement) dated June 15, 2005, the Espinas
group submitted the following as evidence:

1) Conversion Order
[29]
dated November 4, 2004, issued by Secretary
Villa, converting portions of the property from agricultural to
residential and golf courses use, with a total area of 153.3049
hectares; thus, the Espinas group prayed that the remaining 162.7373
hectares (subject property) be covered by the CARP;

2) Letter
[30]
dated June 7, 2005 of both incoming Municipal Agrarian
Reform Officer (MARO) Bismark M. Elma (MARO Elma) and outgoing
MARO Cesar C. Celi (MARO Celi) of Baras, Rizal, addressed to
Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q.
Kagahastian, (MARO Report), informing the latter, among others, that
Palo Alto was already under development and the lots therein were
being offered for sale; that there were actual tillers on the subject
property; that there were agricultural improvements thereon,
including an irrigation system and road projects funded by the
Government; that there was no existing livestock farm on the subject
property; and that the same was not in the possession and/or control
of petitioner; and

3) Certification
[31]
dated June 8, 2005, issued by both MARO Elma and
MARO Celi, manifesting that the subject property was in the
possession and cultivation of actual occupants and tillers, and that,
upon inspection, petitioner maintained no livestock farm thereon.

Four months later, the Espinas group and the DAR filed their
respective Manifestations.
[32]
In its Manifestation dated November
29, 2005, the DAR confirmed that the subject property was no longer
devoted to cattle raising. Hence, in its Resolution
[33]
dated December
21, 2005, the CA directed petitioner to file its comment on the
Supplement and the aforementioned Manifestations. Employing the
services of a new counsel, petitioner filed a Motion to Admit
Rejoinder,
[34]
and prayed that the MARO Report be disregarded and
expunged from the records for lack of factual and legal basis.

With the CA now made aware of these developments, particularly
Secretary Villas Conversion Order of November 4, 2004, the
appellate court had to acknowledge that the property subject of the
controversy would now be limited to the remaining 162.7373
hectares. In the same token, the Espinas group prayed that this
remaining area be covered by the CARP.
[35]


On October 4, 2006, the CA amended its earlier Decision. It held that
its April 29, 2005 Decision was theoretically not final because DAR
A.O. No. 9 required the MARO to make a continuing review and
verification of the subject property. While the CA was cognizant of
our ruling in Department of Agrarian Reform v. Sutton,
[36]
wherein we
declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift the
exemption of the subject property from the CARP, not on the basis of
DAR A.O. No. 9, but on the strength of evidence such as the MARO
Report and Certification, and the Katunayan
[37]
issued by the Punong
Barangay, Alfredo Ruba (Chairman Ruba), of Pinugay, Baras, Rizal,
showing that the subject property was no longer operated as a
livestock farm. Moreover, the CA held that the lease
agreements,
[38]
which petitioner submitted to prove that it was
compelled to lease a ranch as temporary shelter for its cattle, only
reinforced the DARs finding that there was indeed no existing
livestock farm on the subject property. While petitioner claimed that
it was merely forced to do so to prevent further slaughtering of its
cattle allegedly committed by the occupants, the CA found the claim
unsubstantiated. Furthermore, the CA opined that petitioner should
have asserted its rights when the irrigation and road projects were
introduced by the Government within its property. Finally, the CA
accorded the findings of MARO Elma and MARO Celi the presumption
of regularity in the performance of official functions in the absence of
evidence proving misconduct and/or dishonesty when they inspected
the subject property and rendered their report. Thus, the CA
disposed:

WHEREFORE, this Courts Decision dated April 29, 2005 is hereby
amended in that the exemption of the subject landholding from the
coverage of the Comprehensive Agrarian Reform Program is hereby
lifted, and the 162.7373 hectare-agricultural portion thereof is hereby
declared covered by the Comprehensive Agrarian Reform Program.

SO ORDERED.
[39]



Unperturbed, petitioner filed a Motion for Reconsideration.
[40]
On
January 8, 2007, MARO Elma, in compliance with the Memorandum
of DAR Regional Director Dominador B. Andres, tendered another
Report
[41]
reiterating that, upon inspection of the subject property,
together with petitioners counsel-turned witness, Atty. Grace Eloisa
J. Que (Atty. Que), PARO Danilo M. Obarse, Chairman Ruba, and
several occupants thereof, he, among others, found no livestock farm
within the subject property. About 43 heads of cattle were shown,
but MARO Elma observed that the same were inside an area adjacent
to Palo Alto. Subsequently, upon Atty. Ques request for
reinvestigation, designated personnel of the DAR Provincial and
Regional Offices (Investigating Team) conducted another ocular
inspection on the subject property on February 20, 2007. The
Investigating Team, in its Report
[42]
dated February 21, 2007, found
that, per testimony of petitioners caretaker, Rogelio Ludivices
(Roger),
[43]
petitioner has 43 heads of cattle taken care of by the
following individuals: i) Josefino Custodio (Josefino) 18 heads; ii)
Andy Amahit 15 heads; and iii) Bert Pangan 2 heads; that these
individuals pastured the herd of cattle outside the subject property,
while Roger took care of 8 heads of cattle inside the Palo Alto area;
that 21 heads of cattle owned by petitioner were seen in the area
adjacent to Palo Alto; that Josefino confirmed to the Investigating
Team that he takes care of 18 heads of cattle owned by petitioner;
that the said Investigating Team saw 9 heads of cattle in the Palo Alto
area, 2 of which bore MFI marks; and that the 9 heads of cattle
appear to have matched the Certificates of Ownership of Large Cattle
submitted by petitioner.

Because of the contentious factual issues and the conflicting
averments of the parties, the CA set the case for hearing and
reception of evidence on April 24, 2007.
[44]
Thereafter, as narrated by
the CA, the following events transpired:


On May 17, 2007, [petitioner] presented the Judicial Affidavits of its
witnesses, namely, *petitioners] counsel, [Atty. Que], and the alleged
caretaker of *petitioners+ farm, *Roger+, who were both cross-
examined by counsel for farmers-movants and SAPLAG. [Petitioner]
and SAPLAG then marked their documentary exhibits.

On May 24, 2007, [petitioners+ security guard and third
witness, Rodolfo G. Febrada, submitted his Judicial Affidavit and was
cross-examined by counsel for fa[r]mers-movants and
SAPLAG. Farmers-movants also marked their documentary exhibits.

Thereafter, the parties submitted their respective Formal
Offers of Evidence. Farmers-movants and SAPLAG filed
their objectionsto *petitioners+ Formal Offer of Evidence. Later,
[petitioner] and farmers-movants filed their respective Memoranda.

In December 2007, this Court issued a Resolution on the
parties offer of evidence and considered *petitioners+ Motion for
Reconsideration submitted for resolution.
[45]



Finally, petitioners motion for reconsideration was denied by the CA
in its Resolution
[46]
dated March 27, 2008. The CA discarded
petitioners reliance on Sutton. It ratiocinated that the MARO Reports
and the DARs Manifestation could not be disregarded simply because
DAR A.O. No. 9 was declared unconstitutional. The Sutton ruling was
premised on the fact that theSutton property continued to operate as
a livestock farm. The CA also reasoned that, in Sutton, this Court did
not remove from the DAR the power to implement the CARP,
pursuant to the latters authority to oversee the implementation of
agrarian reform laws under Section 50
[47]
of the CARL. Moreover, the
CA found:

Petitioner-appellant claimed that they had 43 heads of cattle which
are being cared for and pastured by 4 individuals. To prove its
ownership of the said cattle, petitioner-appellant offered in evidence
43 Certificates of Ownership of Large Cattle. Significantly, however,
the said Certificates were all dated and issued on November 24, 2006,
nearly 2 months after this Court rendered its Amended Decisionlifting
the exemption of the 162-hectare portion of the subject
landholding. The acquisition of such cattle after the lifting of the
exemption clearly reveals that petitioner-appellant was no longer
operating a livestock farm, and suggests an effort to create a
semblance of livestock-raising for the purpose of its Motion for
Reconsideration.
[48]



On petitioners assertion that between MARO Elmas Report dated
January 8, 2007 and the Investigating Teams Report, the latter should
be given credence, the CA held that there were no material
inconsistencies between the two reports because both showed that
the 43 heads of cattle were found outside the subject property.

Hence, this Petition assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD
THAT LANDS DEVOTED TO LIVESTOCK FARMING WITHIN THE
MEANING OF LUZ FARMS AND SUTTON, AND WHICH ARE THEREBY
EXEMPT FROM CARL COVERAGE, ARE NEVERTHELESS SUBJECT TO
DARS CONTINUING VERIFICATION AS TO USE, AND, ON THE BASIS OF
SUCH VERIFICATION, MAY BE ORDERED REVERTED TO AGRICULTURAL
CLASSIFICATION AND COMPULSORY ACQUISITION[;]

II.

GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO
REVERTED TO AGRICULTURAL CLASSIFICATION, STILL THE
PROCEEDINGS FOR SUCH PURPOSE BELONGS TO THE EXCLUSIVE
ORIGINAL JURISDICTION OF THE DAR, BEFORE WHICH THE
CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES, AND AVAIL
THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT TO THE
COURT OF APPEALS EXERCISING APPELLATE JURISDICTION OVER
ISSUES COMPLETELY UNRELATED TO REVERSION [; AND]

III.

IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE
PROPERTY IN DISPUTE IS NO LONGER BEING USED FOR LIVESTOCK
FARMING.
[49]



Petitioner asseverates that lands devoted to livestock farming as of
June 15, 1988 are classified as industrial lands, hence, outside the
ambit of the CARP; that Luz Farms, Sutton, and R.A. No. 7881 clearly
excluded such lands on constitutional grounds; that petitioners lands
were actually devoted to livestock even before the enactment of the
CARL; that livestock farms are exempt from the CARL, not by reason
of any act of the DAR, but because of their nature as industrial lands;
that petitioners property was admittedly devoted to livestock
farming as of June 1988 and the only issue before was whether or not
petitioners pieces of evidence comply with the ratios provided under
DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared as
unconstitutional, DAR had no more legal basis to conduct a
continuing review and verification proceedings over livestock farms.
Petitioner argues that, in cases where reversion of properties to
agricultural use is proper, only the DAR has the exclusive original
jurisdiction to hear and decide the same; hence, the CA, in this case,
committed serious errors when it ordered the reversion of the
property and when it considered pieces of evidence not existing as of
June 15, 1988, despite its lack of jurisdiction; that the CA should have
remanded the case to the DAR due to conflicting factual claims; that
the CA cannot ventilate allegations of fact that were introduced for
the first time on appeal as a supplement to a motion for
reconsideration of its first decision, use the same to deviate from the
issues pending review, and, on the basis thereof, declare exempt
lands reverted to agricultural use and compulsorily covered by the
CARP; that the newly discovered *pieces of+ evidence were not
introduced in the proceedings before the DAR, hence, it was
erroneous for the CA to consider them; and that piecemeal
presentation of evidence is not in accord with orderly justice. Finally,
petitioner submits that, in any case, the CA gravely erred and
committed grave abuse of discretion when it held that the subject
property was no longer used for livestock farming as shown by the
Report of the Investigating Team. Petitioner relies on the 1997 LUCEC
and DAR findings that the subject property was devoted to livestock
farming, and on the 1999 CA Decision which held that the occupants
of the property were squatters, bereft of any authority to stay and
possess the property.
[50]


On one hand, the farmer-groups, represented by the Espinas group,
contend that they have been planting rice and fruit-bearing trees on
the subject property, and helped the National Irrigation
Administration in setting up an irrigation system therein in 1997, with
a produce of 1,500 to 1,600 sacks of palay each year; that petitioner
came to court with unclean hands because, while it sought the
exemption and exclusion of the entire property, unknown to the CA,
petitioner surreptitiously filed for conversion of the property now
known as Palo Alto, which was actually granted by the DAR Secretary;
that petitioners bad faith is more apparent since, despite the
conversion of the 153.3049-hectare portion of the property, it still
seeks to exempt the entire property in this case; and that the fact
that petitioner applied for conversion is an admission that indeed the
property is agricultural. The farmer-groups also contend that
petitioners reliance on Luz Farms and Sutton is unavailing because in
these cases there was actually no cessation of the business of raising
cattle; that what is being exempted is the activity of raising cattle and
not the property itself; that exemptions due to cattle raising are not
permanent; that the declaration of DAR A.O. No. 9 as unconstitutional
does not at all diminish the mandated duty of the DAR, as the lead
agency of the Government, to implement the CARL; that the DAR,
vested with the power to identify lands subject to CARP, logically also
has the power to identify lands which are excluded and/or exempted
therefrom; that to disregard DARs authority on the matter would
open the floodgates to abuse and fraud by unscrupulous landowners;
that the factual finding of the CA that the subject property is no
longer a livestock farm may not be disturbed on appeal, as
enunciated by this Court; that DAR conducted a review and
monitoring of the subject property by virtue of its powers under the
CARL; and that the CA has sufficient discretion to admit evidence in
order that it could arrive at a fair, just, and equitable ruling in this
case.
[51]


On the other hand, respondent OP, through the Office of the Solicitor
General (OSG), claims that the CA correctly held that the subject
property is not exempt from the coverage of the CARP, as substantial
pieces of evidence show that the said property is not exclusively
devoted to livestock, swine, and/or poultry raising; that the issues
presented by petitioner are factual in nature and not proper in this
case; that under Rule 43 of the 1997 Rules of Civil Procedure,
questions of fact may be raised by the parties and resolved by the CA;
that due to the divergence in the factual findings of the DAR and the
OP, the CA was duty bound to review and ascertain which of the said
findings are duly supported by substantial evidence; that the subject
property was subject to continuing review and verification
proceedings due to the then prevailing DAR A.O. No. 9; that there is
no question that the power to determine if a property is subject to
CARP coverage lies with the DAR Secretary; that pursuant to such
power, the MARO rendered the assailed reports and certification, and
the DAR itself manifested before the CA that the subject property is
no longer devoted to livestock farming; and that, while it is true that
this Courts ruling in Luz Farms declared that agricultural lands
devoted to livestock, poultry, and/or swine raising are excluded from
the CARP, the said ruling is not without any qualification.
[52]


In its Reply
[53]
to the farmer-groups and to the OSGs comment,
petitioner counters that the farmer-groups have no legal basis to
their claims as they admitted that they entered the subject property
without the consent of petitioner; that the rice plots actually found in
the subject property, which were subsequently taken over by
squatters, were, in fact, planted by petitioner in compliance with the
directive of then President Ferdinand Marcos for the employer to
provide rice to its employees; that when a land is declared exempt
from the CARP on the ground that it is not agricultural as of the time
the CARL took effect, the use and disposition of that land is entirely
and forever beyond DARs jurisdiction; and that, inasmuch as the
subject property was not agricultural from the very beginning, DAR
has no power to regulate the same. Petitioner also asserts that the CA
cannot uncharacteristically assume the role of trier of facts and
resolve factual questions not previously adjudicated by the lower
tribunals; that MARO Elma rendered the assailed MARO reports with
bias against petitioner, and the same were contradicted by the
Investigating Teams Report, which confirmed that the subject
property is still devoted to livestock farming; and that there has been
no change in petitioners business interest as an entity engaged in
livestock farming since its inception in 1960, though there was
admittedly a decline in the scale of its operations due to the illegal
acts of the squatter-occupants.

Our Ruling


The Petition is bereft of merit.


Let it be stressed that when the CA provided in its first Decision that
continuing review and verification may be conducted by the DAR
pursuant to DAR A.O. No. 9, the latter was not yet declared
unconstitutional by this Court. The first CA Decision was promulgated
on April 29, 2005, while this Court struck down as unconstitutional
DAR A.O. No. 9, by way of Sutton, on October 19, 2005. Likewise, let it
be emphasized that the Espinas group filed the Supplement and
submitted the assailed MARO reports and certification on June 15,
2005, which proved to be adverse to petitioners case. Thus, it could
not be said that the CA erred or gravely abused its discretion in
respecting the mandate of DAR A.O. No. 9, which was then subsisting
and in full force and effect.

While it is true that an issue which was neither alleged in the
complaint nor raised during the trial cannot be raised for the first
time on appeal as it would be offensive to the basic rules of fair play,
justice, and due process,
[54]
the same is not without
exception,
[55]
such as this case. The CA, under Section 3,
[56]
Rule 43 of
the Rules of Civil Procedure, can, in the interest of justice, entertain
and resolve factual issues. After all, technical and procedural rules are
intended to help secure, and not suppress, substantial justice. A
deviation from a rigid enforcement of the rules may thus be allowed
to attain the prime objective of dispensing justice, for dispensation of
justice is the core reason for the existence of courts.
[57]
Moreover,
petitioner cannot validly claim that it was deprived of due process
because the CA afforded it all the opportunity to be heard.
[58]
The CA
even directed petitioner to file its comment on the Supplement, and
to prove and establish its claim that the subject property was
excluded from the coverage of the CARP. Petitioner actively
participated in the proceedings before the CA by submitting pleadings
and pieces of documentary evidence, such as the Investigating Teams
Report and judicial affidavits. The CA also went further by setting the
case for hearing. In all these proceedings, all the parties rights to due
process were amply protected and recognized.

With the procedural issue disposed of, we find that petitioners
arguments fail to persuade. Its invocation of Sutton is unavailing.
In Sutton, we held:

In the case at bar, we find that the impugned A.O. is invalid as it
contravenes the Constitution. The A.O. sought to regulate livestock
farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership.
However, the deliberations of the 1987 Constitutional Commission
show a clear intent to exclude, inter alia, all lands exclusively devoted
to livestock, swine and poultry-raising. The Court clarified in the Luz
Farms case that livestock, swine and poultry-raising are industrial
activities and do not fall within the definition of agriculture or
agricultural activity. The raising of livestock, swine and poultry is
different from crop or tree farming. It is an industrial, not an
agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal
housing structures and facilities, drainage, waterers and blowers,
feedmill with grinders, mixers, conveyors, exhausts and generators,
extensive warehousing facilities for feeds and other supplies, anti-
pollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms
which have been exempted by the Constitution from the coverage of
agrarian reform. It has exceeded its power in issuing the assailed
A.O.
[59]


Indeed, as pointed out by the CA, the instant case does not rest on
facts parallel to those of Sutton because, in Sutton, the subject
property remained a livestock farm. We even highlighted therein the
fact that there has been no change of business interest in the case of
respondents.
[60]
Similarly, in Department of Agrarian Reform v.
Uy,
[61]
we excluded a parcel of land from CARP coverage due to the
factual findings of the MARO, which were confirmed by the DAR, that
the property was entirely devoted to livestock farming. However,
in A.Z. Arnaiz Realty, Inc., represented by Carmen Z. Arnaiz v. Office of
the President; Department of Agrarian Reform; Regional Director,
DAR Region V, Legaspi City; Provincial Agrarian Reform Officer, DAR
Provincial Office, Masbate, Masbate; and Municipal Agrarian Reform
Officer, DAR Municipal Office, Masbate, Masbate,
[62]
we denied a
similar petition for exemption and/or exclusion, by according respect
to the CAs factual findings and its reliance on the findings of the
DAR and the OP that
the subject parcels of land were not directly, actually, and exclusively
used for pasture.
[63]


Petitioners admission that, since 2001, it leased another ranch for its
own livestock is fatal to its cause.
[64]
While petitioner advances a
defense that it leased this ranch because the occupants of the subject
property harmed its cattle, like the CA, we find it surprising that not
even a single police and/or barangay report was filed by petitioner to
amplify its indignation over these alleged illegal acts. Moreover, we
accord respect to the CAs keen observation that the assailed MARO
reports and the Investigating Teams Report do not actually
contradict one another, finding that the 43 cows, while owned by
petitioner, were actually pastured outside the subject property.
`
Finally, it is established that issues of Exclusion and/or Exemption are
characterized as Agrarian Law Implementation (ALI) cases which are
well within the DAR Secretarys competence and
jurisdiction.
[65]
Section 3, Rule II of the 2003 Department of Agrarian
Reform Adjudication Board Rules of Procedure provides:
Section 3. Agrarian Law Implementation Cases.
The Adjudicator or the Board shall have no jurisdiction over matters
involving the administrative implementation of RA No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law (CARL)
of 1988 and other agrarian laws as enunciated by pertinent rules and
administrative orders, which shall be under the exclusive prerogative
of and cognizable by the Office of the Secretary of the DAR in
accordance with his issuances, to wit:

x x x x
3.8 Exclusion from CARP coverage of agricultural land used for
livestock, swine, and poultry raising.


Thus, we cannot, without going against the law, arbitrarily strip
the DAR Secretary of his legal mandate to exercise jurisdiction and
authority over all ALI cases. To succumb to petitioners contention
that when a land is declared exempt from the CARP on the ground
that it is not agricultural as of the time the CARL took effect, the use
and disposition of that land is entirely and forever beyond DARs
jurisdiction is dangerous, suggestive of self-regulation. Precisely, it is
the DAR Secretary who is vested with such jurisdiction and authority
to exempt and/or exclude a property from CARP coverage based on
the factual circumstances of each case and in accordance with law
and applicable jurisprudence. In addition, albeit parenthetically,
Secretary Villa had already granted the conversion into residential
and golf courses use of nearly one-half of the entire area originally
claimed as exempt from CARP coverage because it was allegedly
devoted to livestock production.

In sum, we find no reversible error in the assailed Amended
Decision and Resolution of the CA which would warrant the
modification, much less the reversal, thereof.

WHEREFORE, the Petition is DENIED and the Court of Appeals
Amended Decision dated October 4, 2006 and Resolution dated
March 27, 2008 are AFFIRMED. No costs.
DEPARTMENT OF AGRARIAN REFORM, as represented by its
Secretary, ROBERTO M. PAGDANGANAN,petitioner, vs.
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS
(DECS), respondent.
D E C I S I O N
YNARES-SANTIAGO, J.:
This petition for review on certiorari seeks to set aside the
decision
[1]
of the Court of Appeals dated October 29, 2002 in CA-G.R.
SP No. 64378, which reversed the August 30, 2000 decision of the
Secretary of Agrarian Reform, as well as the Resolution dated May 7,
2003, which denied petitioners motion for reconsideration.
In controversy are Lot No. 2509 and Lot No. 817-D consisting of an
aggregate area of 189.2462 hectares located at Hacienda Fe,
Escalante, Negros Occidental and Brgy. Gen. Luna, Sagay, Negros
Occidental, respectively. On October 21, 1921, these lands were
donated by the late Esteban Jalandoni to respondent DECS (formerly
Bureau of Education).
[2]
Consequently, titles thereto were transferred
in the name of respondent DECS under Transfer Certificate of Title
No. 167175.
[3]

On July 15, 1985, respondent DECS leased the lands to Anglo
Agricultural Corporation for 10 agricultural crop years, commencing
from crop year 1984-1985 to crop year 1993-1994. The contract of
lease was subsequently renewed for another 10 agricultural crop
years, commencing from crop year 1995-1996 to crop year 2004-
2005.
[4]

On June 10, 1993, Eugenio Alpar and several others, claiming to be
permanent and regular farm workers of the subject lands, filed a
petition for Compulsory Agrarian Reform Program (CARP) coverage
with the Municipal Agrarian Reform Office (MARO) of Escalante.
[5]

After investigation, MARO Jacinto R. Piosa, sent a Notice of
Coverage to respondent DECS, stating that the subject lands are now
covered by CARP and inviting its representatives for a conference
with the farmer beneficiaries.
[6]
Then, MARO Piosa submitted his
report to OIC-PARO Stephen M. Leonidas, who recommended to the
DAR Regional Director the approval of the coverage of the
landholdings.
On August 7, 1998, DAR Regional Director Dominador B. Andres
approved the recommendation, the dispositive portion of which
reads:
WHEREFORE, all the foregoing premises considered, the petition is
granted. Order is hereby issued:
1. Placing under CARP coverage Lot 2509 with an area of 111.4791
hectares situated at Had. Fe, Escalante, Negros Occidental
and Lot 817-D with an area of 77.7671 hectares situated at Brgy. Gen.
Luna, Sagay, Negros Occidental;
2. Affirming the notice of coverage sent by the DAR Provincial Office,
Negros Occidental dated November 23, 1994;
3. Directing the Provincial Agrarian Reform Office of Negros
Occidental and the Municipal Agrarian Reform Officers of Sagay and
Escalante to facilitate the acquisition of the subject landholdings and
the distribution of the same qualified beneficiaries.
SO ORDERED.
[7]

Respondent DECS appealed the case to the Secretary of Agrarian
Reform which affirmed the Order of the Regional Director.
[8]

Aggrieved, respondent DECS filed a petition for certiorari with the
Court of Appeals, which set aside the decision of the Secretary of
Agrarian Reform.
[9]

Hence, the instant petition for review.
The pivotal issue to be resolved in this case is whether or not the
subject properties are exempt from the coverage of Republic Act No.
6657, otherwise known as the Comprehensive Agrarian Reform Law
of 1998 (CARL).
The general policy under CARL is to cover as much lands suitable for
agriculture as possible.
[10]
Section 4 of R.A. No. 6657 sets out the
coverage of CARP. It states that the program shall:
cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the
Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain
devoted to or suitable for agriculture. No reclassification of forest or
mineral lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account, ecological,
developmental and equity considerations, shall have determined by
law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits
as determined by Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or
suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture
regardless of the agricultural products raised or that can be raised
thereon.
Section 3(c) thereof defines agricultural land, as land devoted to
agricultural activity as defined in this Act and not classified as mineral,
forest, residential, commercial or industrial land. The term
agriculture or agricultural activity is also defined by the same law
as follows:
Agriculture, Agricultural Enterprises or Agricultural Activity means the
cultivation of the soil, planting of crops, growing of fruit trees, raising
of livestock, poultry or fish, including the harvesting of such farm
products, and other farm activities, and practices performed by a
farmer in conjunction with such farming operations done by persons
whether natural or juridical.
[11]

The records of the case show that the subject properties were
formerly private agricultural lands owned by the late Esteban
Jalandoni, and were donated to respondent DECS. From that time
until they were leased to Anglo Agricultural Corporation, the lands
continued to be agricultural primarily planted to sugarcane, albeit
part of the public domain being owned by an agency of the
government.
[12]
Moreover, there is no legislative or presidential act,
before and after the enactment of R.A. No. 6657, classifying the said
lands as mineral, forest, residential, commercial or industrial
land. Indubitably, the subject lands fall under the classification of
lands of the public domain devoted to or suitable for agriculture.
Respondent DECS sought exemption from CARP coverage on the
ground that all the income derived from its contract of lease with
Anglo Agricultural Corporation were actually, directly and exclusively
used for educational purposes, such as for the repairs and
renovations of schools in the nearby locality.
Petitioner DAR, on the other hand, argued that the lands subject
hereof are not exempt from the CARP coverage because the same are
not actually, directly and exclusively used as school sites or campuses,
as they are in fact leased to Anglo Agricultural Corporation. Further,
to be exempt from the coverage, it is the land per se, not the income
derived therefrom, that must be actually, directly and exclusively
used for educational purposes.
We agree with the petitioner.
Section 10 of R.A. No. 6657 enumerates the types of lands which are
exempted from the coverage of CARP as well as the purposes of their
exemption, viz:
x x x x x x x x x
c) Lands actually, directly and exclusively used and found to be
necessary for national defense, school sites and campuses, including
experimental farm stations operated by public or private schools for
educational purposes, , shall be exempt from the coverage of this
Act.
[13]

x x x x x x x x x
Clearly, a reading of the paragraph shows that, in order to be exempt
from the coverage: 1) the land must be actually, directly, and
exclusively used and found to be necessary; and 2) the purpose is
for school sites and campuses, including experimental farm stations
operated by public or private schools for educational purposes.
The importance of the phrase actually, directly, and exclusively used
and found to be necessary cannot be understated, as what
respondent DECS would want us to do by not taking the words in
their literal and technical definitions. The words of the law are clear
and unambiguous. Thus, the plain meaning rule or verba legis in
statutory construction is applicable in this case. Where the words of
a statute are clear, plain and free from ambiguity, it must be given its
literal meaning and applied without attempted interpretation.
[14]

We are not unaware of our ruling in the case of Central Mindanao
University v. Department of Agrarian Reform Adjudication
Board,
[15]
wherein we declared the land subject thereof exempt from
CARP coverage. However, respondent DECS reliance thereon is
misplaced because the factual circumstances are different in the case
at bar.
Firstly, in the CMU case, the land involved was not alienable and
disposable land of the public domain because it was reserved by the
late President Carlos P. Garcia under Proclamation No. 476 for the
use of Mindanao Agricultural College (now CMU).
[16]
In this case,
however, the lands fall under the category of alienable and
disposable lands of the public domain suitable for agriculture.
Secondly, in the CMU case, the land was actually, directly and
exclusively used and found to be necessary for school sites and
campuses. Although a portion of it was being used by the Philippine
Packing Corporation (now Del Monte Phils., Inc.) under a
Management and Development Agreement, the undertaking was
that the land shall be used by the Philippine Packing Corporation as
part of the CMU research program, with direct participation of faculty
and students. Moreover, the land was part of the land utilization
program developed by the CMU for its Kilusang Sariling Sikap
Project (CMU-KSSP), a multi-disciplinary applied research extension
and productivity program.
[17]
Hence, the retention of the land was
found to be necessary for the present and future educational needs
of the CMU. On the other hand, the lands in this case were
not actually and exclusively utilized as school sites and campuses, as
they were leased to Anglo Agricultural Corporation, not for
educational purposes but for the furtherance of its business. Also, as
conceded by respondent DECS, it was the income from the contract
of lease and not the subject lands that was directly used for the
repairs and renovations of the schools in the locality.
Anent the issue of whether the farmers are qualified beneficiaries of
CARP, we disagree with the Court of Appeals finding that they were
not.
At the outset, it should be pointed out that the identification of actual
and potential beneficiaries under CARP is vested in the Secretary of
Agrarian Reform pursuant to Section 15, R.A. No. 6657, which states:
SECTION 15. Registration of Beneficiaries. The DAR in
coordination with the Barangay Agrarian Reform Committee (BARC)
as organized in this Act, shall register all agricultural lessees, tenants
and farmworkers who are qualified to be beneficiaries of the CARP.
These potential beneficiaries with the assistance of the BARC and the
DAR shall provide the following data:
(a) names and members of their immediate farm household;
(b) owners or administrators of the lands they work on and the
length of tenurial relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages
received.
A copy of the registry or list of all potential CARP beneficiaries in the
barangay shall be posted in the barangay hall, school or other public
buildings in the barangay where it shall be open to inspection by the
public at all reasonable hours.
In the case at bar, the BARC certified that herein farmers were
potential CARP beneficiaries of the subject properties.
[18]
Further,
onNovember 23, 1994, the Secretary of Agrarian Reform through the
Municipal Agrarian Reform Office (MARO) issued a Notice of
Coverage placing the subject properties under CARP. Since the
identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP,
[19]
it
behooves the courts to exercise great caution in substituting its own
determination of the issue, unless there is grave abuse of discretion
committed by the administrative agency. In this case, there was
none.
The Comprehensive Agrarian Reform Program (CARP) is the bastion of
social justice of poor landless farmers, the mechanism designed to
redistribute to the underprivileged the natural right to toil the earth,
and to liberate them from oppressive tenancy. To those who seek its
benefit, it is the means towards a viable livelihood and, ultimately, a
decent life. The objective of the State is no less certain: landless
farmers and farmworkers will receive the highest consideration to
promote social justice and to move the nation toward sound rural
development and industrialization.
[20]

WHEREFORE, in view of the foregoing, the petition is GRANTED. The
decision of the Court of Appeals dated October 29, 2002, in CA-G.R.
SP No. 64378 is REVERSED and SET ASIDE. The decision dated August
30, 2000 of the Secretary of Agrarian Reform placing the subject lands
under CARP coverage, is REINSTATED.
SO ORDERED.
ROXAS & COMPANY, INC.,
Petitioner,


- versus -


DAMBA-NFSW and the DEPARTMENT
G.R. No. 149548







OF AGRARIAN REFORM,
*

Respondents.
x------------------------------------x
DAMAYAN NG MGA
MANGGAGAWANG BUKID SA
ASYENDA ROXAS-NATIONAL
FEDERATION OF SUGAR WORKERS
(DAMBA-NFSW),
Petitioner,

- versus -

SECRETARY OF THE DEPT. OF
AGRARIAN REFORM, ROXAS & Co.,
INC. AND/OR ATTY. MARIANO AMPIL,
Respondents.


x-----------------------------------x








KATIPUNAN NG MGA MAGBUBUKID
SA HACIENDA ROXAS, INC.
(KAMAHARI), rep. by its President
CARLITO CAISIP, and DAMAYAN NG
MANGGAGAWANG BUKID SA
ASYENDA ROXAS-NATIONAL
FEDERATION OF SUGAR WORKERS
(DAMBA-NFSW), represnted by
LAURO MARTIN,




G.R. No. 167505

Present:

PUNO, C.J.,
CARPIO,
CORONA,
CARPIO MORALES,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD, and
VILLARAMA, JJ.


Promulgated:

December 4, 2009


G.R. No. 167540






Petitioners,



- versus -


SECRETARY OF THE DEPT. OF
AGRARIAN REFORM, ROXAS & Co.,
INC.,
Respondents.

x------------------------------------------x

DEPARTMENT OF LAND REFORM,
FORMERLY DEPARTMENT OF
AGRARIAN REFORM (DAR),
Petitioner,


- versus -


ROXAS & CO, INC.,
Respondent.
x------------------------------------x
ROXAS & CO., INC.,
Petitioner,

- versus -

DAMBA-NFSW,
Respondent.
x------------------------------------x

DAMBA-NFSW REPRESENTED BY

















G.R. No. 167543












G.R. No. 167845





LAURO V. MARTIN,
Petitioner,

- versus -

ROXAS & CO., INC.,
Respondent.
x------------------------------------x

DAMBA-NFSW,
Petitioner,

- versus -

ROXAS & CO., INC.,
Respondent.



G.R. No. 169163









G.R. No. 179650



x----------------------------------------------------------------------------------------x

D E C I S I O N
CARPIO MORALES, J.


The main subject of the seven consolidated petitions is the
application of petitioner Roxas & Co., Inc. (Roxas & Co.) for
conversion from agricultural to non-agricultural use of its
three haciendas located in Nasugbu, Batangas containing a total area
of almost 3,000 hectares. The facts are not new, the Court having
earlier resolved intimately-related issues dealing with
thesehaciendas. Thus, in the 1999 case of Roxas & Co., Inc. v. Court of
Appeals,
[1]
the Court presented the facts as follows:

. . . Roxas & Co. is a domestic corporation and is the registered owner
of three haciendas, namely, Haciendas Palico, Banilad and
Caylaway, all located in the Municipality of Nasugbu,
Batangas. Hacienda Palico is 1,024 hectares in area and is registered
under Transfer Certificate of Title (TCT) No. 985. This land is covered
by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and
0354. Hacienda Banilad is 1,050 hectares in area, registered under
TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and
0390. Hacienda Caylaway is 867.4571 hectares in area and is
registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.

x x x x

On July 27, 1987, the Congress of the Philippines formally convened
and took over legislative power from the President. This Congress
passed Republic Act No. 6657, the Comprehensive Agrarian Reform
Law (CARL) of 1988. The Act was signed by the President on June 10,
1988 and took effect on June 15, 1988.

Before the laws effectivity, on May 6, 1988, [Roxas & Co.] filed with
respondent DAR a voluntary offer to sell [VOS]Hacienda
Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico
and Banilad were later placed under compulsory acquisition by DAR
in accordance with the CARL.

x x x x

Nevertheless, on August 6, 1992, [Roxas & Co.], through its President,
Eduardo J. Roxas, sent a letter to the Secretary of DAR withdrawing
its VOS of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu,
Batangas allegedly authorized the reclassification of Hacienda
Caylaway from agricultural to non-agricultural. As a result,
petitioner informed respondent DAR that it was applying
for conversion of Hacienda Caylaway from agricultural to other uses.

x x x x
[2]
(emphasis and underscoring supplied)


The petitions in G.R. Nos. 167540 and 167543 nub on the
interpretation of Presidential Proclamation (PP) 1520 which was
issued on November 28, 1975 by then President Ferdinand
Marcos. The PP reads:

DECLARING THE MUNICIPALITIES OF MARAGONDON
AND TERNATE IN CAVITE PROVINCE AND
THEMUNICIPALITY OF NASUGBU IN BATANGAS AS A TOURIST ZONE,
AND FOR OTHER PURPOSES

WHEREAS, certain areas in the sector comprising the Municipalities
of Maragondon and Ternate in Cavite Province andNasugbu in
Batangas have potential tourism value after being developed into
resort complexes for the foreign and domestic market; and

WHEREAS, it is necessary to conduct the necessary studies and
to segregate specific geographic areas for concentrated efforts of
both the government and private sectors in developing their tourism
potential;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution,
do hereby declare the area comprising the Municipalities of
Maragondon and Ternate in Cavite Province and Nasugbu in Batangas
Province as a tourist zone under the administration and control of
the Philippine Tourism Authority (PTA) pursuant to Section 5 (D) of
P.D. 564.

The PTA shall identify well-defined geographic areas within the zone
with potential tourism value, wherein optimum use of natural assets
and attractions, as well as existing facilities and concentration of
efforts and limited resources of both government and private sector
may be affected and realized in order to generate foreign exchange as
well as other tourist receipts.

Any duly established military reservation existing within the zone
shall be excluded from this proclamation.

All proclamation, decrees or executive orders inconsistent herewith
are hereby revoked or modified accordingly. (emphasis and
underscoring supplied).

The incidents which spawned the filing of the petitions in G.R. Nos.
149548, 167505, 167845, 169163 and 179650 are stated in the
dissenting opinion of Justice Minita Chico-Nazario, the original draft
of which was made the basis of the Courts deliberations.

Essentially, Roxas & Co. filed its application for conversion of its
three haciendas from argricultural to non-agricultural on the
assumption that the issuance of PP 1520 which declared Nasugbu,
Batangas as a tourism zone, reclassified them to non-agricultural
uses. Its pending application notwithstanding, the Department of
Agrarian Reform (DAR) issued Certificates of Land Ownership Award
(CLOAs) to the farmer-beneficiaries in the
three haciendas including CLOA No. 6654 which was issued
onOctober 15, 1993 covering 513.983 hectares, the subject of G.R.
No. 167505.

The application for conversion of Roxas & Co. was the subject of the
above-stated Roxas & Co., Inc. v. Court of Appealswhich the Court
remanded to the DAR for the observance of proper acquisition
proceedings. As reflected in the above-quoted statement of facts in
said case, during the pendency before the DAR of its application for
conversion following its remand to the DAR or on May 16, 2000,
Roxas & Co. filed with the DAR an application for exemption from the
coverage of the Comprehensive Agrarian Reform Program (CARP) of
1988 on the basis of PP 1520 and of DAR Administrative Order (AO)
No. 6, Series of 1994
[3]
which states that all lands already classified as
commercial, industrial, or residential before the effectivity of CARP no
longer need conversion clearance from the DAR.

It bears mentioning at this juncture that on April 18, 1982,
the Sangguniang Bayan of Nasugbu enacted Municipal Zoning
Ordinance No. 4 (Nasugbu MZO No. 4) which was approved on May 4,
1983 by the Human Settlements Regulation Commission, now the
Housing and Land Use Regulatory Board (HLURB).

The records show that Sangguniang Bayan and Association of
Barangay Captains of Nasugbu filed before this Court petitions for
intervention which were, however, denied by Resolution of June 5,
2006 for lack of standing.
[4]


After the seven present petitions were consolidated and referred to
the Court en banc,
[5]
oral arguments were conducted onJuly 7, 2009.

The core issues are:



1. Whether PP 1520 reclassified in 1975 all lands in the
Maragondon-Ternate-Nasugbu tourism zone to non-agricultural use
to exempt Roxas & Co.s three haciendas in Nasugbu from CARP
coverage;

2. Whether Nasugbu MSO No. 4, Series of 1982 exempted certain
lots in Hacienda Palico from CARP coverage; and

3. Whether the partial and complete cancellations by the DAR of
CLOA No. 6654 subject of G.R. No. 167505 is valid.


The Court shall discuss the issues in seriatim.

I. PP 1520 DID NOT AUTOMATICALLY CONVERT THE
AGRICULTURAL LANDS IN THE THREE MUNICIPALITIES INCLUDING
NASUGBU TO NON-AGRICULTURAL LANDS.

Roxas & Co. contends that PP 1520 declared the three municipalities
as each constituting a tourism zone, reclassified all lands therein to
tourism and, therefore, converted their use to non-agricultural
purposes.

To determine the chief intent of PP 1520, reference to the
whereas clauses is in order. By and large, a reference to the
congressional deliberation records would provide guidance in
dissecting the intent of legislation. But since PP 1520 emanated from
the legislative powers of then President Marcos during martial rule,
reference to the whereas clauses cannot be dispensed with.
[6]


The perambulatory clauses of PP 1520 identified only certain areas
in the sector comprising the [three Municipalities that] have potential
tourism value and mandated the conduct of necessary studies and
the segregation of specific geographic areas to achieve its
purpose. Which is why the PP directed the Philippine Tourism
Authority (PTA) to identify what those potential tourism areas are. If
all the lands in those tourism zones were to be wholly converted to
non-agricultural use, there would have been no need for the PP to
direct the PTA to identify what those specific geographic areas
are.

The Court had in fact passed upon a similar matter before. Thus
in DAR v. Franco,
[7]
it pronounced:

Thus, the DAR Regional Office VII, in coordination with the Philippine
Tourism Authority, has to determine precisely which areas are for
tourism development and excluded from the Operation Land
Transfer and the Comprehensive Agrarian Reform Program. And
suffice it to state here that the Court has repeatedly ruled that lands
already classified as non-agricultural before the enactment of RA
6657 on 15 June 1988 do not need any
conversion clearance.
[8]
(emphasis and underscoring supplied).

While the above pronouncement in Franco is an obiter, it should not
be ignored in the resolution of the present petitions since it reflects a
more rational and just interpretation of PP 1520. There is no
prohibition in embracing the rationale of an obiter dictum in settling
controversies, or in considering related proclamations establishing
tourism zones.

In the above-cited case of Roxas & Co. v. CA,
[9]
the Court made it
clear that the power to determine whether Haciendas
Palico, Banilad and Caylaway are non-agricultural, hence, exempt
from the coverage of the [Comprehensive Agrarian Reform Law]lies
with the [Department of Agrarian Reform], not with this
Court.
[10]
The DAR, an administrative body of special competence,
denied, by Order of October 22, 2001, the application for CARP
exemption of Roxas & Co., it finding that PP 1520
did notautomatically reclassify all the lands in the affected
municipalities from their original uses. It appears that the PTA had
not yet, at that time, identified the specific geographic areas for
tourism development and had no pending tourism development
projects in the areas. Further, report from the Center for Land Use
Policy Planning and Implementation (CLUPPI) indicated that the areas
were planted with sugar cane and other crops.
[11]


Relatedly, the DAR, by Memorandum Circular No. 7, Series of
2004,
[12]
came up with clarificatory guidelines and therein decreed
that

A. x x x x.

B. Proclamations declaring general areas such as whole provinces,
municipalities, barangays, islands or peninsulas as tourist zones that
merely:

(1) recognize certain still unidentified areas within the covered
provinces, municipalities, barangays, islands, or peninsulas to be with
potential tourism value and charge the Philippine Tourism Authority
with the task to identify/delineate specific geographic areas within
the zone with potential tourism value and to coordinate said areas
development; or

(2) recognize the potential value of identified spots located within
the general area declared as tourist zone (i.e. x x x x) and direct the
Philippine Tourism Authority to coordinate said areas development;

could not be regarded as effecting an automatic reclassification of
the entirety of the land area declared as tourist zone. This is so
because reclassification of lands denotes their allocation into
some specific use and providing for the manner of their utilization
and disposition (Sec. 20, Local Government Code) or the act of
specifying how agricultural lands shall be utilized for non-
agricultural uses such as residential, industrial, or commercial, as
embodied in the land use plan. (Joint HLURB, DAR, DA, DILG Memo.
Circular Prescribing Guidelines for MC 54, S. 1995, Sec.2)

A proclamation that merely recognizes the potential tourism
value of certain areas within the general area declared as tourist
zone clearly does not allocate, reserve, or intend the entirety of the
land area of the zone for non-agricultural purposes. Neither does
said proclamation direct that otherwise CARPable lands within the
zone shall already be used for purposes other than agricultural.

Moreover, to view these kinds of proclamation as a
reclassification for non-agricultural purposes of entire provinces,
municipalities, barangays, islands, or peninsulas would be
unreasonable as it amounts to an automatic and sweeping exemption
from CARP in the name of tourism development. The same would
also undermine the land use reclassification powers vested in local
government units in conjunction with pertinent agencies of
government.

C. There being no reclassification, it is clear that said
proclamations/issuances, assuming [these] took effect before June
15, 1988, could not supply a basis for exemption of the entirety of
the lands embraced therein from CARP coverage x x x x.

D. x x x x. (underscoring in the original; emphasis and italics supplied)


The DARs reading into these general proclamations of tourism zones
deserves utmost consideration, more especially in the present
petitions which involve vast tracts of agricultural land. To
reiterate, PP 1520 merely recognized the potential tourism value of
certain areas within the general area declared as tourism zones. It
did not reclassify the areas to non-agricultural use.

Apart from PP 1520, there are similarly worded proclamations
declaring the whole of Ilocos Norte and Bataan Provinces, Camiguin,
Puerto Prinsesa, Siquijor, Panglao Island, parts of Cebu City and
Municipalities of Argao and Dalaguete in CebuProvince as tourism
zones.
[13]


Indubitably, these proclamations, particularly those pertaining to the
Provinces of Ilocos Norte and Bataan, did not intend to reclassify all
agricultural lands into non-agricultural lands in one fell swoop. The
Court takes notice of how the agrarian reform program wasand still
isimplemented in these provinces since there are lands that do not
have any tourism potential and are more appropriate for agricultural
utilization.

Relatedly, a reference to the Special Economic Zone Act of
1995
[14]
provides a parallel orientation on the issue. Under saidAct,
several towns and cities encompassing the whole Philippines were
readily identified as economic zones.
[15]
To uphold Roxas & Co.s
reading of PP 1520 would see a total reclassification of practically all
the agricultural lands in the country to non-agricultural
use. Propitiously, the legislature had the foresight to include a bailout
provision in Section 31 of said Act for land conversion.
[16]
The same
cannot be said of PP 1520, despite the existence of Presidential
Decree (PD) No. 27 or the Tenant Emancipation Decree,
[17]
which is
the precursor of the CARP.

Interestingly, then President Marcos also issued on September 26,
1972 PD No. 2 which declared the entire Philippines as land reform
area.
[18]
Such declaration did not intend to reclassify all lands in the
entire country to agricultural lands. President Marcos, about a month
later or on October 21, 1972, issued PD 27 which decreed that all
private agricultural lands primarily devoted to rice and corn were
deemed awarded to their tenant-farmers.

Given these martial law-era decrees and considering the socio-
political backdrop at the time PP 1520 was issued in 1975, it is
inconceivable that PP 1520, as well as other similarly worded
proclamations which are completely silent on the aspect of
reclassification of the lands in those tourism zones, would nullify the
gains already then achieved by PD 27.

Even so, Roxas & Co. turns to Natalia Realty v. DAR and NHA v.
Allarde to support its position. These cases are not even closely
similar to the petitions in G.R. Nos. 167540 and 167543. The only
time that these cases may find application to said petitions is when
the PTA actually identifies well-defined geographic areas within the
zone with potential tourism value.

In remotely tying these two immediately-cited cases that involve
specific and defined townsite reservations for the housing program of
the National Housing Authority to the present petitions, Roxas & Co.
cites Letter of Instructions No. 352 issued on December 22, 1975
which states that the survey and technical description of the tourism
zones shall be considered an integral part of PP 1520. There were,
however, at the time no surveys and technical delineations yet of the
intended tourism areas.

On hindsight, Natalia and Allarde find application in the petitions in
G.R. Nos. 179650 & 167505, which petitions are anchored on the
extenuating effects of Nasugbu MZO No. 4, but not in the petitions in
G.R. Nos. 167540 & 167543 bearing on PP 1520, as will later be
discussed.

Of significance also in the present petitions is the issuance on August
3, 2007 of Executive Order No. 647
[19]
by President Arroyo which
proclaimed the areas in the Nasugbu Tourism Development Plan as
Special Tourism Zone. Pursuant to said Executive Order, the PTA
completed its validation of 21 out of 42 barangays as tourism priority
areas, hence, it is only after such completion that these identified
lands may be subjected to reclassification proceedings.

It bears emphasis that a mere reclassification of an agricultural land
does not automatically allow a landowner to change its use since
there is still that process of conversion before one is permitted to use
it for other purposes.
[20]


Tourism Act, and not to PP 1520, for possible exemption.

II. ROXAS & CO.S APPLICATION IN DAR ADMINISTRATIVE CASE
NO. A-9999-142-97 FOR CARP EXEMPTION IN HACIENDA
PALICO SUBJECT OF G.R. NO. 179650 CANNOT BE GRANTED IN VIEW
OF DISCREPANCIES IN THE LOCATION AND IDENTITY OF THE
SUBJECT PARCELS OF LAND.


Since PP 1520 did not automatically convert Haciendas Caylaway,
Banilad and Palico into non-agricultural estates, can Roxas & Co.
invoke in the alternative Nasugbu MZO No. 4, which reclassified in
1982 the haciendas to non-agricultural use to exclude six parcels of
land in Hacienda Palico from CARP coverage?

By Roxas & Co.s contention, the affected six parcels of land which are
the subject of DAR Administrative Case No. A-9999-142-97
and nine parcels of land which are the subject of DAR Administrative
Case No. A-9999-008-98 involved in G.R. No. 167505, all
in Hacienda Palico, have been reclassified to non-agricultural uses
via Nasugbu MZO No. 4 which was approved by the forerunner of
HLURB.

Roxas & Co.s contention fails.

To be sure, the Court had on several occasions decreed that a local
government unit has the power to classify and convert land from
agricultural to non-agricultural prior to the effectivity of the
CARL.
[23]
In Agrarian Reform Beneficiaries Association v. Nicolas,
[24]
it
reiterated that

. . . the facts obtaining in this case are similar to those in Natalia
Realty. Both subject lands form part of an area designated for non-
agricultural purposes. Both were classified as non-agricultural
lands prior to June 15, 1988, the date of effectivity of CARL.

x x x x

In the case under review, the subject parcels of lands were
reclassified within an urban zone as per approved Official
Comprehensive Zoning Map of the City of Davao. The reclassification
was embodied in City Ordinance No. 363, Series of 1982. As
such, the subject parcels of land are considered non-agricultural
and may be utilized for residential, commercial, and industrial
purposes. The reclassification was later approved by the
HLURB.
[25]
(emphasis, italics and underscoring supplied)


The DAR Secretary
[26]
denied the application for exemption of Roxas
& Co., however, in this wise:

Initially, CLUPPI-2 based [its] evaluation on the lot nos. as appearing
in CLOA No. 6654. However, for purposes of clarity and to ensure
that the area applied for exemption is indeed part of TCT No. T-
60034, CLUPPI-2 sought to clarify with [Roxas & Co.] the origin of TCT
No. T-60034. In a letter dated May 28, 1998, [Roxas & Co.] explains
that portions of TCT No. T-985, the mother title, was subdivided into
125 lots pursuant to PD 27. A total of 947.8417 was retained by the
landowners and was subsequently registered under TCT No.
49946. [[Roxas & Co.] further explains that TCT No. 49946 was
further subdivided into several lots (Lot125-A to Lot 125-P) with Lot
No. 125-N registered under TCT No. 60034. [A] review of the titles,
however, shows that the origin of T-49946 is T-783 and not T-
985. On the other hand, the origin of T-60034 is listed as 59946, and
not T-49946. The discrepancies were attributed by [Roxas & Co.] to
typographical errors which were acknowledged and initialled *sic+
by the ROD. Per verification, the discrepancies . . . cannot be
ascertained.
[27]
(emphasis and underscoring supplied)

In denying Roxas & Co.s motion for reconsideration, the DAR
Secretary held:

The landholdings covered by the aforesaid titles do not correspond
to the Certification dated February 11, 1998 of the [HLURB] , the
Certification dated September 12, 1996 issued by the Municipal
Planning and Development Coordinator, and the Certifications
dated July 31, 1997 and May 27, 1997 issued by the National
Irrigation Authority. The certifications were issued for Lot Nos. 21,
24, 28, 31, 32 and 34. Thus, it was not even possible to issue
exemption clearance over the lots covered by TCT Nos. 60019 to
60023.

