[G.R. No. 127198.

May 16, 2005]

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.
DECISION
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.

FIRST DIVISION
JOSEFINA S. LUBRICA, in her
capacity as Assignee of FEDERICO
C. SUNTAY, NENITA SUNTAY
TAEDO and EMILIO A.M.
SUNTAY III,
Petitioners,

G.R. No. 170220

Present:

- versus -

Panganiban, C.J. (Chairperson),

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. R1339 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.
2.

In Agrarian Case No. R-1339, the amount of P 51,800,286.43, minus the

amount received by the Landowner;
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 datedMay 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 THEPHILIPPINES 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 tenantfarmer 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.

Republic
SUPREME
Manila

of

SECOND DIVISION

G.R. No. 118712 October 6, 1995

the

Philippines
COURT

LAND
BANK
OF
THE
PHILIPPINES, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO,
AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., respondents.
G.R. No. 118745 October 6, 1995
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 & DEVELOPMENT CORP., ET AL., respondents.

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged should
not be carried out to such an extent as deny justice to the landowner whenever truth and justice
happen to be on his side. 1 As eloquently stated by Justice Isagani Cruz:
. . . 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. 2
In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.
Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR)
(G.R. No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse
ruling by the Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private
respondents, the petitions were ordered consolidated.3
Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which
granted private respondents' Petition for Certiorari and Mandamus and ruled as follows:
WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is
hereby GRANTED:

a) DAR Administrative Order No. 9, Series of 1990 is

declared null and void insofar as it provides for the opening of trust
accounts in lieu of deposits in cash or bonds;
b) Respondent Landbank is ordered to immediately deposit not
merely "earmark", "reserve" or "deposit in trust" with an
accessible bank designated by respondent DAR in the names of the
following petitioners the following amounts in cash and in
government financial instruments within the parameters of Sec.
18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to
withdraw the above-deposited amounts without prejudice to the
final determination of just compensation by the proper authorities;
and
d)
Respondent
DAR
is
ordered
to
1) immediately conduct summary administrative proceedings to
determine the just compensation for the lands of the petitioners
giving the petitioners 15 days from notice within which to submit
evidence and to 2) decide the cases within 30 days after they are
submitted for decision. 4
Likewise, petitioners seek the reversal of the Resolution dated January 18,
1995, 5 denying their motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by the DAR and
subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian
Reform Law (CARL, Republic Act No. 6657).
Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the
valuation and payment of compensation for their land pursuant to the provisions of RA
6657,
private
respondents
filed
with
this
Court
a
Petition
for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of
1992 6 and DAR Administrative Order No. 9, Series of 1990, 7 and sought to compel the

DAR to expedite the pending summary administrative proceedings to finally determine

the just compensation of their properties, and the Landbank to deposit in cash and bonds
the amounts respectively "earmarked", "reserved" and "deposited in trust accounts" for
private respondents, and to allow them to withdraw the same.
Through a Resolution of the Second Division dated February 9, 1994, this Court referred the
petition to respondent Court of Appeals for proper determination and disposition.
As found by respondent court , the following are undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates
of title (TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds
of Leyte and were transferred in the names of farmer beneficiaries collectively,
based on the request of the DAR together with a certification of the Landbank that
the sum of P735,337.77 and P719,869.54 have been earmarked for Landowner
Pedro L. Yap for the parcels of lands covered by TCT Nos. 6282 and 6283,
respectively, and issued in lieu thereof TC-563 and TC-562, respectively, in the
names of listed beneficiaries (ANNEXES "C" & "D") without notice to petitioner
Yap and without complying with the requirement of Section 16 (e) of RA 6657 to
deposit the compensation in cash and Landbank bonds in an accessible bank.
(Rollo, p. 6).
The above allegations are not disputed by any of the respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago
are the owners of a parcel of land located at Laur, NUEVA ECIJA with an area of
18.5615 hectares covered by TCT No. NT-60359 of the registry of Deeds of
Nueva Ecija, registered in the name of the late Emiliano F. Santiago; that in
November and December 1990, without notice to the petitioners, the Landbank
required and the beneficiaries executed Actual tillers Deed of Undertaking
(ANNEX "B") to pay rentals to the LandBank for the use of their farmlots
equivalent to at least 25% of the net harvest; that on 24 October 1991 the DAR
Regional Director issued an order directing the Landbank to pay the landowner
directly or through the establishment of a trust fund in the amount of P135,482.12,
that on 24 February 1992, the Landbank reserved in trust P135,482.12 in the name
of
Emiliano
F.
Santiago.
(ANNEX
"E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they
signed the Actual Tiller's Deed of Undertaking committing themselves to pay
rentals to the LandBank (Rollo, p. 133).