Furthermore, we also note the discrepancies between the
certifications issued by the HLURB and the Municipal Planning
Development Coordinator as to the area of the specific
lots.
[28]
(emphasis and underscoring supplied)

In affirming the DAR Secretarys denial of Roxas & Co.s application
for exemption, the Court of Appeals, in CA-G.R. SP No. 63146 subject
of G.R. No. 179650, observed:

In the instant case, a perusal of the documents before us shows that
there is no indication that the said TCTs refer to the same properties
applied for exemption by [Roxas & Co.] It is true that the certifications
refer, among others, to DAR Lot Nos. 21, 24, 28, 31, 32 and 34But
these certifications contain nothing to show that these lots are the
same as Lots 125-A, 125-B, 125-C, 125-D and 125-E covered by TCT
Nos. 60019, 60020, 60021, 60022 and 60023, respetively. While
[Roxas & Co.] claims that DAR Lot Nos. 21, 24 and 31 correspond to
the aforementioned TCTs submitted to the DAR no evidence was
presented to substantiate such allegation.

Moreover, [Roxas & Co.] failed to submit TCT 634 which it claims
covers DAR Lot Nos. 28, 32 and 24.(TSN, April 24, 2001, pp. 43-44)

x x x x

[Roxas & Co.] also claims that subject properties are located at
Barangay Cogunan and Lumbangan and that these properties are part
of the zone classified as Industrial under Municipal Ordinance No. 4,
Series of 1982 of the Municipality of Nasugbu, Batangas. .a scrutiny
of the said Ordinance shows that only Barangays Talangan and
Lumbangan of the said municipality were classified as Industrial
ZonesBarangay Cogunan was not included. x x x x. In fact, the TCTs
submitted by [Roxas & Co.] show that the properties covered by said
titles are all located at Barrio Lumbangan.
[29]
(emphasis and
underscoring supplied)


Its foregoing findings notwithstanding, the appellate court still
allowed Roxas & Co. to adduce additional evidence to support its
application for exemption under Nasugbu MZO No. 4.

Meanwhile, Roxas & Co. appealed the appellate courts decision in
CA-G.R. No. SP No. 63146 affirming the DAR Secretarys denial of its
application for CARP exemption in Hacienda Palico (now the subject
of G.R. No. 149548).

When Roxas & Co. sought the re-opening of the proceedings in DAR
Administrative Case No. A-9999-142-97 (subject of G.R. No. 179650),
and offered additional evidence in support of its application for CARP
exemption, the DAR Secretary, this time, granted its application for
the six lots including Lot No. 36 since the additional documents
offered by Roxas & Co. mentioned the said lot.

In granting the application, the DAR Secretary
[30]
examined anew the
evidence submitted by Roxas & Co. which consisted mainly of
certifications from various local and national government
agencies.
[31]
Petitioner in G.R. Nos. 167505, 167540, 169163 and
179650, Damayan Ng Mga Manggagawang Bukid Sa Asyenda Roxas-
National Federation of Sugar Workers (DAMBA-NFSW), the
organization of the farmer-beneficiaries, moved to have the grant of
the application reconsidered but the same was denied by the DAR by
Order of December 12, 2003, hence, it filed a petition
for certiorari before the Court of Appeals, docketed as CA-G.R. SP No.
82225, on grounds of forum-shopping and grave abuse of
discretion. The appellate court, by Decision of October 31, 2006,
ruled that DAMBA-NFSW availed of the wrong mode of appeal. At all
events, it dismissed its petition as it upheld the DAR Secretarys ruling
that Roxas & Co. did not commit forum-shopping, hence, the petition
of DAMBA-NGSW in G.R. No. 179650.

While ordinarily findings of facts of quasi-judicial agencies are
generally accorded great weight and even finality by the Court if
supported by substantial evidence in recognition of their expertise on
the specific matters under their consideration,
[32]
this legal precept
cannot be made to apply in G.R. No. 179650.

Even as the existence and validity of Nasugbu MZO No. 4 had already
been established, there remains in dispute the issue of whether the
parcels of land involved in DAR Administrative Case No. A-9999-142-
97 subject of G.R. No. 179650 are actually within the said zoning
ordinance.

The Court finds that the DAR Secretary indeed committed grave
abuse of discretion when he ignored the glaring inconsistencies in the
certifications submitted early on by Roxas & Co. in support of its
application vis--vis the certifications it later submitted when the DAR
Secretary reopened DAR Administrative Case No. A-9999-142-97.

Notably, then DAR Secretary Horacio Morales, on one hand, observed
that the landholdings covered by the aforesaid titles do not
correspond to the Certification dated February 11, 1998 of the
[HLURB], the Certification dated September 12, 1996 issued by the
Municipal Planning and Development Coordinator, and the
Certifications dated July 31, 1997 and May 27, 1997 issued by the
National Irrigation Authority. On the other hand, then Secretary
Hernani Braganza relied on a different set of certifications which were
issued later or on September 19, 1996.

In this regard, the Court finds in order the observation of DAMBA-
NFSW that Roxas & Co. should have submitted the comprehensive
land use plan and pointed therein the exact locations of the
properties to prove that indeed they are within the area of coverage
of Nasugbu MZO No. 4.

The petitions in G.R. Nos. 179650 & 149548 must be distinguished
from Junio v. Garilao
[33]
wherein the certifications submitted in
support of the application for exemption of the therein subject lot
were mainly considered on the presumption of regularity in their
issuance, there being no doubt on the location and identity of the
subject lot.
[34]
In G.R. No. 179650, there exist uncertainties on the
location and identities of the properties being applied for
exemption.

G.R. No. 179650 & G.R. No. 149548 must accordingly be denied for
lack of merit.


III. ROXAS & CO.S APPLICATION FOR CARP EXEMPTION IN DAR
ADMINISTRATIVE CASE NO. A-9999-008-98 FOR THE NINE PARCELS
OF LAND IN HACIENDA PALICO SUBJECT OF G.R. NO.
167505 SHOULD BEGRANTED.

The Court, however, takes a different stance with respect to Roxas &
Co.s application for CARP exemption in DAR Administrative Case No.
A-9999-008-98 over nine parcels of land identified as Lot Nos. 20, 13,
37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No. 985
covering 45.9771 hectares in Hacienda Palico, subject of G.R. No.
167505.


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. Photocopy of TCT No. 985 and its corresponding Tax Declaration
No. 0401;

4. 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 Administrator 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;
[35]


x x x x (emphasis and underscoring supplied)


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.
[36]



DAMBA-NSFW moved for reconsideration but the DAR Secretary
denied the same and explained further why CLOA holders need not
be informed of the pending application for exemption in this wise:

As regards the first ground raised by [DAMBA-NSFW], it should be
remembered that an application for CARP-exemption pursuant to DOJ
Opinion No. 44, series of 1990, as implemented by DAR
Administrative Order No. 6, series of 1994, is non-adversarial or non-
litigious in nature. Hence, applicant is correct in saying that nowhere
in the rules is it required that occupants of a landholding should be
notified of an initiated or pending exemption application.

x x x x

With regard [to] the allegation that oppositors-movants are already
CLOA holders of subject propert[ies] and deserve to be notified, as
owners, of the initiated questioned exemption application, is of no
moment. The Supreme Court in the case of Roxas [&] Co., Inc. v.
Court of Appeals, 321 SCRA 106, held:
We stress that the failure of respondent DAR to comply with the
requisites of due process in the acquisition proceedings does not give
this Court the power to nullify the CLOAs already issued to the
farmer beneficiaries. x x x x. Anyhow, the farmer[-]beneficiaries hold
the property in trust for the rightful owner of the land.

Since subject landholding has been validly determined to be CARP-
exempt, therefore, the previous issuance of the CLOA of oppositors-
movants is erroneous. Hence, similar to the situation of the above-
quoted Supreme Court Decision, oppositors-movants only hold the
property in trust for the rightful owners of the land and are not the
owners of subject landholding who should be notified of the
exemption application of applicant Roxas & Company, Incorporated.

Finally, this Office finds no substantial basis to reverse the assailed
Orders since there is substantial compliance by the applicant with the
requirements for the issuance of exemption clearance under DAR AO
6 (1994).
[37]



On DAMBA-NSFWs petition for certiorari, the Court of Appeals,
noting that the petition was belatedly filed, sustained, by Decision
of December 20, 1994 and Resolution of May 7, 2007,
[38]
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.




IV. THE CLOAs ISSUED BY THE DAR in ADMINISTRATIVE CASE
NO. A-9999-008-98 SUBJECT OF G.R. No. 179650 TO THE FARMER-
BENEFICIARIES INVOLVING THE NINE PARCELS OF LAND IN
HACIENDA PALICO MUST BE CANCELLED.


Turning now to the validity of the issuance of CLOAs in Hacienda
Palico vis--vis the present dispositions: It bears recalling that in DAR
Administrative Case Nos. A-9999-008-98 and A-9999-142-97 (G.R. No.
179650), the Court ruled for Roxas & Co.s grant of exemption in DAR
Administrative Case No. A-9999-008-98 but denied the grant of
exemption in DAR Administrative Case No. A-9999-142-97 for reasons
already discussed. It follows that the CLOAs issued to the farmer-
beneficiaries in DAR Administrative Case No. A-9999-008-98 must be
cancelled.

But first, the Court digresses. The assertion of DAMBA-NSFW that the
petitions for partial and complete cancellations of the CLOAs subject
of DARAB Case Nos. R-401-003-2001 to R-401-005-2001 and No. 401-
239-2001 violated the earlier order inRoxas v. Court of Appeals does
not lie. Nowhere did the Court therein pronounce that the CLOAs
issued cannot and should not be cancelled, what was involved
therein being the legality of the acquisition proceedings. The Court
merely reiterated that it is the DAR which has primary jurisdiction to
rule on the validity of CLOAs. Thus it held:

. . . [t]he failure of respondent DAR to comply with the requisites of
due process in the acquisition proceedings does not give this Court
the power to nullify the [CLOAs] already issued to the farmer-
beneficiaries. To assume the power is to short-circuit the
administrative process, which has yet to run its regular
course. Respondent DAR must be given the chance to correct its
procedural lapses in the acquisition proceedings. x x x x. Anyhow,
the farmer beneficiaries hold the property in trust for the rightful
owner of the land.
[39]




On the procedural question raised by Roxas & Co. on the appellate
courts relaxation of the rules by giving due course to DAMBA-NFSWs
appeal in CA G.R. SP No. 72198, the subject of G.R. No. 167845:

Indeed, the perfection of an appeal within the statutory period is
jurisdictional and failure to do so renders the assailed decision final
and executory.
[40]
A relaxation of the rules may, however, for
meritorious reasons, be allowed in the interest of justice.
[41]
The
Court finds that in giving due course to DAMBA-NSFWs appeal, the
appellate court committed no reversible error. Consider its
ratiocination:

x x x x. To deny [DAMBA-NSFW+s appeal with the PARAD will not
only affect their right over the parcel of land subject of this petition
with an area of 103.1436 hectares, but also that of the whole area
covered by CLOA No. 6654 since the PARAD rendered a Joint
Resolution of the Motion for Reconsideration filed by the [DAMBA-
NSFW+ with regard to *Roxas & Co.+s application for partial and total
cancellation of the CLOA in DARAB Cases No. R-401-003-2001 to R-
401-005-2001 and No. 401-239-2001. There is a pressing need for an
extensive discussion of the issues as raised by both parties as the
matter of canceling CLOA No. 6654 is of utmost importance, involving
as it does the probable displacement of hundreds of farmer-
beneficiaries and their families. x x x x (underscoring supplied)

Unlike courts of justice, the DARAB, as a quasi-judicial body, is not
bound to strictly observe rules of procedure and evidence. To strictly
enforce rules on appeals in this case would render to naught the
Courts dispositions on the other issues in these consolidated
petitions.


In the main, there is no logical recourse except to cancel the CLOAs
issued for the nine parcels of land identified as Lot Nos. 20, 13, 37,
19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No. 985
covering 45.9771 hectares in Hacienda Palico (or those covered by
DAR Administrative Case No. A-9999-008-98). As for the rest of the
CLOAs, they should be respected since Roxas & Co., as shown in the
discussion in G.R. Nos. 167540, 167543 and 167505, failed to prove
that the other lots in Hacienda Palico and the other two haciendas,
aside from the above-mentioned nine lots, are CARP-exempt.

Conformably, Republic Act No. 3844 (R.A. No. 3844), as
amended,
[42]
mandates that disturbance compensation be given to
tenants of parcels of land upon finding that (t)he 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.
[43]
In addition,
DAR AO No. 6, Series of 1994 directs the payment of disturbance
compensation before the application for exemption may be
completely granted.

Roxas & Co. is thus mandated to first satisfy the disturbance
compensation of affected farmer-beneficiaries in the areas covered
by the nine parcels of lands in DAR AO No. A-9999-008-98 before the
CLOAs covering them can be cancelled. And it is enjoined
to strictly follow the instructions of R.A. No. 3844.

Finally then, and in view of the Courts dispositions in G.R. Nos.
179650 and 167505, the May 27, 2001 Decision of the Provincial
Agrarian Reform Adjudicator (PARAD)
[44]
in DARAB Case No. 401-239-
2001 ordering the total cancellation of CLOA No. 6654, subject of G.R.
No. 169163, is SET ASIDE except with respect to the CLOAs issued
for Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are
portions of TCT No. 985 covering 45.9771 hectares in Hacienda
Palico (or those covered by DAR Administrative Case No. A-9999-008-
98). It goes without saying that the motion for reconsideration of
DAMBA-NFSW is granted to thus vacate the Courts October 19, 2005
Resolution dismissing DAMBA-NFSWs petition for review of the
appellate courts Decision in CA-G.R. SP No. 75952;
[45]


WHEREFORE,

1) In G.R. No. 167540, the Court REVERSES and SETS ASIDE the
November 24, 2003 Decision
[46]
and March 18, 2005 Resolution of the
Court of Appeals in CA-G.R. SP No. 72131 which declared that
Presidential Proclamation No. 1520 reclassified the lands in the
municipalities of Nasugbu in Batangas and Maragondon and Ternate
in Cavite to non-agricultural use;

2) The Court accordingly GRANTS the Motion for Reconsideration of
the Department of Agrarian Reform in G.R. No.
167543 and REVERSES and SETS ASIDE its Resolution of July 20, 2005;

3) In G.R. No. 149548, the Court DENIES the petition for review of
Roxas & Co. for lack of merit;

4) In G.R. No. 179650, the Court GRANTS the petition for review of
DAMBA-NSFW and REVERSES and SETS ASIDEthe October 31,
2006 Decision and August 16, 2007 Resolution of the Court of Appeals
in CA-G.R. SP No. 82225;

5) In G.R. No. 167505, the Court DENIES the petition for review of
DAMBA-NSFW and AFFIRMS the December 20, 2004 Decision
and March 7, 2005 Resolution of the Court of Appeals in CA-G.R. SP
No. 82226;

6) In G.R. No. 167845, the Court DENIES Roxas & Co.s petition for
review for lack of merit and AFFIRMS theSeptember 10,
2004 Decision and April 14, 2005 Resolution of the Court of Appeals;

7) In G.R. No. 169163, the Court SETS ASIDE the Decisions of the
Provincial Agrarian Reform Adjudicator in DARAB Case No. 401-239-
2001 ordering the cancellation of CLOA No. 6654 and DARAB Cases
Nos. R-401-003-2001 to No. R-401-005-2001 granting the partial
cancellation of CLOA No. 6654. The CLOAs issued for Lots No. 21 No.
24, No. 26, No. 31, No. 32 and No. 34 or those covered by DAR
Administrative Case No. A-9999-142-97) remain; and

8) Roxas & Co. is ORDERED to pay the disturbance compensation of
affected farmer-beneficiaries in the areas covered by the nine parcels
of lands in DAR Administrative Case No. A-9999-008-98 before the
CLOAs therein can be cancelled, and is ENJOINED to strictly follow the
mandate of R.A. No. 3844.

No pronouncement as to costs.

SO ORDERED.
LAND BANK OF THE PHILIPPINES, petitioner, vs. HON. ELI G. C.
NATIVIDAD, Presiding Judge of the Regional Trial Court, Branch 48,
San Fernando, Pampanga, and JOSE R. CAGUIAT represented by
Attorneys-in-fact JOSE T. BARTOLOME and VICTORIO
MANGALINDAN, respondents.
D E C I S I O N
TINGA, J.:
This is a Petition for Review
[1]
dated December 6, 1996 assailing
the Decision
[2]
of the Regional Trial Court
[3]
dated July 5, 1996 which
ordered the Department of Agrarian Reform (DAR) and petitioner
Land Bank of the Philippines (Land Bank) to pay private respondents
the amount of P30.00 per square meter as just compensation for the
States acquisition of private respondents properties under the land
reform program.
The facts follow.
On May 14, 1993, private respondents filed a petition before the trial
court for the determination of just compensation for their agricultural
lands situated in Arayat, Pampanga, which were acquired by the
government pursuant to Presidential Decree No. 27 (PD 27). The
petition named as respondents the DAR and Land Bank. With leave
of court, the petition was amended to implead as co-respondents the
registered tenants of the land.
After trial, the court rendered the assailed Decision the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of petitioners and
against respondents, ordering respondents, particularly, respondents
Department of Agrarian Reform and the Land Bank of the Philippines,
to pay these lands owned by petitioners and which are the subject of
acquisition by the State under its land reform program, the amount of
THIRTY PESOS (P30.00) per square meter, as the just compensation
due for payment for same lands of petitioners located at San Vicente
(or Camba), Arayat, Pampanga.
Respondent Department of Agrarian Reform is also ordered to pay
petitioners the amount of FIFTY THOUSAND PESOS (P50,000.00) as
Attorneys Fee, and to pay the cost of suit.
SO ORDERED.
[4]

DAR and Land Bank filed separate motions for reconsideration which
were denied by the trial court in its Order
[5]
dated July 30, 1996 for
being pro forma as the same did not contain a notice of
hearing. Thus, the prescriptive period for filing an appeal was not
tolled. Land Bank consequently failed to file a timely appeal and the
assailed Decision became final and executory.
Land Bank then filed a Petition for Relief from Order Dated 30 July
1996,
[6]
citing excusable negligence as its ground for relief. Attached
to the petition for relief were two affidavits of merit claiming that the
failure to include in the motion for reconsideration a notice of hearing
was due to accident and/or mistake.
[7]
The affidavit of Land Banks
counsel of record notably states that he simply scanned and signed
the Motion for Reconsideration for Agrarian Case No. 2005, Regional
Trial Court of Pampanga, Branch 48, not knowing, or unmindful that it
had no notice of hearing
[8]
due to his heavy workload.
The trial court, in its Order
[9]
of November 18, 1996, denied the
petition for relief because Land Bank lost a remedy in law due to its
own negligence.
In the instant petition for review, Land Bank argues that the failure of
its counsel to include a notice of hearing due to pressure of work
constitutes excusable negligence and does not make the motion for
reconsideration pro forma considering its allegedly meritorious
defenses. Hence, the denial of its petition for relief from judgment
was erroneous.
According to Land Bank, private respondents should have sought the
reconsideration of the DARs valuation of their properties. Private
respondents thus failed to exhaust administrative remedies when
they filed a petition for the determination of just compensation
directly with the trial court. Land Bank also insists that the trial court
erred in declaring that PD 27 and Executive Order No. 228 (EO 228)
are mere guidelines in the determination of just compensation, and in
relying on private respondents evidence of the valuation of the
properties at the time of possession in 1993 and not on Land Banks
evidence of the value thereof as of the time of acquisition in 1972.
Private respondents filed a Comment
[10]
dated February 22, 1997,
averring that Land Banks failure to include a notice of hearing in its
motion for reconsideration due merely to counsels heavy workload,
which resulted in the motion being declared pro forma, does not
constitute excusable negligence, especially in light of the admission of
Land Banks counsel that he has been a lawyer since 1973 and has
mastered the intricate art and technique of pleading.
Land Bank filed a Reply
[11]
dated March 12, 1997 insisting that equity
considerations demand that it be heard on substantive issues raised
in its motion for reconsideration.
The Court gave due course to the petition and required the parties to
submit their respective memoranda.
[12]
Both parties complied.
[13]

The petition is unmeritorious.
At issue is whether counsels failure to include a notice of hearing
constitutes excusable negligence entitling Land Bank to a relief from
judgment.
Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides:
Sec. 1. Petition for relief from judgment, order, or other
proceedings.When a judgment or final order is entered, or any
other proceeding is thereafter taken against a party in any court
through fraud, accident, mistake, or excusable negligence, he may file
a petition in such court and in the same case praying that the
judgment, order or proceeding be set aside.
As can clearly be gleaned from the foregoing provision, the remedy of
relief from judgment can only be resorted to on grounds of fraud,
accident, mistake or excusable negligence. Negligence to be
excusable must be one which ordinary diligence and prudence could
not have guarded against.
[14]

Measured against this standard, the reason profferred by Land Banks
counsel, i.e., that his heavy workload prevented him from ensuring
that the motion for reconsideration included a notice of hearing, was
by no means excusable.
Indeed, counsels admission that he simply scanned and signed the
Motion for Reconsideration for Agrarian Case No. 2005, Regional Trial
Court of Pampanga, Branch 48, not knowing, or unmindful that it had
no notice of hearing speaks volumes of his arrant negligence, and
cannot in any manner be deemed to constitute excusable negligence.
The failure to attach a notice of hearing would have been less odious
if committed by a greenhorn but not by a lawyer who claims to have
mastered the intricate art and technique of pleading.
[15]

Indeed, a motion that does not contain the requisite notice of hearing
is nothing but a mere scrap of paper. The clerk of court does not
even have the duty to accept it, much less to bring it to the attention
of the presiding judge.
[16]
The trial court therefore correctly
considered the motion for reconsideration pro forma. Thus, it cannot
be faulted for denying Land Banks motion for reconsideration and
petition for relief from judgment.
It should be emphasized at this point that procedural rules are
designed to facilitate the adjudication of cases. Courts and litigants
alike are enjoined to abide strictly by the rules. While in certain
instances, we allow a relaxation in the application of the rules, we
never intend to forge a weapon for erring litigants to violate the rules
with impunity. The liberal interpretation and application of rules
apply only in proper cases of demonstrable merit and under
justifiable causes and circumstances. While it is true that litigation is
not a game of technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Party litigants and their
counsel are well advised to abide by, rather than flaunt, procedural
rules for these rules illumine the path of the law and rationalize the
pursuit of justice.
[17]

Aside from ruling on this procedural issue, the Court shall also resolve
the other issues presented by Land Bank, specifically as regards
private respondents alleged failure to exhaust administrative
remedies and the question of just compensation.
Land Bank avers that private respondents should have sought the
reconsideration of the DARs valuation instead of filing a petition to
fix just compensation with the trial court.
The records reveal that Land Banks contention is not entirely true. In
fact, private respondents did write a letter
[18]
to the DAR Secretary
objecting to the land valuation summary submitted by the Municipal
Agrarian Reform Office and requesting a conference for the purpose
of fixing just compensation. The letter, however, was left
unanswered prompting private respondents to file a petition directly
with the trial court.
At any rate, in Philippine Veterans Bank v. Court of Appeals,
[19]
we
declared that there is nothing contradictory between the DARs
primary jurisdiction to determine and adjudicate agrarian reform
matters and exclusive original jurisdiction over all matters involving
the implementation of agrarian reform, which includes the
determination of questions of just compensation, and the original and
exclusive jurisdiction of regional trial courts over all petitions for the
determination of just compensation. The first refers to administrative
proceedings, while the second refers to judicial proceedings.
In accordance with settled principles of administrative law, primary
jurisdiction is vested in the DAR to determine in a preliminary manner
the just compensation for the lands taken under the agrarian reform
program, but such determination is subject to challenge before the
courts. The resolution of just compensation cases for the taking of
lands under agrarian reform is, after all, essentially a judicial
function.
[20]

Thus, the trial did not err in taking cognizance of the case as the
determination of just compensation is a function addressed to the
courts of justice.
Land Banks contention that the property was acquired for purposes
of agrarian reform on October 21, 1972, the time of the effectivity of
PD 27, ergo just compensation should be based on the value of the
property as of that time and not at the time of possession in 1993, is
likewise erroneous. In Office of the President, Malacaang, Manila v.
Court of Appeals,
[21]
we ruled that the seizure of the landholding did
not take place on the date of effectivity of PD 27 but would take
effect on the payment of just compensation.
Under the factual circumstances of this case, the agrarian reform
process is still incomplete as the just compensation to be paid private
respondents has yet to be settled. Considering the passage of
Republic Act No. 6657 (RA 6657)
[22]
before the completion of this
process, the just compensation should be determined and the
process concluded under the said law. Indeed, RA 6657 is the
applicable law, with PD 27 and EO 228 having only suppletory effect,
conformably with our ruling in Paris v. Alfeche.
[23]

Section 17 of RA 6657 which is particularly relevant, providing as it
does the guideposts for the determination of just compensation,
reads as follows:
Sec. 17. Determination of Just Compensation.In determining just
compensation, the cost of acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation
by the owner, the tax declarations, and the assessment made by
government assessors shall be considered. The social and economic
benefits contributed by the farmers and the farm-workers and by the
Government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its
valuation.
It would certainly be inequitable to determine just compensation
based on the guideline provided by PD 27 and EO 228 considering the
DARs failure to determine the just compensation for a considerable
length of time. That just compensation should be determined in
accordance with RA 6657, and not PD 27 or EO 228, is especially
imperative considering that just compensation should be the full and
fair equivalent of the property taken from its owner by the
expropriator, the equivalent being real, substantial, full and ample.
[24]

In this case, the trial court arrived at the just compensation due
private respondents for their property, taking into account its nature
as irrigated land, location along the highway, market value, assessors
value and the volume and value of its produce. This Court is
convinced that the trial court correctly determined the amount of just
compensation due private respondents in accordance with, and
guided by, RA 6657 and existing jurisprudence.
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
JOSEFINA S. LUBRICA, in her G.R. No. 170220
capacity as Assignee of FEDERICO
C. SUNTAY, NENITA SUNTAY
TAEDO and EMILIO A.M.
SUNTAY III,
Petitioners, Present:

Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
LAND BANK OF THE PHILIPPINES,
Respondent. Promulgated:

November 20, 2006
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:


This Petition for Review on Certiorari under Rule 45 of the Rules
of Court assails the October 27, 2005 Amended Decision
[1]
of the
Court of Appeals in CA-G.R. SP No. 77530, which vacated its May 26,
2004 Decision affirming (a) the Order of the Regional Trial Court of
San Jose, Occidental Mindoro, Branch 46, acting as Special Agrarian
Court, in Agrarian Case Nos. R-1339 and R-1340, dated March 31,
2003 directing respondent Land Bank of the Philippines (LBP) to
deposit the provisional compensation as determined by the Provincial
Agrarian Reform Adjudicator (PARAD); (b) the May 26, 2003
Resolution denying LBPs motion for reconsideration; and (c) the May
27, 2003 Order requiring Teresita V. Tengco, LBPs Land
Compensation Department Manager, to comply with the March 31,
2003 Order.

The facts of the case are as follows:

Petitioner Josefina S. Lubrica is the assignee
[2]
of Federico C.
Suntay over certain parcels of agricultural land located at Sta. Lucia,
Sablayan, Occidental Mindoro, with an area of 3,682.0285 hectares
covered by Transfer Certificate of Title (TCT) No. T-31 (T-1326)
[3]
of
the Registry of Deeds of Occidental Mindoro. In 1972, a portion of
the said property with an area of 311.7682 hectares, was placed
under the land reform program pursuant to Presidential Decree No.
27 (1972)
[4]
and Executive Order No. 228 (1987).
[5]
The land was
thereafter subdivided and distributed to farmer beneficiaries. The
Department of Agrarian Reform (DAR) and the LBP fixed the value of
the land at P5,056,833.54 which amount was deposited in cash and
bonds in favor of Lubrica.

On the other hand, petitioners Nenita Suntay-Taedo and Emilio
A.M. Suntay III inherited from Federico Suntay a parcel of agricultural
land located at Balansay, Mamburao, Occidental Mindoro covered by
TCT No. T-128
[6]
of the Register of Deeds of Occidental Mindoro,
consisting of two lots, namely, Lot 1 with an area of 45.0760 hectares
and Lot 2 containing an area of 165.1571 hectares or a total of
210.2331 hectares. Lot 2 was placed under the coverage of P.D. No.
27 but only 128.7161 hectares was considered by LBP and valued the
same at P1,512,575.05.

Petitioners rejected the valuation of their properties, hence the
Office of the Provincial Agrarian Reform Adjudicator (PARAD)
conducted summary administrative proceedings for determination of
just compensation. On January 29, 2003, the PARAD fixed the
preliminary just compensation at P51,800,286.43 for the 311.7682
hectares (TCT No. T-31) and P21,608,215.28 for the 128.7161
hectares (TCT No. T-128).
[7]


Not satisfied with the valuation, LBP filed on February 17, 2003,
two separate petitions
[8]
for judicial determination of just
compensation before the Regional Trial Court of San Jose, Occidental
Mindoro, acting as a Special Agrarian Court, docketed as Agrarian
Case No. R-1339 for TCT No. T-31 and Agrarian Case No. R-1340 for
TCT No. T-128, and raffled to Branch 46 thereof.

Petitioners filed separate Motions to Deposit the Preliminary
Valuation Under Section 16(e) of Republic Act (R.A.) No. 6657
(1988)
[9]
and Ad Cautelam Answer praying among others that LBP
deposit the preliminary compensation determined by the PARAD.

On March 31, 2003, the trial court issued an Order
[10]
granting
petitioners motion, the dispositive portion of which reads:

WHEREFORE, Ms. Teresita V. Tengco, of the Land
Compensation Department I (LCD I), Land Bank of the Philippines, is
hereby ordered pursuant to Section 16 (e) of RA 6657 in relation to
Section 2, Administrative Order No. 8, Series of 1991, to deposit the
provisional compensation as determined by the PARAD in cash and
bonds, as follows:

1. In Agrarian Case No. R-1339, the amount of P 51,800,286.43,
minus the amount received by the Landowner;
2. In Agrarian Case No. R-1340, the amount of P 21,608,215.28,
less the amount of P 1,512,575.16, the amount already deposited.

Such deposit must be made with the Land Bank of
the Philippines, Manila within five (5) days from receipt of a copy of
this order and to notify this court of her compliance within such
period.

Let this order be served by the Sheriff of this Court at the
expense of the movants.

SO ORDERED.
[11]


LBPs motion for reconsideration was denied in a
Resolution
[12]
dated May 26, 2003. The following day, May 27, 2003,
the trial court issued an Order
[13]
directing Ms. Teresita V. Tengco,
LBPs Land Compensation Department Manager, to deposit the
amounts.

Thus, on June 17, 2003, LBP filed with the Court of Appeals a
Petition for Certiorari and Prohibition under Rule 65 of the Rules of
Court with application for the issuance of a Temporary Restraining
Order and Writ of Preliminary Injunction docketed as CA-G.R. SP No.
77530.
[14]


On June 27, 2003, the appellate court issued a 60-day
temporary restraining order
[15]
and on October 6, 2003, a writ of
preliminary injunction.
[16]


On May 26, 2004, the Court of Appeals rendered a Decision
[17]
in
favor of the petitioners, the dispositive portion of which reads:

WHEREFORE, premises considered, there being no grave abuse
of discretion, the instant Petition for Certiorari and Prohibition is
DENIED. Accordingly, the Order dated March 31, 2003, Resolution
dated May 26, 2003, and Order dated May 27, 2003 are hereby
AFFIRMED. The preliminary injunction We previously issued is hereby
LIFTED and DISSOLVED.

SO ORDERED.
[18]


The Court of Appeals held that the trial court correctly ordered
LBP to deposit the amounts provisionally determined by the PARAD
as there is no law which prohibits LBP to make a deposit pending the
fixing of the final amount of just compensation. It also noted that
there is no reason for LBP to further delay the deposit considering
that the DAR already took possession of the properties and
distributed the same to farmer-beneficiaries as early as 1972.

LBP moved for reconsideration which was granted. On October
27, 2005, the appellate court rendered the assailed Amended
Decision,
[19]
the dispositive portion of which reads:

Wherefore, in view of the prescription of a different formula in
the case of Gabatin which We hold as cogent and compelling
justification necessitating Us to effect the reversal of Our judgment
herein sought to be reconsidered, the instant Motion for
Reconsideration is GRANTED, and Our May 26, 2004 Decision is
hereby VACATED and ABANDONED with the end in view of giving way
to and acting in harmony and in congruence with the tenor of the
ruling in the case of Gabatin. Accordingly, the assailed rulings of the
Special Agrarian Court is (sic) commanded to compute and fix the just
compensation for the expropriated agricultural lands strictly in
accordance with the mode of computation prescribed (sic) Our May
26, 2004 judgment in the case of Gabatin.

SO ORDERED.
[20]


In the Amended Decision, the Court of Appeals held that the
immediate deposit of the preliminary value of the expropriated
properties is improper because it was erroneously
computed. Citing Gabatin v. Land Bank of the Philippines,
[21]
it held
that the formula to compute the just compensation should be: Land
Value = 2.5 x Average Gross Production x Government Support
Price. Specifically, it held that the value of the government support
price for the corresponding agricultural produce (rice and corn)
should be computed at the time of the legal taking of the subject
agricultural land, that is, on October 21, 1972 when landowners were
effectively deprived of ownership over their properties by virtue of
P.D. No. 27. According to the Court of Appeals, the PARAD incorrectly
used the amounts of P500 and P300 which are the prevailing
government support price for palay and corn, respectively, at the
time of payment, instead of P35 and P31, the prevailing government
support price at the time of the taking in
1972.

Hence, this petition raising the following issues:

A. THE COURT A QUO HAS DECIDED THE CASE IN A WAY NOT IN
ACCORD WITH THE LATEST DECISION OF THE SUPREME COURT IN THE
CASE OF LAND BANK OF THE PHILIPPINES VS. HON. ELI G.C.
NATIVIDAD, ET AL., G.R. NO. 127198, PROM. MAY 16, 2005; and
[22]


B. THE COURT A QUO HAS, WITH GRAVE GRAVE ABUSE OF
DISCRETION, SO FAR DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS, DECIDING ISSUES THAT HAVE
NOT BEEN RAISED, AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION.
[23]


Petitioners insist that the determination of just compensation
should be based on the value of the expropriated properties at the
time of payment. Respondent LBP, on the other hand, claims that the
value of the realties should be computed as of October 21,
1972 when P.D. No. 27 took effect.
The petition is impressed with merit.

In the case of Land Bank of the Philippines v. Natividad,
[24]
the
Court ruled thus:

Land Banks contention that the property was acquired for purposes
of agrarian reform on October 21, 1972, the time of the effectivity of
PD 27, ergo just compensation should be based on the value of the
property as of that time and not at the time of possession in 1993, is
likewise erroneous. In Office of the President, Malacaang, Manila v.
Court of Appeals, we ruled that the seizure of the landholding did not
take place on the date of effectivity of PD 27 but would take effect on
the payment of just compensation.

The Natividad case reiterated the Courts ruling in Office of the
President v. Court of Appeals
[25]
that the expropriation of the
landholding did not take place on the effectivity of P.D. No. 27
on October 21, 1972 but seizure would take effect on the payment of
just compensation judicially determined.

Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v.
Court of Appeals,
[26]
we held that expropriation of landholdings
covered by R.A. No. 6657 take place, not on the effectivity of the Act
on June 15, 1988, but on the payment of just compensation.

In the instant case, petitioners were deprived of their properties in
1972 but have yet to receive the just compensation therefor. The
parcels of land were already subdivided and distributed to the
farmer-beneficiaries thereby immediately depriving petitioners of
their use. Under the circumstances, it would be highly inequitable on
the part of the petitioners to compute the just compensation using
the values at the time of the taking in 1972, and not at the time of the
payment, considering that the government and the farmer-
beneficiaries have already benefited from the land although
ownership thereof have not yet been transferred in their
names. Petitioners were deprived of their properties without
payment of just compensation which, under the law, is a prerequisite
before the property can be taken away from its owners.
[27]
The
transfer of possession and ownership of the land to the government
are conditioned upon the receipt by the landowner of the
corresponding payment or deposit by the DAR of the compensation
with an accessible bank. Until then, title remains with the
landowner.
[28]


Our ruling in Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform
[29]
is instructive, thus:

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

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

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

it was obviously referring to lands already validly acquired under the
said decree, after proof of full-fledged membership in the farmers
cooperatives and full payment of just compensation. x x x

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

We also note that the expropriation proceedings in the instant case
was initiated under P.D. No. 27 but the agrarian reform process is still
incomplete considering that the just compensation to be paid to
petitioners has yet to be settled. Considering the passage of R.A. No.
6657 before the completion of this process, the just compensation
should be determined and the process concluded under the said
law. Indeed, R.A. No. 6657 is the applicable law, with P.D. No. 27 and
E.O. No. 228 having only suppletory effect.
[30]


In Land Bank of the Philippines v. Court of Appeals,
[31]
we held that:

RA 6657 includes PD 27 lands among the properties which the DAR
shall acquire and distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act
should be adhered to.

Section 18 of R.A. No. 6657 mandates that the LBP shall compensate
the landowner in such amount as may be agreed upon by the
landowner and the DAR and the LBP or as may be finally determined
by the court as the just compensation for the land. In determining
just compensation, the cost of the acquisition of the land, the current
value of like properties, its nature, actual use and income, the sworn
valuation by the owner, the tax declarations, and the assessment
made by government assessors shall be considered. The social and
economic benefits contributed by the farmers and the farmworkers
and by the government to the property as well as the nonpayment of
taxes or loans secured from any government financing institution on
the said land shall be considered as additional factors to determine its
valuation.
[32]


Corollarily, we held in Land Bank of the Philippines v. Celada
[33]
that
the above provision was converted into a formula by the DAR through
Administrative Order No. 05, S. 1998, to wit:

Land Value (LV) = (Capitalized Net Income x 0.6) + (Comparable Sales
x 0.3) + (Market Value per Tax Declaration x 0.1)

Petitioners were deprived of their properties way back in 1972,
yet to date, they have not yet received just compensation. Thus, it
would certainly be inequitable to determine just compensation based
on the guideline provided by P.D. No. 227 and E.O. No. 228
considering the failure to determine just compensation for a
considerable length of time. That just compensation should be
determined in accordance with R.A. No. 6657 and not P.D. No. 227 or
E.O. No. 228, is important considering that just compensation should
be the full and fair equivalent of the property taken from its owner by
the expropriator, the equivalent being real, substantial, full and
ample.
[34]


WHEREFORE, premises considered, the petition
is GRANTED. The assailed Amended Decision dated October 27, 2005
of the Court of Appeals in CA-G.R. SP No. 77530 is REVERSED and SET
ASIDE. The Decision dated May 26, 2004 of the Court of Appeals
affirming (a) the March 31, 2003 Order of the Special Agrarian Court
ordering the respondent Land Bank of the Philippines to deposit the
just compensation provisionally determined by the PARAD; (b) the
May 26, 2003 Resolution denying respondents Motion for
Reconsideration; and (c) the May 27, 2003 Order directing Teresita V.
Tengco, respondents Land Compensation Department Manager to
comply with the March 31, 2003 Order, is REINSTATED. The Regional
Trial Court of San Jose, Occidental Mindoro, Branch 46, acting
as Special Agrarian Court is ORDERED to proceed with dispatch in the
trial of Agrarian Case Nos. R-1339 and R-1340, and to compute the
final valuation of the subject properties based on the aforementioned
formula.

SO ORDERED.
LAND BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS,
PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORPORATION, respondents.
[G.R. No. 118745. July 5, 1996]
DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary
of Agrarian Reform, petitioner, vs.COURT OF APPEALS, PEDRO L.
YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT AND DEVELOPMENT CORPORATION, ET
AL., respondents.
R E S O L U T I O N
FRANCISCO, J.:
Consequent to the denial of their petitions for review on certiorari by
this Court on October 6, 1995
[1]
, petitioners Department of Agrarian
Reform (DAR) and Land Bank of the Philippines (LBP), filed their
respective motions for reconsideration contending mainly that,
contrary to the Court's conclusion, the opening of trust accounts in
favor of the rejecting landowners is sufficient compliance with the
mandate of Republic Act 6657. Moreover, it is argued that there is no
legal basis for allowing the withdrawal of the money deposited in
trust for the rejecting landowners pending the determination of the
final valuation of their properties.
Petitioner DAR maintains that "the deposit contemplated by Section
16(e) of Republic Act 6657, absent any specific indication, may either
be general or special, regular or irregular, voluntary or involuntary
(necessary) or other forms known in law, and any thereof should be,
as it is the general rule, deemed complying."
[2]

We reject this contention. Section 16(e) of Republic Act 6657 was
very specific in limiting the type of deposit to be made as
compensation for the rejecting landowners, that is in "cash" or in
"LBP bonds", to wit:
"Sec. 16. Procedure for Acquisition of Private Lands
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding payment or,
in case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act, the
DAR shall take immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of Title (TCT)
in the name of the Republic of the Philippines. x x x" (Italics supplied)
The provision is very clear and unambiguous, foreclosing any doubt as
to allow an expanded construction that would include the opening of
"trust accounts" within the coverage of term "deposit. Accordingly,
we must adhere to the well-settled rule that when the law speaks in
clear and categorical language, there is no reason for interpretation
or construction, but only for application.
[3]
Thus, recourse to any rule
which allows the opening of trust accounts as a mode of deposit
under Section 16(e) of R.A. 6657 goes beyond the scope of the said
provision and is therefore impermissible. As we have previously
declared, the rule-making power must be confined to details for
regulating the mode or proceedings to carry into effect the law as it
has been enacted, and it cannot be extended to amend or expand the
statutory requirements or to embrace matters not covered by the
statute.
[4]
Administrative regulations must always be in harmony with
the provisions of the law because any resulting discrepancy between
the two will always be resolved in favor of the basic law.
[5]

The validity of constituting trust accounts for the benefit of the
rejecting landowners and withholding immediate payment to them is
further premised on the latter's refusal to accept the offered
compensation thereby making it necessary that the amount remains
in the custody of the LBP for safekeeping and in trust for eventual
payment to the landowners.
[6]
Additionally, it is argued that the
release of the amount deposited in trust prior to the final
determination of the just compensation would be premature and
expose the government to unnecessary risks and disadvantages,
citing the possibility that the government may subsequently decide to
abandon or withdraw from the coverage of the CARP certain portions
of the properties that it has already acquired, through supervening
administrative determination that the subject land falls under the
exempt category, or by subsequent legislation allowing additional
exemptions from the coverage, or even the total scrapping of the
program itself. Force majeure is also contemplated in view of the
devastation suffered by Central Luzon de to lahar. Petitioner DAR
maintains that under these conditions, the government will be forced
to institute numerous actions for the recovery of the amounts that it
has already paid in advance to the rejecting landowners.
[7]

We are not persuaded. As an exercise of police power, the
expropriation of private property under the CARP puts the
landowner, and not the government, in a situation where the odds
are already stacked against his favor. He has no recourse but to allow
it. His only consolation is that he can negotiate for the amount of
compensation to be paid for the expropriated property. As expected,
the landowner will exercise this right to the hilt, but subject however
to the limitation that he can only be entitled to a "just
compensation." Clearly therefore, by rejecting and disputing the
valuation of the DAR, the landowner is merely exercising his right to
seek just compensation. If we are to affirm the withholding of the
release of the offered compensation despite depriving the landowner
of the possession and use of his property, we are in effect penalizing
the latter for simply exercising a right afforded to him by law.
Obviously, this would render the right to seek a fair and just
compensation illusory as it would discourage owners of private lands
from contesting the offered valuation of the DAR even if they find it
unacceptable, for fear of the hardships that could result from long
delays in the resolution of their cases. This is contrary to the rules of
fair play because the concept of just compensation embraces not only
the correct determination of the amount to be paid to the owners of
the land, but also the payment of the land within a reasonable time
from its taking. Without prompt payment, compensation cannot be
considered "just" for the property owner is made to suffer the
consequence of being immediately deprived of his land while being
made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss.
[8]
It is significant to note that
despite petitioner's objections to the immediate release of the
rejected compensation, petitioner LBP, taking into account the plight
of the rejecting landowners, has nevertheless allowed partial
withdrawal through LBP Executive Order No. 003,
[9]
limited to fifty
(50) per cent of the net cash proceeds. This is a clear confirmation
that petitioners themselves realize the overriding need of the
landowners' immediate access to the offered compensation despite
rejecting its valuation. But the effort, though laudable, still falls short
because the release of the amount was unexplainably limited to only
fifty per cent instead of the total amount of the rejected offer,
notwithstanding that the rejecting landowner's property is taken in its
entirety. The apprehension against the total release of the rejected
compensation is discounted since the government's interest is amply
protected under the aforementioned payment scheme because
among the conditions already imposed is that the landowner must
execute a Deed of Conditional Transfer for the subject property.
[10]

Anent the aforecited risks and disadvantages to which the
government allegedly will be unnecessarily exposed if immediate
withdrawal of the rejected compensation is allowed, suffice it to say
that in the absence of any substantial evidence to support the same,
the contemplated scenarios are at the moment nothing but
speculations. To allow the taking of the landowners' properties, and
in the meantime leave them empty handed by withholding payment
of compensation while the government speculates on whether or not
it will pursue expropriation, or worse for government to subsequently
decide to abandon the property and return it to the landowner when
it has already been rendered useless by force majeure, is undoubtedly
an oppressive exercise of eminent domain that must never be
sanctioned. Legislations in pursuit of the agrarian reform program are
not mere overnight creations but were the result of long exhaustive
studies and even heated debates. In implementation of the program,
much is therefore expected from the government. Unduly burdening
the property owners from the resulting flaws in the implementation
of the CARP which was supposed to have been a carefully crafted
legislation is plainly unfair and unacceptable.
WHEREFORE, in view of the foregoing, petitioners' motions for
reconsideration are hereby DENIED for lack of merit.
SO ORDERED.
G.R. No. 159674 June 30, 2006
SAMUEL ESTRIBILLO, CALIXTO P. ABAYATO, JR., RONGIE D.
AGUILAR, TACIANA D. AGUILAR, ARTEMIO G. DE JUAN, ESTANISLAO
DELA CRUZ, SR., EDGAR DUENAS, MARIO ERIBAL, REYNALDO C.
ESENCIA, EMMA GONZAGA, RUBEN A. IBOJO, SAMUEL JAMANDRE,
HILARION V. LANTIZA, ANSELMO LOPEZ, TERESITA NACION, CHARIE
E. NASTOR, NELSON L. NULLAS, CARLITO S. OLIA, ANA PATIO,
ROBERTO T. PATIO, ANTONIO P. ROCHA, FERNANDO C. RUFINO,
PATERNO P. SAIN, CLAUDIO S. SAYSON, and JOEMARIE
VIBO, Petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM and HACIENDA MARIA,
INC., Respondents.
D E C I S I O N
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, seeking the review and reversal of the Resolutions
1
of the
Court of Appeals dated 27 January 2003 and 28 August 2003,
respectively.
The factual and procedural antecedents are as follows:
The petitioners, with the exception of two, are the recipients of
Emancipation Patents (EPs) over parcels of land located at Barangay
Angas, Sta. Josefa, Agusan del Sur, with their respective Transfer
Certificate of Title (TCT) and EP numbers presented below:
Petitioners TCT/EP Nos.
Areas
(has.)
1. SAMUEL ESTRIBILLO TCT No. T-287/EP No. A-037675 1.7833
2. CALIXTO P. ABAYATO, JR. TCT No. T-297/EP No. A-037814
TCT No. T-829/EP No. A-027293
2.0000
0.1565
3. RONGIE D. AGUILAR TCT No. T-913/EP No. A-027295 3.1441
4. TACIANA D. AGUILAR TCT No. T-944/EP No. A-027296 4.2405
5. ARTEMIO G. DE JUAN TCT No. T-302/EP No. A-037809 3.3082
6. ESTANISLAO DELA CRUZ, SR. TCT No. T-290/EP No. A-035676 3.1437
7. EDGAR DUENAS TCT No. T-949/EP No. A-037658 4.0128
8. MARIO P. ERIBAL TCT No. T-952/EP No. A-037836 2.3087
9. REYNALDO C. ESENCIA TCT No. T-950/EP No. A-037844 2.0950
10. RUBEN A. IBOJO TCT No. T-928/EP No. A-037873 1.5737
11. SAMUEL JAMANDRE TCT No. T-909/EP No. A-159348 2.2670
12. HILARION V. LANTIZA TCT No. T-288/EP No. A-037674
TCT No. T-401/EP No. A-037825
4.5526
0.4579
13. ANSELMO LOPEZ TCT No. T-973/EP No. A-037840 4.4939
14. TERESITA NACION TCT No. T-900/EP No. A-037849 2.2140
15. CHARIE E. NASTOR TCT No. T-825/EP No. A-037829 3.9291
16. NELSON L. NULLAS TCT No. T-396/EP No. A-037826 2.7491
17. CARLITO S. OLIA TCT No. T-910/EP No. A-037673 1.7954
18. ROBERTO T.PATIO TCT No. T-912/EP No. A-037860 6.4266
19. ANTONIO P. ROCHA TCT No. T-914/EP No. A-037830 2.2143
20. FERNANDO C. RUFINO TCT No. T-923/EP No. A-037848 4.5322
21. PATERNO P. SAIN TCT No. T-954/EP No. A-037813 4.3223
22. CLAUDIO S. SAYSON, and TCT No. T-891/EP No. A-037880 3.7151
23. JOEMARIE VIBO TCT No. T-893/EP No. A-037827 1.3185
2

The two other petitioners, Emma Gonzaga and Ana Patio, are the
surviving spouses of deceased recipients of EPs over parcels of land
also located at Barangay Angas, Sta. Josefa, Agusan del Sur, with their
corresponding TCT and EP numbers identified as follows:
(Deceased) Registered Owners TCT/EP Nos.
Areas
(has.)
1. MANUEL S. GONZAGA TCT No. T-920/EP No. A-037832 4.1953
2. RAFAEL PATIO TCT No. T-929/EP No. A-037861 3.0078
3

The parcels of land described above, the subject matters in this
Petition, were formerly part of a forested area which have been
denuded as a result of the logging operations of respondent Hacienda
Maria, Inc. (HMI). Petitioners, together with other persons, occupied
and tilled these areas believing that the same were public lands. HMI
never disturbed petitioners and the other occupants in their peaceful
cultivation thereof.
HMI acquired such forested area from the Republic of the Philippines
through Sales Patent No. 2683 in 1956 by virtue of which it was
issued OCT No. P-3077-1661. The title covered three parcels of land
with a total area of 527.8308 hectares, to wit:
Lot No.
Area
(in hectares)
Lot No. 1620, Pls 4 28.52
Lot No. 1621, Pls 4 11.64
Lot No. 1622, Pls 4 487.47
TOTAL 527.83
4

On 21 October 1972, Presidential Decree No. 27
5
was issued
mandating that tenanted rice and corn lands be brought under
Operation Land Transfer and awarded to farmer-beneficiaries.
HMI, through a certain Joaquin Colmenares, requested that 527.8308
hectares of its landholdings be placed under the coverage of
Operation Land Transfer. Receiving compensation therefor, HMI
allowed petitioners and other occupants to cultivate the landholdings
so that the same may be covered under said law.
In 1973, the Department of Agrarian Reform (DAR) conducted a
parcellary mapping of the entire landholdings of 527.8308 hectares
covered by OCT No. P-3077-1661. In 1975 and 1976, the DAR
approved the Parcellary Map Sketching (PMS) and the Amended PMS
covering the entire landholdings.
HMI, through its representatives, actively participated in all relevant
proceedings, including the determination of the Average Gross
Production per hectare at the Barangay Committee on Land
Production, and was a signatory of an undated Landowner and
Tenant Production Agreement (LTPA), covering the 527.8308
hectares. The LTPA was submitted to the Land Bank of the Philippines
(LBP) in 1977.
Also in 1977, HMI executed a Deed of Assignment of Rights in favor of
petitioners, among other persons, which was registered with the
Register of Deeds and annotated at the back of OCT No. P-3077-1661.
The annotation in the OCT showed that the entire 527.8308 hectares
was the subject of the Deed of Assignment.
In 1982, a final survey over the entire area was conducted and
approved. From 1984 to 1988, the corresponding TCTs and EPs
covering the entire 527.8308 hectares were issued to petitioners,
among other persons.
In December 1997, HMI filed with the Regional Agrarian Reform
Adjudicator (RARAD) of CARAGA, Region XIII, 17 petitions seeking the
declaration of erroneous coverage under Presidential Decree No. 27
of 277.5008 hectares of its former landholdings covered by OCT No.
P-3077-1661. HMI claimed that said area was not devoted to either
rice or corn, that the area was untenanted, and that no compensation
was paid therefor. The 17 petitions, which were later consolidated,
sought for the cancellation of the EPs covering the disputed 277.5008
hectares which had been awarded to petitioners. HMI did not
question the coverage of the other 250.3300 hectares under
Presidential Decree No. 27 despite claiming that the entire
landholdings were untenanted and not devoted to rice and corn.
On 27 November 1998, after petitioners failed to submit a Position
Paper, the RARAD rendered a Decision declaring as void the TCTs and
EPs awarded to petitioners because the land covered was not
devoted to rice and corn, and neither was there any established
tenancy relations between HMI and petitioners when Presidential
Decree No. 27 took effect on 21 October 1972. The Decision was
based on a 26 March 1998 report submitted by the Hacienda Maria
Action Team. Petitioners TCTs and EPs were ordered cancelled.
Petitioners filed a Motion for Reconsideration, but the same was
denied. Petitioners appealed to the Department of Agrarian Reform
Adjudication Board (DARAB) which affirmed the RARAD Decision.
After the DARAB denied petitioners Motion for Reconsideration, the
latter proceeded to the Court of Appeals with their Petition for
Review on Certiorari. The Court of Appeals issued the following
assailed Resolution:
A perusal of the petition reveals that the Verification and Certification
of Non-Forum Shopping was executed by Samuel A. Estribillo who is
one of the petitioners, without the corresponding Special Power of
Attorneys executed by the other petitioners authorizing him to sign
for their behalf in violation of Section 5, Rule 7 of the 1997 Rules of
Civil Procedure, as amended.
WHEREFORE, the petition is DENIED DUE COURSE and necessarily
DISMISSED.
6

Petitioners filed a "Motion for Reconsideration With Alternative
Prayer with Leave of Court for the Admission of Special Power of
Attorney (SPA) Granted to Petitioner Samuel Estribillo by his Co-
Petitioners." The Court of Appeals denied the motion by issuing the
following assailed Resolution:
Petitioners seek the reconsideration of Our Resolution promulgated
on January 27, 2003 which dismissed the petition for certiorari.
We find no reason to reverse, alter or modify the resolution sought to
be reconsidered, since petitioners have failed to show that their
belated submission of the special power of attorney can be justified
as against the unequivocal requirements set forth by Sec. 5, Rule 7 of
the 1997 Rules of Civil Procedure, as amended.
While it is true that the Supreme Court has recognized special
circumstances that justify the relaxation of the rules on non-forum
shopping, such circumstances, however, are not present in the case at
bar.
More importantly, said Rules cannot be relaxed in view of the
Supreme Courts ruling in Loquias vs. Ombudsman, 338 SCRA 62,
which stated that, substantial compliance will not suffice in a matter
involving strict observance by the rules. The attestation contained in
the certification [on] non-forum shopping requires personal
knowledge by the party who executed the same.
Since the Verification and Certification on Non-Forum shopping was
executed without the proper authorization from all the petitioners,
such personal knowledge cannot be presumed to exist thereby
rendering the petition fatally defective.
Par. 2, Sec. 5 of Rule 7 of the 1997 Rules of Civil Procedure, as
amended states:
"Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice x x x"
It is, thus, clear that the Motion for Reconsideration has no legal basis
to support it and should be dismissed forthwith. Moreover, granting
arguendo that a special power of attorney belatedly filed could cure
the petitions defect, the requirement of personal knowledge of all
the petitioners still has not been met since some of the other
petitioners failed to sign the same.
WHEREFORE, in view of the foregoing, the Motion for
Reconsideration is hereby DENIED.
7

Petitioners now file this present Petition contending that there had
been compliance with Rule 7, Section 5 of the 1997 Rules of Civil
Procedure. They further reiterate their argument that the EPs are
ordinary titles which become indefeasible one year after their
registration.
The petition is impressed with merit.1awphil.net
Petitioners have sufficiently complied with Rule 7, Section 5 of the
1997 Rules of Civil Procedure concerning the Certification Against
Forum shopping
Rule 7, Section 5 of the 1997 Rules of Civil Procedure was preceded
by Revised Circular No. 28-91 and Administrative Circular No. 04-94,
which required a certification against forum shopping to avoid the
filing of multiple petitions and complaints involving the same issues in
the Supreme Court, the Court of Appeals, and other tribunals and
agencies. Stated differently, the rule was designed to avoid a situation
where said courts, tribunals and agencies would have to resolve the
same issues. Rule 7, Section 5, now provides:
Sec. 5. Certification against forum shopping. The plaintiff or
principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a)
that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report that fact within five (5) days
therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing.
The submission of a false certification or non-compliance with any of
the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct
contempt as well as a cause for administrative sanctions.
Revised Circular No. 28-91 "was designed x x x to promote and
facilitate the orderly administration of justice and should not be
interpreted with such absolute literalness as to subvert its own
ultimate and legitimate objective or the goal of all rules of procedure
which is to achieve substantial justice as expeditiously as
possible."
8
Technical rules of procedure should be used to promote,
not frustrate, justice.
9
The same guidelines should still apply in
interpreting what is now Rule 7, Section 5 of the 1997 Rules of Civil
Procedure.
Petitioner Samuel A. Estribillo, in signing the Verification and
Certification Against Forum Shopping, falls within the phrase "plaintiff
or principal party" who is required to certify under oath the matters
mentioned in Rule 7, Section 5 of the 1997 Rules of Civil Procedure.
Such was given emphasis by this Court when we held in Mendigorin v.
Cabantog
10
and Escorpizo v. University of Baguio
11
that the
certification of non-forum shopping must be signed by the plaintiff or
any of the principal parties and not only by the legal counsel. In
Condo Suite Club Travel, Inc. v. National Labor Relations
Commission,
12
we likewise held that:
The certification in this petition was improperly executed by the
external legal counsel of petitioner. For a certification of non-forum
shopping must be by the petitioner, or any of the principal parties
and not by counsel unless clothed with a special power of attorney to
do so. This procedural lapse on the part of petitioner is also a cause
for the dismissal of this action. (Emphasis supplied)
The Court of Appeals heavily relied on the seemingly conflicting case
of Loquias v. Office of the Ombudsman,
13
where this Court ruled that:
At the outset, it is noted that the Verification and Certification was
signed by Antonio Din, Jr., one of the petitioners in the instant case.
We agree with the Solicitor General that the petition is defective.
Section 5, Rule 7 expressly provides that it is the plaintiff or principal
party who shall certify under oath that he has not commenced any
action involving the same issues in any court, etc. Only petitioner Din,
the Vice-Mayor of San Miguel, Zamboanga del Sur, signed the
certification. There is no showing that he was authorized by his co-
petitioners to represent the latter and to sign the certification. It
cannot likewise be presumed that petitioner Din knew, to the best of
his knowledge, whether his co-petitioners had the same or similar
actions or claims filed or pending. We find that substantial
compliance will not suffice in a matter involving strict observance by
the rules. The attestation contained in the certification on non-forum
shopping requires personal knowledge by the party who executed the
same. Petitioners must show reasonable cause for failure to
personally sign the certification. Utter disregard of the rules cannot
justly be rationalized by harking on the policy of liberal construction.
(Emphasis supplied)
Loquias, however, was a case involving only five petitioners seeking
relief from the Resolution of the Ombudsman charging them with
violation of Republic Act No. 3019, where the above declaration "at
the outset" was made together with a determination on the lack of
jurisdiction on our part to decide the Petition.
14
There being only five
petitioners in Loquias, the unreasonableness of the failure to obtain
the signatures of Antonio Din, Jr.s four co-accused is immediately
apparent, hence the remark by this Court that "[p]etitioners must
show reasonable cause for failure to personally sign the certification."
In the present petition, petitioners allege that they are farmer-
beneficiaries who reside in a very remote barangay in Agusan del Sur.
While they reside in the same barangay, they allegedly have to walk
for hours on rough terrain to reach their neighbors due to the
absence of convenient means of transportation. Their houses are
located far apart from each other and the mode of transportation,
habal-habal, is scarce and difficult. Majority of them are also nearing
old age. On the other hand, their lawyers (who are members of a
non-government organization engaged in development work) are
based in Quezon City who started assisting them at the latter part of
the RARAD level litigation in 1998, and became their counsel of
record only at the DARAB level. The petitioner who signed the
initiatory pleading, Samuel Estribillo, was the only petitioner who was
able to travel to Manila at the time of the preparation of the Petition
due to very meager resources of their farmers organization, the
Kahiusahan sa Malahutayong mga Mag-uugma Para sa
Ekonomikanhong Kalambuan (KAMMPE). When the Petition a quo
was dismissed, petitioners counsel went to Agusan del Sur and tried
earnestly to secure all the signatures for the SPA. In fact, when the
SPA was being circulated for their signatures, 24 of the named
petitioners therein failed to sign for various reasons some could not
be found within the area and were said to be temporarily residing in
other towns, while some already died because of old age.
15
Be that as
it may, those who did not sign the SPA did not participate, and are
not parties to this petition.
The Court of Appeals merely said that the special circumstances
recognized by this Court that justify the relaxation of the rules on the
certification against forum shopping are not present in the case at
bar,
16
without discussing the circumstances adduced by the
petitioners in their Motion for Reconsideration. Thus, assuming for
the sake of argument that the actuation of petitioners was not strictly
in consonance with Rule 7, Section 5 of the 1997 Rules of Civil
Procedure, it should still be determined whether there are special
circumstances that would justify the suspension or relaxation of the
rule concerning verification and certification against forum shopping,
such as those which we appreciated in the ensuing cases.
In General Milling Corporation v. National Labor Relations
Commission,
17
the appeal to the Court of Appeals had a certificate
against forum shopping, but was dismissed as it did not contain a
board resolution authorizing the signatory of the Certificate.
Petitioners therein attached the board resolution in their Motion for
Reconsideration but the Court of Appeals, as in this case, denied the
same. In granting the Petition therein, we explained that:
[P]etitioner complied with this procedural requirement except that it
was not accompanied by a board resolution or a secretarys
certificate that the person who signed it was duly authorized by
petitioner to represent it in the case. It would appear that the
signatory of the certification was, in fact, duly authorized as so
evidenced by a board resolution attached to petitioners motion for
reconsideration before the appellate court. It could thus be said that
there was at least substantial compliance with, and that there was no
attempt to ignore, the prescribed procedural requirements.
The rules of procedure are intended to promote, rather than
frustrate, the ends of justice, and while the swift unclogging of court
dockets is a laudable objective, it, nevertheless, must not be met at
the expense of substantial justice. Technical and procedural rules are
intended to help secure, not suppress, the cause of justice and a
deviation from the rigid enforcement of the rules may be allowed to
attain that prime objective for, after all, the dispensation of justice is
the core reason for the existence of courts. [Acme Shoe, Rubber and
Plastic Corp. vs. Court of Appeals; BA Savings Bank vs. Sia, 336 SCRA
484].
In Shipside Incorporated v. Court of Appeals,
18
the authority of
petitioners resident manager to sign the certification against forum
shopping was submitted to the Court of Appeals only after the latter
dismissed the Petition. It turned out, in the Motion for
Reconsideration, that he already had board authority ten days before
the filing of the Petition. We ratiocinated therein that:
On the other hand, the lack of certification against forum shopping is
generally not curable by the submission thereof after the filing of the
petition. Section 5, Rule 45 of the 1997 Rules of Civil Procedure
provides that the failure of the petitioner to submit the required
documents that should accompany the petition, including the
certification against forum shopping, shall be sufficient ground for the
dismissal thereof. The same rule applies to certifications against
forum shopping signed by a person on behalf of a corporation which
are unaccompanied by proof that said signatory is authorized to file a
petition on behalf of the corporation.
In certain exceptional circumstances, however, the Court has allowed
the belated filing of the certification. In Loyola v. Court of Appeals, et
al. (245 SCRA 477 [1995]), the Court considered the filing of the
certification one day after the filing of an election protest as
substantial compliance with the requirement. In Roadway Express,
Inc. v. Court of Appeals, et al. (264 SCRA 696 [1996]), the Court
allowed the filing of the certification 14 days before the dismissal of
the petition. In Uy v. Landbank, supra, the Court had dismissed Uys
petition for lack of verification and certification against non-forum
shopping. However, it subsequently reinstated the petition after Uy
submitted a motion to admit certification and non-forum shopping
certification. In all these cases, there were special circumstances or
compelling reasons that justified the relaxation of the rule requiring
verification and certification on non-forum shopping.
In the instant case, the merits of petitioners case should be
considered special circumstances or compelling reasons that justify
tempering the requirement in regard to the certificate of non-forum
shopping. Moreover, in Loyola, Roadway, and Uy, the Court excused
non-compliance with the requirement as to the certificate of non-
forum shopping. With more reason should we allow the instant
petition since petitioner herein did submit a certification on non-
forum shopping, failing only to show proof that the signatory was
authorized to do so. That petitioner subsequently submitted a
secretarys certificate attesting that Balbin was authorized to file an
action on behalf of petitioner likewise mitigates this oversight.
It must also be kept in mind that while the requirement of the
certificate of non-forum shopping is mandatory, nonetheless the
requirements must not be interpreted too literally and thus defeat
the objective of preventing the undesirable practice of forum-
shopping. Lastly, technical rules of procedure should be used to
promote, not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, the granting of substantial justice is an
even more urgent ideal.
In Uy v. Land Bank of the Philippines,
19
we, likewise, considered the
apparent merits of the substantive aspect of the case as a special
circumstance or compelling reason for the reinstatement of the case,
and invoked our power to suspend our rules to serve the ends of
justice. Thus:
The admission of the petition after the belated filing of the
certification, therefore, is not unprecedented. In those cases where
the Court excused non-compliance with the requirements, there were
special circumstances or compelling reasons making the strict
application of the rule clearly unjustified. In the case at bar, the
apparent merits of the substantive aspects of the case should be
deemed as a "special circumstance" or "compelling reason" for the
reinstatement of the petition. x x x
There were even cases where we held that there was complete non-
compliance with the rule on certification against forum shopping, but
we still proceeded to decide the case on the merits. In De Guia v. De
Guia,
20
petitioners raised in their Petition for Review the allowance of
respondents Appeal Brief which did not contain a certificate against
forum shopping. We held therein that:
With regard to the absence of a certification of non-forum shopping,
substantial justice behooves us to agree with the disquisition of the
appellate court. We do not condone the shortcomings of
respondents counsel, but we simply cannot ignore the merits of their
claim. Indeed, it has been held that "[i]t is within the inherent power
of the Court to suspend its own rules in a particular case in order to
do justice."
In Damasco v. National Labor Relations Commission,
21
the non-
compliance was disregarded because of the principle of social justice,
which is equally applicable to the case at bar:
We note that both petitioners did not comply with the rule on
certification against forum shopping. The certifications in their
respective petitions were executed by their lawyers, which is not
correct. The certification of non-forum shopping must be by the
petitioner or a principal party and not the attorney. This procedural
lapse on the part of petitioners could have warranted the outright
dismissal of their actions.
But, the court recognizes the need to resolve these two petitions on
their merits as a matter of social justice involving labor and capital.
After all, technicality should not be allowed to stand in the way of
equitably and completely resolving herein the rights and obligations
of these parties. Moreover, we must stress that technical rules of
procedure in labor cases are not to be strictly applied if the result
would be detrimental to the working woman.
The foregoing cases show that, even if we assume for the sake of
argument that there was violation of Rule 7, Section 5 of the 1997
Rules of Civil Procedure, a relaxation of such rule would be justified
for two compelling reasons: social justice considerations and the
apparent merit of the Petition, as shall be heretofore discussed.
Certificates of Title issued pursuant to Emancipation Patents are as
indefeasible as TCTs issued in registration proceedings.
Petitioners claim that the EPs have become indefeasible upon the
expiration of one year from the date of its issuance. The DARAB,
however, ruled that the EP "is a title issued through the agrarian
reform program of the government. Its issuance, correction and
cancellation is governed by the rules and regulations issued by the
Secretary of the Department of Agrarian Reform (DAR). Hence, it is
not the same as or in the same category of a Torrens title."
The DARAB is grossly mistaken.
Ybaez v. Intermediate Appellate Court,
22
provides that certificates of
title issued in administrative proceedings are as indefeasible as
certificates of title issued in judicial proceedings:
It must be emphasized that a certificate of title issued under an
administrative proceeding pursuant to a homestead patent, as in the
instant case, is as indefeasible as a certificate of title issued under a
judicial registration proceeding, provided the land covered by said
certificate is a disposable public land within the contemplation of the
Public Land Law.
There is no specific provision in the Public Land Law (C.A. No. 141, as
amended) or the Land Registration Act (Act 496), now P.D. 1529,
fixing the one (1) year period within which the public land patent is
open to review on the ground of actual fraud as in Section 38 of the
Land Registration Act, now Section 32 of P.D. 1529, and clothing a
public land patent certificate of title with indefeasibility.
Nevertheless, the pertinent pronouncements in the aforecited cases
clearly reveal that Section 38 of the Land Registration Act, now
Section 32 of P.D. 1529 was applied by implication by this Court to
the patent issued by the Director of Lands duly approved by the
Secretary of Natural Resources, under the signature of the President
of the Philippines in accordance with law. The date of issuance of the
patent, therefore, corresponds to the date of the issuance of the
decree in ordinary registration cases because the decree finally
awards the land applied for registration to the party entitled to it, and
the patent issued by the Director of Lands equally and finally grants,
awards, and conveys the land applied for to the applicant. This, to our
mind, is in consonance with the intent and spirit of the homestead
laws, i.e. conservation of a family home, and to encourage the
settlement, residence and cultivation and improvement of the lands
of the public domain. If the title to the land grant in favor of the
homesteader would be subjected to inquiry, contest and decision
after it has been given by the Government through the process of
proceedings in accordance with the Public Land Law, there would
arise uncertainty, confusion and suspicion on the governments
system of distributing public agricultural lands pursuant to the "Land
for the Landless" policy of the State.
The same confusion, uncertainty and suspicion on the distribution of
government-acquired lands to the landless would arise if the
possession of the grantee of an EP would still be subject to contest,
just because his certificate of title was issued in an administrative
proceeding. The silence of Presidential Decree No. 27 as to the
indefeasibility of titles issued pursuant thereto is the same as that in
the Public Land Act where Prof. Antonio Noblejas commented:
Inasmuch as there is no positive statement of the Public Land Law,
regarding the titles granted thereunder, such silence should be
construed and interpreted in favor of the homesteader who come
into the possession of his homestead after complying with the
requirements thereof. Section 38 of the Land Registration Law should
be interpreted to apply by implication to the patent issued by the
Director of Lands, duly approved by the Minister of Natural
Resources, under the signature of the President of the Philippines, in
accordance with law.
23

After complying with the procedure, therefore, in Section 105 of
Presidential Decree No. 1529, otherwise known as the Property
Registration Decree (where the DAR is required to issue the
corresponding certificate of title after granting an EP to tenant-
farmers who have complied with Presidential Decree No. 27),
24
the
TCTs issued to petitioners pursuant to their EPs acquire the same
protection accorded to other TCTs. "The certificate of title becomes
indefeasible and incontrovertible upon the expiration of one year
from the date of the issuance of the order for the issuance of the
patent, x x x. Lands covered by such title may no longer be the subject
matter of a cadastral proceeding, nor can it be decreed to another
person."
25

As we held through Justice J.B.L. Reyes in Lahora v. Dayanghirang,
Jr.
26
:
The rule in this jurisdiction, regarding public land patents and the
character of the certificate of title that may be issued by virtue
thereof, is that where land is granted by the government to a private
individual, the corresponding patent therefor is recorded, and the
certificate of title is issued to the grantee; thereafter, the land is
automatically brought within the operation of the Land Registration
Act, the title issued to the grantee becoming entitled to all the
safeguards provided in Section 38 of the said Act. In other
words, upon expiration of one year from its issuance, the certificate
of title shall become irrevocable and indefeasible like a certificate
issued in a registration proceeding.(Emphasis supplied.)
The EPs themselves, like the Certificates of Land Ownership Award
(CLOAs) in Republic Act No. 6657 (the Comprehensive Agrarian
Reform Law of 1988), are enrolled in the Torrens system of
registration. The Property Registration Decree in fact devotes Chapter
IX
27
on the subject of EPs. Indeed, such EPs and CLOAs are, in
themselves, entitled to be as indefeasible as certificates of title issued
in registration proceedings.
The only defense of respondents, that the issue of indefeasibility of
title was raised for the first time on appeal with the DARAB, does not
hold water because said issue was already raised before the RARAD.
28

The recommendation of the Hacienda Maria Action Team to have the
EPs cancelled and the lots covered under the Republic Act No.
6657,
29
with the farmer-beneficiaries later on being issued with
CLOAs, would only delay the application of agrarian reform laws to
the disputed 277.5008 hectares, leading to the expenditure of more
time and resources of the government.
The unreasonable delay of HMI in filing the Petition for cancellation
more than 20 years after the alleged wrongful annotation of the Deed
of Assignment in OCT No. P-3077-1661, and more than ten years after
the issuance of the TCTs to the farmers, is apparently motivated by its
desire to receive a substantially higher valuation and just
compensation should the disputed 277.5008 hectares be covered
under Republic Act No. 6657 instead of Presidential Decree No.
27.
30
This is further proved by the following uncontested allegations
by petitioners:
(i) HMI neither asked for rentals nor brought any action to oust
petitioners from the farm they were cultivating;
(ii) HMI had not paid realty taxes on the disputed property from 1972
onwards and never protested petitioners act of declaring the same
for realty taxation;
(iii) HMI, represented by a certain Angela Colmenares, signed the
LTPA covering the entire landholdings or the area of 527.8308
hectares, which was then represented to be rice and corn lands;
(iv) HMI abandoned the entire landholdings after executing the Deed
of Assignment of Rights in 1977.
WHEREFORE, the Resolutions of the Court of Appeals in CA-G.R. SP
No. 73902 are REVERSED and SET ASIDE. The following EPs and the
corresponding TCTs issued to petitioners or to their successors-in-
interest are hereby declared VALID and SUBSISTING:
Original Grantees TCT/EP Nos.
1. SAMUEL ESTRIBILLO TCT No. T-287/EP No. A-037675
2. CALIXTO P. ABAYATO, JR. TCT No. T-297/EP No. A-037814
TCT No. T-829/EP No. A-027293
3. RONGIE D. AGUILAR TCT No. T-913/EP No. A-027295
4. TACIANA D. AGUILAR TCT No. T-944/EP No. A-027296
5. ARTEMIO G. DE JUAN, TCT No. T-302/EP No. A-037809
6. ESTANISLAO DELA CRUZ, SR. TCT No. T-290/EP No. A-035676
7. EDGAR DUENAS TCT No. T-949/EP No. A-037658
8. MARIO P. ERIBAL TCT No. T-952/EP No. A-037836
9. REYNALDO C. ESENCIA TCT No. T-950/EP No. A-037844
10. RUBEN A. IBOJO TCT No. T-928/EP No. A-037873
11. SAMUEL JAMANDRE TCT No. T-909/EP No. A-159348
12. HILARION V. LANTIZA TCT No. T-288/EP No. A-037674
TCT No. T-401/EP No. A-037825
13. ANSELMO LOPEZ TCT No. T-973/EP No. A-037840
14. TERESITA NACION TCT No. T-900/EP No. A-037849
15. CHARIE E. NASTOR TCT No. T-825/EP No. A-037829
16. NELSON L. NULLAS TCT No. T-396/EP No. A-037826
17. CARLITO S. OLIA TCT No. T-910/EP No. A-037673
18. ROBERTO T.PATIO TCT No. T-912/EP No. A-037860
19. ANTONIO P. ROCHA TCT No. T-914/EP No. A-037830
20. FERNANDO C. RUFINO TCT No. T-923/EP No. A-037848
21. PATERNO P. SAIN TCT No. T-954/EP No. A-037813
22. CLAUSIO S. SAYSON TCT No. T-891/EP No. A-037880
23. JOEMARIE VIBO TCT No. T-893/EP No. A-037827
24. MANUEL S. GONZAGA TCT No. T-920/EP No. A-037832
25. RAFAEL PATIO TCT No. T-297/EP No. A-037861
Costs against respondent Hacienda Maria, Inc.
SO ORDERED.
[G.R. No. 78214. December 5, 1988.]

YOLANDA CABALLES, petitioner, vs. DEPARTMENT OF AGRARIAN
REFORM, HON. HEHERSON T. ALVAREZ and BIENVENIDO
ABAJON, respondents.

D E C I S I O N

SARMIENTO, J p:
Before us is a petition for certiorari seeking the annulment of an
Order issued by the public respondent Ministry of Agrarian Reform
(MAR), now the Department of Agrarian Reform (DAR), through its
then Minister, the Hon. Heherson Alvarez, finding the existence of a
tenancy relationship between the herein petitioner and the private
respondent and certifying the criminal case for malicious mischief
filed by the petitioner against the private respondent as not proper
for trial. LLphil
The facts as gathered by the MAR are as follows:
The landholding subject of the controversy, which consists of
only sixty (60) square meters (20 meters x 3 meters) was acquired by
the spouses Arturo and Yolanda Caballes, the latter being the
petitioner herein, by virtue of a Deed of Absolute Sale dated July 24,
1978 executed by Andrea Alicaba Millenes. This landholding is part of
Lot No. 3109-C, which has a total area of about 500 square meters,
situated at Lawa-an, Talisay, Cebu. The remainder of Lot No. 3109-C
was subsequently sold to the said spouses by Macario Alicaba and the
other members of the Millenes family, thus consolidating ownership
over the entire (500-square meter) property in favor of the petitioner.
In 1975, before the sale in favor of the Caballes spouses, private
respondent Bienvenido Abajon constructed his house on a portion of
the said landholding, paying a monthly rental of P2.00 to the owner,
Andrea Millenes. The landowner likewise allowed Abajon to plant on
a portion of the land, agreeing that the produce thereof would be
shared by both on a fifty-fifty basis. From 1975-1977, Abajon planted
corn and bananas on the landholding. In 1978, he stopped planting
corn but continued to plant bananas and camote. During those four
years, he paid the P2.00 rental for the lot occupied by his house, and
delivered 50% of the produce to Andrea Millenes.
Sometime in March 1979, after the property was sold, the new
owners, Arturo and Yolanda Caballes, told Abajon that the poultry
they intended to build would be close to his house and pursuaded
him to transfer his dwelling to the opposite or southern portion of the
landholding. Abajon offered to pay the new owners rental on the land
occupied by his house, but his offer was not accepted. Later, the new
owners asked Abajon to vacate the premises, saying that they needed
the property. But Abajon refused to leave. The parties had a
confrontation before the Barangay Captain of Lawa-an in Talisay,
Cebu but failed to reach an agreement. All the efforts exerted by the
landowners to oust Abajon from the landholding were in vain as the
latter simply refused to budge. LLphil
On April 1, 1982, the landowner, Yolanda Caballes, executed an
Affidavit stating that immediately after she reprimanded Abajon for
harvesting bananas and jackfruit from the property without her
knowledge, the latter, with malicious and ill intent, cut down the
banana plants on the property worth about P50.00. A criminal case
for malicious mischief was filed against Abajon and which was
docketed as Criminal Case No. 4003. Obviously, all the planting on the
property, including that of the banana plants, had been done by
Abajon. On September 30, 1982, upon motion of the defense in open
court pursuant to PD 1038, the trial court ordered the referral of the
case to the Regional Office No. VII of the then MAR for a preliminary
determination of the relationship between the parties. As a result,
the Regional Director of MAR Regional VII, issued a
certification
1
dated January 24, 1983, stating that said Criminal Case
No. 4003 was not proper for hearing on the bases of the following
findings:
That herein accused is a bona-fide tenant of the land owned by the
complaining witness, which is devoted to bananas;
That this case is filed patently to harass and/or eject the tenant from
his farmholding, which act is prohibited b law; and
That this arose out of or is connected with agrarian relations.
From the said certification, the petitioner appealed to the then
MAR, now the respondent DAR. Acting on said appeal, the
respondent DAR, through its then Minister Conrado Estrella, reversed
the previous certification in its Order
2
of February 3, 1986, declaring
Criminal Case No. 4003 as proper for trial as "the land involved is a
residential lot consisting of only 60 square meters whereon the house
of the accused is constructed and within the industrial zone of the
town as evinced from the Certification issued by the Zoning
Administrator of Talisay, Cebu."
Upon motion for reconsideration filed by Abajon, the respondent
DAR, through its new Minister, herein respondent Heherson Alvarez,
issued an Order
3
dated November 15, 1986, setting aside the
previous Order dated February 3, 1986, and certifying said criminal
case as not proper for trial, finding the existence of a tenancy
relationship between the parties, and that the case was designed to
harass the accused into vacating his tillage.
In the summary investigation conducted by the DAR, the former
landowner, Andrea Millenes, testified that Bienvenido Abajon
dutifully gave her 50% share of the produce of the land under his
cultivation. The grandson of Andrea Millenes, Roger Millenes,
corroborated the testimony of the former, stating that he received
said share from Abajon. Roger Millenes further testified that the
present owners received in his presence a bunch of bananas from the
accused representing 1/2 or 50% of the two bunches of bananas
gathered after Caballes had acquired the property.
4

From these factual findings, the DAR concluded that Abajon was
a tenant of Andrea Millenes, the former owner, who had testified
that she shared the produce of the land with Abajon as tiller
thereof.
5
Thus, invoking Sec. 10 of RA 3844, as amended, which
provides that "[T]he agricultural leasehold relation under this Code
shall not be extinguished by mere expiration of the term or period in
a leasehold contract nor by the sale, alienation or transfer of the legal
possession of the landholding"; and that "(I)n case the agricultural
lessor sells, alienates or transfers the legal possession of the
landholding, the purchaser or transferee thereof shall be subrogated
to the rights and substituted to the obligations of the agricultural
lessor," the MAR ruled that "the new owners are legally bound to
respect the tenancy, notwithstanding their claim that the portion
tilled by Abajon was small, consisting merely of three (3) meters wide
and twenty (20) meters long, or a total of sixty (60) square meters."
6

Hence, its petition for certiorari alleging that:
I. Respondents DAR and Hon. Heherson T. Alvarez committed
"grave abuse of power and discretion amounting to lack of
jurisdiction" in holding that private respondent Abajon is an
agricultural tenant even if he is cultivating only a 60-square meter (3 x
20 meters) portion of a commercial lot of the petitioner.
II. Public respondents gravely erred in holding that Criminal Case
No. 4003 is not proper for trial and hearing by the court.
7

We hold that the private respondent cannot avail of the benefits
afforded by RA 3844, as amended. To invest him with the status of a
tenant is preposterous.
Section 2 of said law provides:
It is the policy of the State:
(1) To establish cooperative-cultivatorship among those who live
and work on the land as tillers, owner-cultivatorship and the
economic family-size farm as the basis of Philippine agriculture and,
as a consequence, divert landlord capital in agriculture to industrial
development;
xxx xxx xxx
RA 3844, as amended, defines an economic family-size farm as
"an area of farm land that permits efficient use of labor and capital
resources of the farm family and will produce an income sufficient to
provide a modest standard of living to meet a farm family's needs for
food, clothing, shelter, and education with possible allowance for
payment of yearly installments on the land, and reasonable reserves
to absorb yearly fluctuations in income."
8

The private respondent only occupied a miniscule portion (60
square meters) of the 500-square meter lot. Sixty square meters of
land planted to bananas, camote, and corn cannot by any stretch of
the imagination be considered as an economic family-size farm.
Surely, planting camote, bananas, and corn on a sixty-square meter
piece of land can not produce an income sufficient to provide a
modest standard of living to meet the farm family's basic needs. The
private respondent himself admitted that he did not depend on the
products of the land because it was too small, and that he took on
carpentry jobs on the side.
9
Thus, the order sought to be reviewed is
patently contrary to the declared policy of the law stated above.
The DAR found that the private respondent shared the produce
of the land with the former owner, Andrea Millenes. This led, or
misled, the public respondents to conclude that a tenancy
relationship existed between the petitioner and the private
respondent because, the public respondents continue, by operation
of Sec. 10 of R. A. 3844, as amended, the petitioner new owner is
subrogated to the rights and substituted to the obligations of the
supposed agricultural lessor (the former owner).
We disagree.
The essential requisites of a tenancy relationship are:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.
All these requisites must concur in order to create a tenancy
relationship between the parties. The absence of one does not make
an occupant of a parcel of land, or a cultivator thereof, or a planter
thereon, a de jure tenant. This is so because unless a person has
established his status as a de jure tenant, he is not entitled to security
of tenure nor is he covered by the Land Reform Program of the
Government under existing tenancy laws.
10

Therefore, the fact of sharing alone is not sufficient to establish a
tenancy relationship. Certainly, it is not unusual for a landowner to
accept some of the produce of his land from someone who plants
certain crops thereon. This is a typical and laudable provinciano trait
of sharing or patikim, a native way of expressing gratitude for favor
received. This, however, does not automatically make the tiller-sharer
a tenant thereof specially when the area tilled is only 60, or even 500,
square meters and located in an urban area and in the heart of an
industrial or commercial zone at that. Tenancy status arises only if an
occupant of a parcel of land has been given its possession for the
primary purpose of agricultural production. The circumstances of this
case indicate that the private respondent's status is more of a
caretaker who was allowed by the owner out of benevolence or
compassion to live in the premises and to have a garden of some sort
at its southwestern side rather than a tenant of the said portion.
Agricultural production as the primary purpose being absent in
the arrangement, it is clear that the private respondent was never a
tenant of the former owner, Andrea Millenes. Consequently, Sec. 10
of RA of 3844, as amended, does not apply. Simply stated, the private
respondent is not a tenant of the herein petitioner.
Anent the second assignment of error, the petitioner argues that
since Abajon, is not an agricultural tenant, the criminal case for
malicious mischief filed against him should be declared as proper for
trial so that proceedings in the lower court can resume.
Notwithstanding our ruling that the private respondent is not a
tenant of the petitioner, we hold that the remand of the case to the
lower court for the resumption of the criminal proceedings is not in
the interest of justice. Remand to the Municipal Court of Talisay,
Cebu, would not serve the ends of justice at all, nor is it necessary,
because this High Tribunal is in a position to resolve with finality the
dispute before it. This Court, in the public interest, and towards the
expeditious administration of justice, has decided to act on the merits
and dispose of the case with finality.
11

The criminal case for malicious mischief filed by the petitioner
against the private respondent for allegedly cutting down banana
trees worth a measly P50.00 will take up much of the time and
attention of the municipal court to the prejudice of other more
pressing cases pending therein. Furthermore, the private respondent
will have to incur unnecessary expenses to finance his legal battle
against the petitioner if proceedings in the court below were to
resume. Court litigants have decried the long and unnecessary delay
in the resolution of their cases and the consequent costs of such
litigations. The poor, particularly, are victims of this unjust judicial
dawdle. Impoverished that they are they must deal with unjust legal
procrastination which they can only interpret as harassment or
intimidation brought about by their poverty, deprivation, and despair.
It must be the mission of the Court to remove the misperceptions
aggrieved people have of the nature of the dispensation of justice. If
justice can be meted out now, why wait for it to drop gently from
heaven? Thus, considering that this case involves a mere bagatelle,
the Court finds it proper and compelling to decide it here and now,
instead of further deferring its final termination.
As found by the DAR, the case for malicious mischief stemmed
from the petitioner's affidavit stating that after she reprimanded
private respondent Abajon for harvesting bananas and jackfruit from
the property without her knowledge, the latter, with ill intent, cut the
banana trees on the property worth about P50.00.
This was corroborated by a certain Anita Duaban, a friend of the
petitioner, who likewise executed an affidavit to the effect that she
saw the private respondent indiscriminately cutting the banana
trees.
12

The Revised Penal Code, as amended, provides that "any person
who shall deliberately cause to the property of another any damage
not falling within the terms of the next preceding chapter shall be
guilty of malicious mischief."
13

The elements of the crime of malicious mischief are:
1. The offender deliberately caused damage to the property of
another;
2. The damage caused did not constitute arson or crimes involving
destructions.
3. The damage was caused maliciously by the offender.
After a review of the facts and circumstances of this case, we rule
that the aforesaid criminal case against the private respondent be
dismissed.
The private respondent can not be held criminally liable for
malicious mischief in cutting the banana trees because, as an
authorized occupant or possessor of the land, and as planter of the
banana trees, he owns said crops including the fruits thereof. The
private respondent's possession of the land is not illegal or in bad
faith because he was allowed by the previous owners to enter and
occupy the premises. In other words, the private respondent worked
the land in dispute with the consent of the previous and present
owners. Consequently, whatever the private respondent planted and
cultivated on that piece of property belonged to him and not to the
landowner. Thus, an essential element of the crime of malicious
mischief, which is "damage deliberately caused to the property of
another," is absent because the private respondent merely cut down
his own plantings. prcd
WHEREFORE, the Order of public respondents dated November
15, 1986 is SET ASIDE and Criminal Case No. 4003, is hereby
DISMISSED. Let a copy of this decision be sent to the Municipal Trial
Court of Talisay, Cebu for appropriate action. This Decision is
IMMEDIATELY EXECUTORY.
No costs.
SO ORDERED.
[G.R. No. 86186. May 8, 1992.]

RAFAEL GELOS, petitioner, vs. THE HONORABLE COURT OF APPEALS
and ERNESTO ALZONA, respondents.

Balagtas P. Ilagan for petitioner.
Emil Capulong, Jr. for private respondent.

SYLLABUS

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI;
FACTUAL ISSUES NOT PROPER. The basic question the petitioner
now raises before the Court is essentially factual and therefore not
proper in a petition for review under Rule 45 of the Rules of Court.
Only questions of law may be raised in this kind of proceeding.
2. ID.; EVIDENCE; FACTUAL FINDINGS OF THE COURT OF APPEALS
SUPPORTED BY SUBSTANTIAL EVIDENCE, CONCLUSIVE ON APPEAL.
The settled rule is that the factual findings of the Court of Appeals are
conclusive on even this Court as long as they are supported by
substantial evidence. The petitioner has not shown such findings may
be validly reversed by this Court.
3. LABOR AND SOCIAL LEGISLATION; TENANCY; A LEGAL
RELATIONSHIP BROUGHT ABOUT BY THE INTENT OF THE PARTIES.
As this Court has stressed in a number of cases, "tenancy is not a
purely factual relationship dependent on what the alleged tenant
does upon the land. It is also a legal relationship. The intent of the
parties, the understanding when the farmer is installed, and as in this
case, their written agreements, provided these are complied with and
are not contrary to law, are even more important."
4. ID.; ID.; PAYMENT OF IRRIGATION FEES, NOT EVIDENCE OF
TENANCY. The petitioner's payment of irrigation fees from 1980 to
1985 to the National Irrigation Administration on the said landholding
is explained by the fact that during the pendency of the CAR case, the
Agrarian Reform Office fixed a provisional leasehold rental after a
preliminary finding that Gelos was the tenant of the private
respondent. As such, it was he who had to pay the irrigation fees.
5. ID.; ID.; DETERMINATION BY THE SECRETARY OF EXISTENCE OF
TENANCY RELATIONSHIP, NOT CONCLUSIVE. Section 12, subpar. (r)
of PD 946 provides that the Secretary's determination of the tenancy
relationship is only preliminary and cannot be conclusive on the lower
court.
6. ID.; ID.; TENANT, DEFINED. A tenant is defined under
Section 5(a) of Republic Act No. 1199 as a person who himself and
with the aid available from within his immediate farm household
cultivates the land belonging to or possessed by another, with the
latter's consent, for purposes of production, sharing the produce with
the landholder under the share tenancy system, or paying to the
landholder a price-certain or ascertainable in produce or in money or
both, under the leasehold tenancy system.
7. ID.; ID.; REQUISITES. For this relationship to exist, it is
necessary that: 1) the parties are the landowner and the tenant; 2)
the subject is agricultural land; 3) there is consent; 4) the purpose is
agricultural production; 5) there is personal cultivation; and 6) there
is sharing of harvest or payment of rental. In the absence of any of
these requisites, an occupant of a parcel of land, or a cultivator
thereof, or planter thereon, cannot qualify as a de jure tenant.
8. ID.; LABOR LAWS; EMPLOYER-EMPLOYEE RELATIONSHIP;
REQUISITES. On the other hand, the indications of an employer-
employee relationship are: 1) the selection and engagement of the
employee; 2) the payment of wages; 3) the power of dismissal; and 4)
the power to control the employee's conduct although the latter is
the most important element.
9. ID.; TENANCY; DISTINGUISHED FARM EMPLOYER-FARM
WORKER RELATIONSHIP. According to a well-known authority on
the subject, tenancy relationship is distinguished from farm
employer-farm worker relationship in that: "In farm employer-farm
worker relationship, the lease is one of labor with the agricultural
laborer as the lessor of his services and the farm employer as the
lessee thereof. In tenancy relationship, it is the landowner who is the
lessor, and the tenant the lessee of agricultural land. The agricultural
worker works for the farm employer and for his labor he receives a
salary or wage regardless of whether the employer makes a profit. On
the other hand, the tenant derives his income from the agricultural
produce or harvest."
10. CIVIL LAW; PRESCRIPTION OF ACTIONS; ACTION BASED ON A
WRITTEN CONTRACT PRESCRIBES IN TEN (10) YEARS; CASE AT BAR.
The other issue raised by the petitioner, which is decidedly legal, is
easily resolved. There being no tenancy relationship, the contention
that the private respondent's complaint has prescribed under Section
38 of R.A. 3844 must also fail. That section is not applicable. It must
be noted that at the very outset, Alzona rejected the petitioner's
claim of agricultural tenancy and immediately instituted his action for
unlawful detainer in accordance with Section 1, Rule 70 of the Rules
of Court. As it happened, the said case was held not proper for trial by
the Ministry of Agrarian Reform. He then resorted to other remedies
just so he could recover possession of his land and, finally, in 1979, he
yielded to the jurisdiction of the defunct Court of Agrarian Relations
by filing there an action for declaration of non-tenancy. The action,
which was commenced in 1979, was within the ten-year prescriptive
period provided under Article 1144 of the Civil Code for actions based
on a written contract.

D E C I S I O N

CRUZ, J p:
The Court is asked to determine the real status of the petitioner,
who claims to be a tenant of the private respondent and entitled to
the benefits of tenancy laws. The private respondent objects,
contending that the petitioner is only a hired laborer whose right to
occupy the subject land ended with the termination of their contract
of employment.
The subject land is a 25,000 square meter farmland situated in
Cabuyao, Laguna, and belonging originally to private respondent
Ernesto Alzona and his parents in equal shares. On July 5, 1970, they
entered into a written contract with petitioner Rafael Gelos
employing him as their laborer on the land at the stipulated daily
wage of P5.00.
1
On September 4, 1973, after Alzona had bought his
parents' share and acquired full ownership of the land, he wrote
Gelos to inform him of the termination of his services and to demand
that he vacate the property. Gelos refused and continued working on
the land.
On October 1, 1973, Gelos went to the Court of Agrarian
Relations and asked for the fixing of the agricultural lease rental on
the property. He later withdrew the case and went to the Ministry of
Agrarian Reform, which granted his petition. For his part, Alzona filed
a complaint for illegal detainer against Gelos in the Municipal Court of
Cabuyao, but this action was declared "not proper for trial" by the
Ministry of Agrarian Reform because of the existence of a tenancy
relationship between the parties. Alzona was rebuffed for the same
reason when he sought the assistance of the Ministry of Labor and
later when he filed a complaint with the Court of Agrarian Relations
for a declaration of non-tenancy and damages against Gelos. On
appeal to the Office of the President, however, the complaint was
declared proper for trial and so de-archived and reinstated.
After hearing, the Regional Trial Court of San Pablo City (which
had taken over the Court of Agrarian Relations under BP 129)
rendered a decision dated April 21, 1987, dismissing the
complaint.
2
It found Gelos to be a tenant of the subject property and
entitled to remain thereon as such. The plaintiff was also held liable in
attorney's fees and costs.
The decision was subsequently reversed by the Court of Appeals.
In its judgment promulgated on November 25, 1988,
3
it held that
Gelos was not a tenant of the land in question and ordered him to
surrender it to Alzona. He was also held liable for the payment of
P10,000.00 as attorney's fees and the costs of the suit.
The basic question the petitioner now raises before the Court is
essentially factual and therefore not proper in a petition for review
under Rule 45 of the Rules of Court. Only questions of law may be
raised in this kind of proceeding. The settled rule is that the factual
findings of the Court of Appeals are conclusive on even this Court as
long as they are supported by substantial evidence. The petitioner
has not shown that his case comes under any of those rare exceptions
when such findings may be validly reversed by this Court.
It is true that in Talavera v. Court of Appeals,
4
we held that a
factual conclusion made by the trial court that a person is a tenant
farmer, if it is supported by the minimum evidence demanded by law,
is final and conclusive and cannot be reversed by the appellate
tribunals except for compelling reasons. In the case at bar, however,
we find with the respondent court that there was such a compelling
reason. A careful examination of the record reveals that, indeed, the
trial court misappreciated the facts when it ruled that the petitioner
was a tenant of the private respondent.
The circumstance that the findings of the respondent court do
not concur with those of the trial court does not, of course, call for
automatic reversal of the appellate court. Precisely, the function of
the appellate court is to review and, if warranted, reverse the findings
of the trial court. Disagreement between the two courts merely calls
on us to make a specially careful study of their respective decisions to
determine which of them should be preferred as more conformable
to the facts at hand.
The Court has made this careful study and will sustain the
decision of the respondent court.
The contract of employment dated July 5, 1970, written in
Tagalog and entitled "Kasunduan ng Upahang Araw," reads
pertinently as follows:
1. Ang Unang Panig ay siyang may-ari at nagtatangkilik ng isang
lagay na lupa, sinasaka, na tumatayo sa Nayon ng Baclaran, Cabuyao,
Laguna, na siyang gagawa at sasaka sa lupa, samantalang ang
Ikalawang Panig ay magiging upahan at katulong sa paggawa ng lupa.
2. Ang Unang Panig ay gustong ipagpatuloy ang pagbubungkal at
paggawa ng bukid na binabanggit sa itaas at ang Ikalawang Panig ay
may ibig na magpaupa sa paggawa sa halagang P5.00 sa bawat araw,
walong oras na trabaho gaya ng mga sumusunod: Patubigan ng
linang; pagpapahalabas ng mga pilapil; pagpapaaldabis sa unang araw
ng pag-aararo; pagpapalinis ng damo sa ibabaw ng pilapil;
pagpapakamot (unang pagpapasuyod), pagpapahalang at
pagpapabalasaw (ikalawa't ikatlong pagpapasuyod); isang tao sa
pagsasabog ng abono una sa pagpapantay ng linang; bago magtanim;
isang tao sa pagaalaga ng dapog; upa sa isang tao ng magbobomba ng
gamot laban sa pagkapit ng mga kulisap (mayroon at wala); sa nag-
we-weeder; upa sa mga tao na maggagamas at magpapatubig ng
palay; magsasapaw ng mga pilapil at iba pa.
3. Ang Unang Panig at ang Ikalawang Panig ay nagkasundo na ang
huli ay gagawa sa bukid ayon sa nabanggit sa itaas bilang katulong at
upahan lamang. Ang Unang Panig bukod sa sila ang gagawa at
magsasaka ay maaaring umupa ng iba pang tao manggagawa sa
upahang umiiral sang-ayon sa batas katulad ng pag-aararo,
pagpapahulip, pagpapagamas, pagbobomba, pagweweeder,
pagsasabog ng abono, pagbobomba ng gamot, pagpapatubig at iba
pang mga gawain. Maaaring alisin ang Ikalawang Panig sa
pagpapatrabaho sa ano mang oras ng Unang Panig.
4. Ipinatatanto ng Ikalawang Panig na siya ay hindi kasama sa bukid
kundi upahan lamang na binabayaran sa bawa't araw ng kanyang
paggawa sa bukid na nabanggit.
It is noted that the agreement provides that "ang Ikalawang
Panig (meaning Gelos) ay may ibig na magpaupa sa paggawa sa
halagang P5.00 sa bawa't araw, walong oras na trabaho" (The Second
Party desires to lease his services at the rate of P5.00 per day, eight
hours of work) and that 'Ipinatatanto ng Ikalawang Panig na siya ay
hindi kasama sa bukid kundi upahan lamang na binabayaran sa bawa't
araw ng kanyang paggawa sa bukid na nabanggit." (The Second Party
makes it known that he is not a farm tenant but only a hired laborer
who is paid for every day of work on the said farm.)
These stipulations clearly indicate that the parties did not enter
into a tendency agreement but only a contract of employment. The
agreement is a lease of services, not of the land in dispute. This
intention is quite consistent with the undisputed fact that three days
before that agreement was concluded, the former tenant of the land,
Laocadio Punongbayan, had executed an instrument in which he
voluntarily surrendered his tenancy rights to the private
respondent.
5
It also clearly demonstrates that, contrary to the
petitioner's contention, Alzona intended to cultivate the land himself
instead of placing it again under tenancy.
The petitioner would now disavow the agreement, but his
protestations are less than convincing. His wife's testimony that he is
illiterate is belied by his own testimony to the contrary in another
proceeding.
6
Her claim that they were tricked into signing the
agreement does not stand up against the testimony of Atty. Santos
Pampolina, who declared under his oath as a witness (and as an
attorney and officer of the court) that he explained the meaning of
the document to Gelos, who even read it himself before signing
it.
7
Atty. Pampolina said the agreement was not notarized because
his commission as notary public was good only for Manila and did not
cover Laguna, where the document was executed.
8
At any rate, the
lack of notarization did not adversely affect the veracity and
effectiveness of the agreement, which, significantly, Gelos and his
wife do not deny having signed.
Gelos points to the specific tasks mentioned in the agreement
and suggests that they are the work of a tenant and not of a mere
hired laborer. Not so. The work specified is not peculiar to tenancy.
What a tenant may do may also be done by a hired laborer working
under the direction of the landowner, as in the case at bar. It is not
the nature of the work involved but the intention of the parties that
determines the relationship between them.
As this Court has stressed in a number of cases,
9
"tenancy is not a
purely factual relationship dependent on what the alleged tenant
does upon the land. It is also a legal relationship. The intent of the
parties, the understanding when the farmer is installed, and as in this
case, their written agreements, provided these are complied with and
are not contrary to law, are even more important."
Gelos presented receipts
10
for fertilizer and pesticides he
allegedly bought and applied to the land of the private respondent,
but the latter insists that it was his brother who bought them, being
an agriculturist and in charge of the technical aspect of the farm.
Moreover, the receipts do not indicate to which particular
landholding the fertilizers would be applied and, as pointed out by
the private respondent, could refer to the other parcels of land which
Gelos was tenanting.
The petitioner's payment of irrigation fees from 1980 to 1985 to
the National Irrigation Administration on the said landholding is
explained by the fact that during the pendency of the CAR case, the
Agrarian Reform Office fixed a provisional leasehold rental after a
preliminary finding that Gelos was the tenant of the private
respondent. As such, it was he who had to pay the irrigation fees.
Incidentally, Section 12, subpar. (r) of PD 946 provides that the
Secretary's determination of the tenancy relationship is only
preliminary and cannot be conclusive on the lower court.
It is noteworthy that, except for the self-serving testimony of the
petitioner's wife, the records of this case are bereft of evidence
regarding the sharing of harvest between Gelos and Alzona. No less
importantly, as the Court of Appeals observed, the petitioner has not
shown that he paid rentals on the subject property from 1970 to
1973, before their dispute arose.
A tenant is defined under Section 5(a) of Republic Act No. 1199
as a person who himself and with the aid available from within his
immediate farm household cultivates the land belonging to or
possessed by another, with the latter's consent, for purposes of
production, sharing the produce with the landholder under the share
tenancy system, or paying to the landholder a price-certain or
ascertainable in produce or in money or both, under the leasehold
tenancy system. (Emphasis supplied)
For this relationship to exist, it is necessary that: 1) the parties
are the landowner and the tenant; 2) the subject is agricultural land;
3) there is consent; 4) the purpose is agricultural production; 5) there
is personal cultivation; and 6) there is sharing of harvest or payment
of rental. In the absence of any of these requisites, an occupant of a
parcel of land, or a cultivator thereof, or planter thereon, cannot
qualify as a de juretenant.
11

On the other hand, the indications of an employer-employee
relationship are: 1) the selection and engagement of the employee; 2)
the payment of wages; 3) the power of dismissal; and 4) the power to
control the employee's conduct - although the latter is the most
important element.
12

According to a well-known authority on the subject,
13
tenancy
relationship is distinguished from farm employer-farm worker
relationship in that: "In farm employer-farm worker relationship, the
lease is one of labor with the agricultural laborer as the lessor of his
services and the farm employer as the lessee thereof. In tenancy
relationship, it is the landowner who is the lessor, and the tenant the
lessee of agricultural land. The agricultural worker works for the farm
employer and for his labor he receives a salary or wage regardless of
whether the employer makes a profit. On the other hand, the tenant
derives his income from the agricultural produce or harvest."
The private respondent, instead of receiving payment of rentals
or sharing in the produce of the land, paid the petitioner lump sums
for specific kinds of work on the subject lot or gave him vales, or
advance payment of his wages as laborer thereon. The petitioner's
wife claims that Alzona made her husband sign the invoices all at one
time because he allegedly needed them to reduce his income taxes.
Even assuming this to be true, we do not think that made the said
payments fictitious, especially so since the petitioner never denied
having received them.
The other issue raised by the petitioner, which is decidedly legal,
is easily resolved. There being no tenancy relationship, the contention
that the private respondent's complaint has prescribed under Section
38 of R.A. 3844 must also fail. That section is not applicable. It must
be noted that at the very outset, Alzona rejected the petitioner's
claim of agricultural tenancy and immediately instituted his action for
unlawful detainer in accordance with Section 1, Rule 70 of the Rules
of Court. As it happened, the said case was held not proper for trial by
the Ministry of Agrarian Reform. He then resorted to other remedies
just so he could recover possession of his land and, finally, in 1979, he
yielded to the jurisdiction of the defunct Court of Agrarian Relations
by filing there an action for declaration of non-tenancy. The action,
which was commenced in 1979. was within the ten-year prescriptive
period provided under Article 1144 of the Civil Code for actions based
on a written contract.
**

The Court quotes with approval the following acute observations
made by Justice Alicia Sempio-Diy:
It might not be amiss to state at this juncture that in deciding this
case in favor of defendant, the lower court might have been greatly
influenced by the fact that defendant is a mere farmer who is almost
illiterate while plaintiff is an educated landlord, such that it had felt
that it was its duty to be vigilant for the protection of defendant's
interests. But the duty of the court to protect the weak and the
underprivileged should not be carried out to such an extent as to
deny justice to the landowner whenever truth and justice happen to
be on his side. Besides, defendant's economic position vis a vis the
plaintiff does not necessarily make him the underprivileged party in
this case, for as testified by plaintiff which defendant never denied,
the small land in question was the only landholding of plaintiff when
he and his father bought the same, at which time he was just a lowly
employee who did not even have a house of his own and his father, a
mere farmer, while defendant was the agricultural tenant of another
piece of land and also owns his own house, a sari saristore, and
a caritela. Plaintiff also surmised that it was only after defendant had
been taken into its wings by the Federation of Free Farmers that he
started claiming to be plaintiff's agricultural tenant, presumably upon
the Federation's instigation and advice. And we cannot discount this
possibility indeed, considering that during the early stages of the
proceedings in this case, defendant even counter-proposed to
plaintiff that he would surrender the land in question to the latter if
plaintiff would convey to him another piece of land adjacent to the
land in question, almost one ha. in area, that plaintiff had also
acquired after buying the land in question, showing that defendant
was not as ignorant as he would want the Court to believe and had
the advice of people knowledgeable on agrarian matters.
This Court has stressed more than once that social justice or
any justice for that matter is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in
case of reasonable doubt, we are called upon to tilt the balance in
favor of the 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 reject 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.
WHEREFORE, the challenged decision of the Court of Appeals is
AFFIRMED and the petition is DENIED, with costs against the
petitioner. It is so ordered.
G.R. No. L-27797 August 26, 1974
TRINIDAD GABRIEL, plaintiff-appellee,
vs.
EUSEBIO PANGILINAN, defendant-appellant.
Mariano Manahan, Jr. for plaintiff-appellee.
Virgilio M. Pablo for defendant-appellant.
Armando M. Laki for movant.