The above allegations are not disputed by the respondents except that respondent
Landbank claims 1) that it was respondent DAR, not Landbank which required
the execution of Actual Tillers Deed of Undertaking (ATDU, for brevity); and 2)
that respondent Landbank, although armed with the ATDU, did not collect any
amount as rental from the substituting beneficiaries (Rollo, p. 99).
Petitioner Agricultural Management and Development Corporation (AMADCOR,
for brevity) alleges with respect to its properties located in San Francisco,
Quezon that the properties of AMADCOR in San Francisco, Quezon consist of
a parcel of land covered by TCT No. 34314 with an area of 209.9215 hectares and
another parcel covered by TCT No. 10832 with an area of 163.6189 hectares; that
a summary administrative proceeding to determine compensation of the property
covered by TCT No. 34314 was conducted by the DARAB in Quezon City
without notice to the landowner; that a decision was rendered on 24 November
1992 (ANNEX "F") fixing the compensation for the parcel of land covered by
TCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering
the Landbank to pay or establish a trust account for said amount in the name of
AMADCOR; and that the trust account in the amount of P2,768,326.34 fixed in
the decision was established by adding P1,986,489.73 to the first trust account
established on 19 December 1991 (ANNEX "G"). With respect to petitioner
AMADCOR's property in Tabaco, Albay, it is alleged that the property of
AMADCOR in Tabaco, Albay is covered by TCT No. T-2466 of the Register of
Deeds of Albay with an area of 1,629.4578 hectares'; that emancipation patents
were issued covering an area of 701.8999 hectares which were registered on 15
February 1988 but no action was taken thereafter by the DAR to fix the
compensation for said land; that on 21 April 1993, a trust account in the name of
AMADCOR was established in the amount of P12,247,217.83', three notices of
acquisition having been previously rejected by AMADCOR. (Rollo, pp. 8-9)
The above allegations are not disputed by the respondents except that respondent
Landbank claims that petitioner failed to participate in the DARAB proceedings
(land valuation case) despite due notice to it (Rollo, p. 100). 8
Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts
by the Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the
DAR, the compensation for the land before it is taken and the titles are cancelled as provided
under Section 16(e) of RA 6657. 9 Private respondents also assail the fact that the DAR and the
Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their
names as landowners despite the clear mandate that before taking possession of the property, the
compensation must be deposited in cash or in bonds. 10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its
rule-making power pursuant to Section 49 of RA 6657. 11 Moreover, the DAR maintained that the
issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance with
Section 16(e) of RA 6657 and the ruling in the case of Association of Small Landowners in the
Philippines, Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989
(175 SCRA 343). 12
For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the
words "reserved/deposited" were also used. 13
On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents. 14Petitioners filed a motion for reconsideration but respondent court denied the
same. 15
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No.
118745 alleging that the appeal has no merit and is merely intended to delay the finality of the
appealed decision. 16 The Court, however, denied the motion and instead required the respondents
to file their comments. 17
Petitioners submit that respondent court erred in (1) declaring as null and void DAR
Administrative Order No. 9, Series of 1990, insofar as it provides for the opening of trust
accounts in lieu of deposit in cash or in bonds, and (2) in holding that private respondents are
entitled as a matter of right to the immediate and provisional release of the amounts deposited in
trust pending the final resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in
Section 16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the
opening of a trust account as a form of deposit. Thus, in opting for the opening of a trust account
as the acceptable form of deposit through Administrative Circular No. 9, petitioner DAR did not
commit any grave abuse of discretion since it merely exercised its power to promulgate rules and
regulations in implementing the declared policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
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. . . . (emphasis
supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds".
Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If it
were the intention to include a "trust account" among the valid modes of deposit, that should
have been made express, or at least, qualifying words ought to have appeared from which it can
be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e)
of RA 6657 to warrant an expanded construction of the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of an administrative
agency may be disturbed or set aside by the judicial department if there is an error of law, a grave
abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either
the letter or the spirit of a legislative enactment. 18 In this regard, it must be stressed that the
function of promulgating rules and regulations may be legitimately exercised only for the
purpose of carrying the provisions of the law into effect. The power of administrative agencies is
thus confined to implementing the law or putting it into effect. Corollary to this is that
administrative
regulations
cannot
extend
19
the law and amend a legislative enactment, for settled is the rule that administrative regulations
must be in harmony with the provisions of the law. And in case there is a discrepancy between
the basic law and an implementing rule or regulation, it is the former that prevails. 20
In the present suit, the DAR clearly overstepped the limits of its power to enact rules and
regulations when it issued Administrative Circular No. 9. There is no basis in allowing the
opening of a trust account in behalf of the landowner as compensation for his property because,
as heretofore discussed, Section 16(e) of RA 6657 is very specific that the deposit must be made
only in "cash" or in "LBP bonds". In the same vein, petitioners cannot invoke LRA Circular Nos.
29, 29-A and 54 because these implementing regulations cannot outweigh the clear provision of
the law. Respondent court therefore did not commit any error in striking down Administrative
Circular No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the
final valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation under
Section 16(e) of RA 6657 and payment of final compensation as provided under Section 18 21 of
the same law. According to petitioners, the right of the landowner to withdraw the amount
deposited in his behalf pertains only to the final valuation as agreed upon by the landowner, the
DAR and the LBP or that adjudged by the court. It has no reference to amount deposited in the
trust account pursuant to Section 16(e) in case of rejection by the landowner because the latter
amount is only provisional and intended merely to secure possession of the property pending
final valuation. To further bolster the contention petitioners cite the following pronouncements in
the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary of Agrarian
Reform". 22
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.
xxx xxx xxx
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.
xxx xxx xxx
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.
Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:
. . . despite the "revolutionary" character of the expropriation envisioned under
RA 6657 which led the Supreme Court, in the case of Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343),
to conclude that "payments of the just compensation is not always required to be
made fully in money" even as the Supreme Court admits in the same case "that
the traditional medium for the payment of just compensation is money and no
other" the Supreme Court in said case did not abandon the "recognized
rule . . . that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation." 23(Emphasis
supplied)