ZALDIVAR, J.:p
This appeal from the decision, dated December 26, 1963, of the Court
of First Instance of Pampanga in its Civil Case No. 1823, was certified
to this Court by the Court of Appeals for the reason that the
jurisdiction of an inferior court is involved.
During the pendency of this case before this Court, under date of
April 29, 1972, Atty. Virgilio M. Pablo, counsel for the appellant
Eusebio Pangilinan, gave notice to this Court that said appellant died
on April 3, 1964, and was survived by his children, who are his legal
heirs, namely: Salvador Pangilinan, Santos Pangilinan, Mariano
Pangilinan, Carlos Pangilinan and Pilar Pangilinan de Avante. For the
purposes of this case the appellant Eusebio Pangilinan, therefore, is
substituted by his heirs herein named.
Under date of November 20, 1973, Atty. Amando M. Laki filed a
motion with this Court advising that appellee Trinidad Gabriel died on
June 14, 1967, and was survived by her heirs and successors-in-
interest, namely: Corazon O. Gabriel, married to Lamberto Ignacio;
Ernesto O. Gabriel; Ester O. Gabriel, married to Emmanuel Padua;
Generoso O. Gabriel, Marciano O. Gabriel and Pablo O. Gabriel, and
prayed that appellee Trinidad Gabriel be substituted by her heirs
herein named. By order of this Court of December 4, 1973 the prayer
for substitution was granted.
In its resolution dated April 19, 1967 certifying the case to this Court,
the Court of Appeals made the following findings, which We adopt:
On June 18, 1960 Trinidad Gabriel filed a complaint in the Court of
First Instance of Pampanga against Eusebio Pangilinan alleging that
she is the owner of a fishpond situated in barrio Sta. Ursula, Betis,
Pampanga and measuring about 169,507 square meters; that
sometime during the last war she entered into an oral contract of
lease thereof with the defendant on a year to year basis, i.e., from
January 1 to December 31, at a rental of P1,200, plus the amount of
real estate taxes, payable in advance in the month of January; that
desiring to develop and cultivate the fishpond by herself, she notified
the defendant in a letter dated June 26, 1957 that she was
terminating the contract as of December 31, 1957; that upon request
of the defendant, she extended the lease for another year; that on
November 19, 1958 she again wrote the defendant that he should
surrender possession of the fishpond on January 1, 1959, which
demand he however ignored. Plaintiff accordingly prayed that the
defendant be ordered to restore the possession of the fishpond to
her and to pay her P1,200, plus the amount of real estate taxes, a
year from 1959, attorney's fees and costs.
The defendant moved for the dismissal of the complaint on the
ground that the trial court had no jurisdiction over the case which
properly pertains to the Court of Agrarian Relations, there being an
agricultural leasehold tenancy relationship between the parties. Upon
opposition by the plaintiff, the motion was denied. The defendant
thereafter filed his answer with counterclaim alleging, inter alia, that
the land in question was originally leased to him, also verbally, by the
plaintiff's father, Potenciano Gabriel in 1923 for as long as the
defendant wanted subject to the condition that he would convert the
major portion into a fishpond and the part which was already a
fishpond be improved at his expense which would be reimbursed by
Potenciano Gabriel or his heirs at the termination of the lease for
whatever cause; that when the plaintiff became the owner of the
property through inheritance, she told the defendant that she would
honor her father's contract with the defendant, and likewise assured
him that he could continue leasing the property, whose original rental
of P400.00 a year had been progressively increased to P1,200.00, for
as long as he wanted since she was not in a position to attend to it
personally. As a special defense, the defendant reiterated the alleged
lack of jurisdiction of the trial court to take cognizance of the case.
On February 12, 1962 the trial court issued an order herein below
quoted in full:
The plaintiff sinks to eject the defendant from the fishpond described
in the complaint which is under lease to the said defendant, who,
however, refuses to vacate. Instead, he has impugned the jurisdiction
of this Court contending that the action should have been filed with
the Court of Agrarian Relations, which has original and exclusive
jurisdiction, as their relationship is one of leasehold tenancy.
After the motion to dismiss was denied on the basis of the allegations
of the complaint, the parties were ordered to adduce evidence for
the purpose of determining which Court shall take cognizance of the
case.
It appears that the fishpond is presently in the possession of the
defendant, who originally leased it from the father of the plaintiff.
Upon the death of the said father, the fishpond was inherited by the
plaintiff. It is now covered by T.C.T. No. 1634 and is registered in her
name. It contains an area of 169,507.00 square meters. The rental is
on a yearly basis.
It also appears that the defendant has ceased to work personally with
the aid of helpers the aforecited fishpond since 1956 he became ill
and incapacitated. His daughter, Pilar Pangilinan, took over. She
testified that she helps her father in administering the leased
property, conveying his instructions to the workers, Urbano
Maninang, Isidro Bernal and Marciano Maninang. The names of Ire,
Juan and Aguedo Viada have been mentioned as the laborers who
were paid for the repair of the dikes. Bernardo Cayanan, a nephew of
the defendant, acts as the watcher. He has lived separately since he
got married. Excepting Pilar Pangilinan. who is residing near the
fishpond, the other children of the defendant are all professions; a
lawyer, an engineer, and a priest all residing in Manila. None of these
persons has been seen working on the fishpond.
The above are the material and pertinent facts upon which we enter
this order.
After a study of the facts and in the light of the provisions of the
Tenancy Law, Republic Act No. 1199, particularly Sections 4 and 9, as
amended. it seems clear that his case does not fall within the purview
of said Act. The lease contract is manifestly a civil lease governed by
the New Civil Code. Considering the area of the fishpond, 16 hectares,
more or less, the fact that neither the defendant, who is physically
incapacitated, or his daughter is Personally cultivating the fishpond or
through the employment of mechanical farm implements, and the
further fact that the persons named above are not members of the
immediate farm household of the defendant, the conclusion is that
no tenancy relationship exists between the plaintiff and the
defendant as defined by Republic Act No. 1199, as amended.
We are, therefore, of the opinion and so hold that this Court is vested
with jurisdiction to try and decide this case. After this order has
become final, the plaintiff may request for the setting of the initial
trial.
The defendant does not contest the findings of facts therein made by
the trial court.
After the parties adduced their respective evidence on the merits,
decision was rendered wherein the trial court Pursuant to Article
1197 of the Civil Code, fixed the period of the low up to June 30,
1964, the defendant on said date to surrender possession of the
fishpond to the plaintiff and to pay the rentals due the latter. The
plaintiff, on her part, was required upon surrender of on to her, to
pay the defendant the sum of P1,000.00 as reimbursement of the
expenses he incurred in improving the fishpond, and upon failure by
either party to pay the amount due the other, the same would bear
interest at the legal rate until full payment is made.
A reconsideration by the defendant having been denied, he appealed
to this Court and assigned the following errors:
1. The lower court erred in considering the relationship of appellee
and appellant as that of a civil lease, in accordance with the Civil Code
of the Philippines and not a leasehold tenancy under Rep. Act No.
1199 as amended.
2. The lower court erred in not holding that the Court of First Instance
is without jurisdiction, the cue being that of an agrarian relation in
nature pursuant to Rep Act. NO. 1199 as amended.
3. The lower court erred in appreciating the evidence of the appellant
particularly the basis for the expenditure for the development of the
fishpond in question.
4. The lower court erred in rendering judgment in favor of the
appellant in them easily amount of one thousand pesos for
reimbursement and for seven hundred pesos for the cost of the
floodgate.
Anent the question of jurisdiction, it is an admitted fact that plaintiff
leased the fishpond to the defendant in 1943 without a fixed term,
the annual rental payable at the end of the year (Exhibit C, Deposition
of plaintiff, Dec. 13, 1962, pp. 2 and 3). It is likewise undisputed that
the work in the fishpond consisted in letting out the water so algae
(lumut) would grow or if algae would not grow, getting some from
the river and putting them in the fishpond, changing the dirty water
with fresh water, repairing leaks in the dikes, and planting of
fingerlings and attending to them; that these were done by
defendant, with some help; that he personally attended to the
fishpond until 1956 when he became ill; that thereafter his nephew
Bernardo Cayanan, who was living with him, helped in the work to be
done in the fishpond and his daughter Pilar Pangilinan helped in the
management, conveying his instructions to the workers (t.s.n., pp. 4-
8, Magat).
Upon the foregoing facts, the defendant insists that the relationship
between the parties is an agricultural leasehold tenancy governed by
Republic Act No. 1199, as amended, pursuant to section 35 of
Republic Act No. 3844, and the present case is therefore within the
original and exclusive jurisdiction of the Court of Agrarian Relations.
Plaintiff, on the other hand, maintains in effect that since defendant
has ceased to work the fishpond personally or with the aid of the
members of his immediate farm household (Section 4, Republic Act
No. 1199) the tenancy relationship between the parties has been
extinguished (Section 9, id.) and become of civil lease and therefore
the trial court properly assumed jurisdiction over the case.
It does appear that the controversy on the issue of jurisdiction calls
for the interpretation of cultivating or working the land by the tenant
personally or with the aid of the members of his immediate farm
household.
1

Those are the findings and conclusions of facts made by the Court of
Appeals which, as a general rule, bind this Court.
2

1. Let Us now discuss the issues raised in this appeal. First, was the
relationship between the appellee and appellant a leasehold tenancy
or a civil law lease?
There are important differences between a leasehold tenancy and a
civil law lease. The subject matter of leasehold tenancy is limited to
agricultural land; that of civil law lease may be either rural or urban
property. As to attention and cultivation, the law requires the
leasehold tenant to personally attend to, and cultivate the
agricultural land, whereas the civil law lessee need not personally
cultivate or work the thing leased. As to purpose, the landholding in
leasehold tenancy is devoted to agriculture, whereas in civil law lease,
the purpose may be for any other lawful pursuits. As to the law that
governs, the civil law lease is governed by the Civil Code, whereas
leasehold tenancy is governed by special laws.
3

In order that leasehold tenancy under the Agricultural Tenancy Act
may exist, the following requisites must concur.
1. That the land worked by the tenant is an agricultural land;
2. That the land is susceptible of cultivation by a single person
together with members of his immediate farm household;
3. That the land must be cultivated by the tenant either personally or
with the aid of labor available from members of his immediate farm
household;
4. That the land belongs to another; and
5. That the use of the land by the tenant is for a consideration of a
fixed amount in money or in produce or in both.
4

Were the foregoing requisites present in the instant case?
There is no doubt that the land in question is agricultural land. It is a
fishpond and the Agricultural Tenancy Act, which refers to
"agricultural land", specifically mentions fishponds and prescribes the
consideration for the use thereof. Thus Section 46(c) of said Act
provides that "the consideration for the use of sugar lands, fishponds,
salt beds and of lands devoted to the raising of livestock shall be
governed by stipulation between the parties". This Court has already
ruled that "land in which fish is produced is classified as agricultural
land."
5
The mere fact, however, that a person works an agricultural
land does not necessarily make him a leasehold tenant within the
purview of section 4 of Republic Act No. 1199. He may still be a civil
law lessee unless the other requisites as above enumerated are
complied with.
Regarding the second requisite, it is to be noted that the land in
question has an area of 169,507 square meters, or roughly 17
hectares of fishpond. The question of whether such a big parcel of
land is susceptible of being worked by the appellant's family or not
has not been raised, and We see no need of tarrying on this point. So,
We pass to the third requisite, to wit, whether the tenant himself
personally or with the aid of his immediate family worked the land.
Assuming that appellant had previously entered in 1923 into an
agreement of leasehold tenancy with Potenciano Gabriel, appellee's
father, such tenancy agreement was severed in 1956 when he ceased
to work the fishpond personally because he became ill and
incapacitated. Not even did the members of appellant's immediate
farm household work the land in question. Only the members of the
family of the tenant and such other persons, whether related to the
tenant or not, who are dependent upon him for support and who
usually help him to operate the farm enterprise are included in the
term "immediate farm household"
6
The record shows who helped
work the land in question, and We quote:
It also appears that the defendant has ceased to work personally with
the aid of helpers the aforecited fishpond since 1956 when he
became ill and incapacitated. His daughter, Pilar Pangilinan took over.
She testified that she helps her father in administering the leased
property, conveying his instructions to the workers, Urbano
Maninang, Isidro Bernal and Marciano Maninang. The names of Ire,
Juan and Aguedo Viada have been mentioned as the laborers who
were paid for the repair of the dikes. Bernardo Cayanan, a nephew of
the defendant, acts as the watcher. He has lived separately since he
got married. Excepting Pilar Pangilinan, who is residing near the
fishpond, the other children of the defendant are all professionals: a
lawyer, an engineer, and a priest all residing in Manila. None of
these persons has been seen working on the fishpond.
7

The law is explicit in requiring the tenant and his immediate family to
work the land. Thus Section 5 (a) of Republic Act No. 1199, as
amended, defines a "tenant" as a person who, himself and with the
aid available from within his immediate farm household, cultivates
the land belonging to, or possessed by, another, with the latter's
consent for purposes of production sharing the produce with the
landholder under the share tenancy system, or paying to the
landholder a price certain in produce or in money or both, under the
leasehold tenancy system. Section 8 of the same Act limits the
relation of landholder and tenant to the person who furnishes the
land and to the person who actually works the land himself with the
aid of labor available from within his immediate farm household.
Finally, Section 4 of the same Act requires for the existence of
leasehold tenancy that the tenant and his immediate farm household
work the land. It provides that leasehold tenancy exists when a
person, who either personally or with the aid of labor available from
members of his immediate farm household, undertakes to cultivate a
piece of agricultural land susceptible of cultivation by a single person
together with members of his immediate farm household, belonging
to, or legally possessed by, another in consideration of a fixed amount
in money or in produce or in both.
A person, in order to be considered a tenant, must himself and with
the aid available from his immediate farm household cultivate the
land. Persons, therefore, who do not actually work the land cannot be
considered tenants;
8
and he who hires others whom he pays for doing
the cultivation of the land, ceases to hold, and is considered as having
abandoned the land as tenant within the meaning of sections 5 and 8
of Republic Act. No. 1199, and ceases to enjoy the status, rights, and
privileges of one.
We are, therefore, constrained to agree with the court a quo that the
relationship between the appellee Trinidad Gabriel and appellant
Eusebio Pangilinan was not a leasehold tenancy under Republic Act
No. 1199. Hence, this case was not within the original and exclusive
jurisdiction of the Court of Agrarian Relations.
9

2. Regarding the second assignment of error, We accordingly rule that
the Court of First Instance correctly assumed jurisdiction over the
case at bar, this being a case of civil law lease.
3. We deem it unnecessary to discuss the third and fourth assigned
errors as these are issues involving findings of facts which have been
settled by the lower court, and unless there is grave abuse of
discretion, which we do not find in the record of the case, We shall
not venture to discuss the merits of the factual findings of the court a
quo.
IN VIEW OF THE FOREGOING, the decision of the Court of First
Instance of Pampanga in its Civil Case No. 1823, appealed from, is
affirmed, with costs against the appellants.
This decision should apply to the heirs and successors-in-interest of
the original parties, as named in this decision. In consonance with the
decision of the lower court, the heirs and successors-in-interest of
appellant Eusebio Pangilinan should deliver the possession of the
fishpond in question to the heirs and successors-in-interest of
appellee Trinidad Gabriel; and said heirs and successors-in-interest of
appellant Eusebio Pangilinan should pay the heirs and successors-in-
interest of appellee Trinidad Gabriel the accrued rentals. From
January 1, 1960, at the rate of P1,200.00 a year, until the actual
delivery of the possession of the fishpond as herein ordered, with
interest at the legal rate until full payment is made.
IT IS SO ORDERED.
JOSE LUIS ROS, ANDONI F.
ABOITIZ, XAVIER ABOITIZ,
ROBERTO E. ABOITIZ, ENRIQUE
ABOITIZ, MATTHIAS G.
MENDEZONA, CEBU
INDUSTRIAL PARK DEVELOPERS,
INC. and FBM ABOITIZ MARINE,
INC.,
P e t i t i o n e r s,

G.R. No. 132477



Present:

PUNO,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,

- versus -


DEPARTMENT OF AGRARIAN
REFORM, HON. ERNESTO
GARILAO, in his capacity as DAR
Secretary, and DIR. JOSE
LLAMES, in his capacity as
Director of DAR-Regional 7,
R e s p o n d e n t s.
TINGA, and
CHICO-NAZARIO, JJ.





Promulgated:


August 31, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N


CHICO-NAZARIO, J.:

Petitioners are the owners/developers of several parcels of land
located in Arpili, Balamban, Cebu. By virtue of Municipal Ordinance
No. 101 passed by the Municipal Council of Balamban, Cebu, these
lands were reclassified as industrial lands.
[1]
On 03 April 1995, the
Provincial Board of Cebu approved Balambans land use plan and
adopted en toto Balambans Municipal Ordinance No. 101 with the
passage of Resolution No. 836-95 and Provincial Ordinance No. 95-8,
respectively.
[2]
As part of their preparation for the development of
the subject lands as an industrial park, petitioners secured all the
necessary permits and appropriate government certifications.
[3]


Despite these permits and certifications, petitioner Matthias
Mendezona received a letter from Mr. Jose Llames, Director of the
Department of Agrarian Reform (DAR) Regional Office for Region 7,
informing him that the DAR was disallowing the conversion of the
subject lands for industrial use and directed him to cease and desist
from further developments on the land to avoid the incurrence of civil
and criminal liabilities.
[4]


Petitioners were thus constrained to file with the Regional Trial
Court (RTC) of Toledo City a Complaint dated 29 July 1996 for
Injunction with Application for Temporary Restraining Order and a
Writ of Preliminary Injunction, docketed as Civil Case No. T-590.
[5]
In
an order
[6]
dated 12 August 1996, the RTC, ruling that it is the DAR
which has jurisdiction, dismissed the Complaint for lack of
jurisdiction.
[7]
It justified the dismissal in this wise:

A perusal of Section 20 of the Local Government Code
expressly provides that the Municipalities through an Ordinance by
the Sanggunian may authorize the reclassification of the agricultural
land within their area into non-agricultural. Paragraph (e) of the
aforesaid Section, provides further: that nothing in this Section shall
be construed as repealing or modifying in any manner the provision
of Republic Act 6657. In an opinion of the Secretary of Justice,
quoted: With respect of (sic) conversion of agricultural land to non-
agricultural uses the authority of the DAR to approve the same may
be exercise (sic) only from the date of the effectivity of the Agrarian
Reform Law on June 15, 1988. It appears that the petitioners had
applied for conversion on June 13, 1995 and therefore the petitioner
(sic) are estopped from questioning the authority and jurisdiction of
the Department of Agrarian Reform. The application having been
filed after June 15, 1988, the reclassification by the Municipal Council
of Balamban was just a step in the conversion of the aforestated
lands according to its purpose. Executive Order No. 129-A, Section 5,
The Department shall be responsible for implementing
Comprehensive Agrarian Reform and for such purpose it is authorized
to (J) approve or disapprove the conversion, restructuring or
readjustment of agricultural land into non-agricultural uses. Said
Executive Order amended Section 36 of Republic Act No. 3644 which
clearly mandates that the DAR Secretary (sic) approve or disapprove
conversion are not impliedly repealed. In fact, under Section 75 of
Republic Act 6657 the above laws and other laws not inconsistent of
(sic) this act shall have suppletory effect. Further, Section 68 of
Republic Act 6657 provides: No injunction, restraining order,
prohibition or mandamus shall be issued by the lower court against
the Department of Agrarian Reform, DENR and Department of Justice
in their implementation of the program. With this provision, it is
therefore clear (sic) when there is conflict of laws determining
whether the Department of Agrarian Reform has been exclusively
empowered by law to approve land conversion after June 15, 1988
and (sic) the final ruling falls only with the Supreme Court or Office of
the President.

WHEREFORE, in view of the foregoing, the Application for
Restraining Order is hereby ordered DENIED and the main case is
DISMISSED, this Court having no jurisdiction over the same.
[8]




In an order dated 18 September 1996, the trial court denied the
motion for reconsideration filed by the petitioners.
[9]
Petitioners filed
before this Court a Petition for Review on Certiorari with application
for Temporary Restraining Order and Writ of Preliminary
Injunction.
[10]
In a resolution
[11]
dated 11 November 1996, this Court
referred the petition to the Court of Appeals.
[12]
Petitioners moved
for a reconsideration of the said resolution but the same was denied
in a resolution dated 27 January 1997.
[13]


At the Court of Appeals, the public respondents were
ordered
[14]
to file their Comments on the petition. Two sets of
comments from the public respondents, one from the Department of
Agrarian Reform Provincial Office
[15]
and another from the Office of
the Solicitor General,
[16]
were submitted, to which petitioners filed
their Consolidated Reply.
[17]


On 02 December 1997, the Court of Appeals rendered a
decision
[18]
affirming the Order of Dismissal issued by the RTC.
[19]
A
motion for reconsideration filed by the petitioners was denied in a
resolution dated 30 January 1998.
[20]


Hence, this petition.

The following issues
[21]
are raised by the petitioners for
resolution:

(a) Whether or not the reclassification of the subject lands to
industrial use by the Municipality of Balamban, Cebu pursuant to its
authority under Section 20(a) of Republic Act No. 7160 or the Local
Government Code of 1991 (the LGC) has the effect of taking such
lands out of the coverage of the CARL and beyond the jurisdiction of
the DAR;

(b) Whether or not the Complaint for Injunction may be
dismissed under the doctrine of primary jurisdiction;

(c) Whether or not the Complaint for Injunction is an
appropriate remedy against the order of the DAR enjoining
development works on the subject lands;

(d) Whether or not the Regional Trial Court of Toledo City had
authority to issue a writ of injunction against the DAR.



In sum, petitioners are of the view that local governments have
the power to reclassify portions of their agricultural lands, subject to
the conditions set forth in Section 20
[22][23]
of the Local Government
Code. According to them, if the agricultural land sought to be
reclassified by the local government is one which has already been
brought under the coverage of the Comprehensive Agrarian Reform
Law (CARL) and/or which has been distributed to agrarian reform
beneficiaries, then such reclassification must be confirmed by the
DAR pursuant to its authority under Section 65
22
of the CARL, in order
for the reclassification to become effective. If, however, the land
sought to be reclassified is not covered by the CARL and not
distributed to agrarian reform beneficiaries, then no confirmation
from the DAR is necessary in order for the reclassification to become
effective as such case would not fall within the DARs conversion
authority. Stated otherwise, Section 65 of the CARL does not, in all
cases, grant the DAR absolute, sweeping and all-encompassing power
to approve or disapprove reclassifications or conversions of all
agricultural lands. Said section only grants the DAR exclusive
authority to approve or disapprove conversions of agricultural lands
which have already been brought under the coverage of the CARL and
which have already been distributed to farmer beneficiaries.

The petition lacks merit.

After the passage of Republic Act No. 6657, otherwise known as
Comprehensive Agrarian Reform Program, agricultural lands, though
reclassified, have to go through the process of conversion, jurisdiction
over which is vested in the DAR. However, agricultural lands already
reclassified before the effectivity of Rep. Act No. 6657 are exempted
from conversion.

Department of Justice Opinion No. 44, Series of 1990,
provides:

. . . True, the DARs express power over land use conversion is
limited to cases in which agricultural lands already awarded have,
after five years, ceased to be economically feasible and sound for
agricultural purposes, or the locality has become urbanized and the
land will have a greater economic value for residential, commercial or
industrial purposes. But to suggest that these are the only instances
when the DAR can require conversion clearances would open a
loophole in R.A. No. 6657, which every landowner may use to evade
compliance with the agrarian reform program. Hence, it should
logically follow from the said departments express duty and function
to execute and enforce the said statute that any reclassification of a
private land as a residential, commercial or industrial property should
first be cleared by the DAR.



The requirement that agricultural lands must go through the
process of conversion despite having undergone reclassification was
underscored in the case of Alarcon v. Court of Appeals,
[24]
where it
was held that reclassification of land does not suffice:

In the case at bar, there is no final order of conversion. The
subject landholding was merely reclassified. Conversion is different
from reclassification. Conversion is the act of changing the current
use of a piece of agricultural land into some other use as approved by
the Department of Agrarian Reform. Reclassification, on the other
hand, is the act of specifying how agricultural lands shall be utilized
for non-agricultural uses such as residential, industrial, commercial,
as embodied in the land use plan, subject to the requirements and
procedure for land use conversion. Accordingly, a mere
reclassification of agricultural land does not automatically allow a
landowner to change its use and thus cause the ejectment of the
tenants. He has to undergo the process of conversion before he is
permitted to use the agricultural land for other purposes.



Rep. Act No. 6657 took effect on 15 June 1988. Municipal
Ordinance No. 101 of Balamban, Cebu, which reclassified the subject
lands, was passed on 25 March 1992, and Provincial Ordinance No.
95-8 of the Provincial Board of Cebu, which adopted Municipal
Ordinance No. 101, was passed on 03 April 1995, long after Rep. Act
No. 6657 has taken effect. Section 4 of Rep. Act No. 6657 provides:

SEC. 4. Scope. The Comprehensive Agrarian Reform Law of
1988 shall cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture.

. . .

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



To further clarify any doubt on its authority, the DAR issued
Administrative Order No. 12 dated October 1994 which reads:

Administrative Order No. 12
Series of 1994

SUBJECT: CONSOLIDATED AND REVISED RULES AND PROCEDURES
GOVERNING CONVERSION OF ARICULTURAL LANDS TO NON-
AGRICULTURAL USES

I. PREFATORY STATEMENT

The guiding principles on land use conversion is to preserve prime
agricultural lands. On the other hand, conversion of agricultural lands,
when coinciding with the objectives of the Comprehensive Agrarian
Reform Law to promote social justice, industrialization, and the
optimum use of land as a national resource for public welfare, shall
be pursued in a speedy and judicious manner.

To rationalize these principles, and by virtue of Republic Act (R.A.) No.
3844, as amended, Presidential Decree (P.D.) No. 27, P.D. No. 946,
Executive Order (E.O.) No. 129-A and R.A. No. 6657, the Department
of Agrarian Reform (DAR) has issued several policy guidelines to
regulate land use conversion. This Administrative Order consolidates
and revises all existing implementing guidelines issued by the DAR,
taking into consideration, other Presidential issuances and national
policies related to land use conversion.




II. LEGAL MANDATE

A. The Department of Agrarian Reform (DAR) is mandated to
approve or disapprove applications for conversion, restructuring or
readjustment of agricultural lands into non-agricultural uses,
pursuant to Section 4(i) of Executive Order No. 129-A, Series of 1987.

B. Section 5(i) of E.O. No. 129-A, Series of 1987, vests in the
DAR, exclusive authority to approve or disapprove applications for
conversion of agricultural lands for residential, commercial, industrial,
and other land uses.

C. Section 65 of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, likewise empowers the
DAR to authorize under certain conditions, the reclassification or
conversion of agricultural lands.

D. Section 4 of Memorandum Circular No. 54, Series of 1993
of the Office of the President, provides that action on applications
for land use conversion on individual landholdings shall remain as the
responsibility of the DAR, which shall utilize as its primary reference,
documents on the comprehensive land use plans and accompanying
ordinances passed upon and approved by the local government units
concerned, together with the National Land Use Policy, pursuant to
R.A. No. 6657 and E.O. No. 129-A.

III. DEFINITION OF TERMS

A. Agricultural land refers to land devoted to agricultural activity
and not classified as mineral, forest, residential, commercial or
industrial land (Section 3[c], R.A. No. 6657).

B. Conversion is the act of changing the current use of a piece of
agricultural land into some other use.

C. Reclassification of agricultural lands is the act of specifying
how agricultural lands shall be utilized for non-agricultural uses such
as residential, industrial, commercial, as embodied in the land use
plan. It also includes the reversion of non-agricultural lands to
agricultural use.

. . .

V. COVERAGE

These rules shall cover all private agricultural lands as defined
herein regardless of tenurial arrangement and commodity produced.
It shall also include agricultural lands reclassified by LGUs into non-
agricultural uses, after June 15, 1988, pursuant to Memorandum
Circular (M.C.) No. 54, Series of 1993 of the Office of the President
and those proposed to be used for livestock, poultry and swine raising
as provided in DAR Administrative Order No. 9, Series of 1993.



In the case of Advincula-Velasquez v. Court of Appeals,
[25]
we
held:

Our ruling in the Natalia case was reiterated in National
Housing Authority v. Allarde (318 SCRA 22 [1999]).

The Court of Appeals reliance on DOJ Opinion No. 44, Series of
1990, is in order. In the said opinion, the Secretary of Justice
declared, viz:

Based on the foregoing premises, we reiterate the view that
with respect to conversions of agricultural lands covered by R.A. No.
6657 to non-agricultural uses, the authority of DAR to approve such
conversions may be exercised from the date of the laws effectivity on
June 15, 1988. This conclusion is based on a liberal interpretation of
R.A. No. 6657 in the light of DARs mandate and extensive coverage of
the agrarian reform program.

Following the DOJ opinion, the DAR issued Administrative
Order No. 6, Series of 1994, stating that lands already classified as
non-agricultural before the enactment of Rep. Act No. 6657 no longer
needed any conversion clearance:



I. Prefatory Statement

In order to streamline the issuance of exemption clearances,
based on DOJ Opinion No. 44, the following guidelines are being
issued for the guidance of the DAR and the public in general.

II. Legal Basis

Sec. 3(c) of RA 6657 states that agricultural lands refers to the
land devoted to agricultural activity as defined in this act and not
classified as mineral, forest, residential, commercial or industrial
land.

Department of Justice Opinion No. 44, series of 1990 has ruled
that, with respect to the conversion of agricultural lands covered by
RA No. 6657 to non-agricultural uses, the authority of DAR to approve
such conversion may be exercised from the date of its effectivity, on
June 15, 1988. Thus, all lands that are already classified as
commercial, industrial, or residential before 15 June 1988 no longer
need any conversion clearance.



The authority of the DAR to approve conversions of agricultural
lands covered by Rep. Act No. 6657 to non-agricultural uses has not
been pierced by the passage of the Local Government Code. The
Code explicitly provides
[26]
that nothing in this section shall be
construed as repealing or modifying in any manner the provisions of
Rep. Act No. 6657.

It being settled that jurisdiction over conversion of land is
vested in the DAR, the complaint for injunction was correctly
dismissed by the trial and appellate courts under the doctrine of
primary jurisdiction. This Court, in Bautista v. Mag-isa Vda. De
Villena,
[27]
found occasion to reiterate the doctrine of primary
jurisdiction

The doctrine of primary jurisdiction precludes the courts from
resolving a controversy over which jurisdiction has initially been
lodged with an administrative body of special competence. For
agrarian reform cases, jurisdiction is vested in the Department of
Agrarian Reform (DAR); more specifically, in the Department of
Agrarian Reform Adjudication Board (DARAB).

Executive Order 229 vested the DAR with (1) quasi-judicial
powers to determine and adjudicate agrarian reform matters; and (2)
jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive original jurisdiction of
the Department of Agriculture and the Department of Environment
and Natural Resources. This law divested the regional trial courts of
their general jurisdiction to try agrarian reform matters.

Under Republic Act 6657, the DAR retains jurisdiction over all
agrarian reform matters. The pertinent provision reads:

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

It shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all 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 and the merits of the case. Toward this end, it shall adopt
a uniform rule of procedure to achieve a just, expeditious and
inexpensive determination of every action or proceeding before it. . .
.



Finally, the third and fourth issues which may be summed up
into whether or not an injunction is the appropriate remedy against
the order of the DAR enjoining petitioners in developing the subject
land, we rule in the negative. Section 68 of Rep. Act No. 6657
provides:

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



WHEREFORE, premises considered, the instant petition
is DENIED for lack of merit. The decision of the Court of Appeals in
CA-G.R. SP No. 42666 dated 02 December 1997 affirming the order
dated 12 August 1996 of the Regional Trial Court of Toledo City,
Branch 29, in Civil Case No. T-590 is AFFIRMED. Costs against
petitioners.

G.R. No. 183409 June 18, 2010
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.
(CREBA), petitioner,
vs.
THE SECRETARY OF AGRARIAN REFORM, Respondent.
D E C I S I O N
PEREZ, J.:
This case is a Petition for Certiorari and Prohibition (with application
for temporary restraining order and/or writ of preliminary injunction)
under Rule 65 of the 1997 Revised Rules of Civil Procedure, filed by
herein petitioner Chamber of Real Estate and Builders Associations,
Inc. (CREBA) seeking to nullify and prohibit the enforcement of
Department of Agrarian Reform (DAR) Administrative Order (AO) No.
01-02, as amended by DAR AO No. 05-07,
1
and DAR Memorandum No.
88,
2
for having been issued by the Secretary of Agrarian Reform with
grave abuse of discretion amounting to lack or excess of jurisdiction
as some provisions of the aforesaid administrative issuances are
illegal and unconstitutional.
Petitioner CREBA, a private non-stock, non-profit corporation duly
organized and existing under the laws of the Republic of the
Philippines, is the umbrella organization of some 3,500 private
corporations, partnerships, single proprietorships and individuals
directly or indirectly involved in land and housing development,
building and infrastructure construction, materials production and
supply, and services in the various related fields of engineering,
architecture, community planning and development financing. The
Secretary of Agrarian Reform is named respondent as he is the duly
appointive head of the DAR whose administrative issuances are the
subject of this petition.
The Antecedent Facts
The Secretary of Agrarian Reform issued, on 29 October 1997, DAR
AO No. 07-97,
3
entitled "Omnibus Rules and Procedures Governing
Conversion of Agricultural Lands to Non-Agricultural Uses," which
consolidated all existing implementing guidelines related to land use
conversion. The aforesaid rules embraced all private agricultural lands
regardless of tenurial arrangement and commodity produced, and all
untitled agricultural lands and agricultural lands reclassified by Local
Government Units (LGUs) into non-agricultural uses after 15 June
1988.
Subsequently, on 30 March 1999, the Secretary of Agrarian Reform
issued DAR AO No. 01-99,
4
entitled "Revised Rules and Regulations on
the Conversion of Agricultural Lands to Non-agricultural Uses,"
amending and updating the previous rules on land use conversion. Its
coverage includes the following agricultural lands, to wit: (1) those to
be converted to residential, commercial, industrial, institutional and
other non-agricultural purposes; (2) those to be devoted to another
type of agricultural activity such as livestock, poultry, and fishpond
the effect of which is to exempt the land from the Comprehensive
Agrarian Reform Program (CARP) coverage; (3) those to be converted
to non-agricultural use other than that previously authorized; and (4)
those reclassified to residential, commercial, industrial, or other non-
agricultural uses on or after the effectivity of Republic Act No.
6657
5
on 15 June 1988 pursuant to Section 20
6
of Republic Act No.
7160
7
and other pertinent laws and regulations, and are to be
converted to such uses.
On 28 February 2002, the Secretary of Agrarian Reform issued
another Administrative Order, i.e., DAR AO No. 01-02, entitled "2002
Comprehensive Rules on Land Use Conversion," which further
amended DAR AO No. 07-97 and DAR AO No. 01-99, and repealed all
issuances inconsistent therewith. The aforesaid DAR AO No. 01-02
covers all applications for conversion from agricultural to non-
agricultural uses or to another agricultural use.
Thereafter, on 2 August 2007, the Secretary of Agrarian Reform
amended certain provisions
8
of DAR AO No. 01-02 by formulating DAR
AO No. 05-07, particularly addressing land conversion in time of
exigencies and calamities.
To address the unabated conversion of prime agricultural lands for
real estate development, the Secretary of Agrarian Reform further
issued Memorandum No. 88 on 15 April 2008, which temporarily
suspended the processing and approval of all land use conversion
applications.
By reason thereof, petitioner claims that there is an actual slow down
of housing projects, which, in turn, aggravated the housing shortage,
unemployment and illegal squatting problems to the substantial
prejudice not only of the petitioner and its members but more so of
the whole nation.
Hence, this petition.
The Issues
In its Memorandum, petitioner posits the following issues:
I.
WHETHER THE DAR SECRETARY HAS JURISDICTION OVER LANDS THAT
HAVE BEEN RECLASSIFIED AS RESIDENTIAL, COMMERCIAL,
INDUSTRIAL, OR FOR OTHER NON-AGRICULTURAL USES.
II.
WHETHER THE DAR SECRETARY ACTED IN EXCESS OF HIS
JURISDICTION AND GRAVELY ABUSED HIS DISCRETION BY ISSUING
AND ENFORCING [DAR AO NO. 01-02, AS AMENDED] WHICH SEEK TO
REGULATE RECLASSIFIED LANDS.
III.
WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL
AUTONOMY OF LOCAL GOVERNMENT UNITS.
IV.
WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE
PROCESS AND EQUAL PROTECTION CLAUSE[S] OF THE
CONSTITUTION.
V.
WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE
POWER.
9

The subject of the submission that the DAR Secretary gravely abused
his discretion is AO No. 01-02, as amended, which states:
Section 3. Applicability of Rules. These guidelines shall apply to all
applications for conversion, from agricultural to non-agricultural uses
or to another agricultural use, such as:
x x x x
3.4 Conversion of agricultural lands or areas that have been
reclassified by the LGU or by way of a Presidential Proclamation, to
residential, commercial, industrial, or other non-agricultural uses on
or after the effectivity of RA 6657 on 15 June 1988, x x x. [Emphasis
supplied].
Petitioner holds that under Republic Act No. 6657 and Republic Act
No. 8435,
10
the term agricultural lands refers to "lands devoted to or
suitable for the cultivation of the soil, planting of crops, growing of
fruit trees, raising of livestock, poultry or fish, including the harvesting
of such farm products, and other farm activities and practices
performed by a farmer in conjunction with such farming operations
done by a person whether natural or juridical, and not classified by
the law as mineral, forest, residential, commercial or industrial land."
When the Secretary of Agrarian Reform, however, issued DAR AO No.
01-02, as amended, he included in the definition of agricultural lands
"lands not reclassified as residential, commercial, industrial or other
non-agricultural uses before 15 June 1988." In effect, lands
reclassified from agricultural to residential, commercial, industrial, or
other non-agricultural uses after 15 June 1988 are considered to be
agricultural lands for purposes of conversion, redistribution, or
otherwise. In so doing, petitioner avows that the Secretary of
Agrarian Reform acted without jurisdiction as he has no authority to
expand or enlarge the legal signification of the term agricultural lands
through DAR AO No. 01-02. Being a mere administrative issuance, it
must conform to the statute it seeks to implement, i.e., Republic Act
No. 6657, or to the Constitution, otherwise, its validity or
constitutionality may be questioned.
In the same breath, petitioner contends that DAR AO No. 01-02, as
amended, was made in violation of Section 65
11
of Republic Act No.
6657 because it covers all applications for conversion from
agricultural to non-agricultural uses or to other agricultural uses, such
as the conversion of agricultural lands or areas that have been
reclassified by the LGUs or by way of Presidential Proclamations, to
residential, commercial, industrial or other non-agricultural uses on
or after 15 June 1988. According to petitioner, there is nothing in
Section 65 of Republic Act No. 6657 or in any other provision of law
that confers to the DAR the jurisdiction or authority to require that
non-awarded lands or reclassified lands be submitted to its
conversion authority. Thus, in issuing and enforcing DAR AO No. 01-
02, as amended, the Secretary of Agrarian Reform acted with grave
abuse of discretion amounting to lack or excess of jurisdiction.
Petitioner further asseverates that Section 2.19,
12
Article I of DAR AO
No. 01-02, as amended, making reclassification of agricultural lands
subject to the requirements and procedure for land use conversion,
violates Section 20 of Republic Act No. 7160, because it was not
provided therein that reclassification by LGUs shall be subject to
conversion procedures or requirements, or that the DARs approval or
clearance must be secured to effect reclassification. The said Section
2.19 of DAR AO No. 01-02, as amended, also contravenes the
constitutional mandate on local autonomy under Section 25,
13
Article
II and Section 2,
14
Article X of the 1987 Philippine Constitution.
Petitioner similarly avers that the promulgation and enforcement of
DAR AO No. 01-02, as amended, constitute deprivation of liberty and
property without due process of law. There is deprivation of liberty
and property without due process of law because under DAR AO No.
01-02, as amended, lands that are not within DARs jurisdiction are
unjustly, arbitrarily and oppressively prohibited or restricted from
legitimate use on pain of administrative and criminal penalties. More
so, there is discrimination and violation of the equal protection clause
of the Constitution because the aforesaid administrative order is
patently biased in favor of the peasantry at the expense of all other
sectors of society.
As its final argument, petitioner avows that DAR Memorandum No.
88 is not a valid exercise of police power for it is the prerogative of
the legislature and that it is unconstitutional because it suspended
the land use conversion without any basis.
The Courts Ruling
This petition must be dismissed.
Primarily, although this Court, the Court of Appeals and the Regional
Trial Courts have concurrent jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction,
such concurrence does not give the petitioner unrestricted freedom
of choice of court forum.
15
In Heirs of Bertuldo Hinog v.
Melicor,
16
citing People v. Cuaresma,
17
this Court made the following
pronouncements:
This Court's original jurisdiction to issue writs of certiorari is not
exclusive. It is shared by this Court with Regional Trial Courts and with
the Court of Appeals. This concurrence of jurisdiction is not, however,
to be taken as according to parties seeking any of the writs an
absolute, unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all a hierarchy of
courts. That hierarchy is determinative of the venue of appeals, and
also serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for that
judicial hierarchy most certainly indicates that petitions for the
issuance of extraordinary writs against first level ("inferior") courts
should be filed with the Regional Trial Court, and those against the
latter, with the Court of Appeals. A direct invocation of the Supreme
Courts original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly
and specifically set out in the petition. This is [an] established policy.
It is a policy necessary to prevent inordinate demands upon the
Courts time and attention which are better devoted to those matters
within its exclusive jurisdiction, and to prevent further over-crowding
of the Courts docket.
18
(Emphasis supplied.)
The rationale for this rule is two-fold: (a) it would be an imposition
upon the precious time of this Court; and (b) it would cause an
inevitable and resultant delay, intended or otherwise, in the
adjudication of cases, which in some instances had to be remanded or
referred to the lower court as the proper forum under the rules of
procedure, or as better equipped to resolve the issues because this
Court is not a trier of facts.
19

This Court thus reaffirms the judicial policy that it will not entertain
direct resort to it unless the redress desired cannot be obtained in the
appropriate courts, and exceptional and compelling circumstances,
such as cases of national interest and of serious implications, justify
the availment of the extraordinary remedy of writ of certiorari, calling
for the exercise of its primary jurisdiction.
20

Exceptional and compelling circumstances were held present in the
following cases: (a) Chavez v. Romulo,
21
on citizens right to bear
arms; (b) Government of [the] United States of America v. Hon.
Purganan,
22
on bail in extradition proceedings; (c) Commission on
Elections v. Judge Quijano-Padilla,
23
on government contract involving
modernization and computerization of voters registration list; (d)
Buklod ng Kawaning EIIB v. Hon. Sec. Zamora,
24
on status and
existence of a public office; and (e) Hon. Fortich v. Hon. Corona,
25
on
the so-called "Win-Win Resolution" of the Office of the President
which modified the approval of the conversion to agro-industrial
area.
26

In the case at bench, petitioner failed to specifically and sufficiently
set forth special and important reasons to justify direct recourse to
this Court and why this Court should give due course to this petition
in the first instance, hereby failing to fulfill the conditions set forth
in Heirs of Bertuldo Hinog v. Melicor.
27
The present petition should
have been initially filed in the Court of Appeals in strict observance of
the doctrine on the hierarchy of courts. Failure to do so is sufficient
cause for the dismissal of this petition.
Moreover, although the instant petition is styled as a Petition for
Certiorari, in essence, it seeks the declaration by this Court of the
unconstitutionality or illegality of the questioned DAR AO No. 01-02,
as amended, and Memorandum No. 88. It, thus, partakes of the
nature of a Petition for Declaratory Relief over which this Court has
only appellate, not original, jurisdiction.
28
Section 5, Article VIII of the
1987 Philippine Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors,
other public ministers and consuls, and over petitions for certiorari,
prohibition, mandamus, quo warranto, and habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as
the law or the Rules of Court may provide, final judgments and orders
of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in
question. (Emphasis supplied.)
With that, this Petition must necessarily fail because this Court does
not have original jurisdiction over a Petition for Declaratory Relief
even if only questions of law are involved.
Even if the petitioner has properly observed the doctrine of judicial
hierarchy, this Petition is still dismissible.
The special civil action for certiorari is intended for the correction of
errors of jurisdiction only or grave abuse of discretion amounting to
lack or excess of jurisdiction. Its principal office is only to keep the
inferior court within the parameters of its jurisdiction or to prevent it
from committing such a grave abuse of discretion amounting to lack
or excess of jurisdiction.
29

The essential requisites for a Petition for Certiorari under Rule 65 are:
(1) the writ is directed against a tribunal, a board, or an officer
exercising judicial or quasi-judicial functions; (2) such tribunal, board,
or officer has acted without or in excess of jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction; and (3)
there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.
30

Excess of jurisdiction as distinguished from absence of jurisdiction
means that an act, though within the general power of a tribunal,
board or officer, is not authorized and invalid with respect to the
particular proceeding, because the conditions which alone authorize
the exercise of the general power in respect of it are
wanting.
31
Without jurisdiction means lack or want of legal power,
right or authority to hear and determine a cause or causes,
considered either in general or with reference to a particular matter.
It means lack of power to exercise authority.
32
Grave abuse of
discretion implies such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction or, in other words, where the
power is exercised in an arbitrary manner by reason of passion,
prejudice, or personal hostility, and it must be so patent or gross as to
amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law.
33

In the case before this Court, the petitioner fails to meet the above-
mentioned requisites for the proper invocation of a Petition for
Certiorari under Rule 65. The Secretary of Agrarian Reform in issuing
the assailed DAR AO No. 01-02, as amended, as well as Memorandum
No. 88 did so in accordance with his mandate to implement the land
use conversion provisions of Republic Act No. 6657. In the process, he
neither acted in any judicial or quasi-judicial capacity nor assumed
unto himself any performance of judicial or quasi-judicial prerogative.
A Petition for Certiorari is a special civil action that may be invoked
only against a tribunal, board, or officer exercising judicial functions.
Section 1, Rule 65 of the 1997 Revised Rules of Civil Procedure is
explicit on this matter, viz.:
SECTION 1. Petition for certiorari. When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted without
or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, nor
any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that
judgment must be rendered annulling or modifying the proceedings
of such tribunal, board or officer.1avvphi1
A tribunal, board, or officer is said to be exercising judicial function
where it has the power to determine what the law is and what the
legal rights of the parties are, and then undertakes to determine
these questions and adjudicate upon the rights of the parties. Quasi-
judicial function, on the other hand, is "a term which applies to the
actions, discretion, etc., of public administrative officers or bodies x x
x required to investigate facts or ascertain the existence of facts, hold
hearings, and draw conclusions from them as a basis for their official
action and to exercise discretion of a judicial nature."
34

Before a tribunal, board, or officer may exercise judicial or quasi-
judicial acts, it is necessary that there be a law that gives rise to some
specific rights of persons or property under which adverse claims to
such rights are made, and the controversy ensuing therefrom is
brought before a tribunal, board, or officer clothed with power and
authority to determine the law and adjudicate the respective rights of
the contending parties.
35

The Secretary of Agrarian Reform does not fall within the ambit of a
tribunal, board, or officer exercising judicial or quasi-judicial
functions. The issuance and enforcement by the Secretary of Agrarian
Reform of the questioned DAR AO No. 01-02, as amended, and
Memorandum No. 88 were done in the exercise of his quasi-
legislative and administrative functions and not of judicial or quasi-
judicial functions. In issuing the aforesaid administrative issuances,
the Secretary of Agrarian Reform never made any adjudication of
rights of the parties. As such, it can never be said that the Secretary of
Agrarian Reform had acted with grave abuse of discretion amounting
to lack or excess of jurisdiction in issuing and enforcing DAR AO No.
01-02, as amended, and Memorandum No. 88 for he never exercised
any judicial or quasi-judicial functions but merely his quasi-legislative
and administrative functions.
Furthermore, as this Court has previously discussed, the instant
petition in essence seeks the declaration by this Court of the
unconstitutionality or illegality of the questioned DAR AO No. 01-02,
as amended, and Memorandum No. 88. Thus, the adequate and
proper remedy for the petitioner therefor is to file a Petition for
Declaratory Relief, which this Court has only appellate and not
original jurisdiction. It is beyond the province of certiorari to declare
the aforesaid administrative issuances unconstitutional and illegal
because certiorari is confined only to the determination of the
existence of grave abuse of discretion amounting to lack or excess of
jurisdiction. Petitioner cannot simply allege grave abuse of discretion
amounting to lack or excess of jurisdiction and then invoke certiorari
to declare the aforesaid administrative issuances unconstitutional and
illegal. Emphasis must be given to the fact that the writ of certiorari
dealt with in Rule 65 of the 1997 Revised Rules of Civil Procedure is a
prerogative writ, never demandable as a matter of right, "never
issued except in the exercise of judicial discretion."
36

At any rate, even if the Court will set aside procedural infirmities, the
instant petition should still be dismissed.
Executive Order No. 129-A
37
vested upon the DAR the responsibility
of implementing the CARP. Pursuant to the said mandate and to
ensure the successful implementation of the CARP, Section 5(c) of the
said executive order authorized the DAR to establish and promulgate
operational policies, rules and regulations and priorities for agrarian
reform implementation. Section 4(k) thereof authorized the DAR to
approve or disapprove the conversion, restructuring or readjustment
of agricultural lands into non-agricultural uses. Similarly, Section 5(l)
of the same executive order has given the DAR the exclusive authority
to approve or disapprove conversion of agricultural lands for
residential, commercial, industrial, and other land uses as may be
provided for by law. Section 7 of the aforesaid executive order clearly
provides that "the authority and responsibility for the exercise of the
mandate of the [DAR] and the discharge of its powers and functions
shall be vested in the Secretary of Agrarian Reform x x x."
Under DAR AO No. 01-02, as amended, "lands not reclassified as
residential, commercial, industrial or other non-agricultural uses
before 15 June 1988" have been included in the definition of
agricultural lands. In so doing, the Secretary of Agrarian Reform
merely acted within the scope of his authority stated in the aforesaid
sections of Executive Order No. 129-A, which is to promulgate rules
and regulations for agrarian reform implementation and that includes
the authority to define agricultural lands for purposes of land use
conversion. Further, the definition of agricultural lands under DAR AO
No. 01-02, as amended, merely refers to the category of agricultural
lands that may be the subject for conversion to non-agricultural uses
and is not in any way confined to agricultural lands in the context of
land redistribution as provided for under Republic Act No. 6657.
More so, Department of Justice Opinion No. 44, Series of 1990, which
Opinion has been recognized in many cases decided by this Court,
clarified that after the effectivity of Republic Act No. 6657 on 15 June
1988 the DAR has been given the authority to approve land
conversion.
38
Concomitant to such authority, therefore, is the
authority to include in the definition of agricultural lands "lands not
reclassified as residential, commercial, industrial or other non-
agricultural uses before 15 June 1988" for purposes of land use
conversion.
In the same vein, the authority of the Secretary of Agrarian Reform to
include "lands not reclassified as residential, commercial, industrial or
other non-agricultural uses before 15 June 1988" in the definition of
agricultural lands finds basis in jurisprudence. In Ros v. Department of
Agrarian Reform,
39
this Court has enunciated that after the passage of
Republic Act No. 6657, agricultural lands, though reclassified, have to
go through the process of conversion, jurisdiction over which is
vested in the DAR. However, agricultural lands, which are already
reclassified before the effectivity of Republic Act No. 6657 which is 15
June 1988, are exempted from conversion.
40
It bears stressing that
the said date of effectivity of Republic Act No. 6657 served as the cut-
off period for automatic reclassifications or rezoning of agricultural
lands that no longer require any DAR conversion clearance or
authority.
41
It necessarily follows that any reclassification made
thereafter can be the subject of DARs conversion authority. Having
recognized the DARs conversion authority over lands reclassified
after 15 June 1988, it can no longer be argued that the Secretary of
Agrarian Reform was wrongfully given the authority and power to
include "lands not reclassified as residential, commercial, industrial or
other non-agricultural uses before 15 June 1988" in the definition of
agricultural lands. Such inclusion does not unduly expand or enlarge
the definition of agricultural lands; instead, it made clear what are the
lands that can be the subject of DARs conversion authority, thus,
serving the very purpose of the land use conversion provisions of
Republic Act No. 6657.
The argument of the petitioner that DAR AO No. 01-02, as amended,
was made in violation of Section 65 of Republic Act No. 6657, as it
covers even those non-awarded lands and reclassified lands by the
LGUs or by way of Presidential Proclamations on or after 15 June
1988 is specious. As explained in Department of Justice Opinion No.
44, series of 1990, it is true that the DARs express power over land
use conversion provided for under Section 65 of Republic Act No.
6657 is limited to cases in which agricultural lands already awarded
have, after five years, ceased to be economically feasible and sound
for agricultural purposes, or the locality has become urbanized and
the land will have a greater economic value for residential,
commercial or industrial purposes. To suggest, however, that these
are the only instances that the DAR can require conversion clearances
would open a loophole in Republic Act No. 6657 which every
landowner may use to evade compliance with the agrarian reform
program. It should logically follow, therefore, from the said
departments express duty and function to execute and enforce the
said statute that any reclassification of a private land as a residential,
commercial or industrial property, on or after the effectivity of
Republic Act No. 6657 on 15 June 1988 should first be cleared by the
DAR.
42

This Court held in Alarcon v. Court of Appeals
43
that reclassification of
lands does not suffice. Conversion and reclassification differ from
each other. Conversion is the act of changing the current use of a
piece of agricultural land into some other use as approved by the DAR
while reclassification is the act of specifying how agricultural lands
shall be utilized for non-agricultural uses such as residential,
industrial, and commercial, as embodied in the land use plan, subject
to the requirements and procedures for land use conversion. In view
thereof, a mere reclassification of an agricultural land does not
automatically allow a landowner to change its use. He has to undergo
the process of conversion before he is permitted to use the
agricultural land for other purposes.
44

It is clear from the aforesaid distinction between reclassification and
conversion that agricultural lands though reclassified to residential,
commercial, industrial or other non-agricultural uses must still
undergo the process of conversion before they can be used for the
purpose to which they are intended.
Nevertheless, emphasis must be given to the fact that DARs
conversion authority can only be exercised after the effectivity of
Republic Act No. 6657 on 15 June 1988.
45
The said date served as the
cut-off period for automatic reclassification or rezoning of agricultural
lands that no longer require any DAR conversion clearance or
authority.
46
Thereafter, reclassification of agricultural lands is already
subject to DARs conversion authority. Reclassification alone will not
suffice to use the agricultural lands for other purposes. Conversion is
needed to change the current use of reclassified agricultural lands.
It is of no moment whether the reclassification of agricultural lands to
residential, commercial, industrial or other non-agricultural uses was
done by the LGUs or by way of Presidential Proclamations because
either way they must still undergo conversion process. It bears
stressing that the act of reclassifying agricultural lands to non-
agricultural uses simply specifies how agricultural lands shall be
utilized for non-agricultural uses and does not automatically convert
agricultural lands to non-agricultural uses or for other purposes. As
explained in DAR Memorandum Circular No. 7, Series of 1994, cited in
the 2009 case of Roxas & Company, Inc. v. DAMBA-NFSW and the
Department of Agrarian Reform,
47
reclassification of lands denotes
their allocation into some specific use and providing for the manner
of their utilization and disposition or the act of specifying how
agricultural lands shall be utilized for non-agricultural uses such as
residential, industrial, or commercial, as embodied in the land use
plan. For reclassified agricultural lands, therefore, to be used for the
purpose to which they are intended there is still a need to change the
current use thereof through the process of conversion. The authority
to do so is vested in the DAR, which is mandated to preserve and
maintain agricultural lands with increased productivity. Thus,
notwithstanding the reclassification of agricultural lands to non-
agricultural uses, they must still undergo conversion before they can
be used for other purposes.
Even reclassification of agricultural lands by way of Presidential
Proclamations to non-agricultural uses, such as school sites, needs
conversion clearance from the DAR. We reiterate that reclassification
is different from conversion. Reclassification alone will not suffice and
does not automatically allow the landowner to change its use. It must
still undergo conversion process before the landowner can use such
agricultural lands for such purpose.
48
Reclassification of agricultural
lands is one thing, conversion is another. Agricultural lands that are
reclassified to non-agricultural uses do not ipso facto allow the
landowner thereof to use the same for such purpose. Stated
differently, despite having reclassified into school sites, the
landowner of such reclassified agricultural lands must apply for
conversion before the DAR in order to use the same for the said
purpose.
Any reclassification, therefore, of agricultural lands to residential,
commercial, industrial or other non-agricultural uses either by the
LGUs or by way of Presidential Proclamations enacted on or after 15
June 1988 must undergo the process of conversion, despite having
undergone reclassification, before agricultural lands may be used for
other purposes.
It is different, however, when through Presidential Proclamations
public agricultural lands have been reserved in whole or in part for
public use or purpose, i.e., public school, etc., because in such a case,
conversion is no longer necessary. As held in Republic v.
Estonilo,
49
only a positive act of the President is needed to segregate
or reserve a piece of land of the public domain for a public purpose.
As such, reservation of public agricultural lands for public use or
purpose in effect converted the same to such use without undergoing
any conversion process and that they must be actually, directly and
exclusively used for such public purpose for which they have been
reserved, otherwise, they will be segregated from the reservations
and transferred to the DAR for distribution to qualified beneficiaries
under the CARP.
50
More so, public agricultural lands already reserved
for public use or purpose no longer form part of the alienable and
disposable lands of the public domain suitable for
agriculture.
51
Hence, they are outside the coverage of the CARP and it
logically follows that they are also beyond the conversion authority of
the DAR.
Clearly from the foregoing, the Secretary of Agrarian Reform did not
act without jurisdiction or in excess of jurisdiction or with grave abuse
of discretion amounting to lack or excess of jurisdiction in (1)
including lands not reclassified as residential, commercial, industrial
or other non-agricultural uses before 15 June 1988 in the definition of
agricultural lands under DAR AO No. 01-02, as amended, and; (2)
issuing and enforcing DAR AO No. 01-02, as amended, subjecting to
DARs jurisdiction for conversion lands which had already been
reclassified as residential, commercial, industrial or for other non-
agricultural uses on or after 15 June 1988.
Similarly, DAR AO No. 01-02, as amended, providing that the
reclassification of agricultural lands by LGUs shall be subject to the
requirements of land use conversion procedure or that DARs
approval or clearance must be secured to effect reclassification, did
not violate the autonomy of the LGUs.
Section 20 of Republic Act No. 7160 states that:
SECTION 20. Reclassification of Lands. (a) A city or municipality may,
through an ordinance passed by the sanggunian after conducting
public hearings for the purpose, authorize the reclassification of
agricultural lands and provide for the manner of their utilization or
disposition in the following cases: (1) when the land ceases to be
economically feasible and sound for agricultural purposes as
determined by the Department of Agriculture or (2) where the land
shall have substantially greater economic value for residential,
commercial, or industrial purposes, as determined by the sanggunian
concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of
the passage of the ordinance:
x x x x
(3) For fourth to sixth class municipalities, five percent (5%): Provided,
further, That agricultural lands distributed to agrarian reform
beneficiaries pursuant to Republic Act Numbered Sixty-six hundred
fifty-seven (R.A. No. 6657), otherwise known as "The Comprehensive
Agrarian Reform Law," shall not be affected by the said
reclassification and the conversion of such lands into other purposes
shall be governed by Section 65 of said Act.
x x x x
(e) Nothing in this Section shall be construed as repealing, amending,
or modifying in any manner the provisions of R.A. No. 6657.
The aforequoted provisions of law show that the power of the LGUs
to reclassify agricultural lands is not absolute. The authority of the
DAR to approve conversion of agricultural lands covered by Republic
Act No. 6657 to non-agricultural uses has been validly recognized by
said Section 20 of Republic Act No. 7160 by explicitly providing
therein that, "nothing in this section shall be construed as repealing
or modifying in any manner the provisions of Republic Act No. 6657."
DAR AO No. 01-02, as amended, does not also violate the due process
clause, as well as the equal protection clause of the Constitution. In
providing administrative and criminal penalties in the said
administrative order, the Secretary of Agrarian Reform simply
implements the provisions of Sections 73 and 74 of Republic Act No.
6657, thus:
Sec. 73. Prohibited Acts and Omissions. The following are
prohibited:
x x x x
(c) The conversion by any landowner of his agricultural land into any
non-agricultural use with intent to avoid the application of this Act to
his landholdings and to disposes his tenant farmers of the land tilled
by them;
x x x x
(f) The sale, transfer or conveyance by a beneficiary of the right to use
or any other usufructuary right over the land he acquired by virtue of
being a beneficiary, in order to circumvent the provisions of this Act.
x x x x
Sec. 74. Penalties. Any person who knowingly or willfully violates
the provisions of this Act shall be punished by imprisonment of not
less than one (1) month to not more than three (3) years or a fine of
not less than one thousand pesos (P1,000.00) and not more than
fifteen thousand pesos (P15,000.00), or both, at the discretion of the
court.
If the offender is a corporation or association, the officer responsible
therefor shall be criminally liable.
And Section 11 of Republic Act No. 8435, which specifically provides:
Sec. 11. Penalty for Agricultural Inactivity and Premature
Conversion. x x x.
Any person found guilty of premature or illegal conversion shall be
penalized with imprisonment of two (2) to six (6) years, or a fine
equivalent to one hundred percent (100%) of the government's
investment cost, or both, at the discretion of the court, and an
accessory penalty of forfeiture of the land and any improvement
thereon.
In addition, the DAR may impose the following penalties, after
determining, in an administrative proceedings, that violation of this
law has been committed:
a. Consolation or withdrawal of the authorization for land use
conversion; and
b. Blacklisting, or automatic disapproval of pending and subsequent
conversion applications that they may file with the DAR.
Contrary to petitioners assertions, the administrative and criminal
penalties provided for under DAR AO No. 01-02, as amended, are
imposed upon the illegal or premature conversion of lands within
DARs jurisdiction, i.e., "lands not reclassified as residential,
commercial, industrial or for other non-agricultural uses before 15
June 1998."
The petitioners argument that DAR Memorandum No. 88 is
unconstitutional, as it suspends the land use conversion without any
basis, stands on hollow ground.
It bears emphasis that said Memorandum No. 88 was issued upon the
instruction of the President in order to address the unabated
conversion of prime agricultural lands for real estate development
because of the worsening rice shortage in the country at that time.
Such measure was made in order to ensure that there are enough
agricultural lands in which rice cultivation and production may be
carried into. The issuance of said Memorandum No. 88 was made
pursuant to the general welfare of the public, thus, it cannot be
argued that it was made without any basis.
WHEREFORE, premises considered, the instant Petition for Certiorari
is DISMISSED. Costs against petitioner.
SO ORDERED.
HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON,
HON. REY B. BAULA, MUNICIPAL MAYOR OF SUMILAO, BUKIDNON,
NQSR MANAGEMENT AND DEVELOPMENT
CORPORATION,petitioners, vs. HON. RENATO C. CORONA, DEPUTY
EXECUTIVE SECRETARY, HON. ERNESTO D. GARILAO, SECRETARY OF
THE DEPARTMENT OF AGRARIAN REFORM, respondents.
D E C I S I O N
MARTINEZ, J.:
The dramatic and well-publicized hunger strike staged by some
alleged farmer-beneficiaries in front of the Department of Agrarian
Reform compound in Quezon City on October 9, 1997 commanded
nationwide attention that even church leaders and some presidential
candidates tried to intervene for the strikers cause.
The strikers protested the March 29, 1996 Decision
[1]
of the Office of
the President (OP), issued through then Executive Secretary Ruben D.
Torres in OP Case No. 96-C-6424, which approved the conversion of a
one hundred forty-four (144)-hectare land from agricultural to agro-
industrial/institutional area. This led the Office of the President,
through then Deputy Executive Secretary Renato C. Corona, to issue
the so-called Win-Win Resolution
[2]
on November 7, 1997,
substantially modifying its earlier Decision after it hadalready
become final and executory. The said Resolution modified the
approval of the land conversion to agro-industrial area only to the
extent of forty-four (44) hectares, and ordered the remaining one
hundred (100) hectares to be distributed to qualified farmer-
beneficiaries.
But, did the Win-Win Resolution culminate in victory for all the
contending parties?
The above-named petitioners cried foul. They have come to this
Court urging us to annul and set aside the Win-Win Resolution and
to enjoin respondent Secretary Ernesto D. Garilao of the Department
of Agrarian Reform from implementing the said Resolution.
Thus, the crucial issue to be resolved in this case is: What is the legal
effect of the Win-Win Resolution issued by the Office of the
President on its earlier Decision involving the same subject matter,
which had already become final and executory?
The antecedent facts of this controversy, as culled from the pleadings,
may be stated as follows:
1. This case involves a 144-hectare land located at San Vicente,
Sumilao, Bukidnon, owned by the Norberto Quisumbing, Sr.
Management and Development Corporation (NQSRMDC), one of the
petitioners. The property is covered by a Transfer Certificate of Title
No. 14371
[3]
of the Registry of Deeds of the Province of Bukidnon.
2. In 1984, the land was leased as a pineapple plantation to the
Philippine Packing Corporation, now Del Monte Philippines, Inc.
(DMPI), a multinational corporation, for a period of ten (10) years
under the Crop Producer and Growers Agreement duly annotated in
the certificate of title. The lease expired in April, 1994.
3. In October, 1991, during the existence of the lease, the
Department of Agrarian Reform (DAR) placed the entire 144-hectare
property under compulsory acquisition and assessed the land value
at P2.38 million.
[4]

4. NQSRMDC resisted the DARs action. In February, 1992, it sought
and was granted by the DAR Adjudication Board (DARAB), through its
Provincial Agrarian Reform Adjudicator (PARAD) in DARAB Case No. X-
576, a writ of prohibition with preliminary injunction which ordered
the DAR Region X Director, the Provincial Agrarian Reform Officer
(PARO) of Bukidnon, the Municipal Agrarian Reform Office (MARO) of
Sumilao, Bukidnon, the Land Bank of the Philippines (Land Bank), and
their authorized representatives to desist from pursuing any activity
or activities concerning the subject land until further orders.
[5]

5. Despite the DARAB order of March 31, 1992, the DAR Regional
Director issued a memorandum, dated May 21, 1992, directing the
Land Bank to open a trust account for P2.38 million in the name of
NQSRMDC and to conduct summary proceedings to determine the
just compensation of the subject property. NQSRMDC objected to
these moves and filed on June 9, 1992 an Omnibus Motion to enforce
the DARAB order of March 31, 1992 and to nullify the summary
proceedings undertaken by the DAR Regional Director and Land Bank
on the valuation of the subject property.
6. The DARAB, on October 22, 1992, acted favorably on the Omnibus
Motion by (a) ordering the DAR Regional Director and Land Bank to
seriously comply with the terms of the order dated March 31, 1992;
(b) nullifying the DAR Regional Directors memorandum, dated May
21, 1992, and the summary proceedings conducted pursuant thereto;
and (c) directing the Land Bank to return the claim folder of
Petitioner NQSRMDCs subject property to the DAR until further
orders.
[6]

7. The Land Bank complied with the DARAB order and cancelled the
trust account it opened in the name of petitioner NQSRMDC.
[7]

8. In the meantime, the Provincial Development Council (PDC) of
Bukidnon, headed by Governor Carlos O. Fortich, passed Resolution
No. 6,
[8]
dated January 7, 1993, designating certain areas along
Bukidnon-Sayre Highway as part of the Bukidnon Agro-Industrial
Zones where the subject property is situated.
9. What happened thereafter is well-narrated in the OP (TORRES)
Decision of March 29, 1996, pertinent portions of which we quote:
Pursuant to Section 20 of R.A. No. 7160, otherwise known as the
Local Government Code, the Sangguniang Bayan of Sumilao,
Bukidnon, on March 4, 1993, enacted Ordinance No. 24 converting or
re-classifying 144 hectares of land in Bgy. San Vicente, said
Municipality, from agricultural to industrial/institutional with a view
of providing an opportunity to attract investors who can inject new
economic vitality, provide more jobs and raise the income of its
people.
Parenthetically, under said section, 4
th
to 5
th
class municipalities may
authorize the classification of five percent (5%) of their agricultural
land area and provide for the manner of their utilization or
disposition.
On 12 October 1993, the Bukidnon Provincial Land Use Committee
approved the said Ordinance. Accordingly, on 11 December 1993, the
instant application for conversion was filed by Mr. Gaudencio Beduya
in behalf of NQSRMDC/BAIDA (Bukidnon Agro-Industrial
Development Association).
Expressing support for the proposed project, the Bukidnon Provincial
Board, on the basis of a Joint Committee Report submitted by its
Committee on Laws, Committee on Agrarian Reform and Socio-
Economic Committee approved, on 1 February 1994, the said
Ordinance now docketed as Resolution No. 94-95. The said industrial
area, as conceived by NQSRMDC (project proponent) is supposed to
have the following components:
1. The Development Academy of Mindanao which constitutes the
following: Institute for Continuing Higher Education; Institute for
Livelihood Science (Vocational and Technical School); Institute for
Agribusiness Research; Museum, Library, Cultural Center, and
Mindanao Sports Development Complex which covers an area of 24
hectares;
2. Bukidnon Agro-Industrial Park which consists of corn processing
for corn oil, corn starch, various corn products; rice processing for
wine, rice-based snacks, exportable rice; cassava processing for
starch, alcohol and food delicacies; processing plants, fruits and fruit
products such as juices; processing plants for vegetables processed
and prepared for market; cold storage and ice plant; cannery system;
commercial stores; public market; and abattoir needing about 67
hectares;
3. Forest development which includes open spaces and parks for
recreation, horse-back riding, memorial and mini-zoo estimated to
cover 33 hectares; and
4. Support facilities which comprise the construction of a 360-room
hotel, restaurants, dormitories and a housing project covering an area
of 20 hectares.
The said NQSRMDC Proposal was, per Certification dated January 4,
1995, adopted by the Department of Trade and Industry, Bukidnon
Provincial Office, as one of its flagship projects. The same was
likewise favorably recommended by the Provincial Development
Council of Bukidnon; the municipal, provincial and regional office of
the DAR; the Regional Office (Region X) of the DENR (which issued an
Environmental Compliance Certificate on June 5, 1995); the Executive
Director, signing By Authority of PAUL G. DOMINGUEZ, Office of the
President Mindanao; the Secretary of DILG; and Undersecretary of
DECS Wilfredo D. Clemente.
In the same vein, the National Irrigation Administration, Provincial
Irrigation Office, Bagontaas Valencia, Bukidnon, thru Mr. Julius S.
Maquiling, Chief, Provincial Irrigation Office, interposed NO
OBJECTION to the proposed conversion as long as the development
cost of the irrigation systems thereat which is P2,377.00 per hectare
be replenished by the developer x x x. Also, the Kisolon-San Vicente
Irrigators Multi Purpose Cooperative, San Vicente, Sumilao, Bukidnon,
interposed no objection to the proposed conversion of the land in
question as it will provide more economic benefits to the community
in terms of outside investments that will come and employment
opportunities that will be generated by the projects to be put up x x
x.
On the same score, it is represented that during the public
consultation held at the Kisolan Elementary School on 18 March 1995
with Director Jose Macalindong of DAR Central Office and DECS
Undersecretary Clemente, the people of the affected barangay rallied
behind their respective officials in endorsing the project.
Notwithstanding the foregoing favorable recommendation,
however, on November 14, 1994, the DAR, thru Secretary Garilao,
invoking its powers to approve conversion of lands under Section 65
of R.A. No. 6657, issued an Order denying the instant application for
the conversion of the subject land from agricultural to agro-industrial
and, instead, placed the same under the compulsory coverage of
CARP and directed the distribution thereof to all qualified
beneficiaries on the following grounds:
1. The area is considered as a prime agricultural land with irrigation
facility;
2. The land has long been covered by a Notice of Compulsory
Acquisition (NCA);
3. The existing policy on withdrawal or lifting on areas covered by
NCA is not applicable;
4. There is no clear and tangible compensation package
arrangements for the beneficiaries;
5. The procedures on how the area was identified and reclassified
for agro-industrial project has no reference to Memo Circular No. 54,
Series of 1993, E.O. No. 72, Series of 1993, and E.O. No. 124, Series of
1993.
A Motion for Reconsideration of the aforesaid Order was filed on
January 9, 1995 by applicant but the same was denied (in an Order
dated June 7, 1995).
[9]

10. Thus, the DAR Secretary ordered the DAR Regional Director to
proceed with the compulsory acquisition and distribution of the
property.
[10]

11. Governor Carlos O. Fortich of Bukidnon appealed
[11]
the order of
denial to the Office of the President and prayed for the
conversion/reclassification of the subject land as the same would be
more beneficial to the people of Bukidnon.
12. To prevent the enforcement of the DAR Secretarys order,
NQSRMDC, on June 29, 1995, filed with the Court of Appeals a
petition for certiorari, prohibition with preliminary
injunction,
[12]
docketed as CA-G.R. SP No. 37614.
13. Meanwhile, on July 25, 1995, the Honorable Paul G. Dominguez,
then Presidential Assistant for Mindanao, after conducting an
evaluation of the proposed project, sent a memorandum
[13]
to the
President favorably endorsing the project with a recommendation
that the DAR Secretary reconsider his decision in denying the
application of the province for the conversion of the land.
14. Also, in a memorandum
[14]
to the President dated August 23,
1995, the Honorable Rafael Alunan III, then Secretary of the
Department of the Interior and Local Government (DILG),
recommended the conversion of the subject land to
industrial/institutional use with a request that the President hold the
implementation of the DAR order to distribute the land in question.
15. On October 23, 1995, the Court of Appeals, in CA-G.R. SP No.
37614, issued a Resolution
[15]
ordering the parties to observe status
quo pending resolution of the petition. At the hearing held in said
case on October 5, 1995, the DAR, through the Solicitor General,
manifested before the said court that the DAR was merely in the
processing stage of the applications of farmers-claimants and has
agreed to respect status quo pending the resolution of the
petition.
[16]

16. In resolving the appeal, the Office of the President, through then
Executive Secretary Ruben D. Torres, issued a Decision in OP Case No.
96-C-6424, dated March 29, 1996, reversing the DAR Secretarys
decision, the pertinent portions of which read:
After a careful evaluation of the petition vis--vis the grounds upon
which the denial thereof by Secretary Garilao was based, we find that
the instant application for conversion by the Municipality of Sumilao,
Bukidnon is impressed with merit. To be sure, converting the land in
question from agricultural to agro-industrial would open great
opportunities for employment and bring about real development in
the area towards a sustained economic growth of the
municipality. On the other hand, distributing the land to would-be
beneficiaries (who are not even tenants, as there are none) does not
guarantee such benefits.
Nevertheless, on the issue that the land is considered a prime
agricultural land with irrigation facility it maybe appropriate to
mention that, as claimed by petitioner, while it is true that there is,
indeed, an irrigation facility in the area, the same merely passes thru
the property (as a right of way) to provide water to the ricelands
located on the lower portion thereof. The land itself, subject of the
instant petition, is not irrigated as the same was, for several years,
planted with pineapple by the Philippine Packing Corporation.
On the issue that the land has long been covered by a Notice of
Compulsory Acquisition (NCA) and that the existing policy on
withdrawal or lifting on areas covered by NCA is not applicable,
suffice it to state that the said NCA was declared null and void by the
Department of Agrarian Reform Adjudication Board (DARAB) as early
as March 1, 1992. Deciding in favor of NQSRMDC, the DARAB
correctly pointed out that under Section 8 of R.A. No. 6657, the
subject property could not validly be the subject of compulsory
acquisition until after the expiration of the lease contract with Del
Monte Philippines, a Multi-National Company, or until April 1994, and
ordered the DAR Regional Office and the Land Bank of the Philippines,
both in Butuan City, to `desist from pursuing any activity or activities
covering petitioners land.
On this score, we take special notice of the fact that the Quisumbing
family has already contributed substantially to the land reform
program of the government, as follows: 300 hectares of rice land in
Nueva Ecija in the 70s and another 400 hectares in the nearby
Municipality of Impasugong, Bukidnon, ten (10) years ago, for which
they have not received just compensation up to this time.
Neither can the assertion that there is no clear and tangible
compensation package arrangements for the beneficiaries hold
water as, in the first place, there are no beneficiaries to speak about,
for the land is not tenanted as already stated.
Nor can procedural lapses in the manner of identifying/reclassifying
the subject property for agro-industrial purposes be allowed to defeat
the very purpose of the law granting autonomy to local government
units in the management of their local affairs. Stated more simply,
the language of Section 20 of R.A. No. 7160, supra, is clear and
affords no room for any other interpretation. By unequivocal legal
mandate, it grants local government units autonomy in their local
affairs including the power to convert portions of their agricultural
lands and provide for the manner of their utilization and disposition
to enable them to attain their fullest development as self-reliant
communities.
WHEREFORE, in pursuance of the spirit and intent of the said legal
mandate and in view of the favorable recommendations of the
various government agencies abovementioned, the subject Order,
dated November 14, 1994 of the Hon. Secretary, Department of
Agrarian Reform, is hereby SET ASIDE and the instant application of
NQSRMDC/BAIDA is hereby APPROVED.
[17]

17.On May 20, 1996, DAR filed a motion for reconsideration of the OP
decision.
18 On September 11, 1996, in compliance with the OP decision of
March 29, 1996, NQSRMDC and the Department of Education,
Culture and Sports (DECS) executed a Memorandum of
Agreement whereby the former donated four (4) hectares from the
subject land to DECS for the establishment of the NQSR High
School.
[18]

When NQSRMDC was about to transfer the title over the 4-hectare
donated to DECS, it discovered that the title over the subject property
was no longer in its name. It soon found out that during the pendency
of both the Petition for Certiorari, Prohibition, with Preliminary
Injunction it filed against DAR in the Court of Appeals and the appeal
to the President filed by Governor Carlos O. Fortich, the DAR, without
giving just compensation, caused the cancellation of NQSRMDCs title
on August 11, 1995 and had it transferred in the name of the Republic
of the Philippines under TCT No. T-50264
[19]
of the Registry of Deeds
of Bukidnon. Thereafter, on September 25, 1995, DAR caused the
issuance of Certificates of Land Ownership Award (CLOA) No.
00240227 and had it registered in the name of 137 farmer-
beneficiaries under TCT No. AT-3536
[20]
of the Registry of Deeds of
Bukidnon.
19. Thus, on April 10, 1997, NQSRMDC filed a complaint
[21]
with the
Regional Trial Court (RTC) of Malaybalay, Bukidnon (Branch 9),
docketed as Civil Case No. 2687-97, for annulment and cancellation of
title, damages and injunction against DAR and 141 others. The RTC
then issued a Temporary Restraining Order on April 30, 1997
[22]
and a
Writ of Preliminary Injunction on May 19, 1997,
[23]
restraining the
DAR and 141 others from entering, occupying and/or wresting from
NQSRMDC the possession of the subject land.
20. Meanwhile, on June 23, 1997, an Order
[24]
was issued by then
Executive Secretary Ruben D. Torres denying DARs motion for
reconsideration for having been filed beyond the reglementary period
of fifteen (15) days. The said order further declared that the March
29, 1996 OP decision had already become final and executory.
21. The DAR filed on July 11, 1997 a second motion for
reconsideration of the June 23, 1997 Order of the President.
22. On August 12, 1997, the said writ of preliminary injunction issued
by the RTC was challenged by some alleged farmers before the Court
of Appeals through a petition for certiorari and prohibition, docketed
as CA-G.R. SP No. 44905, praying for the lifting of the injunction and
for the issuance of a writ of prohibition from further trying the RTC
case.
23. On October 9, 1997, some alleged farmer-beneficiaries began
their hunger strike in front of the DAR Compound in Quezon City to
protest the OP Decision of March 29, 1996. On October 10, 1997,
some persons claiming to be farmer-beneficiaries of the NQSRMDC
property filed a motion for intervention (styled as Memorandum In
Intervention) in O.P. Case No. 96-C-6424, asking that the OP Decision
allowing the conversion of the entire 144-hectare property be set
aside.
[25]

24. President Fidel V. Ramos then held a dialogue with the strikers
and promised to resolve their grievance within the framework of the
law. He created an eight (8)-man Fact Finding Task Force (FFTF)
chaired by Agriculture Secretary Salvador Escudero to look into the
controversy and recommend possible solutions to the problem.
[26]

25. On November 7, 1997, the Office of the President resolved the
strikers protest by issuing the so-called Win/Win Resolution
penned by then Deputy Executive Secretary Renato C. Corona, the
dispositive portion of which reads:
WHEREFORE, premises considered, the decision of the Office of the
President, through Executive Secretary Ruben Torres, dated March
29, 1996, is hereby MODIFIED as follows:
1. NQSRMDCs application for conversion is APPROVED only with
respect to the approximately forty-four (44) hectare portion of the
land adjacent to the highway, as recommended by the Department of
Agriculture.
2. The remaining approximately one hundred (100) hectares
traversed by an irrigation canal and found to be suitable for
agriculture shall be distributed to qualified farmer-beneficiaries in
accordance with RA 6657 or the Comprehensive Agrarian Reform Law
with a right of way to said portion from the highway provided in the
portion fronting the highway. For this purpose, the DAR and other
concerned government agencies are directed to immediately conduct
the segregation survey of the area, valuation of the property and
generation of titles in the name of the identified farmer-beneficiaries.
3. The Department of Agrarian Reform is hereby directed to carefully
and meticulously determine who among the claimants are qualified
farmer-beneficiaries.
4. The Department of Agrarian Reform is hereby further directed to
expedite payment of just compensation to NQSRMDC for the portion
of the land to be covered by the CARP, including other lands
previously surrendered by NQSRMDC for CARP coverage.
5. The Philippine National Police is hereby directed to render full
assistance to the Department of Agrarian Reform in the
implementation of this Order.
We take note of the Memorandum in Intervention filed by 113
farmers on October 10, 1997 without ruling on the propriety or
merits thereof since it is unnecessary to pass upon it at this time.
SO ORDERED.
[27]

A copy of the Win-Win Resolution was received by Governor Carlos
O. Fortich of Bukidnon, Mayor Rey B. Baula of Sumilao, Bukidnon, and
NQSRMDC on November 24, 1997
[28]
and, on December 4, 1997, they
filed the present petition for certiorari, prohibition (under Rule 65 of
the Revised Rules of Court) and injunction with urgent prayer for a
temporary restraining order and/or writ of preliminary injunction
(under Rule 58, ibid.), against then Deputy Executive Secretary Renato
C. Corona and DAR Secretary Ernesto D. Garilao.
On December 12, 1997, a Motion For Leave To Intervene
[29]
was filed
by alleged farmer-beneficiaries, through counsel, claiming that they
are real parties in interest as they were previously identified by
respondent DAR as agrarian reform beneficiaries on the 144-hectare
property subject of this case. The motion was vehemently
opposed
[30]
by the petitioners.
In seeking the nullification of the Win-Win Resolution, the
petitioners claim that the Office of the President was prompted to
issue the said resolution after a very well-managed hunger strike led
by fake farmer-beneficiary Linda Ligmon succeeded in pressuring
and/or politically blackmailing the Office of the President to come up
with this purely political decision to appease the farmers, by reviving
and modifying the Decision of 29 March 1996 which has been
declared final and executory in an Order of 23 June 1997.
[31]
Thus,
petitioners further allege, respondent then Deputy Executive
Secretary Renato C. Corona committed grave abuse of discretion and
acted beyond his jurisdiction when he issued the questioned
Resolution of 7 November 1997.
[32]
They availed of this
extraordinary writ of certiorari because there is no other plain,
speedy and adequate remedy in the ordinary course of law.
[33]
They
never filed a motion for reconsideration of the subject Resolution
because (it) is patently illegal or contrary to law and it would be a
futile exercise to seek a reconsideration .
[34]

The respondents, through the Solicitor General, opposed the petition
and prayed that it be dismissed outright on the following grounds:
(1) The proper remedy of petitioners should have been to file a
petition for review directly with the Court of Appeals in accordance
with Rule 43 of the Revised Rules of Court;
(2) The petitioners failed to file a motion for reconsideration of the
assailed Win-Win Resolution before filing the present petition; and
(3) Petitioner NQSRMDC is guilty of forum-shopping.
These are the preliminary issues which must first be resolved,
including the incident on the motion for intervention filed by the
alleged farmer-beneficiaries.
Anent the first issue, in order to determine whether the recourse of
petitioners is proper or not, it is necessary to draw a line between an
error of judgment and an error of jurisdiction. An error of
judgment is one which the court may commit in the exercise of its
jurisdiction,and which error is reviewable only by an appeal.
[35]
On the
other hand, an error of jurisdiction is one where the act complained
of was issued by the court, officer or a quasi-judicial
body without or in excess of jurisdiction, or with grave abuse of
discretion which is tantamount to lack or in excess of
jurisdiction.
[36]
This error is correctable only by the extraordinary writ
of certiorari.
[37]

It is true that under Rule 43, appeals from awards, judgments, final
orders or resolutions of any quasi-judicial agency exercising quasi-
judicial functions,
[38]
including the Office of the President,
[39]
may be
taken to the Court of Appeals by filing a verified petition for
review
[40]
within fifteen (15) days from notice of the said judgment,
final order or resolution,
[41]
whether the appeal involves questions of
fact, of law, or mixed questions of fact and law.
[42]

However, we hold that, in this particular case, the remedy prescribed
in Rule 43 is inapplicable considering that the present petition
contains an allegation that the challenged resolution is patently
illegal
[43]
and was issued with grave abuse of discretion and
beyond his (respondent Secretary Renato C. Coronas)
jurisdiction
[44]
when said resolution substantially modified the earlier
OP Decision of March 29, 1996 which had long become final and
executory. In other words, the crucial issue raised here involves an
error of jurisdiction, not an error of judgment which is reviewable by
an appeal under Rule 43. Thus, the appropriate remedy to annul and
set aside the assailed resolution is an original special civil action for
certiorari under Rule 65, as what the petitioners have correctly
done. The pertinent portion of Section 1 thereof provides:
SECTION 1. Petition for certiorari. When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted without
or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or
any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
x x x x x x x x x.
The office of a writ of certiorari is restricted to truly extraordinary
cases cases in which the act of the lower court or quasi-judicial body
is wholly void.
[45]

The aforequoted Section 1 of Rule 65 mandates that the person
aggrieved by the assailed illegal act may file a verified petition (for
certiorari) in the proper court. The proper court where the petition
must be filed is stated in Section 4 of the same Rule 65 which reads:
SEC. 4. Where petition filed.- The petition may be filed not later than
sixty (60) days from notice of the judgment, order or resolution
sought to be assailed in the Supreme Court or, if it relates to the acts
or omissions of a lower court or of a corporation, board, officer or
person, in the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed
in the Court of Appeals whether or not the same is in aid of its
appellate jurisdiction, or in the Sandiganbayan if it is in aid of its
jurisdiction. If it involves the acts or omissions of a quasi-judicial
agency, and unless otherwise provided by law or these Rules, the
petition shall be filed in and cognizable only by the Court of Appeals.
(4a)
Under the above-quoted Section 4, the Supreme Court, Court of
Appeals and Regional Trial Court have original concurrent jurisdiction
to issue a writ of certiorari,
[46]
prohibition
[47]
and mandamus.
[48]
But
the jurisdiction of these three (3) courts are also delineated in that, if
the challenged act relates to acts or omissions of a lower court or of a
corporation, board, officer or person, the petition must be filed with
the Regional Trial Court which exercises jurisdiction over the
territorial area as defined by the Supreme Court. And if it involves
the act or omission of a quasi-judicial agency, the petition shall be
filed only with the Court of Appeals, unless otherwise provided by law
or the Rules of Court. We have clearly discussed this matter of
concurrence of jurisdiction in People vs. Cuaresma, et. al.,
[49]
through
now Chief Justice Andres R. Narvasa, thus:
x x x. This Courts original jurisdiction to issue writs of certiorari (as
well as prohibition, mandamus, quo warranto, habeas corpus and
injunction) is not exclusive. It is shared by this Court with Regional
Trial Courts (formerly Courts of First Instance), which may issue the
writ, enforceable in any part of their respective regions. It is also
shared by this Court, and by the Regional Trial Court, with the Court
of Appeals (formerly, Intermediate Appellate Court), although prior to
the effectivity of Batas Pambansa Bilang 129 on August 14, 1981, the
latters competence to issue the extraordinary writs was restricted to
those in aid of its appellate jurisdiction. This concurrence of
jurisdiction is not, however, to be taken as according to parties
seeking any of the writs an absolute, unrestrained freedom of choice
of the court to which application therefor will be directed. There is
after all a hierarchy of courts. That hierarchy is determinative of the
venue of appeals, and should also serve as a general determinant of
the appropriate forum for petitions for the extraordinary writs. A
becoming regard for that judicial hierarchy most certainly indicates
that petitions for the issuance of extraordinary writs against first level
(inferior) courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. (Citations
omitted)
But the Supreme Court has the full discretionary power to take
cognizance of the petition filed directly to it if compelling reasons, or
the nature and importance of the issues raised, warrant. This has
been the judicial policy to be observed and which has been reiterated
in subsequent cases, namely:
[50]
Uy vs. Contreras, et. al.,
[51]
Torres vs.
Arranz,
[52]
Bercero vs. De Guzman,
[53]
and Advincula vs. Legaspi, et.
al.
[54]
As we have further stated in Cuaresma:
x x x. A direct invocation of the Supreme Courts original jurisdiction
to issue these writs should be allowed only when there are special
and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to
prevent inordinate demands upon the Courts time and attention
which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Courts
docket.
Pursuant to said judicial policy, we resolve to take primary jurisdiction
over the present petition in the interest of speedy justice
[55]
and to
avoid future litigations so as to promptly put an end to the present
controversy which, as correctly observed by petitioners, has sparked
national interest because of the magnitude of the problem created by
the issuance of the assailed resolution. Moreover, as will be
discussed later, we find the assailed resolution wholly void and
requiring the petitioners to file their petition first with the Court of
Appeals would only result in a waste of time and money.
That the Court has the power to set aside its own rules in the higher
interests of justice is well-entrenched in our jurisprudence. We
reiterate what we said in Piczon vs. Court of Appeals:
[56]

Be it remembered that rules of procedure are but mere tools
designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be
avoided. Time and again, this Court has suspended its own rules and
excepted a particular case from their operation whenever the higher
interests of justice so require. In the instant petition, we forego a
lengthy disquisition of the proper procedure that should have been
taken by the parties involved and proceed directly to the merits of
the case."
As to the second issue of whether the petitioners committed a fatal
procedural lapse when they failed to file a motion for reconsideration
of the assailed resolution before seeking judicial recourse, suffice it to
state that the said motion is not necessary when the questioned
resolution is a patent nullity,
[57]
as will be taken up later.
With respect to the third issue, the respondents claim that the filing
by the petitioners of: (a) a petition for certiorari, prohibition with
preliminary injunction (CA-G.R. SP No. 37614) with the Court of
Appeals; (b) a complaint for annulment and cancellation of title,
damages and injunction against DAR and 141 others (Civil Case No.
2687-97) with the Regional Trial Court of Malaybalay, Bukidnon; and
(c) the present petition, constitute forum shopping.
We disagree.
The rule is that:
There is forum-shopping whenever, as a result of an adverse opinion
in one forum, a party seeks a favorable opinion (other than by appeal
or certiorari) in another. The principle applies not only with respect
to suits filed in the courts but also in connection with litigation
commenced in the courts while an administrative proceeding is
pending, as in this case, in order to defeat administrative processes
and in anticipation of an unfavorable administrative ruling and a
favorable court ruling. This specially so, as in this case, where the
court in which the second suit was brought, has no jurisdiction
(citations omitted).
The test for determining whether a party violated the rule against
forum shopping has been laid down in the 1986 case of Buan vs.
Lopez(145 SCRA 34), x x x and that is, forum shopping exists where
the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in the other, as
follows:
There thus exists between the action before this Court and RTC Case
No. 86-36563 identity of parties, or at least such parties as represent
the same interests in both actions, as well as identity of rights
asserted and relief prayed for, the relief being founded on the same
facts, and the identity on the two preceding particulars is such
that any judgment rendered in the other action, will, regardless of
which party is successful, amount to res adjudicata in the action
under consideration: all the requisites, in fine, of auter action
pendant.'
[58]

It is clear from the above-quoted rule that the petitioners are not
guilty of forum shopping. The test for determining whether a party
has violated the rule against forum shopping is where a final
judgment in one case will amount to res adjudicata in the action
under consideration. A cursory examination of the cases filed by the
petitioners does not show that the said cases are similar with each
other. The petition for certiorari in the Court of Appeals sought the
nullification of the DAR Secretarys order to proceed with the
compulsory acquisition and distribution of the subject property. On
the other hand, the civil case in RTC of Malaybalay, Bukidnon for the
annulment and cancellation of title issued in the name of the Republic
of the Philippines, with damages, was based on the following
grounds: (1) the DAR, in applying for cancellation of petitioner
NQSRMDCs title, used documents which were earlier declared null
and void by the DARAB; (2) the cancellation of NQSRMDCs title was
made without payment of just compensation; and (3) without notice
to NQSRMDC for the surrender of its title. The present petition is
entirely different from the said two cases as it seeks the nullification
of the assailed Win-Win Resolution of the Office of the President
dated November 7, 1997, which resolution was issued long after the
previous two cases were instituted.
The fourth and final preliminary issue to be resolved is the motion for
intervention filed by alleged farmer-beneficiaries, which we have to
deny for lack of merit. In their motion, movants contend that they
are the farmer-beneficiaries of the land in question, hence, are real
parties in interest. To prove this, they attached as Annex I in their
motion a Master List of Farmer-Beneficiaries. Apparently, the alleged
master list was made pursuant to the directive in the dispositive
portion of the assailed Win-Win Resolution which directs the DAR
to carefully and meticulously determine who among the claimants
are qualified farmer-beneficiaries. However, a perusal of the said
document reveals that movants are those purportedly Found
Qualified and Recommended for Approval. In other words, movants
are merely recommendeefarmer-beneficiaries.
The rule in this jurisdiction is that a real party in interest is a party
who would be benefited or injured by the judgment or is the party
entitled to the avails of the suit. Real interest means
a present substantial interest, as distinguished from a mere
expectancy or a future, contingent, subordinate or consequential
interest.
[59]
Undoubtedly, movants interest over the land in question
is a mere expectancy. Ergo, they are not real parties in interest.
Furthermore, the challenged resolution upon which movants based
their motion is, as intimated earlier, null and void. Hence, their
motion for intervention has no leg to stand on.
Now to the main issue of whether the final and executory Decision
dated March 29,1996 can still be substantially modified by the Win-
Win Resolution.
We rule in the negative.
The rules and regulations governing appeals to the Office of the
President of the Philippines are embodied in Administrative Order No.
18. Section 7 thereof provides:
SEC. 7. Decisions/resolutions/orders of the Office of the President
shall, except as otherwise provided for by special laws, become final
after the lapse of fifteen (15) days from receipt of a copy thereof by
the parties, unless a motion for reconsideration thereof is filed
within such period.
Only one motion for reconsideration by any one party shall be
allowed and entertained, save in exceptionally meritorious cases.
(Emphasis ours)
It is further provided for in Section 9 that The Rules of Court shall
apply in a suppletory character whenever practicable.
When the Office of the President issued the Order dated June
23,1997 declaring the Decision of March 29, 1996 final and executory,
as no one has seasonably filed a motion for reconsideration thereto,
the said Office had lost its jurisdiction to re-open the case, more so
modify its Decision. Having lost its jurisdiction, the Office of the
President has no more authority to entertain the second motion for
reconsideration filed by respondent DAR Secretary, which second
motion became the basis of the assailed Win-Win Resolution.
Section 7 of Administrative Order No. 18 and Section 4, Rule 43 of the
Revised Rules of Court mandate that only one (1) motion for
reconsideration is allowed to be taken from the Decision of March 29,
1996. And even if a second motion for reconsideration was permitted
to be filed in exceptionally meritorious cases, as provided in the
second paragraph of Section 7 of AO 18, still the said motion should
not have been entertained considering that the first motion for
reconsideration was not seasonably filed, thereby allowing the
Decision of March 29, 1996 to lapse into finality. Thus, the act of the
Office of the President in re-opening the case and substantially
modifying its March 29,1996 Decision which had already become final
and executory, was in gross disregard of the rules and basic legal
precept that accord finality to administrative determinations.
In San Luis, et al. vs. Court of Appeals, et al.
[60]
we held:
Since the decisions of both the Civil Service Commission and the
Office of the President had long become final and executory, the
same can no longer be reviewed by the courts. It is well-established in
our jurisprudence that the decisions and orders of administrative
agencies, rendered pursuant to their quasi-judicial authority, have
upon their finality, the force and binding effect of a final judgment
within the purview of the doctrine of res judicata [Brillantes v. Castro,
99 Phil. 497 (1956), Ipekdijna Merchandizing Co., Inc. v. Court of Tax
Appeals, G.R. No. L-15430, September 30, 1963, 9 SCRA 72.] The rule
of res judicata which forbids the reopening of a matter once judicially
determined by competent authority applies as well to the judicial and
quasi-judicial acts of public, executive or administrative officers and
boards acting within their jurisdiction as to the judgments of courts
having general judicial powers [Brillantes v. Castro, supra at 503+.
The orderly administration of justice requires that the
judgments/resolutions of a court or quasi-judicial body must reach a
point of finality set by the law, rules and regulations. The noble
purpose is to write finis to disputes once and for all.
[61]
This is a
fundamental principle in our justice system, without which there
would be no end to litigations. Utmost respect and adherence to this
principle must always be maintained by those who wield the power of
adjudication. Any act which violates such principle must immediately
be struck down.
Therefore, the assailed Win-Win Resolution which substantially
modified the Decision of March 29, 1996 after it has attained finality,
is utterly void. Such void resolution, as aptly stressed by Justice
Thomas A. Street
[62]
in a 1918 case,
[63]
is a lawless thing, which can
be treated as an outlaw and slain at sight, or ignored wherever and
whenever it exhibits its head.
[64]

WHEREFORE, the present petition is hereby GRANTED. The
challenged Resolution dated November 7, 1997, issued by the Office
of the President in OP Case No. 96-C-6424, is hereby NULLIFIED and
SET ASIDE. The Motion For Leave To Intervene filed by alleged farmer-
beneficiaries is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
RUFINA VDA. DE TANGUB, petitioner, vs. COURT OF APPEALS,
PRESIDING JUDGE of the [CAR] RTC, Branch 4, Iligan City, and
SPOUSES DOMINGO and EUGENIA MARTIL,respondents.

Dulcesimo P. Tampus for petitioner.
Alan L. Flores for private respondents.