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized
payment other than in cash. It did not, however, dispense with the settled rule that there must be
full payment of just compensation before the title to the expropriated property is transferred.
The attempt to make a distinction between the deposit of compensation under Section 16(e) of
RA 6657 and determination of just compensation under Section 18 is unacceptable. To withhold
the right of the landowners to appropriate the amounts already deposited in their behalf as
compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and use of such
properties, is an oppressive exercise of eminent domain. The irresistible expropriation of private
respondents' properties was painful enough for them. But petitioner DAR rubbed it in all the
more by withholding that which rightfully belongs to private respondents in exchange for the
taking, under an authority (the "Association" case) that is, however, misplaced. This is misery
twice bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section
16(e) and final compensation under Section 18 for purposes of exercising the landowners' right
to appropriate the same. The immediate effect in both situations is the same, the landowner is
deprived of the use and possession of his property for which he should be fairly and immediately
compensated. Fittingly, we reiterate the cardinal rule that:
. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be paid
to the owner 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. 24 (Emphasis
supplied)
The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true
freedom of the farmer. 25 But despite this, cases involving its implementation continue to multiply
and clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally
emancipating the farmers from their bondage will be attained in due time. It must be stressed,
however, that in the pursuit of this objective, vigilance over the rights of the landowners is
equally important because social justice cannot be invoked to trample on the rights of property
owners, who under our Constitution and laws are also entitled to protection. 26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of
merit and the appealed decision is AFFIRMED in toto.
SO ORDERED.
Regalado, Puno and Mendoza, JJ., concur.
Narvasa, C.J., is on leave.
Footnotes
1 Gelos v. Court of Appeals, 208 SCRA 608. 615 (1992), quoting Justice
Alicia Sempio-Diy.
2 Ibid, p. 616.
3 Rollo, p. 7.
4 Rollo, pp. 122-123.
5 Rollo, p. 149.
6 which provides formulas for the valuation of land expropriated under
RA 6657.
7 which provides for the opening of trust accounts in the Land Bank
instead of depositing in an accessible bank, in cash and bonds, the
compensation for land expropriated by the DAR.
8 Rollo, pp. 109-111.
9 Sec. 16. Procedure for Acquisition of Private Lands. For purposes of
acquisition of private lands, the following shall be followed:
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. The DAR shall thereafter proceed with the redistribution
of the land to the qualified beneficiaries.
10 Rollo, p. 111.
11 Sec. 49. Rules and Regulations. The PARC and the DAR shall have
the power to issue rules and regulations, whether substantive or
procedural, to carry out the objects and purposes of this Act. Said rules
shall take effect ten (l0) days after the publication in two (2) national
newspapers of general circulation.
12 Rollo, pp. 111-112.
13 Rollo, p. 112.
14 Rollo, p. 107.
15 Rollo, p. 149.
16 Rollo, p. 63.
17 Rollo, p. 67.
18 Peralta vs. Civil Service Commission 212 SCRA 425, 432 (1992).
19 Toledo vs. Civil Service Commission 202 SCRA 507, 54
(1991) citing Teoxon v. Members of the Board of Administrators,
Philippine
Veterans
Administration,
33
SCRA
585,
589
(1970),citing Santos vs. Estenzo, 109 Phil. 419 (1960); Animos vs. Phil.
Veterans Affairs Office, 174 SCRA 214, 223-224 (1989).
20 Shell Philippines, Inc. vs. Central Bank of the Philippines, 162 SCRA
628 (1988).
21 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 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.
22 175 SCRA 343.