SYLLABUS

1. REMEDIAL LAW; JURISDICTION, ORIGINAL AND EXCLUSIVE;
OVER CASES INVOLVING AGRARIAN LAWS; VESTED IN THE AGRARIAN
REFORM ADJUDICATORY BOARD OF THE DEPARTMENT OF AGRARIAN
REFORM. The jurisdiction conferred on the Department of Agrarian
Reform, i.e.: (a) adjudication of all matters involving implementation
of agrarian reform; (b) resolution of agrarian conflicts and land tenure
related problems; and (c) approval or disapproval of the conversion,
restructuring or readjustment of agricultural lands into residential,
commercial, industrial, and other non-agricultural uses, is evidently
quite as extensive as that theretofore vested in the Regional Trial
Court by Presidential Decree No. 946, which extended to the rights
and obligations of persons in the cultivation and use of agricultural
land, and other matters affecting tenant-farmers, agricultural lessees,
settlers, owner-cultivators, farms' cooperatives or organizations
under laws, Presidential Decrees, Orders, instructions, Rules and
Regulations in relation to the agrarian reform program. Clearly, the
latter must be deemed to have been eliminated by its being
subsumed in the broad jurisdiction conferred on the Department of
Agrarian Reform. The intention evidently was to transfer original
jurisdiction to the Department of Agrarian Reform, a proposition
stressed by the rules formulated and promulgated by the Department
for the implementation of the executive orders just quoted. (Rules of
the DAR Adjudication Board, which took effect on March 8, 1988) The
rules included the creation of the Agrarian Reform Adjudication Board
designed to exercise the adjudicatory functions of the Department,
and the allocation to it of ". . . original and exclusive jurisdiction
over the subject matter vested upon it by law, and all cases, disputes,
controversies and matters or incidents involving the implementation
of the Comprehensive Agrarian Reform Program under Executive
Order No. 229, Executive Order No. 129-A, Republic Act No. 3844, as
amended by Republic Act No. 6289, Presidential Decree No. 27 and
other agrarian laws and their implementing rules and regulations."
The implementing rules also declare that "(s)pecifically, such
jurisdiction shall extend over but not be limited to . . . (that
theretofore vested in the Regional Trial Courts, i.e.) (c)ases involving
the rights and obligations of persons engaged in the cultivation and
use of agricultural land covered by the Comprehensive Agrarian
Reform Program (CARP) and other agrarian laws . . . "
2. ID.; ID.; OVER TWO GROUPS OF CASES; RESTORED TO THE
REGIONAL TRIAL COURTS AS SPECIAL AGRARIAN COURTS. Republic
Act No. 6657, was signed into law by President Aquino on June 10,
1988 and became effective immediately after its "publication in two
(2) national newspapers of general circulation" on June 15, 1988. The
Act makes references to and explicitly recognizes the effectivity and
applicability of Presidential Decree No. 229. More particularly, the Act
echoes the provisions of Section 17 of Presidential Decree No. 229,
investing the Department of Agrarian Reform with original
jurisdiction, generally, over all cases involving agrarian laws, although
it restores to the Regional Trial Court, limited jurisdiction over two
groups of cases. The Regional Trial Courts have not, however, been
completely divested of jurisdiction over agrarian reform matters.
Section 56 of RA 6657, on the other hand, confers "special
jurisdiction" on "Special Agrarian Court," which are Regional Trial
Courts designated by the Supreme Court at least one (1) branch
within each province to act as such. These Regional Trial Courts
qua Special Agrarian Courts have, according to Section 57 of the same
law, original and exclusive jurisdiction over: 1) "all petitions for the
determination of just compensation to land-owners," and 2) "the
prosecution of all criminal offenses under . . . (the) Act." In these
cases, "(t)he Rules of Court shall apply . . . unless modified by . . . (the)
Act."
3. ID.; APPEAL; CASES INVOLVING AGRARIAN DISPUTES;
PROCEDURE, FOLLOWED. It is relevant to mention in this
connection that - (1) appeals from decisions of the Special Agrarian
Courts "may be taken by filing a petition for review with the Court of
Appeals within fifteen (15) days from receipt or notice of the decision,
. . ." (Sec. 60) and (2) appeals from any "decision, order, award or
ruling of the DAR on any agrarian dispute or on any matter pertaining
to the application, implementation, enforcement, or interpretation of
this Act and other pertinent laws on agrarian reform may be brought
to the Court of Appeals by certiorari (This mode of appeal is sui
generis. It is only instance when an appeal by certiorari may be taken
to the Court of Appeals. Heretofore, appeals by certiorari were
authorized only when taken to the Supreme Court) except as
otherwise provided . . . within fifteen (15) days from receipt of a copy
thereof," the "findings of fact of the DAR . . . (being) final and
conclusive if based on substantial evidence." (Sec. 54)

D E C I S I O N

NARVASA, J p:
The jurisdiction of the Regional Trial Court, acting as a special
agrarian court, in the light of Executive Orders Numbered 129-A and
229 and Republic Act No. 6657, is what is at issue in the proceeding at
bar.
Rufina Tangub and her husband, Andres, now deceased, filed
with the Regional Trial Court of Lanao del Norte in March, 1988, "an
agrarian case for damages by reason of the(ir) unlawful dispossession
. . .was tenants from the landholding" owned by the Spouses
Domingo and Eugenia Martil.
1
Several persons were also impleaded
as defendants, including the Philippine National Bank, it being alleged
by the plaintiff spouses that said bank, holder of a mortgage on the
land involved, had caused foreclosure thereof, resulting in the
acquisition of the property by the bank as the highest bidder at the
foreclosure sale, and in the sale by the latter, some time later, of
portions of the land to the other persons named as its co-defendants
(all employees of the National Steel Corporation), and it being prayed
that mortgage and the transactions thereafter made in relation
thereto be annulled and voided.
2

In an Order rendered on August 24, 1988, respondent Judge
Felipe G. Javier, Jr. dismissed the complaint.
3
He opined that by virtue
of Executive Order No. 229 "providing the mechanisms for the
implementation of the Comprehensive Agrarian Reform Program
approved on July 24, 1987" Executive No. 129-A approved on July
26, 1987, as well as the Rules of the Adjudication Board of the
Department of Agrarian Reform, jurisdiction of the Regional Trial
Court over agrarian cases had been transferred to the Department of
Agrarian Reform.
The Tangub Spouses filed a petition for certiorari with this Court,
docketed as UDK-8867, assigned to the Second Division. Discerning
however no special and important reason for taking cognizance of the
action, this Court referred the same to the Court of Appeals, that
tribunal having concurrent jurisdiction to act tereon.
The Court of Appeals, by Decision promulgated on October 23,
1989,
4
dismissed the petition, finding that the jurisdictional question
had been correctly resolved by the Trial Court. The Court of Appeals,
adverted to a case earlier decided by it, on August 30,
1989, Estanislao Casinillo v. Hon. Felipe G. Javier, Jr., et al., in which it
was "emphatically ruled that agrarian cases no longer fall under the
jurisdiction of Regional Trial Courts but rather under the jurisdiction
of the DAR Adjudication Board."
5
The ruling was grounded on the
provisions of Executive Orders Numbered 229, approved on July 22,
1987, and 129-A, issued on July 26, 1987, in relation to Republic Act
No. 6657, effective on June 15, 1988. Said executive orders, it was
pointed out, were issued by President Corazon C. Aquino
undoubtedly in the exercise of her revolutionary powers in
accordance with Section 6, Article XVIII [Transitory Provisions] of the
1986 Constitution providing that the "incumbent President shall
continue to exercise legislative powers until the first Congress is
convened."
The petitioner Rufina Vda. de Tangub, now widowed, is once
again before this Court, contending that the Trial Court's "order of
dismissal of August 26, 1988, and the decision of the Honorable Court
of Appeals affirming it, are patently illegal and unconstitutional"
because they deprive "a poor tenant access to courts and directly
violate R.A. 6657, PD 946, and Batas Bilang 129."
The petition is without merit.
Section 1 of Executive Order No. 229 sets out the scope of the
Comprehensive Agrarian Reform Program (CARP). It states that the
program
". . . shall cover, regardless of tenurial arrangement and commodity
produce, all public and private agricultural land as provided in
Proclamation No. 131 dated July 22, 1987, including whenever
applicable in accordance with law, other lands of the public domain
suitable to agriculture."
Section 17 thereof.
1) vested the Department of Agrarian Reform with "quasi-judicial
powers to determine and adjudicate agrarian reform matters," and
2) granted it "jurisdiction over all matters involving
implementation of agrarian reform, except those falling under the
exclusive original jurisdiction of the DENR and the Department of
Agriculture [DA], as well as "powers to punish for contempt and to
issue subpoena, subpoena duces tecum and writs to enforce its
orders or decisions."
Section 4 of Executive Order No. 129-A made the Department of
Agrarian Reform "responsible for implementing the Comprehensive
Agrarian Reform Program, and, for such purpose," authorized it,
among others, to
"(g) Provide free legal services to agrarian reform beneficiaries and
resolve agrarian conflicts and land tenure problems; . . (and)
xxx xxx xxx
(j) Approve or disapprove the conversion, restructuring or
readjustment of agricultural lands into non-agricultural uses: . ."
And Section 5 of the same Executive Order No. 129-A specified
the powers and functions of the Department of Agrarian Reform,
including the following:
"(b) Implement all agrarian laws, and for this purpose, punish for
contempt and issue subpoena, subpoena duces tecum, writ of
execution of its decision, and other legal processes to ensure
successful and expeditious program implementation; the decisions of
the Department may in proper cases, be appealed to the Regional
Trial Courts but shall be immediately executory notwithstanding such
appeal;
xxx xxx xxx
(h) Provide free legal service to agrarian reform beneficiaries and
resolve agrarian conflicts and land tenure related problems as may be
provided for by laws;
(i) Have exclusive authority to approve or disapprove conversion of
agricultural lands for residential, commercial, industrial, and other
land uses as may be provided . . ."
The jurisdiction thus conferred on the Department of Agrarian
Reform, i.e.:
(a) adjudication of all matters involving implementation of agrarian
reform;
(b) resolution of agrarian conflicts and land tenure related
problems; and
(c) approval or disapproval of the conversion, restructuring or
readjustment of agricultural lands into residential, commercial,
industrial, and other non-agricultural uses,
is evidently quite as extensive as that theretofore vested in the
Regional Trial Court by Presidential Decree No. 946, which extended
to the rights and obligations of persons in the cultivation and use of
agricultural land, and other matters affecting tenant-farmers,
agricultural lessees, settlers, owner-cultivators, farms' cooperatives or
organizations under laws, Presidential Decrees, Orders, instructions,
Rules and Regulations in relation to the agrarian reform
program.
6
Clearly, the latter must be deemed to have been
eliminated by its being subsumed in the broad jurisdiction conferred
on the Department of Agrarian Reform. The intention evidently was
to transfer original jurisdiction to the Department of Agrarian Reform,
a proposition stressed by the rules formulated and promulgated by
the Department for the implementation of the executive orders just
quoted.
7
The rules included the creation of the Agrarian Reform
Adjudication Board designed to exercise the adjudicatory functions of
the Department, and the allocation to it of
". . . original and exclusive jurisdiction over the subject matter vested
upon it by law, and all cases, disputes, controversies and matters or
incidents involving the implementation of the Comprehensive
Agrarian Reform Program under Executive Order No. 229, Executive
Order No. 129-A, Republic Act No. 3844, as amended by Republic Act
No. 6289, Presidential Decree No. 27 and other agrarian laws and
their implementing rules and regulations."
The implementing rules also declare that "(s)pecifically, such
jurisdiction shall extend over but not be limited to . . (that theretofore
vested in the Regional Trial Courts, i.e.) (c)ases involving the rights
and obligations of persons engaged in the cultivation and use of
agricultural land covered by the Comprehensive Agrarian Reform
Program (CARP) and other agrarian laws . . ."
The matter has since been further and definitively clarified by
Republic Act No. 6657, which was signed into law by President Aquino
on June 10, 1988 and became effective immediately after its
"publication in two (2) national newspapers of general circulation" on
June 15, 1988. The Act makes references to and explicitly recognizes
the effectivity and applicability of Presidential Decree No. 229.
8
More
particularly, the Act echoes the provisions of Section 17 of
Presidential Decree No. 229, supra, investing the Department of
Agrarian Reform with original jurisdiction, generally, over all cases
involving agrarian laws, although, as shall shortly be pointed out, it
restores to the Regional Trial Court, limited jurisdiction over two
groups of cases. Section 50 reads as follows:
"SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby
vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction over all
matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of
Agriculture [DA] and the Department of Environment and Natural
Resources [DENR].
It shall not be bound by technical rules of procedure and evidence but
shall proceed to hear and decide all 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
and the merits of the case. Toward this end, it shall adopt a uniform
rule of procedure to achieve a just, expeditious and inexpensive
determination of every action or proceeding before it.
It shall have the power to summon witnesses, administer oaths, take
testimony, require submission of reports, compel the production of
books and documents and answers to interrogatories and
issue subpoena and subpoena duces tecumand to enforce its writs
through sheriffs or other duly deputized officers. It shall likewise have
the power to punish direct and indirect contempts in the same
manner and subject to the same penalties as provided in the Rules of
Court.
xxx xxx xxx
Notwithstanding an appeal to the court of appeals, the decision of
the DAR shall be immediately executory."
9

The Regional Trial Courts have not, however, been completely
divested of jurisdiction over agrarian reform matters. Section 56 of RA
6657, on the other hand, confers "special jurisdiction" on "Special
Agrarian Courts," which are Regional Trial Courts designated by the
Supreme Court at least one (1) branch within each province to
act as such. These Regional Trial Courts qua Special Agrarian Courts
have, according to Section 57 of the same law, original and exclusive
jurisdiction over:
1) "all petitions for the determination of just compensation to
land-owners," and
2) "the prosecution of all criminal offenses under . . [the] Act."
In these cases, "(t)he Rules of Court shall apply . . unless modified
by . . . (the) Act."
It is relevant to mention in this connection that
(1) appeals from decisions of the Special Agrarian Courts "may be
taken by filing a petition for review with the Court of Appeals within
fifteen (15) days from receipt or notice of the decision, . ."
10
and
(2) appeals from any "decision, order, award or ruling of the DAR
on any agrarian dispute or on any matter pertaining to the
application, implementation, enforcement, or interpretation of this
Act and other pertinent laws on agrarian reform may be brought to
the Court of Appeals bycertiorari
11
except as otherwise provided . . .
within fifteen (15) days from receipt of a copy thereof," the "findings
of fact of the DAR [being] final and conclusive if based on substantial
evidence."
12

The Regional Trial Court of Iligan City was therefore correct in
dismissing Agrarian Case No. 1094. It being a case concerning the
rights of the plaintiffs as tenants on agricultural land, not involving
the "special jurisdiction" of said Trial Court acting as a Special
Agrarian Court, it clearly came within the exclusive original
jurisdiction of the Department of Agrarian Reform, or more
particularly, the Agrarian Reform Adjudication Board, established
precisely to wield the adjudicatory powers of the Department, supra.
The petitioner had not bothered to substantiate her contention
that she has been denied access to the courts, which is just as well.
The contention is on its face utterly without merit. It may profit her
and her counsel to realize that apart from granting all concerned
parties access to a quasi-judicial forum (the Adjudication Board of the
Department of Agrarian Reform), the law strives to make resolution
of controversies therein more expeditious and inexpensive, by
providing not only that the Board "shall not be bound by technical
rules of procedure and evidence," supra, but also that, as explicitly
stated by the penultimate paragraph of Section 50 of the Act:
"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."
WHEREFORE, for lack of merit, the petition is DISMISSED, and the
Decision of the Court of Appeals in CA-G.R. SP. No. 16725 dated
October 23, 1989, AFFIRMED, without pronouncement as to costs.
SO ORDERED.
[G.R. No. 112526. March 16, 2005]
STA. ROSA REALTY DEVELOPMENT CORPORATION, petitioner, vs.
JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P.
AYENDE, LETICIA P. BALAT, FILOMENA B. BATINO, ANICETO A.
BURGOS, JAIME A. BURGOS, FLORENCIA CANUBAS, LORETO A.
CANUBAS, MAXIMO A. CANUBAS, REYNALDO CARINGAL, QUIRINO
C. CASALME, BENIGNO A. CRUZAT, ELINO A. CRUZAT, GREGORIO F.
CRUZAT, RUFINO C. CRUZAT, SERGIO CRUZAT, SEVERINO F. CRUZAT,
VICTORIA DE SAGUN, SEVERINO DE SAGUN, FELICISIMO A.
GONZALES, FRANCISCO A. GONZALES, GREGORIO A. GONZALES,
LEODEGARIO N. GONZALES, PASCUAL P. GONZALES, ROLANDO A.
GONZALES, FRANCISCO A. JUANGCO, GERVACIO A. JUANGCO,
LOURDES U. LUNA, ANSELMO M. MANDANAS, CRISANTO
MANDANAS, EMILIO M. MANDANAS, GREGORIO A. MANDANAS,
MARIO G. MANDANAS, TEODORO MANDANAS, CONSTANCIO B.
MARQUEZ, EUGENIO B. MARQUEZ, ARMANDO P. MATIENZO,
DANIEL D. MATIENZO, MAXIMINO MATIENZO, PACENCIA P.
MATIENZO, DOROTEA L. PANGANIBAN, JUANITO T. PEREZ,
MARIANITO T. PEREZ, SEVERO M. PEREZ, INOCENCIA S. PASQUIZA,
BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO PETATE,
PABLO A. PLATON, PRECILLO V. PLATON, AQUILINO B. SUBOL,
CASIANO T. VILLA, DOMINGO VILLA, JUAN T. VILLA, MARIO C. VILLA,
NATIVIDAD B. VILLA, JACINTA S. ALVARADO, RODOLFO ANGELES,
DOMINGO A. CANUBAS, EDGARDO L. CASALME, QUIRINO DE LEON,
LEONILO M. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R. LANGUE,
QUINTILLANO LANGUE, REYNALDO LANGUE, ROMEO S. LANGUE,
MARIANITO T. PEREZ, INOCENCIA S. PASQUIZA, AQUILINO B. SUBOL,
BONIFACIO VILLA, ROGELIO AYENDE, ANTONIO B. FERNANDEZ,
ZACARIAS HERRERA, REYNARIO U. LAZO, AGAPITO MATIENZO,
DIONISIO F. PETATE, LITO G. REYES, JOSE M. SUBOL, CELESTINO G.
TOPI NO, ROSA C. AMANTE, SOTERA CASALME, REMIGIO M.
SILVERIO, THE COURT OF APPEALS, THE SECRETARY OF AGRARIAN
REFORM, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, LAND BANK OF THE PHILIPPINES, REGISTER OF DEEDS OF
LAGUNA, DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES REGIONAL EXECUTIVE DIRECTOR FOR REGION IV and
REGIONAL AGRARIAN REFORM OFFICER FOR REGION
IV.,respondents.
[G.R. No. 118838. March 16, 2005]
JUAN B. AMANTE, IGNACIO PETATE, DOMINGO CANUBAS,
FLORENCIO CANUBAS, CRESENCIO AMANTE, QUIRINO CASALME,
LEODEGARIO GONZALES, DOMINGO VILLA, JAIME BURGOS,
NICOMEDES PETATE, MAXIMINO MATIENZO, MAXIMO CANUBAS,
ELINO CRUZAT, RUFINO CRUZAT, FELICISIMO GONZALES,
QUINTILLANO LANGUE, TEODORO MANDANAS, SERGIO CRUZAT,
AGAPITO MATIENZO and SEVERINO DE SAGUM, petitioners, vs. LUIS
YULO, JESUS MIGUEL YULO, C-J YULO & SONS, INC., STA. ROSA
REALTY DEVELOPMENT CORPORATION, JOSE LAMBATIN, LAUREANO
LAUREL, GALICANO MAILOM, JR., REYNALDO OPENA, AGAPITO
PRECILLA, DANILO SUMADSAD, ALFREDO SUMADSAD, JUAN
CANTAL, INIGO MENDOZA, ALEJANDRO SANCHEZ, SENADOR
RODRIGUEZ, VICTOR MOLINAR, DANILO CANLOBO, RESTING
CARAAN, IGNACIO VERGARA, HANDO MERCADO, FAUSTINO
MAILOM, CONRADO BARRIENTOS, RENATO VISAYA, DANTE
BATHAN, SERAPIO NATIVIDAD, HONESTO TENORIO, NESTOR
MERCADO, BIENVENIDO OLFATO, RENE LIRAZAN, RUDY CANLOBO,
BASIOLIO MULINGTAPANG, ITO GONZALES, RENATO RINO, TINOY
MABAGA, PACIO PADILLA, JOHNNY REAMILLO, ROLANDO
CARINGAL, IGNOY VILLAMAYOR, ROMEO TANTENGCO, LODRING
CARAAN, FREDO MERCADO, TOMMY MENDOZA, RAFAEL ONTE, REY
MANAIG, DICK GASPAR, ANTONIO MALLARI, ALFREDO ANIEL,
BARIT, ALBERTO MANGUE, AGATON LUCIDO, ONYONG CANTAL,
BAYANI LACSON, ISKO CABILION, MANGUIAT, IGME OPINA,
VILARETE, PEDRO BENEDICTO, HECTOR BICO, RUFO SANCHEZ,
LARRY DE LEON, BARIVAR SAMSON and ROMEO
NAVARRO, respondents.
A M E N D E D D E C I S I O N
AUSTRIA-MARTINEZ, J.:
By virtue of the En Banc Resolution issued on January 13, 2004, the
Court authorized the Special First Division to suspend the Rules so as
to allow it to consider and resolve the second Motion for
Reconsideration of respondents,
[1]
after the motion was heard on oral
arguments on August 13, 2003. On July 9, 2004,
[2]
the Court resolved
to submit for resolution the second Motion for Reconsideration
inG.R. No. 112526 together with G.R. No. 118338 in view of the
Resolution of the Court dated January 15, 2001 issued in G.R. No.
118838,
[3]
consolidating the latter case with G.R. No. 112526, the
issues therein being interrelated.
[4]
Hence, the herein Amended
Decision.
The factual background of the two cases is as follows:
The Canlubang Estate in Laguna is a vast landholding previously titled
in the name of the late Speaker and Chief Justice Jose Yulo, Sr. Within
this estate are two parcels of land (hereinafter referred to as the
subject property) covered by TCT Nos. 81949 and 84891
measuring 254.766 hectares and part of Barangay Casile,
subsequently titled in the name of Sta. Rosa Realty Development
Corporation (SRRDC), the majority stockholder of which is C.J. Yulo
and Sons, Inc.
The subject property was involved in civil suits and administrative
proceedings that led to the filing of G.R. Nos. 112526 and 118838,
thus:
Injunction Case Filed by Amante, et al.
On December 6, 1985, Amante, et al., who are the private
respondents in G.R. No. 112526 and petitioners in G.R. No. 118838,
instituted an action for injunction with damages in the Regional Trial
Court of Laguna (Branch 24) against Luis Yulo, SRRDC, and several
SRRDC security personnel, docketed as Civil Case No. B-2333.
Amante, et al. alleged that: they are residents of Barangay Casile,
Cabuyao, Laguna, which covers an area of around 300 hectares; in
1910, their ancestors started occupying the area, built their houses
and planted fruit-bearing trees thereon, and since then, have been
peacefully occupying the land; some time in June 3, 1985, SRRDCs
security people illegally entered Bgy. Casile and fenced the area;
SRRDCs men also entered the barangay on November 4, 1985, cut
down the trees, burned their huts, and barred the lone jeepney from
entering the Canlubang Sugar Estate; as a result of these acts,
Amante, et al. were deprived of possession and cultivation of their
lands. Thus, they claimed damages, sought the issuance of
permanent injunction and proposed that a right of way be declared.
[5]

In their Answer, the defendants denied the allegations and disclaimed
any control and supervision over its security personnel. Defendant
SRRDC also alleged that as the real owner of the property, it was the
one that suffered damages due to the encroachment on the
property.
[6]

A writ of preliminary injunction was issued by the trial court on
August 17, 1987,
[7]
but this was subsequently dissolved by the Court
of Appeals (CA) on April 22, 1988 in its decision in CA-G.R. SP No.
13908.
[8]

After trial on the merits, the trial court, on January 20, 1992,
rendered a decision ordering Amante, et al. to vacate the property,
the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the defendants and against the plaintiffs hereby dismissing
the complaint and amended complaint.
The plaintiffs are hereby ordered to vacate the parcels of land
belonging to the defendants Luis Yulo and Sta. Rosa Realty. They are
likewise enjoined from entering the subject parcels of land.
Although attorneys fees and expenses of litigation are recoverable in
case of a clearly unfounded civil action against the plaintiff (Enervida
vs. De la Torre, 55 SCRA 339), this Court resolves not to award
attorneys fees etc. in favor of the defendants because the plaintiffs
appear to have acted in good faith in filing the present civil action
(Salao vs. Salao, 70 SCRA 65) and that it would not be just and
equitable to award the same in the case at bar. (Liwanag vs. Court of
Appeals, 121 SCRA 354) Accordingly, the other reliefs prayed for by
the defendants are hereby dismissed.
SO ORDERED.
[9]

Amante, et al. appealed the aforesaid decision to the CA, docketed as
CA-G.R. CV No. 38182.
On June 28, 1994, the CA affirmed with modification the decision of
the trial court in the injunction case. The dispositive portion of the
appellate courts decision
[10]
reads as follows:
WHEREFORE, the judgment herein appealed from is hereby
AFFIRMED, with the modification that the defendants-appellees are
hereby ordered, jointly and severally, to pay the plaintiffs-appellants
nominal damages in the amount of P5,000.00 per plaintiff. No
pronouncement as to costs.
SO ORDERED.
[11]

Nominal damages were awarded by the CA because it found that
SRRDC violated Amante, et al.s rights as possessors of the subject
property.
[12]

Amante, et al. filed a motion for reconsideration thereof, pointing out
the DARABs decision placing the property under compulsory
acquisition, and the CA decision in CA-G.R. SP No. 27234, affirming
the same.
[13]
The CA, however, denied the motion, with the
modification that only SRRDC and the defendants-security guards
should be held jointly and severally liable for the nominal damages
awarded. It also made the clarification that the decision should not
preempt any judgment or prejudice the right of any party in the
agrarian reform case pending before the Supreme Court (G.R. No.
112526).
[14]

Thus, Amante, et al. filed on March 2, 1995, herein petition, docketed
as G.R. No. 118838 on the following grounds:
4.1. THE COURT OF APPEALS DECIDED THE CASE CONTRARY TO LAW
OR APPLICABLE SUPREME COURT DECISIONS BECAUSE:
4.1.1 FIRST, PETITIONERS MAY NOT BE LAWFULLY EVICTED FROM
THEIR LANDHOLDINGS CONSIDERING THAT:
-- (A) PETITIONERS ARE ALREADY THE REGISTERED OWNERS
UNDER THE TORRENS SYSTEM OF THE PROPERTIES IN QUESTION
SINCE FEBRUARY 26, 1992 BY VIRTUE OF RA 6657 OR THE
COMPREHENSIVE AGRARIAN REFORM LAW;
-- (B) THE COURT OF APPEALS HAS AFFIRMED THE REGIONAL
TRIAL COURT OF LAGUNAS DISMISSAL OF THE EJECTMENT CASES
FILED BY RESPONDENT SRRDC AGAINST PETITIONERS; AND
-- (C) ASSUMING FOR THE SAKE OF ARGUMENT ONLY THAT
PETITIONERS ARE NOT YET THE REGISTERED OWNERS OF THE
PROPERTIES IN QUESTION, RESPONDENTS MAY NOT RAISE THE ISSUE
OF OWNERSHIP IN THIS CASE FOR INJUNCTION WITH DAMAGES, THE
SAME TO BE VENTILATED IN A SEPARATE ACTION, NOT IN THIS CASE
BROUGHT TO PREVENT RESPONDENTS FROM COMMITTING FURTHER
ACTS OF DISPOSSESSION [BACAR V. DEL ROSARIO ET AL., 171 SCRA
451 (1989)].
4.1.2 SECOND, PETITIONERS ARE ENTITLED TO MORAL, EXEMPLARY
DAMAGES AND ATTORNEYS FEES, INSTEAD OF MERE NOMINAL
DAMAGES, CONSIDERING THAT THE COURT OF APPEALS FOUND
RESPONDENTS TO HAVE UNLAWFULLY AND ILLEGALLY DISTURBED
PETITIONERS PEACEFUL AND CONTINUOUS POSSESSION.
[15]

Ejectment Cases Filed by SRRDC
Between October 1986 and August 1987, after the injunction case
was filed by Amante, et al., SRRDC filed with the Municipal Trial Court
(MTC) of Cabuyao, Laguna, several complaints for forcible entry with
preliminary injunction and damages against Amante, et al., docketed
as Civil Cases Nos. 250, 258, 260, 262 and 266. SRRDC alleged that
some time in July 1987, they learned that Amante, et al., without
their authority and through stealth and strategy, were clearing,
cultivating and planting on the subject property; and that despite
requests from SRRDCs counsel, Amante, et al. refused to vacate the
property, prompting them to file the ejectment cases.
[16]
Amante, et
al. denied that SRRDC are the absolute owners of the property,
stating that they have been in peaceful possession thereof, through
their predecessors-in-interest, since 1910.
[17]

On May 24, 1991, the MTC-Cabuyao rendered its decision in favor of
SRRDC. Amante, et al. were ordered to surrender possession and
vacate the subject property. The decision was appealed to the
Regional Trial Court of Bian, Laguna (Assisting Court).
On February 18, 1992, the RTC dismissed the ejectment cases on the
ground that the subject property is an agricultural land being tilled by
Amante, et al., hence it is the Department of Agrarian Reform (DAR),
which has jurisdiction over the dispute.
[18]
The RTCs dismissal of the
complaints was brought to the CA via a petition for review, docketed
as CA-G.R. SP No. 33382.
[19]
In turn, the CA dismissed the petition per
its Decision dated January 17, 1995 on the ground that SRRDC failed
to show any prior physical possession of the subject property that
would have justified the filing of the ejectment cases.
[20]
Also, the CA
did not sustain the RTCs finding that the subject properties are
agricultural lands and Amante, et al. are tenant/farmers thereof, as
the evidence on record does not support such finding. The parties did
not file any motion for reconsideration from the Court of Appeals
dismissal, hence, it became final and executory.
[21]

Administrative Proceedings
While the injunction and ejectment cases were still in process, it
appears that in August, 1989, the Municipal Agrarian Reform Office
(MARO) issued a Notice of Coverage to SRRDC, informing petitioners
that the property covered by TCT Nos. T-81949, T-84891 and T-92014
is scheduled for compulsory acquisition under the Comprehensive
Agrarian Reform Program (CARP).
[22]
SRRDC filed its Protest and
Objection with the MARO on the grounds that the area was not
appropriate for agricultural purposes, as it was rugged in terrain with
slopes of 18% and above, and that the occupants of the land were
squatters, who were not entitled to any land as
beneficiaries.
[23]
Thereafter, as narrated in the Decision of the Court
dated October 12, 2001 in G.R. No. 112526, the following
proceedings ensued:
On August 29, 1989, the farmer beneficiaries together with the BARC
chairman answered the protest and objection stating that the slope
of the land is not 18% but only 5-10% and that the land is suitable and
economically viable for agricultural purposes, as evidenced by the
Certification of the Department of Agriculture, municipality of
Cabuyao, Laguna.
On September 8, 1989, MARO Belen dela Torre made a summary
investigation report and forwarded the Compulsory Acquisition
Folder Indorsement (CAFI) to the Provincial Agrarian Reform Officer
(hereafter, PARO).
On September 21, 1989, PARO Durante Ubeda forwarded his
endorsement of the compulsory acquisition to the Secretary of
Agrarian Reform.
On November 23, 1989, Acting Director Eduardo C. Visperas of the
Bureau of Land Acquisition and Development, DAR forwarded two (2)
Compulsory Acquisition Claim Folders covering the landholding of
SRRDC, covered by TCT Nos. T-81949 and T-84891 to the President,
Land Bank of the Philippines for further review and evaluation.
On December 12, 1989, Secretary of Agrarian Reform Miriam
Defensor Santiago sent two (2) notices of acquisition to petitioner,
stating that petitioners landholdings covered by TCT Nos. T-81949
and T-84891, containing an area of 188.2858 and 58.5800 hectares,
valued atP4,417,735.65 and P1,220,229.93, respectively, had been
placed under the Comprehensive Agrarian Reform Program.
On February 6, 1990, petitioner SRRDC in two letters separately
addressed to Secretary Florencio B. Abad and the Director, Bureau of
Land Acquisition and Distribution, sent its formal protest, protesting
not only the amount of compensation offered by DAR for the
property but also the two (2) notices of acquisition.
On March 17, 1990, Secretary Abad referred the case to the DARAB
for summary proceedings to determine just compensation under
R.A. No. 6657, Section 16.
On March 23, 1990, the LBP returned the two (2) claim folders
previously referred for review and evaluation to the Director of BLAD
mentioning its inability to value the SRRDC landholding due to some
deficiencies.
On March 28, 1990, Executive Director Emmanuel S. Galvez wrote
the Land Bank President Deogracias Vistan to forward the two (2)
claim folders involving the property of SRRDC to the DARAB for it to
conduct summary proceedings to determine the just compensation
for the land.
On April 6, 1990, petitioner sent a letter to the Land Bank of the
Philippines stating that its property under the aforesaid land titles
were exempt from CARP coverage because they had been classified
as watershed area and were the subject of a pending petition for land
conversion.
On May 10, 1990, Director Narciso Villapando of BLAD turned over
the two (2) claim folders (CACFs) to the Executive Director of the DAR
Adjudication Board for proper administrative valuation. Acting on the
CACFs, on September 10, 1990, the Board promulgated a resolution
asking the office of the Secretary of Agrarian Reform (DAR) to first
resolve two (2) issues before it proceeds with the summary land
valuation proceedings.
The issues that need to be threshed out were as follows: (1) whether
the subject parcels of land fall within the coverage of the Compulsory
Acquisition Program of the CARP; and (2) whether the petition for
land conversion of the parcels of land may be granted.
On December 7, 1990, the Office of the Secretary, DAR, through the
Undersecretary for Operations (Assistant Secretary for Luzon
Operations) and the Regional Director of Region IV, submitted a
report answering the two issues raised. According to them, firstly,
by virtue of the issuance of the notice of coverage on August 11,
1989, and notice of acquisition on December 12, 1989, the property
is covered under compulsory acquisition. Secondly, Administrative
Order No. 1, Series of 1990, Section IV D also supports the DAR
position on the coverage of the said property. During the
consideration of the case by the Board, there was no pending
petition for land conversion specifically concerning the parcels of
land in question.
On February 19, 1991, the Board sent a notice of hearing to all the
parties interested, setting the hearing for the administrative valuation
of the subject parcels of land on March 6, 1991. However, on
February 22, 1991, Atty. Ma. Elena P. Hernandez-Cueva, counsel for
SRRDC, wrote the Board requesting for its assistance in the
reconstruction of the records of the case because the records could
not be found as her co-counsel, Atty. Ricardo Blancaflor, who
originally handled the case for SRRDC and had possession of all the
records of the case was on indefinite leave and could not be
contacted. The Board granted counsels request and moved the
hearing on April 4, 1991.
On March 18, 1991, SRRDC submitted a petition to the Board for the
latter to resolve SRRDCs petition for exemption from CARP
coverage before any administrative valuation of their landholding
could be had by the Board.
On April 4, 1991, the initial DARAB hearing of the case was held and
subsequently, different dates of hearing were set without objection
from counsel of SRRDC. During the April 15, 1991 hearing, the
subdivision plan of subject property at Casile, Cabuyao, Laguna was
submitted and marked as Exhibit 5 for SRRDC. At the hearing on
April 23, 1991, the Land Bank asked for a period of one month to
value the land in dispute.
At the hearing on April 23, 1991, certification from Deputy Zoning
Administrator Generoso B. Opina was presented. The certification
issued on September 8, 1989, stated that the parcels of land subject
of the case were classified as Industrial Park per Sangguniang Bayan
Resolution No. 45-89 dated March 29, 1989.
To avert any opportunity that the DARAB might distribute the lands to
the farmer beneficiaries, on April 30, 1991, petitioner filed a petition
with DARAB to disqualify private respondents as beneficiaries.
However, DARAB refused to address the issue of beneficiaries.
[24]

. . .
On December 19, 1991, the DARAB promulgated a decision, affirming
the dismissal of the protest of SRRDC against the compulsory
coverage of the property covered by TCT Nos. 81949 and 84891. The
decretal portion of the decision reads:
WHEREFORE, based on the foregoing premises, the Board hereby
orders:
1. The dismissal for lack of merit of the protest against the
compulsory coverage of the landholdings of Sta. Rosa Realty
Development Corporation (Transfer Certificates of Title Nos. 81949
and 84891 with an area of 254.766 hectares) in Barangay Casile,
Municipality of Cabuyao, Province of Laguna under the
Comprehensive Agrarian Reform Program is hereby affirmed;
2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty
Development Corporation the amount of Seven Million Eight Hundred
Forty-One Thousand, Nine Hundred Ninety Seven Pesos and Sixty-
Four centavos (P7,841,997.64) for its landholdings covered by the two
(2) Transfer Certificates of Title mentioned above. Should there be a
rejection of the payment tendered, to open, if none has yet been
made, a trust account for said amount in the name of Sta. Rosa Realty
Development Corporation;
3. The Register of Deeds of the Province of Laguna to cancel with
dispatch Transfer Certificate of Title Nos. 84891 and 81949 and new
one be issued in the name of the Republic of the Philippines, free
from liens and encumbrances;
4. The Department of Environment and Natural Resources either
through its Provincial Office in Laguna or the Regional Office, Region
IV, to conduct a final segregation survey on the lands covered by
Transfer Certificate of Title Nos. 84891 and 81949 so the same can be
transferred by the Register of Deeds to the name of the Republic of
the Philippines;
5. The Regional Office of the Department of Agrarian Reform through
its Municipal and Provincial Agrarian Reform Office to take immediate
possession on the said landholding after Title shall have been
transferred to the name of the Republic of the Philippines, and
distribute the same to the immediate issuance of Emancipation
Patents to the farmer-beneficiaries as determined by the Municipal
Agrarian Reform Office of Cabuyao, Laguna.
[25]

On July 11, 1991, DAR Secretary Benjamin T. Leong issued a
memorandum directing the Land Bank of the Philippines (LBP) to
open a trust account in favor of SRRDC, for P5,637,965.55, as
valuation for the SRRDC property.
The titles in the name of SRRDC were cancelled and corresponding
TCTs were issued in the name of the Republic of the Philippines on
February 11, 1992,
[26]
after which Certificates of Land Ownership
Award (CLOA) were issued in the name of the farmers-beneficiaries
on February 26, 1992.
[27]

In the meantime, SRRDC had filed with the CA a petition for review of
the DARABs decision, docketed as CA-G.R. SP No. 27234.
On November 5, 1993, the CA affirmed the decision of DARAB, to wit:
WHEREFORE, premises considered, the DARAB decision dated
December 19, 1991 is AFFIRMED, without prejudice to petitioner Sta.
Rosa Realty Development Corporation ventilating its case with the
Special Agrarian Court on the issue of just compensation.
[28]

Hence, SRRDC filed on November 24, 1993, herein petition, docketed
as G.R. No. 112526 on the following grounds:
I
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS JURISDICTION
IN RULING THAT THE SRRDC PROPERTIES, DESPITE THE UNDISPUTED
FACT OF THEIR NON-AGRICULTURAL CLASSIFICATION PRIOR TO RA
6657, ARE COVERED BY THE CARP CONTRARY TO THE NATALIA
REALTY DECISION OF THIS HONORABLE COURT.
i. The SRRDC properties have been zoned and approved as PARK
since 1979.
ii. The SRRDC properties form part of a watershed area.
II
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS JURISDICTION
IN DISREGARDING ECOLOGICAL CONSIDERATIONS AS MANDATED BY
LAW.
III
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS JURISDICTION
IN AFFIRMING THE DISTRIBUTION OF THE SRRDC PROPERTIES TO
PRIVATE RESPONDENTS WHO HAVE BEEN JUDICIALLY DECLARED AS
SQUATTERS AND THEREFORE ARE NOT QUALIFIED BENEFICIARIES
PURSUANT TO THE CENTRAL MINDANAO UNIVERSITY DECISION OF
THIS HONORABLE COURT.
i. The acquisition of the SRRDC properties cannot be valid for future
beneficiaries.
ii. Section 22 of RA 6657 insofar as it expands the coverage of the
CARP to landless residents is unconstitutional.
IV
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS JURISDICTION
IN HOLDING THAT THE DARAB HAS JURISDICTION TO PASS UPON THE
ISSUE OF WHETHER THE SRRDC PROPERTIES ARE SUBJECT TO CARP
COVERAGE.
[29]

On October 12, 2001, the Court rendered its Decision in G.R. No.
112526 only, setting aside the decision of the CA in CA-G.R. SP No.
27234 and ordering the remand of the case to the DARAB for re-
evaluation and determination of the nature of the land. The
dispositive portion of the Decision reads as follows:
IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of
Appeals in CA-G.R. SP No. 27234.
In lieu thereof, the Court REMANDS the case to the DARAB for re-
evaluation and determination of the nature of the parcels of land
involved to resolve the issue of its coverage by the Comprehensive
Land Reform Program.
In the meantime, the effects of the CLOAs issued by the DAR to
supposed farmer beneficiaries shall continue to be stayed by the
temporary restraining order issued on December 15, 1993, which
shall remain in effect until final decision on the case.
No costs.
SO ORDERED.
[30]

It is the opinion of the Court in G.R. No. 112526, that the property is
part of a watershed, and that during the hearing at the DARAB, there
was proof that the land may be excluded from the coverage of the
CARP because of its high slopes.
[31]
Thus, the Court concluded that a
remand of the case to the DARAB for re-evaluation of the issue of
coverage is appropriate in order to resolve the true nature of the
subject property.
[32]

In their Memorandum, Amante, et al. argues that there exist
compelling reasons to grant the second motion for reconsideration of
the assailed decision of the Court, to wit:
2.1 Only QUESTIONS OF LAW are admittedly and undeniably at
issue; yet the Honorable Court reviewed the findings of facts of the
Court of Appeals and the DARAB although the case does not fall into
any of the well-recognized exceptions to conduct a factual review.
Worse, the 12 October 2001 Decision assumed facts not proven
before any administrative, quasi-judicial or judicial bodies;
2.2 The DARAB and the Court of Appeals already found the land to
be CARPable; yet the Honorable Court remanded the case to DARAB
to re-evaluate if the land is CARPable;
2.3 The Decision did not express clearly and distinctly the facts and
the law on which it is based;
2.4 The Decision renewed the Temporary Restraining Order issued
on 15 December 1993, issuance of which is barred by Sec. 55 of R.A.
6657; and
2.5 This Honorable Court denied private respondents Motion for
Reconsideration although issues raised therein were never passed
upon in the 12 October 2001 Decision or elsewhere.
[33]

The DAR and the DARAB, through the Office of the Solicitor General,
did not interpose any objection to the second motion for
reconsideration. It also maintained that if SRRDCs claim that the
property is watershed is true, then it is the DENR that should exercise
control and supervision in the disposition, utilization, management,
renewal and conservation of the property.
[34]

SRRDC meanwhile insists that there are no compelling reasons to give
due course to the second motion for reconsideration.
[35]

At the outset, the Court notes that petitioner designated its petition
in G.R. No. 112526 as one for review on certiorari of the decision of
the CA. In the same breath, it likewise averred that it was also being
filed as a special civil action for certiorari as public respondents
committed grave abuse of discretion.
[36]
Petitioner should not have
been allowed, in the first place, to pursue such remedies
simultaneously as these are mutually exclusive.
[37]

It is SRRDCs claim that the CA committed grave abuse of discretion in
holding that the subject property is agricultural in nature. In support
of its contention, it argued, among others, that the subject property
had already been classified as park since 1979 under the Zoning
Ordinance of Cabuyao, as approved by the Housing and Land Use
Regulatory Board (HLURB); that it forms part of a watershed; and that
the CA disregarded ecological considerations.
[38]
SRRDC also claimed
that Amante, et al. are not qualified beneficiaries.
[39]

Clearly, these issues are factual in nature, which the Court, as a rule,
should not have considered in this case. However, there are
recognized exceptions, e.g., when the factual inferences of the
appellate court are manifestly mistaken; the judgment is based on a
misapprehension of facts; or the CA manifestly overlooked certain
relevant and undisputed facts that, if properly considered, would
justify a different legal conclusion.
[40]
The present cases fall under the
above exceptions.
Thus, in order to finally set these cases to rest, the Court shall resolve
the substantive matters raised, which in effect comes down to the
issue of the validity of the acquisition of the subject property by the
Government under Republic Act (R.A.) No. 6657, or the
Comprehensive Agrarian Reform Law of 1988 (CARL).
As noted earlier, the DARAB made its finding regarding the nature of
the property in question, i.e., the parcels of land are agricultural and
may be the subject of compulsory acquisition for distribution to
farmer-beneficiaries, thus:
Ocular inspections conducted by the Board show that the subject
landholdings have been under the possession and tillage of the DAR
identified potential beneficiaries which they inherited from their
forebears (workers of the Yulo Estate). They are bonafide residents
and registered voters (DARAB Exhibits C and J) of Barangay Casile,
Cabuyao, Laguna. There is a barangay road leading toward the
barangay school and sites and the settlement has a barangay hall,
church, elementary school buildings (DARAB Exhibit Q), Comelec
precincts (DARAB Exhibits J-1 and J-2), and other structures extant
in progressive communities. The barangay progressive development
agencies, like the DECS, DA, COMELEC, DAR and Support Services of
Land Bank, DPWH, DTI and the Cooperative Development Authority
have extended support services to the community (DARAB Exhibits
I, K to K-3, L, M, N, O, P to P-6). More importantly,
subject landholdings are suitable for agriculture. Their topography
is flat to undulating 3-15% slope. (Testimony of Rosalina Jumaquio,
Agricultural Engineer, DAR, TSN, June 21, 1991, DARAB Exhibits F
and H). Though some portions are over 18% slope, nevertheless,
clearly visible thereat are fruit-bearing trees, like coconut, coffee,
and pineapple plantations, etc. (see Petitioners Exhibits A to
YYY and DARAB Exhibits A to S, Records). In other words,
they are already productive and fully developed.
. . .
As the landholdings of SRRDC subject of the instant proceedings are
already developed not only as a community but also as an
agricultural farm capable of sustaining daily existence and growth,
We find no infirmity in placing said parcels of land under
compulsory coverage. They do not belong to the exempt class of
lands. The claim that the landholding of SRRDC is a watershed;
hence, belonging to the exempt class of lands is literally throwing
punches at the moon because the DENR certified that the only
declared watershed in Laguna Province and San Pablo City is the
Caliraya-Lumot Rivers (Petitioners Exhibit A). A sensu contrario,
the landholdings subject herein are not.
[41]
(Emphasis supplied)
The evidence on record supports these findings, to wit:
1. Certification dated January 16, 1989 by the OIC Provincial
Environment and Natural Resources Office of Laguna that the only
declared watershed in the Laguna province and San Pablo City is the
Caliraya-Lumot Rivers No. 1570 dated September 1, 1976;
[42]

2. Map prepared by Agricultural Engineer Rosalina H. Jumaquio
showing that: a) the topography of the property covered by TCT No.
T-84891 topography is flat to undulating with a 5 to 10% slope; (b) it
is suitable to agricultural crops; and (c) the land is presently planted
with diversified crops;
[43]

3. Certification dated August 28, 1989 by APT Felicito Buban of the
Department of Agriculture of Laguna that, per his ocular inspection,
the subject property is an agricultural area, and that the inhabitants
main occupation is farming;
[44]

4. Pictures taken by MARO Belen La Torre of Cabuyao, Laguna,
showing that the property is cultivated and inhabited by the farmer-
beneficiaries;
[45]

SRRDC however, insists that the property has already been classified
as a municipal park and beyond the scope of CARP. To prove this,
SRRDC submitted the following:
1. Certification dated March 1, 1991 by the Municipality of Cabuyao,
Laguna that the entire barangay of Casile is delineated as Municipal
Park;
[46]

2. Certification dated March 11, 1991 by the Housing and Land Use
Regulatory Board that the parcels of land located in Barangay Casile
are within the Municipal Park, based on the municipalitys approved
General Land Use Plan ratified by the Housing and Land Use
Regulatory Board as per Resolution No. 38-2 dated June 25, 1980;
[47]

3. Photocopies of pictures taken by Mr. Ernesto Garcia, Officer-in-
Charge of the Special Project Section of CJ Yulo and Sons, Inc., of
portions of Barangay Casile;
[48]

The Court recognizes the power of a local government to reclassify
and convert lands through local ordinance, especially if said ordinance
is approved by the HLURB.
[49]
Municipal Ordinance No. 110-54 dated
November 3, 1979, enacted by the Municipality of Cabuyao, divided
the municipality into residential, commercial, industrial, agricultural
and institutional districts, and districts and parks for open spaces.
[50]
It
did not convert, however, existing agricultural lands into residential,
commercial, industrial, or institutional. While it classified Barangay
Casile into a municipal park, as shown in its permitted uses of land
map, the ordinance did not provide for the retroactivity of its
classification. In Co vs. Intermediate Appellate Court,
[51]
it was held
that an ordinance converting agricultural lands into residential or light
industrial should be given prospective application only, and should
not change the nature of existing agricultural lands in the area or the
legal relationships existing over such lands. Thus, it was stated:
A reading of Metro Manila Zoning Ordinance No. 81-01, series of
1981, does not disclose any provision converting existing agricultural
lands in the covered area into residential or light industrial. While it
declared that after the passage of the measure, the subject area shall
be used only for residential or light industrial purposes, it is not
provided therein that it shall have retroactive effect so as to
discontinue all rights previously acquired over lands located within
the zone which are neither residential nor light industrial in
nature. This simply means that, if we apply the general rule, as we
must, the ordinance should be given prospective operation only.
The further implication is that it should not change the nature of
existing agricultural lands in the area or the legal relationships
existing over such lands
[52]
(Emphasis supplied)
Under Section 3 (c) of R.A. No. 6657, agricultural land is defined as
land devoted to agricultural activity and not classified as mineral,
forest, residential, commercial or industrial land. Section 3 (b)
meanwhile defines agricultural activity as the cultivation of the soil,
planting of crops, growing of fruit trees, raising of livestock, poultry or
fish, including the harvesting of such products, and other farm
activities, and practices performed by a farmer in conjunction with
such farming operations done by persons whether natural or juridical.
Before Barangay Casile was classified into a municipal park by the
local government of Cabuyao, Laguna in November 1979, it was part
of a vast property popularly known as the Canlubang Sugar Estate.
SRRDC claimed that in May 1979, the late Miguel Yulo allowed the
employees of the Yulo group of companies to cultivate a maximum
area of one hectare each subject to the condition that they should
not plant crops being grown by the Canlubang Sugar Estate, like
coconuts and coffee, to avoid confusion as to ownership of
crops.
[53]
The consolidation and subdivision plan surveyed for SRRDC
on March 10-15, 1984
[54]
also show that the subject property is sugar
land. Evidently, the subject property is already agricultural at the
time the municipality of Cabuyao enacted the zoning ordinance, and
such ordinance should not affect the nature of the land. More so
since the municipality of Cabuyao did not even take any step to
utilize the property as a park.
SRRDC cites the case of Natalia Realty, Inc. vs. DAR,
[55]
wherein it was
ruled that lands not devoted to agricultural activity and not classified
as mineral or forest by the DENR and its predecessor agencies, and
not classified in town plans and zoning ordinances as approved by the
HLURB and its preceding competent authorities prior to the
enactment of R.A. No. 6657 on June 15, 1988, are outside the
coverage of the CARP. Said ruling, however, finds no application in
the present case. As previously stated, Municipal Ordinance No. 110-
54 of the Municipality of Cabuyao did not provide for any retroactive
application nor did it convert existing agricultural lands into
residential, commercial, industrial, or institutional. Consequently, the
subject property remains agricultural in nature and therefore within
the coverage of the CARP.
Only on March 9, 2004, SRRDC filed with the Court a Manifestation
pointing out DAR Order No. (E)4-03-507-309 dated February 17, 2004,
exempting from CARP coverage two parcels of land owned by SRRDC
and covered by TCT Nos. T-85573 and T-92014.
[56]
The DAR found
that these properties have been re-classified into Municipal Parks by
the Municipal Ordinance of Cabuyao, Laguna, and are part of the
Kabangaan-Casile watershed, as certified by the DENR.
[57]

The Court notes however that the said DAR Order has absolutely no
bearing on these cases. The herein subject property is covered by
TCT Nos. 81949 and 34891, totally different, although adjacent, from
the property referred to in said DAR Order.
SRRDC also contends that the property has an 18% slope and over
and therefore exempt from acquisition and distribution under Section
10 of R.A. No. 6657. What SRRDC opted to ignore is that Section 10,
as implemented by DAR Administrative Order No. 13 dated August
30, 1990, also provides that those with 18% slope and over
but already developed for agricultural purposes as of June 15, 1988,
may be allocated to qualified occupants.
[58]
Hence, even assuming
that the property has an 18% slope and above, since it is already
developed for agricultural purposes, then it cannot be exempt from
acquisition and distribution. Moreover, the topography maps
prepared by Agricultural Engineer Rosalina H. Jumaquio show that the
property to be acquired has a 5-10% flat to undulating scope;
[59]
that it
is suitable to agricultural crops;
[60]
and it is in fact already planted
with diversified crops.
[61]

Also, the Certification dated July 1, 1991 by Geodetic Engineer
Conrado R. Rigor that the top portion of Barangay Casile has a 0 to
18% slope while the side of the hill has a 19 to 75% slope,
[62]
was
presented by SRRDC only during the proceedings before the CA
which had no probative value in a petition for review proceedings.
The Court notes that SRRDC had been given ample time and
opportunity by the DARAB to prove the grounds for its protest and
objection but miserably failed to take advantage of such time and
opportunity
[63]
in the DARAB proceedings.
SRRDC also contends that the property is part of a watershed, citing
as evidence, the Certification dated June 26, 1991 by the Laguna Lake
Development Authority that Barangay Casile is part of the watershed
area of the Laguna Lake Basin,
[64]
and the Final Report for Watershed
Area Assessment Study for the Canlubang Estate dated July 1991
undertaken by the Engineering & Development Corporation of the
Philippines.
[65]
It must be noted, however, that these pieces of
evidence were likewise brought to record only when petitioner filed
its petition for review with the CA. The DARAB never had the
opportunity to assess these pieces of evidence.
The DARAB stated:
Noting the absence of evidence which, in the nature of things, should
have been submitted by landowner SRRDC and to avoid any claim of
deprivation of its right to prove its claim to just compensation (Uy v.
Genato, 57 SCRA 123). We practically directed its counsel in not only
one instance, during the series of hearings conducted, to do so. We
even granted continuances to give it enough time to prepare and be
ready with the proof and documents. To Our dismay, none was
submitted and this constrained Us to take the failure/refusal of
SRRDC to present evidence as a waiver or, at least, an implied
acceptance of the valuation made by the DAR.
[66]

The same goes with the CA, which did not have the discretion to
consider evidence in a petition for certiorari or petition for review
oncertiorari outside than that submitted before the DARAB. The CA
noted petitioners failure to present evidence in behalf of its
arguments, thus:
. . . It must be recalled that petitioner Sta. Rosa Realty itself had asked
the DARAB in a petition dated March 18, 1991 to allow it to adduce
evidence in support of its position that the subject parcels of land are
not covered by the CARP beginning on the scheduled hearing dated
April 4, 1991. And DARAB obliged as in fact the petitioner
commenced to introduce evidence. If petitioner failed to complete
the presentation of evidence to support its claim of exemption from
CARP coverage, it has only itself to blame for which DARAB cannot be
accused of not being impartial.
[67]

Consequently, there is no need to order the remand of the case to
the DARAB for re-evaluation and determination of the nature of the
parcels of land involved. It runs contrary to orderly administration of
justice and would give petitioner undue opportunity to present
evidence in support of its stance, an opportunity it already had during
the DARAB proceedings, and which opportunity it regrettably failed to
take advantage of.
More significantly however, it is the DAR Secretary that originally
declared the subject property as falling under the coverage of the
CARP.
Moreover, DAR Administrative Order No. 13, Series of 1990 (Rules
and Procedure Governing Exemption of Lands from CARP Coverage
under Section 10, R.A. No. 6657) provides:
I. LEGAL MANDATE
The general policy under CARP is to cover as much lands suitable for
agriculture as possible. However, Section 10, RA 6657 excludes and
exempts certain types of lands from the coverage of CARP, to wit:
A. Lands actually, directly and exclusively used and found to be
necessary for parks, wildlife, forest reserves, reforestation, fish
sanctuaries and breeding grounds, watersheds and mangroves,
national defense, school sites and campuses including experimental
farm stations operated by public or private schools for educational
purposes, seeds and seedlings research and pilot production centers,
church sites and convents appurtenant thereto, mosque sites and
Islamic centers appurtenant thereof, communal burial grounds and
cemeteries, penal colonies and penal farms actually worked by the
inmates, government and private research and quarantine centers;
and
. . .
II. POLICIES
In the application of the aforecited provision of law, the following
guidelines shall be observed:
A. For an area in I.A to be exempted from CARP coverage, it must
be actually, directly and exclusively used and found to be necessary
for the purpose so stated.
. . .
C. Lands which have been classified or proclaimed, and/or actually
directly and exclusively used and found to be necessary for parks,
wildlife, forest reserves, fish sanctuaries and breeding grounds, and
watersheds and mangroves shall be exempted from the coverage of
CARP until Congress, taking into account ecological, developmental
and equity considerations, shall have determined by law, the specific
limits of public domain, as provided for under Sec. 4(a) of RA 6657,
and a reclassification of the said areas or portions thereof as alienable
and disposable has been approved. (Emphasis supplied)
In order to be exempt from coverage, the land must have
been classified or proclaimed and actually, directly and exclusively
used and found to be necessary for watershed purposes.
[68]
In this
case, at the time the DAR issued the Notices of Coverage up to the
time the DARAB rendered its decision on the dispute, the subject
property is yet to be officially classified or proclaimed as a watershed
and has in fact long been used for agricultural purposes. SRRDC relies
on the case of Central Mindanao University (CMU) vs.
DARAB,
[69]
wherein the Court ruled that CMU is in the best position to
determine what property is found necessary for its use. SRRDC claims
that it is in the best position to determine whether its properties are
necessary for development as park and watershed area.
[70]

But SRRDCs reliance on the CMU case is flawed. In the CMU case,
the subject property from the very beginning was not alienable and
disposable because Proclamation No. 476 issued by the late President
Carlos P. Garcia already reserved the property for the use of the
school. Besides, the subject property in the CMU case was actually,
directly and exclusively used and found to be necessary for
educational purposes.
In the present case, the property is agricultural and was not actually
and exclusively used for watershed purposes. As records show, the
subject property was first utilized for the purposes of the Canlubang
Sugar Estate.
[71]
Later, petitioner claimed that the occupants were
allowed to cultivate the area so long as they do not plant crops being
grown by the Canlubang Sugar Estate in order to avoid confusion as
to ownership thereof.
[72]
Thus, based on its own assertions, it appears
that it had benefited from the fruits of the land as agricultural land.
Now, in a complete turnaround, it is claiming that the property is part
of a watershed.
Furthermore, in a belated attempt to prove that the subject property
is part of a watershed that must be environmentally protected,
SRRDC submitted before the Court a Final Report dated February
1994 undertaken by the Ecosystems Research and Development
Bureau (ERDB) of the DENR entitled, Environmental Assessment of
the Casile and Kabanga-an River Watersheds.
[73]
The study, according
to SRRDC, was made pursuant to a handwritten instruction issued by
then President Fidel V. Ramos. The study noted that, the continuing
threat of widespread deforestation and unwise land use practices
have resulted in the deteriorating condition of the
watersheds.
[74]
But the Court also notes the Memorandum for the
President dated September 1993 by then DENR Secretary Angel C.
Alcala that, after a field inspection conducted by the DENRs Regional
Executive Director and the Provincial and Community Natural
Resource Officers, it was found that:
. . .
2. Many bankal trees were found growing in the watershed/CARP
areas, including some which have been coppiced, and that water
conduits for domestic and industrial uses were found installed at the
watershed area claimed by the Yulos. Records further show that in
the 1970s, a Private Land Timber Permit was issued to Canlubang
Sugar Estate thru its marketing arm, the Sta. Rosa Realty Devpt. Corp.
3. Resident farmers denied that they have been cutting bankal trees
and volunteered the information that one of the Estates security
guards was dismissed for cutting and transporting bankal trees. The
trees cut by the dismissed security guard were found stacked
adjacent to the Canlubang Security Agencys headquarters.
[75]

Evidently, SRRDC had a hand in the degradation of the area, and now
wants to put the entire blame on the farmer-beneficiaries. It is
reasonable to conclude that SRRDC is merely using ecological
considerations to avert any disposition of the property adverse to it.
SRRDC also objects to the identification of Amante, et al. as
beneficiaries of the subject property. Suffice it to say that under
Section 15 of R.A. No. 6657, the identification of beneficiaries is a
matter involving strictly the administrative implementation of the
CARP, a matter which is exclusively vested in the Secretary of
Agrarian Reform, through its authorized offices. Section 15 reads:
SECTION 15. Registration of Beneficiaries. The DAR in coordination
with the Barangay Agrarian Reform Committee (BARC) as organized in
this Act, shall register all agricultural lessees, tenants and
farmworkers who are qualified to be beneficiaries of the CARP. These
potential beneficiaries with the assistance of the BARC and the DAR
shall provide the following data:
(a) names and members of their immediate farm household;
(b) owners or administrators of the lands they work on and the
length of tenurial relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages
received.
A copy of the registry or list of all potential CARP beneficiaries in the
barangay shall be posted in the barangay hall, school or other public
buildings in the barangay where it shall be open to inspection by the
public at all reasonable hours.
Meanwhile, Administrative Order No. 10 (Rules and Procedures
Governing the Registration of Beneficiaries), Series of 1989, provides:
SUBJECT: I. PREFATORY STATEMENT
Pursuant to Section 15, Chapter IV, of the Comprehensive Agrarian
Reform Law of 1988, the DAR, in coordination with the Barangay
Agrarian Reform Committee (BARC), as organized pursuant to RA
6657, shall register all agricultural lessees, tenants and farmworkers
who are qualified beneficiaries of the CARP. This Administrative Order
provides the Implementing Rules and Procedures for the said
registration.
. . .
B. Specific
1. Identify the actual and potential farmer-beneficiaries of the
CARP.
In Lercana vs. Jalandoni,
[76]
the Court categorically stated that:
the identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP, a
matter exclusively cognizable by the Secretary of the Department of
Agrarian Reform, and beyond the jurisdiction of the DARAB.
[77]

The farmer-beneficiaries have already been identified in this case.
Also, the DAR Secretary has already issued Notices of Coverage and
Notices of Acquisition pertaining to the subject property. It behooves
the courts to exercise great caution in substituting its own
determination of the issue, unless there is grave abuse of discretion
committed by the administrative agency,
[78]
which in these cases the
Court finds none.
SRRDC questions the constitutionality of Section 22 of R.A. No. 6657,
which reads in part:
SECTION 22. Qualified Beneficiaries. The lands covered by the CARP
shall be distributed as much as possible to landless residents of the
same barangay, or in the absence thereof, landless residents of the
same municipality in the following order of priority.
(a) agricultural lessees and share tenants;
(b) regular farmworkers;
(c) seasonal farmworkers;
(d) other farmworkers;
(e) actual tillers or occupants of public lands;
(f) collectives or cooperatives of the above beneficiaries; and
(g) others directly working on the land.
. . .
SRRDC argues that Section 22 sweepingly declares landless residents
as beneficiaries of the CARP (to mean also squatters), in violation of
Article XIII, Section 4 of the Constitution, which aims to benefit only
the landless farmers and regular farmworkers.
[79]

The Court cannot entertain such constitutional challenge. The
requirements before a litigant can challenge the constitutionality of a
law are well-delineated, viz.:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the
constitutional question;
(3) The exercise of judicial review is pleaded at the earliest
opportunity; and
(4) The constitutional question is the lis mota of the
case.
[80]
(Emphasis supplied)
Earliest opportunity means that the question of unconstitutionality of
the act in question should have been immediately raised in the
proceedings in the court below,
[81]
in this case, the DAR Secretary. It
must be pointed out that all controversies on the implementation of
the CARP fall under the jurisdiction of the DAR, even though they
raise questions that are also legal or constitutional in nature.
[82]
The
earliest opportunity to raise a constitutional issue is to raise it in the
pleadings before a competent court that can resolve the same, such
that, if it is not raised in the pleadings, it cannot be considered at the
trial, and, if not considered at the trial, it cannot be considered on
appeal.
[83]
Records show that SRRDC raised such constitutional
challenge only before this Court despite the fact that it had the
opportunity to do so before the DAR Secretary. The DARAB correctly
refused to deal on this issue as it is the DAR Secretary who, under the
law, has the authority to determine the beneficiaries of the CARP.
This Court will not entertain questions on the invalidity of a statute
where that issue was not specifically raised, insisted upon, and
adequately argued
[84]
in the DAR.
Likewise, the constitutional question raised by SRRDC is not the
very lis mota in the present case. Basic is the rule that every law has
in its favor the presumption of constitutionality, and to justify its
nullification, there must be a clear and unequivocal breach of the
Constitution, and not one that is doubtful, speculative or
argumentative.
[85]
The controversy at hand is principally anchored on
the coverage of the subject property under the CARP, an issue that
can be determined without delving into the constitutionality of
Section 22 of R.A. No. 6657. While the identification of Amante, et al.
as farmer-beneficiaries is a corollary matter, yet, the same may be
resolved by the DAR.
SRRDC questions the DARABs jurisdiction to entertain the question of
whether the subject property is subject to CARP coverage.
According to SRRDC, such authority is vested with the DAR Secretary
who has the exclusive prerogative to resolve matters involving the
administrative implementation of the CARP and agrarian laws and
regulations.
[86]

There is no question that the power to determine whether a property
is subject to CARP coverage lies with the DAR Secretary. Section 50 of
R.A. No. 6657 provides that:
SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby
vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction over all
matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural
Resources (DENR).
. . .
The DARs jurisdiction under Section 50 of R.A. No. 6657 is two-fold.
The first is essentially executive and pertains to the enforcement and
administration of the laws, carrying them into practical operation and
enforcing their due observance, while the second is judicial and
involves the determination of rights and obligations of the parties.
[87]

Pursuant to its judicial mandate of achieving a just, expeditious and
inexpensive determination of every action or proceeding before
it,
[88]
the DAR adopted the DARAB Revised Rules, Rule II (Jurisdiction
of the Adjudication Board) of which provides:
SECTION 1. Primary, Original and Appellate Jurisdiction. The
Agrarian Reform Adjudication Board shall have primary jurisdiction,
both original and appellate, to determine and adjudicate all agrarian
disputes, cases, controversies, and matters or incidents involving the
implementation of the Comprehensive Agrarian Reform Program
under Republic Act No. 6657, Executive Order Nos. 229, 228 and 129-
A, Republic Act No. 3844 as amended by Republic Act No. 6389,
Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations.
Specifically, such jurisdiction shall extend over but not be limited to
the following:
a) Cases involving the rights and obligations of persons engaged in
the cultivation and use of agricultural land covered by the
Comprehensive Agrarian Reform Program (CARP) and other agrarian
laws;
b) Cases involving the valuation of land, and determination and
payment of just compensation, fixing and collection of lease rentals,
disturbance compensation, amortization payments, and similar
disputes concerning the functions of the Land Bank;
c) Cases involving the annulment or cancellation of orders or
decisions of DAR officials other than the Secretary, lease contracts or
deeds of sale or their amendments under the administration and
disposition of the DAR and LBP;
d) Cases arising from, or connected with membership or
representation in compact farms, farmers cooperatives and other
registered farmers associations or organizations, related to land
covered by the CARP and other agrarian laws;
e) Cases involving the sale, alienation, mortgage, foreclosure, pre-
emption and redemption of agricultural lands under the coverage of
the CARP or other agrarian laws;
f) Cases involving the issuance of Certificate of Land Transfer (CLT),
Certificate of Land Ownership Award (CLOA) and Emancipation Patent
(EP) and the administrative correction thereof;
g) And such other agrarian cases, disputes, matters or concerns
referred to it by the Secretary of the DAR.
Provided, however, that matters involving strictly the administrative
implementation of the CARP and other agrarian laws and
regulations, shall be the exclusive prerogative of and cognizable by
the Secretary of the DAR. (Emphasis supplied)
On the other hand, Administrative Order No. 06-00,
[89]
which provides
for the Rules of Procedure for Agrarian Law Implementation (ALI)
Cases, govern the administrative function of the DAR. Under said
Rules of Procedure, the DAR Secretary has exclusive jurisdiction over
classification and identification of landholdings for coverage under
the CARP, including protests or oppositions thereto and petitions for
lifting of coverage. Section 2 of the said Rules specifically
provides, inter alia, that:
SECTION 2. Cases Covered. - These Rules shall govern cases falling
within the exclusive jurisdiction of the DAR Secretary which shall
include the following:
(a) Classification and identification of landholdings for coverage
under the Comprehensive Agrarian Reform Program (CARP),
including protests or oppositions thereto and petitions for lifting of
coverage;
(b) Identification, qualification or disqualification of potential
farmer-beneficiaries;
(c) Subdivision surveys of lands under CARP;
(d) Issuance, recall or cancellation of Certificates of Land Transfer
(CLTs) and CARP Beneficiary Certificates (CBCs) in cases outside the
purview of Presidential Decree (PD) No. 816, including the issuance,
recall or cancellation of Emancipation Patents (EPs) or Certificates of
Land Ownership Awards (CLOAs) not yet registered with the Register
of Deeds;
(e) Exercise of the right of retention by landowner; . . . (Emphasis
supplied)
Thus, the power to determine whether a property is agricultural and
subject to CARP coverage together with the identification,
qualification or disqualification of farmer-beneficiaries lies with the
DAR Secretary.
[90]

Significantly, the DAR had already determined that the properties
are subject to expropriation under the CARP and has distributed the
same to the farmer-beneficiaries.
Initially, the LBP forwarded the two Compulsory Acquisition Claim
Folders (CACF) covering the subject properties to the DARAB for
summary proceedings for the sole purpose of determining just
compensation. SRRDC then sent a letter to the LBP claiming that the
subject properties were exempt from CARP coverage and subject of a
pending petition for land conversion. As a consequence, the DARAB
asked the DAR Secretary to first resolve the issues raised by SRRDC
before it can proceed with the land valuation proceedings. In
response, the DAR, through the Undersecretary for Operations and
the Regional Director of Region IV, submitted its report stating that:
(1) the property is subject to compulsory acquisition by virtue of the
Notice of Coverage issued on August 11, 1989, and Notice of
Acquisition issued on December 12, 1989, and that it was subject to
CARP coverage per Section IV D of DAR Administrative Order No. 1,
Series of 1990; and (2) there was no pending petition for land
conversion involving the subject property. When SRRDC petitioned
the DARAB to resolve the issue of exemption from coverage, it was
only then that the DARAB took cognizance of said issue.
[91]

As the DARAB succinctly pointed out, it was SRRDC that initiated and
invoked the DARABs jurisdiction to pass upon the question of CARP
coverage. As stated by the DARAB:
4.5.2.2. The ISSUE ON CARP COVERAGE was initiated and
incorporated in said proceeding, at the instance of petitioner itself,
by filing a petition dated March 18, 1991, Prayed therein were that
DARAB:
1. Take cognizance and assume jurisdiction over the question of
CARP coverage of the subject parcels of land;
2. Defer or hold in abeyance the proceedings for administrative
valuation of the subject properties pending determination of the
question of CARP coverage;
3. Allow respondent SRRDC to adduce evidence in support of its
position that the subject parcels of land are not covered by the CARP
beginning on the scheduled hearing date of April 4, 1991 (p.3;
emphasis and underscoring supplied).
Upon persistent request of petitioner SRRDC, it was accommodated
by DARAB and a counsel of SRRDC even took the witness stand. Its
lawyers were always in attendance during the scheduled hearings
until it was time for SRRDC to present its own evidence.
4.5.2.3. But, as earlier stated, despite the open session proddings by
DARAB for SRRDC to submit evidence and the rescheduling for,
allegedly, they are still collating the evidence, nay, the request that it
be allowed to adduce evidence, none was adduced and this
constrained public respondent to declare SRRDC as having waived its
right to present evidence. And, after the remaining parties were
heard, the hearing was formally terminated.
. . .
4.5.3. Needless to state, the jurisdictional objection (CARP
coverage), now being raised herein was not one of the original
matters in issue. Principally, DARAB was called upon under Section
16 of Republic Act No. 6657 to resolve a land valuation case. But
SRRDC itself insisted that DARAB should take cognizance thereof in
the same land valuation proceeding. And, SRRDC, through its
lawyers, actively participated in the hearings conducted.
4.5.4. It was only when an adverse decision was rendered by DARAB
that the jurisdictional issue was raised in the petition for review it
filed with the Honorable Court of Appeals. It was also only then
that petitioner presented proof/evidence.
. . .
4.5.6. Public respondents (DAR/DARAB) are not unmindful of the rule
that matter of jurisdiction may be raised at any stage of the
proceeding. But for two serious considerations, the applicability
thereof in the case at bar should not be allowed.
4.5.6.1. The fact [part (municipal/industrial) and/or watershed] upon
which the jurisdictional issue interchangeably hinges were not
established during the hearing of the case. No proof was adduced.
That the matter of CARP coverage is strictly administrative
implementation of CARP and, therefore, beyond the competence of
DARAB, belonging, as it does, to the DAR Secretary, was not even
alleged, either before DARAB or the Honorable Court of Appeals, the
numerous petitions/incidents filed notwithstanding. Be it that as it
may, the records of the case show that initially DARAB refused to take
cognizance thereof and, in fact, forwarded the issue of CARP coverage
to the office of the DAR Secretary. It was only when it was returned
to DARAB by said office that proceedings thereon commenced
pursuant to Section 1(g) of Rule II of the DARAB Revised Rules of
Procedure.
4.5.6.2. Petitioner is now estopped from assailing the jurisdiction of
DARAB. First, it expressly acknowledged the same, in fact invoked
it, when it filed its petition (Annex 4); and, second, during the
scheduled hearings, SRRDC, through its counsel, actively
participated, one of its counsel (sic) even testifying. It may not now
be allowed to impugn the jurisdiction of public
respondent
[92]
(Emphasis supplied)
In CA-G.R. SP No. 27234, the CA likewise found that it was SRRDC that
called upon the DARAB to determine the issue and it, in fact, actively
participated in the proceedings before it.
[93]
It was SRRDCs own act
of summoning the DARABs authority that cured whatever
jurisdictional defect it now raises. It is elementary that the active
participation of a party in a case pending against him before a court
or a quasi-judicial body, is tantamount to a recognition of that courts
or bodys jurisdiction and a willingness to abide by the resolution of
the case and will bar said party from later on impugning the courts or
bodys jurisdiction.
[94]

Moreover, the issue of jurisdiction was raised by SRRDC only before
the CA. It was never presented or discussed before the DARAB for
obvious reasons, i.e., it was SRRDC itself that invoked the latters
jurisdiction. As a rule, when a party adopts a certain theory, and the
case is tried and decided upon that theory in the court below, he will
not be permitted to change his theory on appeal.
[95]
Points of law,
theories, issues and arguments not brought to the attention of the
lower court need not be, and ordinarily will not be, considered by a
reviewing court, as these cannot be raised for the first time at such
late stage.
[96]
To permit SRRDC to change its theory on appeal would
not only be unfair to Amante, et al. but would also be offensive to the
basic scales of fair play, justice and due process.
[97]

Finally, the Court notes that then DAR Secretary Benjamin T. Leong
issued a Memorandum on July 11, 1991, ordering the opening of a
trust account in favor of SRRDC. In Land Bank of the Philippines vs.
Court of Appeals, this Court struck down as void DAR Administrative
Circular No. 9, Series of 1990, providing for the opening of trust
accounts in lieu of the deposit in cash or in bonds contemplated in
Section 16 (e) of R.A. No. 6657. As a result, the DAR issued
Administrative Order No. 2, Series of 1996, converting trust accounts
in the name of landowners into deposit accounts.
[98]
Thus, the trust
account opened by the LBP per instructions of DAR Secretary
Benjamin T. Leong should be converted to a deposit account, to be
retroactive in application in order to rectify the error committed by
the DAR in opening a trust account and to grant the landowners the
benefits concomitant to payment in cash or LBP bonds prior to the
ruling of the Court in Land Bank of the Philippines vs. Court of
Appeals. The account shall earn a 12% interest per annum from the
time the LBP opened a trust account up to the time said account was
actually converted into cash and LBP bonds deposit accounts.
Given the foregoing conclusions, the petition filed in G.R. No. 118838,
which primarily rests on G.R. No. 112526, should be granted.
The judgments of the trial court in the injunction case (Civil Case No.
B-2333) and the CA in CA-G.R. SP No. 38182 were premised on
SRRDCs transfer certificates of title over the subject property. The
trial court and the CA cannot be faulted for denying the writ of
injunction prayed for by Amante, et al. since at the time the trial
court rendered its decision in the injunction case on January 20, 1992,
SRRDC was still the holder of the titles covering the subject property.
The titles in its name were cancelled and corresponding TCTs were
issued in the name of the Republic of the Philippines on February 11,
1992, and CLOAs were issued to the farmer-beneficiaries on February
26, 1992. When Amante, et al., in their motion for reconsideration
filed in CA-G.R. SP No. 38182, brought to the CAs attention the
issuance of the CLOAs, the CA, per Resolution dated January 19, 1995,
reiterated its ruling that whether or not the subject property is
covered by the Comprehensive Agrarian Reform Law (R.A. No. 6657)
is the subject matter of a separate case, and we cannot interfere with
the same at the present time. The CA further stated that (O)ur
present decision is, therefore, not intended to preempt any judgment
or prejudice the right of any party in the said case.
[99]
It must be
noted that at that juncture, the DARAB Decision and the CA decision
in CA-G.R. SP No. 27234, finding the subject property covered by the
CARP Law, is yet to be finally resolved by this Court in G.R. No.
112526 and in fact, a temporary restraining order was issued by the
Court on December 15, 1993, enjoining the DARAB from enforcing
the effects of the CLOAs. Amante, et al. was likewise restrained from
further clearing the subject property.
[100]
Hence, the decision of the
trial court and the CA denying the writ of injunction was warranted.
Nevertheless, considering that the subject property is agricultural and
may be acquired for distribution to farmer-beneficiaries identified by
the DAR under the CARP, the transfer certificates of title issued in the
name of the Republic of the Philippines and the CLOAs issued by the
DAR in the names of Amante, et al.,
[101]
are valid titles and therefore
must be upheld. By virtue thereof, Amante, et al. who have been
issued CLOAs are now the owners of the subject property.
Consequently, the decisions of the trial court in the injunction case
and the CA in CA-G.R. SP No. 38182 must now be set aside, insofar as
it orders Amante, et al. to vacate and/or enjoins them from entering
the subject property.
The Court, however, agrees with the CA that Amante, et al. is not
entitled to actual, moral and exemplary damages, as well as
attorneys fees. SRRDCs right of possession over the subject property
was predicated on its claim of ownership, and it cannot be sanctioned
in exercising its rights or protecting its interests thereon. As was
ruled by the CA, Amante, et al. is merely entitled to nominal damages
as a result of SRRDCs acts.
[102]

All is not lost in this case. In its Memorandum dated September 29,
1993, to the DAR Secretary, the DENR manifested that:
. . . the farmers themselves could be tapped to undertake watershed
management and protection. This community-based approach in
natural resource management, is in fact, being used in numerous
watershed management projects nationwide. Adopting the same
approach in the area is deemed the best possible solution to the case
since it will not prejudice the CLOAs issued to the farmer-
beneficiaries. They should, however, be required to undertake the
necessary reforestation and other watershed
management/rehabilitation measures in the area.
In view of the foregoing, we recommend that a watershed
management plan for the area espousing the community-based
approach be drawn-up jointly by the DAR and DENR. . . .
[103]

If SRRDC sincerely wants to preserve the property for ecological
considerations, it can be done regardless of who owns it. After all, we
are all stewards of this earth, and it rests on all of us to tend to it.
WHEREFORE, the Second Motion for Reconsideration is GRANTED.
The Courts Decision dated October 12, 2001 in G.R. No. 112526 is
SET ASIDE and the Decision of the Court of Appeals dated November
5, 1993 in CA-G.R. SP No. 27234 is AFFIRMED with MODIFICATION, in
that the Land Bank of the Philippines is ordered to convert the trust
account in the name of Sta. Rosa Realty Development Corporation to
a deposit account, subject to a 12% interest per annum from the time
the LBP opened a trust account up to the time said account was
actually converted into cash and LBP bonds deposit accounts. The
temporary restraining order issued by the Court on December 15,
1993, is LIFTED.
The petition filed by Amante, et al. in G.R. No. 118838 is GRANTED in
that Sta. Rosa Realty Development Corporation is
herebyENJOINED from disturbing the peaceful possession of the
farmer-beneficiaries with CLOAs. The Decision of the Court of
Appeals dated June 28, 1994 in CA-G.R. CV No. 38182
is AFFIRMED insofar as the award of nominal damages is concerned.
The Department of Environment and Natural Resources and the
Department of Agrarian Reform, in coordination with the farmer-
beneficiaries identified by the DAR, are URGED to formulate a
community-based watershed plan for the management and
rehabilitation of Barangay Casile.
SO ORDERED.
DEPARTMENT OF AGRARIAN REFORM, petitioner, vs. ROBERTO J.
CUENCA and Hon. ALFONSO B. COMBONG JR., in His Capacity as the
Presiding Judge of the Regional Trial Court, Branch 63, La Carlota
City, respondents.
D E C I S I O N
PANGANIBAN, J.:
All controversies on the implementation of the Comprehensive
Agrarian Reform Program (CARP) fall under the jurisdiction of the
Department of Agrarian Reform (DAR), even though they raise
questions that are also legal or constitutional in nature. All doubts
should be resolved in favor of the DAR, since the law has granted it
special and original authority to hear and adjudicate agrarian matters.
The Case
Before us is a Petition for Review
[1]
under Rule 45 of the Rules of
Court, assailing the March 15, 2002 Decision
[2]
and the June 18, 2002
Resolution
[3]
of the Court of Appeals in CA-GR SP No. 58536. In the
challenged Decision, the CA disposed as follows:
As previously stated, the principal issue raised in the court below
involves a pure question of law. Thus, it being clear that the court a
quo has jurisdiction over the nature and subject matter of the case
below, it did not commit grave abuse of discretion when it issued the
assailed order denying petitioners motion to dismiss and granting
private respondents application for the issuance of a writ of
preliminary injunction.
WHEREFORE, premises considered, the petition is denied due
course and is accordingly DISMISSED.
[4]

The assailed Resolution, on the other hand, denied petitioners
Motion for Reconsideration.
The Facts
The CA narrated the facts as follows:
Private respondent Roberto J. Cuenca is the registered owner of a
parcel of land designated as Lot No. 816-A and covered by TCT No.
1084, containing an area of 81.6117 hectares, situated in Brgy.
Haguimit, La Carlota City and devoted principally to the planting of
sugar cane.
On 21 September 1999, Noe Fortunado, Municipal Agrarian Reform
Officer (MARO) of La Carlota City issued and sent a NOTICE OF
COVERAGE to private respondent Cuenca placing the above-described
landholding under the compulsory coverage of R.A. 6657, otherwise
known as the Comprehensive Agrarian Reform Program (CARP). The
NOTICE OF COVERAGE also stated that the Land Bank of the
Philippines (LBP) will determine the value of the subject land
pursuant to Executive Order No. 405 dated 14 June 1990.
On 29 September 1999, private respondent Cuenca filed with the
Regional Trial Court, Branch 63, La Carlota City, a complaint against
Noe Fortunado and Land Bank of the Philippines for Annulment of
Notice of Coverage and Declaration of Unconstitutionality of E.O. No.
405, Series of 1990, With Preliminary Injunction and Restraining
Order. The case was docketed as Civil Case No. 713.
In his complaint, Cuenca alleged, inter alia, that the implementation
of CARP in his landholding is no longer with authority of law
considering that, if at all, the implementation should have
commenced and should have been completed between June 1988 to
June 1992, as provided in the Comprehensive Agrarian Reform Law
(CARL); that the placing of the subject landholding under CARP is
without the imprimatur of the Presidential Agrarian Reform Council
(PARC) and the Provincial Agrarian Reform Coordinating Committee
(PARCOM) as required by R.A. 7905; that Executive Order No. 405
dated 14 June 1990 amends, modifies and/or repeals CARL and,
therefore, it is unconstitutional considering that on 14 June 1990,
then President Corazon Aquino no longer had law-making powers;
that the NOTICE OF COVERAGE is a gross violation of PD 399 dated 28
February 1974.
Private respondent Cuenca prayed that the Notice of Coverage be
declared null and void ab initio and Executive Order No. 405 dated 14
June 1990 be declared unconstitutional.
On 05 October 1999, MARO Noe Fortunado filed a motion to dismiss
the complaint on the ground that the court a quo has no jurisdiction
over the nature and subject matter of the action, pursuant to R.A.
6657.
On 12 January 2000, the respondent Judge issued a Temporary
Restraining Order directing MARO and LBP to cease and desist from
implementing the Notice of Coverage. In the same order, the
respondent Judge set the hearing on the application for the issuance
of a writ of preliminary injunction on January 17 and 18, 2000.
On 14 January 2000, MARO Fortunado filed a Motion for
Reconsideration of the order granting the TRO contending inter alia
that the DAR, through the MARO, in the course of implementing the
Notice of Coverage under CARP cannot be enjoined through a
Temporary Restraining Order in the light of Sections 55 and 68 of R.A.
6657.
In an order dated 16 February 2000, the respondent Judge denied
MARO Noe Fortunados motion to dismiss and issued a Writ of
Preliminary Injunction directing Fortunado and all persons acting in
his behalf to cease and desist from implementing the Notice of
Coverage, and the LBP from proceeding with the determination of the
value of the subject land.
The Department of Agrarian Reform (DAR) *thereafter filed before
the CA] a petition for certiorari under Rule 65 of the 1997 Rules of
Civil Procedure, assailing the writ of preliminary injunction issued by
respondent Judge on the ground of grave abuse of discretion
amounting to lack of jurisdiction.
It is the submission of the petitioner that the assailed order is in
direct defiance of Republic Act 6657, particularly Section 55 and 68
thereof, which read:
SECTION 55. NO RESTRAINING ORDERS OR PRELIMINARY
INJUNCTIONS No court in the Philippines shall have jurisdiction to
issue any restraining order or writ of preliminary injunction against
the PARC or any of its duly authorized or designated agencies in any
case, dispute or controversy arising from, necessary to, or in
connection with the application, implementation, or enforcement or
interpretation of this Act and other pertinent laws on agrarian
reform.
SECTION 68 IMMUNITY OF GOVERNMENT AGENCIES FROM
COURTS INTERFERENCE No injunction, Restraining Order,
prohibition or mandamus shall be issued by the lower court against
the Department of Agrarian Reform (DAR), the Department of
Agriculture (DA), the Department of Environment and Natural
Resources (DENR), and the Department of Justice (DOJ) in the
implementation of their program.
Petitioner contends that by virtue of the above provisions, all lower
courts, such as the court presided over by respondent Judge, are
barred if not prohibited by law to issue orders of injunctions against
the Department of Agrarian Reform in the full implementation of the
Notice of Coverage which is the initial step of acquiring lands under
R.A. 6657.
Petitioner also contends that the nature and subject matter of the
case below is purely agrarian in character over which the court a
quo has no jurisdiction and that therefore, it had no authority to issue
the assailed injunction order.
[5]

Ruling of the Court of Appeals
Stressing that the issue was not simply the improper issuance of the
Notice of Coverage, but was mainly the constitutionality of Executive
Order No. 405, the CA ruled that the Regional Trial Court (RTC) had
jurisdiction over the case. Consonant with that authority, the court a
quo also had the power to issue writs and processes to enforce or
protect the rights of the parties.
The appellate court likewise held that petitioners reliance on
Sections 55 and 68 of RA 6657 had been misplaced, because the case
was not about a purely agrarian matter. It opined that the
prohibition in certain statutes against such writs pertained only to
injunctions against administrative acts, to controversies involving
facts, or to the exercise of discretion in technical cases. But on issues
involving pure questions of law, courts were not prevented from
exercising their power to restrain or prohibit administrative acts.
Hence, this Petition.
[6]

Issues
In its Memorandum, petitioner raises the following issues:
1. The Honorable Court of Appeals committed serious error by not
taking into cognizance that the issues raised in the complaint filed by
the private respondent, which seeks to exclude his land from the
coverage of the CARP, is an agrarian reform matter and within the
jurisdiction of the DAR, not with the trial court.
2. The Honorable Court of Appeals, with due respect, gravely
abused its discretion by sustaining the writ of injunction issued by the
trial court, which is a violation of Sections 55 and 68 of Republic Act
No. 6657.
[7]

The Courts Ruling
The Petition has merit.
First Issue:
Jurisdiction
In its bare essentials, petitioners argument is that private
respondent, in his Complaint for Annulment of the Notice of
Coverage, is asking for the exclusion of his landholding from the
coverage of the Comprehensive Agrarian Reform Program
(CARP). According to the DAR, the issue involves the implementation
of agrarian reform, a matter over which the DAR has original and
exclusive jurisdiction, pursuant to Section 50 of the Comprehensive
Agrarian Reform Law (RA 6657).
On the other hand, private respondent maintains that his Complaint
assails mainly the constitutionality of EO 405. He contends that since
the Complaint raises a purely legal issue, it thus falls within the
jurisdiction of the RTC. We do not agree.
Conflicts involving jurisdiction over agrarian disputes are as tortuous
as the history of Philippine agrarian reform laws. The changing
jurisdictional landscape is matched only by the tumultuous struggle
for, and resistance to, the breaking up and distribution of large
landholdings.
Two Basic Rules
Two basic rules have guided this Court in determining jurisdiction in
these cases. First, jurisdiction is conferred by law.
[8]
And second, the
nature of the action and the issue of jurisdiction are shaped by the
material averments of the complaint and the character of the relief
sought.
[9]
The defenses resorted to in the answer or motion to dismiss
are disregarded; otherwise, the question of jurisdiction would depend
entirely upon the whim of the defendant.
[10]

Grant of Jurisdiction
Ever since agrarian reform legislations began, litigants have invariably
sought the aid of the courts. Courts of Agrarian Relations (CARs) were
organized under RA 1267
[11]
*f+or the enforcement of all laws and
regulations governing the relation of capital and labor on all
agricultural lands under any system of cultivation. The jurisdiction of
these courts was spelled out in Section 7 of the said law as follows:
Sec. 7. Jurisdiction of the Court. - The Court shall have original
and exclusive jurisdiction over the entire Philippines, to consider,
investigate, decide, and settle all questions, matters, controversies or
disputes involving all those relationships established by law which
determine the varying rights of persons in the cultivation and use of
agricultural land where one of the parties works the land, and shall
have concurrent jurisdiction with the Court of First Instance over
employer and farm employee or labor under Republic Act Numbered
six hundred two and over landlord and tenant involving violations of
the Usury Law (Act No. 2655, as amended) and of inflicting the
penalties provided therefor.
All the powers and prerogatives inherent in or belonging to the then
Courts of First Instance
[12]
(now the RTCs) were granted to the
CARs. The latter were further vested by the Agricultural Land Reform
Code (RA 3844) with original and exclusive jurisdiction over the
following matters:
(1) All cases or actions involving matters, controversies, disputes,
or money claims arising from agrarian relations: x x x
(2) All cases or actions involving violations of Chapters I and II of
this Code and Republic Act Number eight hundred and nine; and
(3) Expropriations to be instituted by the Land Authority: x x x.
[13]

Presidential Decree (PD) No. 946 thereafter reorganized the CARs,
streamlined their operations, and expanded their jurisdiction as
follows:
Sec. 12. Jurisdiction over Subject Matter. - The Courts of
Agrarian Relations shall have original and exclusive jurisdiction over:
a) Cases involving the rights and obligations of persons in the
cultivation and use of agricultural land except those cognizable by the
National Labor Relations Commission; x x x ;
b) Questions involving rights granted and obligations imposed
by laws, Presidential Decrees, Orders, Instructions, Rules and
Regulations issued and promulgated in relation to the agrarian reform
program; Provided, however, That matters involving the
administrative implementation of the transfer of the land to the
tenant-farmer under Presidential Decree No. 27 and amendatory and
related decrees, orders, instructions, rules and regulations, shall be
exclusively cognizable by the Secretary of Agrarian Reform, namely:
(1) classification and identification of landholdings;
(2) x x x;
(3) parcellary mapping;
(4) x x x;
x x x x x x x x x
m) Cases involving expropriation of all kinds of land in
furtherance of the agrarian reform program;
x x x x x x x x x
p) Ejectment proceedings instituted by the Department of
Agrarian Reform and the Land Bank involving lands under their
administration and disposition, except urban properties belonging to
the Land Bank;
q) Cases involving violations of the penal provisions of Republic
Act Numbered eleven hundred and ninety-nine, as amended,
Republic Act Numbered thirty eight hundred and forty-four, as
amended, Presidential Decrees and laws relating to agrarian reform;
Provided, however, That violations of the said penal provisions
committed by any Judge shall be tried by the courts of general
jurisdiction; and
r) Violations of Presidential Decrees Nos. 815 and 816.
The CARs were abolished, however, pursuant to Section 44
[14]
of
Batas Pambansa Blg. 129
[15]
(approved August 14, 1981), which had
fully been implemented on February 14, 1983. Jurisdiction over cases
theretofore given to the CARs was vested in the RTCs.
[16]

Then came Executive Order No. 229.
[17]
Under Section 17 thereof, the
DAR shall exercise quasi-judicial powers to determine and adjudicate
agrarian reform matters, and shall have exclusive jurisdiction over all
matters involving implementation of agrarian reform, except those
falling under the exclusive original jurisdiction of the DENR and the
Department of Agriculture *DA+. The DAR shall also have the
powers to punish for contempt and to issue subpoena, subpoena
duces tecum and writs to enforce its orders or decisions.
In Quismundo v. CA,
[18]
this provision was deemed to have repealed
Section 12 (a) and (b) of Presidential Decree No. 946, which vested
the then Courts of Agrarian Relations with original exclusive
jurisdiction over cases and questions involving rights granted and
obligations imposed by presidential issuances promulgated in relation
to the agrarian reform program.
Under Section 4 of Executive Order No. 129-A, the DAR was also
made responsible for implementing the Comprehensive Agrarian
Reform Program. In accordance with Section 5 of the same EO, it
possessed the following powers and functions:
(b) Implement all agrarian laws, and for this purpose, punish for
contempt and issue subpoena, subpoena duces tecum, writs of
execution of its decisions, and other legal processes to ensure
successful and expeditious program implementation; the decisions of
the Department may in proper cases, be appealed to the Regional
Trial Courts but shall be immediately executory notwithstanding such
appeal;
x x x x x x x x x
(h) Provide free legal services to agrarian reform beneficiaries and
resolve agrarian conflicts and land-tenure related problems as may be
provided for by law;
x x x x x x x x x
(l) Have exclusive authority to approve or disapprove conversion
of agricultural lands for residential, commercial, industrial, and other
land uses as may be provided x x x."
The above grant of jurisdiction to the DAR covers these areas:
(a) adjudication of all matters involving implementation of agrarian
reform;
(b) resolution of agrarian conflicts and land tenure related
problems; and
(c) approval or disapproval of the conversion, restructuring or
readjustment of agricultural lands into residential, commercial,
industrial, and other non-agricultural uses.
The foregoing provision was as broad as those theretofore vested in
the Regional Trial Court by Presidential Decree No. 946, as the Court
ruled in Vda. de Tangub v. CA,
[19]
which we quote:
x x x. The intention evidently was to transfer original jurisdiction to
the Department of Agrarian Reform, a proposition stressed by the
rules formulated and promulgated by the Department for the
implementation of the executive orders just quoted. The rules
included the creation of the Agrarian Reform Adjudication Board
designed to exercise the adjudicatory functions of the Department,
and the allocation to it of
x x x *O+riginal and exclusive jurisdiction over the subject matter
vested upon it by law, and all cases, disputes, controversies and
matters or incidents involving the implementation of the
Comprehensive Agrarian Reform Program under Executive Order No.
229, Executive Order No. 129-A, Republic Act No. 3844, as amended
by Republic Act No. 6289, Presidential Decree No. 27 and other
agrarian laws and their implementing rules and regulations.
The implementing rules also declare that (s)pecifically, such
jurisdiction shall extend over but not be limited to x x x (that
theretofore vested in the Regional Trial Courts, i.e.) (c)ases involving
the rights and obligations of persons engaged in the cultivation and
use of agricultural land covered by the Comprehensive Agrarian
Reform Program (CARP) and other agrarian laws x x x.
[20]

In the same case, the Court also held that the jurisdictional
competence of the DAR had further been clarified by RA 6657 thus:
x x x. The Act *RA 6657+ makes references to and explicitly
recognizes the effectivity and applicability of Presidential Decree No.
229. More particularly, the Act echoes the provisions of Section 17 of
Presidential Decree No. 229, supra, investing the Department of
Agrarian Reform with original jurisdiction, generally, over all cases
involving agrarian laws, although, as shall shortly be pointed out, it
restores to the Regional Trial Court, limited jurisdiction over two
groups of cases. Section 50 reads as follows:
SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby
vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction over all
matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of
Agriculture [DA] and the Department of Environment and Natural
Resources [DENR].
x x x x x x x x x
It shall have the power to summon witnesses, administer oaths, take
testimony, require submission of reports, compel the production of
books and documents and answers to interrogatories and issue
subpoena and subpoena duces tecum and to enforce its writs through
sheriffs or other duly deputized officers. It shall likewise have the
power to punish direct and indirect contempt in the same manner
and subject to the same penalties as provided in the Rules of
Court.
[21]

Nonetheless, we have held that the RTCs have not been completely
divested of jurisdiction over agrarian reform matters. Section 56 of RA
6657 confers special jurisdiction on Special Agrarian Courts, which
are actually RTCs designated as such by the Supreme Court.
[22]
Under
Section 57 of the same law, these Special Agrarian Courts have
original and exclusive jurisdiction over the following matters:
1) all petitions for the determination of just compensation to
land-owners, and
2) the prosecution of all criminal offenses under x x x *the+ Act.
The above delineation of jurisdiction remains in place to this
date. Administrative Circular No. 29-2002
[23]
of this Court stresses the
distinction between the quasi-judicial powers of the DAR under
Sections 50 and 55 of RA 6657 and the jurisdiction of the Special
Agrarian Courts referred to by Sections 56 and 57 of the same law.
Allegations of the Complaint
A careful perusal of respondents Complaint
[24]
shows that the
principal averments and reliefs prayed for refer -- not to the pure
question of law spawned by the alleged unconstitutionality of EO
405 -- but to the annulment of the DARs Notice of Coverage. Clearly,
the main thrust of the allegations is the propriety of the Notice of
Coverage, as may be gleaned from the following averments, among
others:
6. This implementation of CARP in the landholding of the
*respondent+ is contrary to law and, therefore, violates *respondents+
constitutional right not to be deprived of his property without due
process of law. The coverage of *respondents+ landholding under
CARP is NO longer with authority of law. If at all, the implementation
of CARP in the landholding of [respondent] should have commenced
and [been] completed between June 1988 to June 1992 as provided
for in CARL, to wit: x x x;
7. Moreover, the placing of [respondents] landholding under CARP
as of 21 September 1999 is without the imprimatur of the Presidential
Agrarian Reform Council (PARC) and the Provincial Agrarian Reform
Coordinating Committee (PARCOM) as mandated and required by law
pursuant to R.A. 7905 x x x;
x x x x x x x x x
9. Under the provisions of CARL, it is the PARC and/or the DAR, and
not x x x Land Bank, which is authorized to preliminarily determine
the value of the lands as compensation therefor, thus x x x;
x x x x x x x x x
12. That the aforementioned NOTICE OF COVERAGE with
intendment and purpose of acquiring *respondents+ aforementioned
land is a gross violation of law (PD 399 dated 28 February 1974 which
is still effective up to now) inasmuch as *respondents+ land is
traversed by and a road frontage as admitted by the DARs technician
and defendant FORTUNADO (MARO) x x x;
13. That as reflected in said Pre-Ocular Inspection Report, copy of
which is hereto attached as annex D forming part hereof,
*respondents+ land is above eighteen percent (18%) slope and
therefore, automatically exempted and excluded from the operation
of Rep. Act 6657, x x x.
[25]
(Italics supplied)
In contrast, the 14-page Complaint touches on the alleged
unconstitutionality of EO 405 by merely making these two allegations:
10. Executive Order No. 405 dated 14 June 1990 (issued by the then
President Corazon Aquino) is unconstitutional for it plainly amends,
modifies and/or repeals CARL. On 14 June 1990, then President
Corazon Aquino had no longer law-making powers as the Philippine
Congress was by then already organized, existing and operational
pursuant to the 1987 Constitution. A copy of the said Executive Order
is hereto attached as Annex B forming part hereof.
11. Our constitutional system of separation of powers renders the
said Executive Order No. 405 unconstitutional and all valuations
made, and to be made, by the defendant Land Bank pursuant thereto
are null and void and without force and effect. Indispensably and
ineludibly, all related rules, regulations, orders and other issuances
issued or promulgated pursuant to said Executive Order No. 405 are
also null and void ab initio and without force and effect.
[26]

We stress that the main subject matter raised by private respondent
before the trial court was not the issue of compensation (the subject
matter of EO 405
[27]
). Note that no amount had yet been determined
nor proposed by the DAR. Hence, there was no occasion to invoke
the courts function of determining just compensation.
[28]

To be sure, the issuance of the Notice of Coverage
[29]
constitutes the
first necessary step towards the acquisition of private land under the
CARP. Plainly then, the propriety of the Notice relates to the
implementation of the CARP, which is under the quasi-judicial
jurisdiction of the DAR. Thus, the DAR could not be ousted from its
authority by the simple expediency of appending an allegedly
constitutional or legal dimension to an issue that is clearly agrarian.
In view of the foregoing, there is no need to address the other points
pleaded by respondent in relation to the jurisdictional issue. We
need only to point that in case of doubt, the jurisprudential trend is
for courts to refrain from resolving a controversy involving matters
that demand the special competence of administrative agencies,
even if the question*s+ involved *are+ also judicial in character,
[30]
as
in this case.
Second Issue:
Preliminary Injunction
Having declared the RTCs to be without jurisdiction over the instant
case, it follows that the RTC of La Carlota City (Branch 63) was devoid
of authority to issue the assailed Writ of Preliminary Injunction. That
Writ must perforce be stricken down as a nullity. Such nullity is
particularly true in the light of the express prohibitory provisions of
the CARP and this Courts Administrative Circular Nos. 29-2002 and
38-2002. These Circulars enjoin all trial judges to strictly observe
Section 68 of RA 6657, which reads:
Section 68. Immunity of Government Agencies from Undue
Interference. No injunction, restraining order, prohibition or
mandamus shall be issued by the lower courts against the
Department of Agrarian Reform (DAR), the Department of Agriculture
(DA), the Department of Environment and Natural Resources (DENR)
and the Department of Justice (DOJ) in their implementation of the
program.
WHEREFORE, the Petition is hereby GRANTED, and the challenged
Decision and Resolution REVERSED AND SET ASIDE. Accordingly, the
February 16, 2000 Order of the Regional Trial Court of La
Carlota City (Branch 63) is ANNULLED and a new one
entered,DISMISSING the Complaint in Civil Case 713. The Writ of
Preliminary Injunction issued therein is also expressly VOIDED. No
costs.
SO ORDERED.
PHILIPPINE VETERANS BANK, petitioner, vs. THE HON. COURT OF
APPEALS, HON. SECRETARY OF THE DEPT. OF AGRARIAN REFORM,
DEPT. OF AGRARIAN REFORM ADJUDICATION BOARD, DAVAO CITY
and LAND BANK OF THE PHILIPPINES, respondents.
D E C I S I O N
MENDOZA, J.:
This is a petition for review of the decision of the Court of
Appeals,
[1]
dated August 28, 1997, affirming the dismissal by the
Regional Trial Court, Branch 2, Tagum, Davao, of the petition for
judicial determination of the just compensation filed by petitioner for
the taking of its property under the Comprehensive Agrarian Reform
Program.
The facts are as follows:
Petitioner Philippine Veterans Bank owned four parcels of land in
Tagum, Davao, which are covered by Transfer Certificates of Title Nos.
T-38666, T-38667, T-6236, and T-27591. The lands were taken by the
Department of Agrarian Reform for distribution to landless farmers
pursuant to the Comprehensive Agrarian Reform Law (R.A. No. 6657).
Dissatisfied with the valuation of the land made by respondents Land
Bank of the Philippines and the Department of Agrarian Reform
Adjudication Board (DARAB), petitioner filed a petition for a
determination of the just compensation for its property. The petition
was filed on January 26, 1994 with the Regional Trial Court, Branch 2,
Tagum, Davao, which on February 23, 1995, 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. Its order
[2]
states in
pertinent parts:
Since this case was filed only on January 26, 1994, the fifteen-day
period provided for under Section 51 of Republic Act 6657 which is
the Comprehensive Agrarian Reform Law within which to appeal,
already lapsed.
Section 51 of Republic Act No. 6657 provides:
Section 51. Finality of Determination. - Any case or controversy
before it (DAR) shall be decided within thirty (30) days after it is
submitted for resolution. Only one (1) motion for reconsideration
shall be allowed. Any order, ruling or decision shall be final after the
lapse of fifteen (15) days from receipt of a copy thereof.
On appeal to the Court of Appeals, the decision was affirmed. It was
held that:
Jurisdiction over land valuation cases is lodged in the Department of
Agrarian Reform Adjudication Board, as is plainly provided under Rule
II of the DARAB Revised Rules of Procedure. Jksm
Section 1. Primary and Exclusive Original and Appellate Jurisdiction.
The Board shall have primary and exclusive jurisdiction, both original
and appellate, to determine and adjudicate all agrarian disputes,
involving the implementation of the Comprehensive Agrarian Reform
Program (CARP) under Republic Act No. 6657, Executive Order Nos.
228, 229, and 129-A, Republic Act No. 3844 as amended by Republic
Act No. 6389, Presidential Decree No. 27 and other agrarian laws and
their implementing rules and regulations. Specifically, such
jurisdiction shall include but not be limited to the following:
. . . .
b) The valuation of land, and determination and payment of just
compensation, fixing and collection of lease rentals, disturbance
compensation, amortization payments, and similar disputes
concerning the functions of the Land Bank of the Philippines.
. . . .
The above provision does not negate the original and exclusive
jurisdiction vested in Special Agrarian Court over all petitions for the
determination of just compensation to landowners as provided in
Section 51 of R.A. 6657.
Note, however, must be taken of Rule XIII, Section 11 of the DARAB
Rules of Procedure, which specifically states that,
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 Court 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.
. . . .
In pursuance thereof, it is clear that the right of a landowner who
disagrees with the valuation fixed by the DAR to file a petition for the
judicial fixing of just compensation before special agrarian courts
must be exercised within the period provided in Rule XIII, Section 11.
In this case, appellant neither gives information regarding the date of
its receipt of the questioned Order of the DAR Provincial Adjudicator,
nor disputes the conclusion made by the trial court that, "(s)ince this
case was filed only on January 26, 1994, the fifteen-day period
provided for under Section 51 of Republic Act 6657 which is the
Comprehensive Agrarian Reform Law within which to appeal already
lapsed". The court a quos conclusion therefore stands. It did not
commit an error in dismissing the petition filed by Philippine Veterans
Bank for having been filed out of time.
[3]
Esmsc
Petitioner filed a motion for reconsideration, but its motion was
likewise denied. Hence, this petition for review. Petitioner raises the
following issue:
SHOULD A PETITION FOR THE JUDICIAL FIXING OF JUST
COMPENSATION BEFORE SPECIAL AGRARIAN COURT BE [FILED]
WITHIN THE PERIOD PROVIDED IN RULE XIII, SECTION 11 OF THE
DARAB RULES OF PROCEDURE AND BEFORE THE DECISION OF THE
DAR PROVINCIAL ADJUDICATOR BECOMES FINAL AND EXECUTORY?
Petitioner argues that DAR adjudicators have no jurisdiction to
determine the just compensation for the taking of lands under the
Comprehensive Agrarian Reform Program, because such jurisdiction
is vested in Regional Trial Courts designated as Special Agrarian
Courts and, therefore, a petition for the fixing of just compensation
can be filed beyond the 15-day period of appeal provided from the
decision of the DAR adjudicator.
On the other hand, respondents argue that actions for the fixing of
just compensation must be filed in the appropriate courts within 15
days from receipt of the decision of the DAR adjudicator, otherwise
such decision becomes final and executory, pursuant to 51 of R.A.
No. 6657.
Petitioners contention has no merit.
The pertinent provisions of R.A. No. 6657 provides:
Sec. 50. Quasi-Judicial Power 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) . .
. .
Sec. 57. Special Jurisdiction. - The Special Agrarian Courts shall have
original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners, and the
prosecution of all criminal offenses under this Act. The Rules of Court
shall apply to all proceedings before the Special Agrarian Courts,
unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under
their special jurisdiction within thirty (30) days from submission of the
case for decision. Esmmis
There is nothing contradictory between the provision of 50 granting
the DAR primary jurisdiction to determine and adjudicate "agrarian
reform matters" and exclusive original jurisdiction over "all matters
involving the implementation of agrarian reform," which includes the
determination of questions of just compensation, and the provision
of 57 granting Regional Trial Courts "original and exclusive
jurisdiction" over (1) all petitions for the determination of just
compensation to landowner, and (2) prosecutions of criminal
offenses under R.A. No. 6657.
[4]
The first refers to administrative
proceedings, while the second refers to judicial proceedings. Under
R.A. No. 6657, the Land Bank of the Philippines is charged with the
preliminary determination of the value of lands placed under land
reform program and the compensation to be paid for their taking. It
initiates the acquisition of agricultural lands by notifying the
landowner of the governments intention to acquire his land and the
valuation of the same as determined by the Land Bank.
[5]
Within 30
days from receipt of notice, the landowner shall inform the DAR of his
acceptance or rejection of the offer.
[6]
In the event the landowner
rejects the offer, a summary administrative proceeding is held by the
provincial (PARAD), the regional (RARAD) or the central (DARAB)
adjudicator, as the case may be, depending on the value of the land,
for the purpose of determining the compensation for the land. The
landowner, the Land Bank, and other interested parties are then
required to submit evidence as to the just compensation for the land.
The DAR adjudicator decides the case within 30 days after it is
submitted for decision.
[7]
If the landowner finds the price
unsatisfactory, he may bring the matter directly to the appropriate
Regional Trial Court.
[8]

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. Chief
As we held in Republic v. Court of Appeals,
[9]
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.
[10]

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.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
LAND BANK OF THE PHILIPPINES,
Petitioner,




- versus -




RAYMUNDA MARTINEZ,
Respondent.

G.R. No. 169008

Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.

Promulgated:

August 14, 2007

x------------------------------------------------------------------------------------x


D E C I S I O N

NACHURA, J.:




Before the Court is a petition for review on certiorari under Rule
45 of the Rules of Court assailing the September 28, 2004
Resolution
[1]
of the Court of Appeals (CA) in CA-G.R. SP No. 83276 and
the July 15, 2005 resolution
[2]
denying the motion for reconsideration
thereof.

Undisputed are the following antecedent facts:

After compulsory acquisition by the Department of Agrarian
Reform (DAR), on November 16, 1993, of respondent Martinezs
62.5369-hectare land in Barangay Agpudlos, San Andres, Romblon,
pursuant to Republic Act No. 6657, or the Comprehensive Agrarian
Reform Law of 1988 (CARL), petitioner Land Bank of the Philippines
(LBP) offered P1,955,485.60 as just compensation.
[3]
Convinced that
the proffered amount was unjust and confiscatory, respondent
rejected it. Thus, the Department of Agrarian Reform Adjudication
Board (DARAB), through its Provincial Agrarian Reform Adjudicator
(PARAD) conducted summary administrative proceedings for the
preliminary determination of just compensation in accordance with
Section 16 (d) of the CARL.

On September 4, 2002, PARAD Virgilio M. Sorita, finding some
marked inconsistencies in the figures and factors made as bases by
LBP in its computation, rendered judgment as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered:

Ordering the Land Bank of the Philippines to pay landowner-
protestant RAYMUNDA MARTINEZ for her property covered and
embraced by TCT No. T-712 with an area of 62.5369 hectares, more
or less, which the Department of Agrarian Reform intends to acquire,
the total amount of TWELVE MILLION ONE HUNDRED SEVENTY NINE
THOUSAND FOUR HUNDRED NINETY TWO and 50/100 Pesos
(Php12,179,492.50), in the manner provided for by law.

SO ORDERED.
[4]



A petition for the fixing of just compensation
[5]
docketed as Agrarian
Case No. 696 was then filed by LBPs counsel before the Special
Agrarian Court (SAC), the Regional Trial Court of Odiongan, Romblon,
Branch 82. After filing her answer to the said petition,
[6]
respondent,
contending that the orders, rulings and decisions of the DARAB
become final after the lapse of 15 days from their receipt, moved for
the dismissal of the petition for being filed out of time.
[7]
Petitioner
opposed the motion.
[8]


Meanwhile, respondent, still asserting the finality of PARAD Soritas
decision, filed before the Office of the PARAD a motion for the
issuance of a writ of execution, which was eventually granted
on November 11, 2003.
[9]
Ascertaining that the petition before the
SAC was filed by LBP 26 days after it received a copy of PARAD
Soritas decision, the Office of the PARAD denied LBPs motion for
reconsideration and ordered the issuance of a writ of execution
on February 23, 2004.
[10]
Aggrieved by these developments, LBP,
on March 12, 2004, moved to quash the said February 23,
2004 PARAD resolution.
[11]


On April 6, 2004, even as the motion to quash was yet unresolved,
LBP instituted a petition for certiorari
[12]
before the CA, which was
docketed as CA-G.R. SP No. 83276, assailing both the November 11,
2003 and the February 23, 2004 PARAD resolutions. LBP primarily
contended that the Office of the PARAD gravely abused its discretion
when it issued the writ of execution despite the pendency with the
SAC of a petition for the fixing of just compensation.

The CA, finding LBP guilty of forum-shopping for not disclosing the
pendency of the Motion to Quash dated March 12, 2004, dismissed
the petition on September 28, 2004,
[13]
thus:

ACCORDINGLY, the present petition for certiorari is DISMISSED
outright.

Consequently, in view of the dismissal of the above-entitled case, we
are no longer in a position to act on the private respondents motion
for execution pending appeal.

Further, this Court, mindful that under Sec. 5, Rule 7, of the 1997
Rules of Civil Procedure, willful and deliberate forum-shopping
constitutes direct contempt of court and cause for administrative
sanctions, which may both be resolved and imposed in the same case
where the forum shopping is found, WARNS the counsel of record of
the petitioner that a repetition of a similar act of submitting a false
certification shall be dealt with most severely.

SO ORDERED.
[14]



Not persuaded by LBPs motion for reconsideration, the appellate
court denied the same on July 15, 2005.
[15]
Thus, LBP, through its
legal department, elevated the case to this Court on September 9,
2005 via a petition for review on certiorari
[16]
under Rule 45,
contending, among others, that it did not commit deliberate forum
shopping for what it filed with the Office of the PARAD was a motion
to quash, which is not an initiatory pleading, and that the decision of
the PARAD cannot be executed due to the pending petition for fixing
of just compensation with the SAC.

On September 14, 2005, we issued a temporary restraining order
(TRO) restraining the appellate court and the DAR adjudicators from
implementing the November 11, 2003 and the February 23,
2004 resolutions.
[17]


For her part, respondent contends that petitioner committed forum-
shopping when it filed a certiorari petition without first awaiting the
resolution by the Office of the PARAD of the motion to quash;
[18]
and
that petitioner has lost its standing to sue considering that it is being
represented by its lawyers and not the Office of the Government
Corporate Counsel (OGCC).
[19]


On the basis of these antecedents, the Court shall now
resolve seriatim the following issues: (1) whether or not petitioner
may file the instant appeal solely through its legal department; (2)
whether or not petitioner has committed forum shopping; and (3)
whether or not the PARAD, in this case, gravely abused its discretion
when it issued a writ of execution despite the pendency of LBPs
petition for fixing of just compensation with the SAC.

After meticulously reviewing the records and considering the
arguments of the parties, the Court finds the appeal devoid of merit.

In Land Bank of the Philippines v. Teresita Panlilio-Luciano,
[20]
the
Court explained in one of its resolutions that nothing in the LBP
charter expressly authorizes the LBP Legal Department to appear in
behalf of LBP in any court or quasi-judicial proceeding and that the
Administrative Code of 1987 mandates the OGCC, not the LBP Legal
Department, to act as the principal law office of the LBP, thus:

There is nothing in the LBP charter that expressly authorizes the said
Legal Department to appear in behalf of LBP in any court or quasi-
judicial proceeding. Attys. Beramo and Berbao insist that the
creation of the LBP Legal Department necessarily entails conferment
of the power to represent *LBP+ in any and all cases and
consequently confers the power to exercise such incidental powers
or perform such acts as are necessary to make the conferred power
effective. At first blush, this is not an unreasonable position; yet, we
are precluded from adopting the same, owing to the explicit proviso in
Section 10, Book IV, Title III, Chapter 3 of the Administrative Code of
1987, which reads:

Section 10. Office of the Government Corporate Counsel. The Office
of the Government Corporate Counsel (OGCC) shall act as
the principal law office of all government-owned or controlled
corporations, their subsidiaries, other corporate offsprings and
government acquired asset corporations and shall exercise control
and supervision over all legal departments or divisions maintained
separately and such powers and functions as are now or may
hereafter be provided by law. In the exercise of such control and
supervision, the Government Corporate Counsel shall promulgate
rules and regulations to effectively implement the objectives of the
Office.
The OGCC is authorized to receive the attorney's fees adjudged in
favor of their client government-owned or controlled corporations,
their subsidiaries/other corporate offsprings and government
acquired asset corporations. These attorney's fees shall accrue to a
Special fund of the OGCC, and shall be deposited in an authorized
government depository as trust liability and shall be made available
for expenditure without the need for a Cash Disbursement Ceiling, for
purposes of upgrading facilities and equipment, granting of
employee's incentive pay and other benefits, and defraying such
other incentive expenses not provided for in the General
Appropriations Act as may be determined by the Government
Corporate Counsel. (Emphasis supplied.)

The above provision mandates the OGCC, and not the LBP Legal
Department, as the principal law office of the LBP. Moreover, it
establishes the proper hierarchical order in that the LBP Legal
Department remains under the control and supervision of the
OGCC.Indeed, if we were to accede to the position of Attys. Beramo
and Berbao that the mere constitution of an LBP Legal
Department ipso facto confers upon it the capacity to litigate cases in
behalf of LBP in any legal proceeding, then the role of the OGCC as the
principal law office of all GOCCs would be rendered nugatory in all
GOCCs with Legal Departments.

At the same time, the existence of the OGCC does not render the LBP
Legal Department a superfluity. We do not doubt that the LBP Legal
Department carries out vital legal services to LBP. However, the
performance of such functions cannot deprive the OGCCs role as
overseer of the LBP Legal Department and its mandate of exercising
control and supervision over all GOCC legal departments. For the
purpose of filing petitions and making submissions before this Court,
such control and supervision imply express participation by the OGCC
as principal legal counsel of LBP. Our succeeding disposition of the
OGCCs pending Manifestation would delve in detail the extent of the
OGCCs required participation. But suffice for now, Attys. Beramo and
Berbao are in error when they assert that the OGCCs participation
in the present petition is not required at all.

It should also be noted that the aforementioned Section 10, Book IV,
Title III, Chapter 3 of the Administrative Code of 1987 authorizes the
OGCC to receive the attorney's fees adjudged in favor of their client
GOCCs, such fees accruing to a special fund of the OGCC. Evidently,
the non-participation of the OGCC in litigations pursued by GOCCs
would deprive the former of its due funding as authorized by law.
Hence, this is another reason why we cannot sustain Attys. Beramo
and Berbao's position that the OGCC need not participate in
litigations pursued by LBP.

It may strike as disruptive to the flow of a GOCCs daily grind to
require the participation of the OGCC as its principal law office, or the
exercise of control and supervision by the OGCC over the acts of the
GOCCs legal departments. For reasons such as proximity and
comfort, the GOCC may find it convenient to rely instead on its in-
house legal departments, or more irregularly, on private
practitioners.Yet the statutory role of the OGCC as principal law office
of GOCCs is one of long-standing, and we have to recognize such
function as part of public policy. Since the jurisdiction of the OGCC
includes all GOCCs, its perspective is less myopic than that maintained
by a particular legal department of a GOCC. It is not inconceivable
that left to its own devices, the legal department of a given GOCC may
adopt a legal position inconsistent with or detrimental to other
GOCCs. Since GOCCs fall within the same governmental framework, it
would be detrimental to have GOCCs foisted into adversarial positions
by their respective legal departments. Hence, there is indubitable
wisdom in having one overseer over all these legal departments which
would ensure that the legal positions adopted by the GOCCs would
not conflict with each other or the government.

Attys. Beramo and Berbao claim that the LBP Legal Department had
handled some cases which had been decided by the Court and that
the OGCC has never been involved in the litigation and handling of
LBPs appellate cases involving specialized fields such as banking and
agrarian reform. These points should not be dismissed lightly, but
then again, years of wrong practice do not make a statutory right. The
Administrative Code of 1987, adopting a decades-old legal precept,
expressly provides that it is the OGCC that acts as the principal law
office of GOCCs and exercises control and supervision over the legal
departments of GOCCs. If the LBP Legal Department has long
operated as an independent fiefdom absent any control, supervision,
or even concern from the OGCC, then this practice must end now. As
to the pending litigations of LBP which are [handled] exclusively by the
LBP Legal Department, it shall be the individual courts with
jurisdiction over those cases that shall decide how to proceed next.
We shall not, by reason of this Resolution, interfere with the
dispensation of those cases. Certainly, Section 10, Book IV, Title III,
Chapter 3 of the Administrative Code of 1987 can be invoked by
adverse parties or by the courts in citing as deficient the exclusive
representation of LBP by its Legal Department. Then again, if neither
the adverse parties nor the courts of jurisdiction choose to contest this
point, there would be no impediment to the litigation to maintain.

Of course, if the principle that the OGCC is the principal law office of
GOCCs proves persistently inconvenient in practice, it would be up to
Congress to amend the Administrative Code, or for the OGCC itself to
promulgate rules and regulations that would alleviate the problems in
practice without abdicating its legal mandate. The succeeding
discussion on the OGCC's pending Manifestationinvolves a review of
the OGCC's current practices, including the present rules and
regulations.
[21]



In the present controversy, we find nothing in the record which
shows that the OGCC has entered its appearance as the principal legal
counsel of petitioner LBP or that it has expressly given its conformity
to the LBP Legal Departments filing of the instant petition. On this
ground alone, the appeal must be denied. Petitioner should have
been more circumspect, considering that the instant petition was
filed on September 9, 2005, or several months after we issued the
said resolution in LBP v. Panlilio-Luciano. Further, respondent
precisely raised in her pleadings this issue of lack of authority to sue
of petitioners Law Department. Prudence, therefore, should have
impelled LBP to request its principal counsel, the OGCC, to participate
in the case. Up to this date, however, petitioner remains insensitive
to the import of its charter and the Administrative Code as elucidated
in our ruling. Certainly, we cannot simply close our eyes to LBPs
intransigence to and disrespect for the rule of law.

Even if we allow the LBPs filing of the instant petition without any
authority from the OGCC, we must still deny the same for we find no
reversible error in the CAs ruling that LBP forum shopped. In Repol v.
Commission on Elections,
[22]
we found forum shopping in the filing of
a petition for certiorari during the pendency of an omnibus motion to
reconsider, set aside and quash a writ of execution with the trial
court. Likewise, in Go v. Judge Abrogar,
[23]
we deemed as a violation
of the rules against forum shopping the institution of a separate
action for annulment of auction sale with injunction, simultaneous
with a third-party adverse claim and motion to quash writ of
execution, and a petition for certiorari, mandamus and prohibition.
Further, in La Campana Development Corporation v. See,
[24]
we
explained that the simultaneous filing of a motion to quash writ of
execution and an action for the annulment of a judgment run afoul of
the prohibition on forum shopping, thus:

In essence, forum shopping is the practice of litigants resorting to two
different fora for the purpose of obtaining the same relief, to increase
their chances of obtaining a favorable judgment. In determining
whether forum shopping exists, it is important to consider the
vexation caused to the courts and the parties-litigants by a person
who asks appellate courts and/or administrative entities to rule on
the same related causes and/or to grant the same or substantially the
same relief, in the process creating the possibility of conflicting
decisions by the different courts or fora on the same issues. We have
ruled that forum shopping is present when, in two or more cases
pending, there is identity of (1) parties (2) rights or causes of action
and reliefs prayed for and (3) the identity of the two preceding
particulars is such that any judgment rendered in the other action,
will, regardless of which party is successful, amount to res judicata in
the action under consideration.

The parties in the two cases are indisputably identical. The allegations
of facts giving rise to respondents rights, such as extrinsic fraud and
lack of jurisdiction, are also essentially the same, as are the reliefs
prayed for. Finally, in the light of these close similarities, res
judicata may arise. Acting on the documents filed with them, the RTC
and the MeTC may well come up with completely opposite rulings on
the question of whether or not the latter courts decision should be
implemented. This is the very evil that the proscription on forum
shopping seeks to avert. If they wanted to avoid this kind of problem,
respondents should not have filed what were essentially the same
documents with two different courts.
[25]



Similarly, in this case, petitioner moved to quash the PARAD
resolutions and at the same time petitioned for their annulment
via certiorari under Rule 65. In both proceedings, the parties are
identical and the reliefs prayed for are the same. In the two actions,
petitioner also has a singular stance: the PARAD resolutions should
not be executed in view of the pendency of the petition for fixing of
just compensation with the SAC. Thus a situation is created where the
two fora could come up with conflicting decisions. This is precisely
the evil sought to be avoided by the rule against forum-shopping.

Finally and most importantly, we find petitioner not entitled to the
grant of a writ of certiorari by the appellate court because the Office
of the PARAD did not gravely abuse its discretion when it undertook
to execute the September 4, 2002 decision. Rule XIII, Section 11 of
the DARAB Rules of Procedure,
[26]
which was then applicable,
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.


In Philippine Veterans Bank v. Court of Appeals
[27]
and in Department
of Agrarian Reform Adjudication Board v. Lubrica,
[28]
we explained the
consequence of the said rule to the effect that the adjudicators
decision on land valuation attains finality after the lapse of the 15-day
period. Considering therefore that, in this case, LBPs petition with
the SAC for the fixing of just compensation was filed 26 days after its
receipt of the PARADs decision, or eleven days beyond the
reglementary period, the latter had already attained finality. The
PARAD could very well issue the writ of execution.

WHEREFORE, premises considered, the appeal is DENIED. The
decision of the Court of Appeals in CA-G.R. SP No. 83276
is AFFIRMED.

LAND BANK OF THE PHILIPPINES, G.R. No. 175175
Petitioner,

Present:

QUISUMBING, J.,
- versus - Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.,
HEIRS OF ELEUTERIO CRUZ,
Respondents.
Promulgated:

September 29, 2008

x -----------------------------------------------------------------------------------x

D E C I S I O N

TINGA, J.:


This is a Petition for Review on Certiorari
[1]
under Rule 45 of the
1997 Rules of Civil Procedure, assailing the Decision
[2]
and
Resolution
[3]
of the Court of Appeals (CA) in CA-G.R. SP No. 93207.
The CA decision affirmed the decision of the Regional Trial Court
(RTC) of Tuguegarao City, Branch 1 sitting as a Special Agrarian Court
(SAC), which approved and ordered the payment of the amount of
just compensation fixed by the Cagayan Provincial Agrarian Reform
Adjudicator (PARAD) in favor of herein respondents.
[4]
The CA
resolution denied petitioners motion for reconsideration of the
decision.
[5]


The following factual antecedents are matters of record.

Petitioner Land Bank of the Philippines (LBP) is a government banking
institution designated under Section 64 of Republic Act (R.A.) No.
6654 as the financial intermediary of the agrarian reform program of
the government.

Respondent Heirs of Eleuterio Cruz are Anicia Cruz-
Papa, Resurreccion Cruz-Pagcaliwagan, Antonio D. Cruz, Lourdes Cruz-
Doma, Lorna Cruz-Felipe, Mamerto D. Cruz, Eduardo D. Cruz and
Victoria Cruz-Dumlao. Eleuterio Cruz is the registered owner of an
unirrigated riceland situated in Lakambini, Tuao, Cagayan per
Transfer Certificate of Title No. T-368. Of the total 13.7320 hectares
of respondents landholding, an area of 13.5550 hectares was placed
by the government under the coverage of the operation land transfer
program under Presidential Decree (P.D.) No. 27.
[6]





Petitioner pegged the value of the acquired landholding
at P106,935.76 based on the guidelines set forth under P.D. No.
27
[7]
and Executive Order (E.O.) No. 228.
[8]
Respondents rejected
petitioners valuation and instituted an action for a summary
proceeding for the preliminary determination of just compensation
before the PARAD. On 23 November 1999, the PARAD rendered a
decision fixing the just compensation in the amount of P80,000.00
per hectare.
[9]
Petitioner sought reconsideration but was
unsuccessful.

Thus, on 28 January 2000, petitioner filed a petition for the
determination of just compensation before the RTC
ofTuguegarao City.
[10]
The petition was docketed as Agrarian Case No.
0058 and entitled Land Bank of the Philippines v. Heirs of Eleuterio
Cruz, represented by Lorna Cruz, et al.
[11]


Petitioners evidence consisted of the testimonies of Benedicta
Simon, head of the LBP Evaluation Division of Land Owners
Compensation Department, and Francisco de la Cruz, Chief, PARAD,
Cagayan. Simon testified that as the officer charged with reviewing
claims under the agrarian reform program, she computed the
valuation of respondents landholdings based on the formula set forth
in P.D. No. 27, E.O. No. 228 and Administrative Order (A.O.) No. 13,
series of 1994 and arrived at the value ofP106,935.76. As the PARAD
Chief tasked to oversee the implementation of the agrarian reform
program, De la Cruz testified that the subject landholding was
tenanted and covered by production agreements between the owner
and various tenants.
[12]
Petitioner offered in evidence Exhibit H to
prove that the subject landholding had an average production of 25
and 40 cavans per hectare annually.

For their part, respondents presented Lorna Cruz Felipe, who testified
that as one of the heirs of Eleuterio Cruz, she knew that the subject
landholding was planted with rice two or three times a year and had a
production capacity of 80 to 100 cavans per hectare. Felipe also
claimed that the current market value of the property was
between P150,000.00 to P200,000.00 per hectare.
[13]


On 07 December 2005, the RTC, sitting as an Special Agrarian Court
(SAC), rendered a decision, the dispositive portion of which reads:


WHEREFORE, in the light of the foregoing ratiocination, judgment is
hereby rendered fixing the amount of P80,000.00 to be the just
compensation of the land subject of this case with an area of 13.7320
hectares situated at Lakambini, Tuao, Cagayan and covered under TCT
No. T-368 and ordering Land Bank of the Philippines to pay
respondent represented by Lorna Cruz-Felipe the amount
ofP1,098,560.00 in the manner provided by R.A. No. 6657 by way of
full payment of the said just compensation.

SO DECIDED.
[14]



The SAC held that the value of P80,000.00 per hectare fixed by the
PARAD should be accorded weight and probative value and that the
SAC is guided by the various factors enumerated in Section 17
[15]
of
R.A. No. 6657 in determining just compensation. It disregarded
respondents claim that the valuation should be based on the current
market value of the landholding since no evidence was adduced in
support of the claim. The SAC also did not accept petitioners
valuation as it was based on P.D. No. 27, in which just compensation
was determined at the time of the taking of the property.
[16]


Petitioner filed a motion for reconsideration, which was denied in a
Resolution dated 26 January 2006,
[17]
prompting petitioner to elevate
the matter to the CA. In its petition for review,
[18]
petitioner
questioned the total land area as well as the amount of just
compensation adjudged by the SAC.
[19]


On 17 August 2006, the CA rendered the assailed decision partly
granting petitioners appeal.
[20]
The appellate court ruled that the
total area covered by the agrarian reform program as was duly
established before the PARAD and expressly stated in the pre-trial
order was only 13.5550 hectares and not 13.7320 hectares as was
stated in the dispositive portion of the decision of the
SAC.
[21]
However, the appellate court affirmed the SAC decision fixing
just compensation at P80,000.00 per hectare. Petitioner sought
consideration but was denied in the assailed Resolution dated 30
October 2006.
[22]


Hence, the instant petition, arguing that the formula set forth in P.D.
No. 27/E.O. No. 228 should be applied in fixing just compensation
since respondents landholding was acquired under P.D. No. 27. Citing
Section 2
[23]
of E.O. No. 228 and LBP v. Hon. David C.
Naval,
[24]
petitioner posits that the correct formula in determining the
just compensation should be Land Value = (2.5 x AGP x P35) x A,
where AGP is the Average Gross Production per hectare; P35.00 is the
Government Support Price for palayin 1972; and A is the total land
area.

Petitioner insists that the values in E.O. No. 228 are applicable to
lands acquired under P.D. No. 27 in cognizance of the well-settled
rule that just compensation is the value of the property at the time of
the taking on 21 October 1972, when the ownership of the subject
property was transferred from the landowner to the farmers-
beneficiaries and when the former was effectively deprived of
dominion and possession over said land.

The petition lacks merit.

The Court laid down in Paris v. Alfeche
[25]
the applicability of P.D. No.
27 and E.O. No. 228 in relation to R.A. No. 6657 in the matter of the
payment of just compensation. There the Court explained that while
under P.D. No. 27 tenant farmers are already deemed owners of the
land they till, they are still required to pay the cost of the land before
the title is transferred to them and that pending the payment of just
compensation, actual title to the tenanted land remains with the
landowner.

In Paris, the application of the process of agrarian reform was still
incomplete thus, the Court held therein that with the passage of R.A.
No. 6657 before its completion, the process should now be
completed under R.A. No. 6657, with P.D. No. 27 and E.O. No. 228
applying only suppletorily.
[26]


In Land Bank of the Philippines v. Natividad,
[27]
the Court explained
why the guidelines under P.D. No. 27 and E.O. No. 228 are no longer
applicable to the delayed payment of lands acquired under P.D. No.
27, to wit:

It would certainly be inequitable to determine just compensation
based on the guideline provided by PD No. 27 and EO 228 considering
the DARs failure to determine the just compensation for a
considerable length of time. That just compensation should be
determined in accordance with RA 6657, and not PD 27 or EO 228, is
especially imperative considering that just compensation should be
the full and fair equivalent of the property taken from its owner by
the expropriator, the equivalent being real, substantial, full and
ample.
[28]



The decisive backdrop of the instant case coincides with that in Paris,
that is, the amount of just compensation due to respondents had not
yet been settled by the time R.A. No. 6657 became effective.
Following the aforementioned pronouncement inParis, the fixing of
just compensation should therefore be based on the parameters set
out in R.A. No. 6657, with P.D. No. 27 and E.O. No. 228 having
only suppletory effect.

Section 17 of R.A. No. 6657 states:

SEC. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation
by the owner, the tax declarations, and the assessment made by
government assessors, shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers and by
government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its
valuation.


In Land Bank of the Philippines v. Celada,
[29]
the Court ruled that the
factors enumerated under Section 17, R.A. No. 6657 had already been
translated into a basic formula by the Department of Agrarian Reform
(DAR) pursuant to its rule-making power under Section 49 of R.A. No.
6657. Thus, the Court held in Celada that the formula outlined in DAR
A.O. No. 5, series of 1998
[30]
should be applied in computing just
compensation.

Likewise, in Land Bank of the Philippines v. Sps. Banal,
[31]
the Court
ruled that the applicable formula in fixing just compensation is DAR
A.O. No. 6, series of 1992, as amended by DAR A.O. No. 11, series of
1994, then the governing regulation applicable to compulsory
acquisition of lands, in recognition of the DARs rule-making power to
carry out the object of R.A. No. 6657. Because the trial court therein
based its valuation upon a different formula and did not conduct any
hearing for the reception of evidence, the Court ordered a remand of
the case to the SAC for trial on the merits.

The mandatory application of the aforementioned guidelines in
determining just compensation has been reiterated recently inLand
Bank of the Philippines v. Lim,
[32]
where the Court also ordered the
remand of the case to the SAC for the determination of just
compensation strictly in accordance with DAR A.O. No. 6, series of
1992, as amended.

A perusal of the PARADs Decision dated 23 November 1999, which
mandated payment of just compensation in the amount
of P80,000.00 per hectare, reveals that the PARAD did not adhere to
the formula prescribed in any of the aforementioned regulations
issued by the DAR or was at least silent on the applicability of the
aforementioned DAR regulations to the question of just
compensation. The PARAD decision also did not refer to any evidence
in support of its finding.

The SAC, meanwhile, referred to DAR A.O. No. 6, series of 1992, as
amended, as the controlling guideline in fixing just compensation.
Pertinently, to obtain the land value, the formula
[33]
under said
regulation requires that the values for the Capitalized Net Income,
Comparable Sales and Market Value based on the tax declaration
must be shown. Moreover, said formula has been superseded by DAR
A.O. No. 05, series of 1998, which also requires values for Capitalized
Net Income, Comparable Sales and Market Value, the same
parameters laid down in the prior regulation.

Stating that no evidence was presented by respondents on the
aforementioned parameters, the SAC ruled that it was constrained to
adopt the finding of the PARAD, which fixed the value of the land
at P80,000.00 per hectare. On appeal, the CA adopted the same
finding.

The general rule is that factual findings of the trial court, especially
when affirmed by the CA, are binding and conclusive on the Court.
However, the rule admits of exceptions, as when the factual findings
are grounded entirely on speculation, surmises, or conjectures or
when the findings are conclusions without citation of specific
evidence on which they are based.
[34]


A perusal of the PARAD decision, which was adopted by both the SAC
and the CA, shows that its valuation of P80,000.00per hectare is
sorely lacking in any evidentiary or legal basis. While the Court wants
to fix just compensation due to respondents if only to write finis to
the controversy, the evidence on record is not sufficient for the Court
to do so in accordance with DAR A.O. No. 5, series of 1998.

WHEREFORE, the instant petition for review on certiorari
is DENIED and the decision and resolution of the Court of Appeals in
CA-G.R. SP No. 93207 are REVERSED and SET ASIDE. Agrarian Case
No. 0058 is REMANDED to the Regional Trial Court, Branch
1, Tuguegarao City, Cagayan, which is directed to determine with
dispatch the just compensation due respondents strictly in
accordance with DAR A.O. No. 5, series of 1998.

SO ORDERED.
LAND BANK OF THE PHILIPPINES, G.R. No. 164876
Petitioner,
Present:

Panganiban, C.J. (Chairman),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
LEONILA P. CELADA,
Respondent. Promulgated:

January 23, 2006
x ---------------------------------------------------------------------------------------- x

DECISION


YNARES-SANTIAGO, J.:

Respondent Leonila P. Celada owns 22.3167 hectares of
agricultural land situated in Calatrava, Carmen, Bohol registered
under TCT No. 16436,
[1]
of which 14.1939 hectares was identified in
1998 by the Department of Agrarian Reform (DAR) as suitable for
compulsory acquisition under the Comprehensive Agrarian Reform
Program (CARP). The matter was then indorsed to petitioner Land
Bank of the Philippines (LBP) for field investigation and land valuation.

In due course, LBP valued respondents land at P2.1105517 per
square meter for an aggregate value of P299,569.61.
[2]
The DAR
offered the same amount to respondent as just compensation, but it
was rejected. Nonetheless, on August 27, 1999, LBP deposited the
said sum in cash and bonds in the name of respondent.
[3]


Pursuant to Section 16(d) of Republic Act (RA) No. 6657 or the
Comprehensive Agrarian Reform Law of 1988, the matter was
referred to the DAR Adjudication Board (DARAB), Region VII-Cebu
City, for summary administrative hearing on determination of just
compensation. The case was docketed as DARAB Case No. VII-4767-
B-990.

While the DARAB case was pending, respondent filed, on
February 10, 2000, a petition
[4]
for judicial determination of just
compensation against LBP, the DAR and the Municipal Agrarian
Reform Officer (MARO) of Carmen, Bohol, before the Regional Trial
Court of Tagbilaran City. The same was docketed as Civil Case No.
6462 and raffled to Branch 3, the designated Special Agrarian Court
(SAC). Respondent alleged that the current market value of her land is
at least P150,000.00 per hectare based on the following factors:

14.1. The land in question has been mortgaged to the defunct Rural
Bank of San Miguel (Bohol), Inc., for P1,220,000.00 on July 23, 1998
since it was appraised at P15.00 per square meter;

14.2. Agricultural lands in said barangay are priced ranging from
P140,000.00 to P150,000.00 per hectare and current land
transactions reveal said price range;

14.3. The land in question is titled or registered property, cultivated
and fully developed with rice
[5]
and corn occupying the greater
portion thereof;

14.4. The topography of the land, its soil condition, climate and
productivity of surrounding lots justify the just compensation
requested or asked for;

14.5. Even the class and base unit market value for agricultural
lands in Bohol is about thirty (30) times higher than the price offered
per hectare by DAR/LBP.
[6]


On April 27, 2000, LBP filed its Answer
[7]
raising non-exhaustion
of administrative remedies as well as forum-shopping as affirmative
defense. According to petitioner, respondent must first await the
outcome of the DARAB case before taking any judicial recourse; that
its valuation was arrived at by applying the formula prescribed by law
whereas respondents was based only on the current value of like
properties.

The DAR and the MARO likewise filed an Answer
[8]
averring that
the determination of just compensation rests exclusively with the
LBP. Thus, they are not liable to respondent and are merely nominal
parties in the case.

Meanwhile, the DARAB Provincial Adjudicator (PARAD) issued
an Order
[9]
dated April 12, 2000 affirming the valuation made by LBP.
Respondent failed to appear in the DARAB case despite due notice.

On June 4, 2001, the SAC issued an order resolving petitioners
affirmative defense in this wise:

WHEREFORE, the Affirmative Defense of x x x Land Bank is
hereby denied. Besides, in the mind of the court, the recourse to the
DARAB is x x x of no moment since it is only conciliatory to the
parties.

Upon agreement of the parties, the pre-trial is reset to June 11,
2001 at 9:00 in the morning.

SO ORDERED.
[10]


Thereafter, a pre-trial conference was conducted
[11]
and trial on
the merits ensued. On March 1, 2003, the SAC rendered judgment as
follows:

WHEREFORE, in view of all the foregoing, the Court hereby
fixes the compensation of the land of petitioner at P2.50 per square
meter or a total of P354,847.50 for the portion of 14.1939 hectares
subject of compulsory acquisition under the CARP which it believes
just, fair and equitable under the present circumstances and which
shall earn legal interest of twelve percent (12%) per annum from the
time of its taking by the DAR. Furthermore, respondent Land Bank is
hereby ordered to indemnify petitioner the amount of P10,000.00 for
attorneys fee and incidental expenses of P5,000.00 and costs.

SO ORDERED.
[12]


LBP elevated the matter to the Court of Appeals which,
however, dismissed the appeal outright on the following grounds:

1. The petition is not accompanied with an affidavit of service,
although there is an explanation that respondent, respondents
counsel and Judge Venancio J. Amila were furnished with copies of
the petition by registered mail x x x.

2. Petitioners counsel indicated his IBP and PTR but not his Roll
of Attorneys Number x x x.

3. Copies of (a) PARAD Decision x x x adverted to in the petition
which fixed the land valuation for just compensation at P299,569.11
and (b) petitioners Petition for Judicial Determination of Just
Compensation filed with the Regional Trial Court of Tagbilaran City,
Branch 3, were not attached as annexes, x x x.
[13]


Upon denial of its motion for reconsideration,
[14]
LBP filed the
instant petition under Rule 45 of the Rules of Court, alleging that:

A
THE COURT OF APPEALS ERRED IN X X X RIGIDLY OR STRICTLY
APPLYING PROCEDURAL LAW AT THE EXPENSE OF SUBSTANTIAL
JUSTICE AND THE RIGHT TO APPEAL.

B
THE SAC A QUO ERRED IN ASSUMING JURISDICTION OVER THE
PETITION FOR DETERMINATION OF JUST COMPENSATION WHILE
ADMINISTRATIVE PROCEEDINGS IS ON-GOING BEFORE THE DARAB,
REGION VII, CEBU CITY.

C
THE SAC A QUO ERRED IN FIXING THE JUST COMPENSATION OF THE
LAND BASED NOT ON ITS ACTUAL LAND USE BUT ON THE VALUATION
OF NEIGHBORING LANDS.

D
THE SAC A QUO ERRED IN AWARDING ATTORNEYS FEES AND
INCIDENTAL EXPENSES X X X.
[15]


On the first assigned error, petitioner asserts that the Court of
Appeals should have liberally construed the rules of procedure and
not dismissed its appeal on technical grounds.

We agree with petitioner.

The Court of Appeals dismissed petitioners appeal on three technical
grounds, namely: (a) lack of affidavit of service; (b) failure of counsel
to indicate his Roll of Attorneys number; and (c) failure to attach
material portions of the records. However, the lack of affidavit of
service is not deemed fatal where the petition filed below is
accompanied by the original registry receipts showing that the
petition and its annexes were served upon the parties.
[16]
On the
other hand, the failure of counsel to indicate his Roll of Attorneys
number would not affect respondents substantive rights, such that
petitioners counsel could have been directed to comply with the
latter requirement rather than dismiss the petition on purely
technical grounds. As for petitioners failure to attach material
portions of the records, we held in Donato v. Court of Appeals
[17]
that:

[T]he failure of the petitioner to x x x append to his petition copies of
the pleadings and other material portions of the records as would
support the petition, does not justify the outright dismissal of the
petition. It must be emphasized that the RIRCA (Revised Internal
Rules of the Court of Appeals) gives the appellate court a certain
leeway to require parties to submit additional documents as may be
necessary in the interest of substantial justice. Under Section 3,
paragraph d of Rule 3 of the RIRCA, the CA may require the parties to
complete the annexes as the court deems necessary, and if the
petition is given due course, the CA may require the elevation of a
complete record of the case as provided for under Section 3(d)(5) of
Rule 6 of the RIRCA x x x.
[18]


An examination of the records and pleadings filed before the Court of
Appeals reveals that there was substantial compliance with
procedural requirements. Moreover, we have held time and again
that cases should, as much as possible, be determined on the merits
after the parties have been given full opportunity to ventilate their
causes and defenses, rather than on technicality or some procedural
imperfection.
[19]
After all, technical rules of procedure are not ends in
themselves but are primarily devised to help in the proper and
expedient dispensation of justice. In appropriate cases, therefore,
the rules may be construed liberally in order to meet and advance the
cause of substantial justice.
[20]


While a remand of the case to the appellate court would seem to be
in order, we deem it proper to resolve the case on the merits if only
to write finis to the present controversy.

We do not agree with petitioners submission that the SAC erred in
assuming jurisdiction over respondents petition for determination of
just compensation despite the pendency of the administrative
proceedings before the DARAB. In Land Bank of the Philippines v.
Court of Appeals,
[21]
the landowner filed an action for determination
of just compensation without waiting for the completion of the
DARABs re-evaluation of the land. The Court nonetheless held
therein that the SAC acquired jurisdiction over the action for the
following reason:

It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian
Court, has original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners. This original and
exclusive jurisdiction of the RTC would be undermined if the DAR
would vest in administrative officials original jurisdiction in
compensation cases and make the RTC an appellate court for the
review of administrative decision. Thus, although the new rules speak
of directly appealing the decision of adjudicators to the RTCs sitting as
Special Agrarian Courts, it is clear from Sec. 57 that the original and
exclusive jurisdiction to determine such cases is in the RTCs. Any
effort to transfer such jurisdiction to the adjudicators and to convert
the original jurisdiction of the RTCs into appellate jurisdiction would
be contrary to Sec. 57 and therefore would be void. Thus, direct
resort to the SAC by private respondent is valid.
[22]


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.
[23]
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.
[24]
Consequently, the SAC properly took cognizance of
respondents petition for determination of just compensation.

In the same vein, there is no merit to petitioners contention that
respondent failed to exhaust administrative remedies when she
directly filed the petition for determination of just compensation with
the SAC even before the DARAB case could be resolved. The issue is
now moot considering that the valuation made by petitioner had long
been affirmed by the DARAB in its order dated April 12, 2000. As held
in Land Bank of the Philippines v. Wycoco,
[25]
the doctrine of
exhaustion of administrative remedies is inapplicable when the issue
is rendered moot and academic, as in the instant case.

With regard to the third assigned error, however, we agree with
petitioner that the SAC erred in setting aside petitioners valuation of
respondents land on the sole basis of the higher valuation given for
neighboring properties. In this regard, the SAC held:

It appears from the evidence of petitioner that the neighboring lands
of similar classification were paid higher than what was quoted to her
land by respondent Land Bank as the value per square meter to her
land was only quoted at P2.1105517 while the others which were of
the same classification were paid by respondent Bank at P2.42 more
or less, per square meter referring to the land of Consuelito Borja
(Exh. D) and Cesar Borja (Exh. F). Furthermore, the land of petitioner
was allegedly mortgaged for a loan of P1,200,000.00 before the Rural
Bank of San Miguel, Bohol and that it was purchased by her from a
certain Felipe Dungog for P450,000.00 although no documents
therefor were shown to support her claim. Nevertheless, the Court
finds a patent disparity in the price quotations by respondent Land
Bank for the land of petitioner and that of the other landowners
brought under CARP which could be caused by deficient or erroneous
references due to the petitioners indifference and stubborn attitude
in not cooperating with respondent bank in submitting the data
needed for the evaluation of the property. x x x At any rate, the price
quotation by respondent Land Bank on the land of the petitioner is
low more so that it was done some four years ago, particularly, on
June 22, 1998 (Exh. 1) and the same has become irrelevant in the
course of time due to the devaluation of the peso brought about by
our staggering economy.
[26]


As can be gleaned from above ruling, the SAC based its valuation
solely on the observation that there was a patent disparity between
the price given to respondent and the other landowners. We note
that it did not apply the DAR valuation formula since according to the
SAC, it is Section 17 of RA No. 6657 that should be the principal basis
of computation as it is the law governing the matter.
[27]
The SAC
further held that said Section 17 cannot be superseded by any
administrative order of a government agency,
[28]
thereby implying
that the valuation formula under DAR Administrative Order No. 5,
Series of 1998 (DAR AO No. 5, s. of 1998),
[29]
is invalid and of no
effect.

While SAC is required to consider the acquisition cost of the land, the
current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declaration and the
assessments made by the government assessors
[30]
to determine just
compensation, it is equally true that these factors have been
translated into a basic formula by the DAR pursuant to its rule-making
power under Section 49 of RA No. 6657.
[31]
As the government
agency principally tasked to implement the agrarian reform program,
it is the DARs duty to issue rules and regulations to carry out the
object of the law. DAR AO No. 5, s. of 1998 precisely filled in the
details of Section 17, RA No. 6657 by providing a basic formula by
which the factors mentioned therein may be taken into account. The
SAC was at no liberty to disregard the formula which was devised to
implement the said provision.

It is elementary that rules and regulations issued by administrative
bodies to interpret the law which they are entrusted to enforce, have
the force of law, and are entitled to great respect.
[32]
Administrative
issuances partake of the nature of a statute
[33]
and have in their favor
a presumption of legality.
[34]
As such, courts cannot ignore
administrative issuances especially when, as in this case, its validity
was not put in issue. Unless an administrative order is declared
invalid, courts have no option but to apply the same.

Thus, Section 17 of RA No. 6657 states:

SEC. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation
by the owner, the tax declarations, and the assessment made by
government assessors, shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers and by the
Government to the property as well as the nonpayment of taxes or
loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its
valuation.

As stated earlier, the above provision is implemented through DAR
AO No. 5, s. of 1998, which provides that:

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

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

Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

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

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

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

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

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

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

LV = MV x 2

In no case shall the value of idle land using the formula MV x 2 exceed
the lowest value of land within the same estate under consideration
or within the same barangay or municipality (in that order) approved
by LBP within one (1) year from receipt of claimfolder.

Accordingly, petitioner applied the formula under A1 above since the
comparable sales factor (CS factor) was not present. As observed
by the SAC itself, respondent refused to cooperate with the local
valuation office of petitioner and did not provide the necessary data
to arrive at a proper CS factor. DAR AO No. 5, s. of 1998 defines CS
factor as follows:

C. CS shall refer to any one or the average of all the applicable
sub-factors, namely ST, AC and MVM:

Where: ST = Peso Value of Sales Transactions as defined under
Item C.2
AC = Acquisition Cost as defined under Item C.3
MVM = Market Value Based on Mortgage as defined under Item C.4

x x x x

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

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

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

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

x x x x

C.3. Acquisition Cost (AC) AC shall be deemed relevant when the
property subject of acquisition was acquired through purchase or
exchange with another property within the period January 1, 1985 to
June 15, 1988 and registered within the period January 1, 1985 to
September 13, 1988, and the condition of said property is still
substantially similar from the date of purchase or exchange to the
date of FI.

x x x x

C.4. Market Value Based on Mortgage (MVM) For MVM to be
relevant or applicable, the property subject of acquisition should have
been mortgaged as of June 15, 1988 and the condition of the
property is still substantially similar up to the date of FI. MVM shall
refer to the latest available appraised value of the property.

In the case at bar, while respondent attempted to prove during the
hearings before the SAC, comparable sales transactions, the
acquisition cost of the property as well as its mortgage value, she
failed to submit adequate documentary evidence to support the
same. Consequently, there was nothing from which the CS factor
could be determined.

In contrast, petitioner arrived at its valuation by using available
factors culled from the Department of Agriculture and Philippine
Coconut Authority,
[35]
and by computing the same in accordance with
the formula provided, thus

COMPUTATION (Applicable Formula) : LV = 0.90 CNI + 0.10 MV

Comparable Land Transactions (P x x x x ____ ) = P x-x-x

Capitalized Net Income: Cassava 16,666.67 x 0.90 =
15,000.00
Corn/Coco 26,571.70 =
23,914.53

Market Value Cassava 8,963.78 x 0.10 =
896.38
per Tax Declaration: Corn/Coco 10,053.93 =
1,005.39

Computed Value per Hectare: Cassava 15,896.38; Corn/Coco
24,919.92

x x x

Value per hectare used: Cassava 15,896.38 x 6.0000 has. =
95,378.28
Corn/Coco 24,919.92 x 8.1939 has.
= 204,191.33

Payment due to LO : P299, 569.61

The above computation was explained by Antero M. Gablines, Chief
of the Claims, Processing, Valuation and Payment Division of the
Agrarian Operations Center of the Land Bank, to wit:

ATTY. CABANGBANG: (On direct):

x x x x

q. What are the items needed for the Land Bank to compute?
a. In accordance with Administrative Order No. 5, series of 1998,
the value of the land should be computed using the capitalized net
income plus the market value. We need the gross production of the
land and its output and the net income of the property.

q. You said gross production. How would you fix the gross
production of the property?
a. In that Administrative Order No. 5, if the owner of the land is
cooperative, he is required to submit the net income. Without
submitting all his sworn statements, we will get the data from the DA
(Agriculture) or from the coconut authorities.

x x x x

q. In this recommended amount which you approved, how did
you arrive at this figure?
a. We used the data from the Philippine (Coconut) Authority and
the Agriculture and the data stated that Cassava production was only
10,000 kilos per hectare; corn, 2,000 kilos; and coconuts, 15.38 kilos
per hectare. The data stated that in the first cropping of 1986, the
price of cassava was P1.00 per kilo; corn was sold at P7.75 per kilo;
and the Philippine Coconut Authority stated that during that time, the
selling price of coconuts was P8.23 per kilo.

q. After these Production data and selling price, there is here a
cost of operation, what is this?
a. It is the expenses of the land owner or farmer. From day one of
the cultivation until production. Without the land owners submission
of the sworn statement of the income, production and the cost, x x x
Administrative Order No. 5 states that x x x we will use 20% as the net
income, meaning 80% of the production in peso. This is the cost of
valuation.

q. 80 % for what crops?
a. All crops except for coconuts where the cost of expenses is
only 20%.

q. Summing all these data, what is the value per hectare of the
cassava?
a. The cassava is P15,896.38.

q. How about the corn x x x intercropped with coconuts?
a. P24,919.92.
[36]


Under the circumstances, we find the explanation and computation
of petitioner to be sufficient and in accordance with applicable laws.
Petitioners valuation must thus be upheld.

Finally, there is no basis for the SACs award of 12% interest per
annum in favor of respondent. Although in some expropriation cases,
the Court allowed the imposition of said interest, the same was in the
nature of damages for delay in payment which in effect makes the
obligation on the part of the government one of forbearance.
[37]
In
this case, there is no delay that would justify the payment of interest
since the just compensation due to respondent has been promptly
and validly deposited in her name in cash and LBP bonds. Neither is
there factual or legal justification for the award of attorneys fees and
costs of litigation in favor of respondent.

WHEREFORE, the instant petition is GRANTED. The Decision of the
Regional Trial Court, Tagbilaran City, Branch 3 in Civil Case No. 6462
dated March 1, 2003 is REVERSED and SET ASIDE. A new judgment is
entered fixing the just compensation for respondents land at
P2.1105517 per square meter or a total of P299,569.61.

SO ORDERED.