23 Decision, Court of Appeals, p. 14.

24 Municipality of Makati vs. Court of Appeals, 190 SCRA 207, 213
(1990) citing Cosculluela vs. The Hon. Court of Appeals, 164 SCRA 393,
400 (1988); Provincial Government of Sorsogon vs. Vda. de Villaroya,
153 SCRA 291, 302 (1987).
25 175 SCRA 343, 392.
26 Mata vs. Court of Appeals, 207 SCRA 748, 753 (1992).

DEPARTMENT OF AGRARIAN
REFORM, represented by SECRETARY
JOSE MARI B. PONCE (OIC),
Petitioner,

- versus -

G.R. No. 162070

Present:
Davide, C.J.,
Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
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 hereby DECLARED 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 isREVERSED 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 yetstill 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 swineraising.[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.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

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

BELLOSILLO, J.:
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 80,000 hectares,
on 13 October 1983; 5 and for Phase III, which consisted of the remaining 31.7707 hectares, on
25 April 1986. 6 Petitioner 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 the brevity), filed a complaint against NATALIA and EDIC before the DAR
Regional Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA
members. 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
undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL.
They argue that NATALIA properties already ceased to be agricultural lands when they were
included in the areas reserved by presidential fiat for the townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They
maintain that the permits granted petitioners were not valid and binding because they did not
comply with the implementing Standards, Rules and Regulations of P.D. 957, otherwise known
as "The Subdivision and Condominium Buyers Protective Decree," in that no application for
conversion of the NATALIA lands from agricultural residential was ever filed with the DAR. In
other words, there was no valid conversion. Moreover, public respondents allege that the instant
petition was prematurely filed because the case instituted by SAMBA against petitioners before
the DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a consequence,
that petitioners failed to fully exhaust administrative remedies available to them before coming
to court.
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.
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 continued to be
developed as a low-cost housing subdivision, albeit at a snail's pace. This can readily be gleaned
from the fact that SAMBA members even instituted an action to restrain petitioners from

continuing with such development. The enormity of the resources needed for developing a
subdivision may have delayed its completion but this does not detract from the fact that these
lands are still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, 18 DAR itself
defined "agricultural land" thus
. . . Agricultural lands refers to those devoted to agricultural activity as defined in
R.A. 6657 and not classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its predecessor agencies,
and not classified in town plans and zoning ordinances as approved by the
Housing and Land Use Regulatory Board (HLURB) and its preceding competent
authorities prior to 15 June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by
such conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills
Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian
Reform, noted in an Opinion 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 letterprotests, this after sitting it out for almost a year. Given the official indifference, which under the
circumstances could have continued forever, petitioners had to act to assert and protect their
interests. 20
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in
issuing the assailed Notice of Coverage of 22 November 1990 by of lands over which they no
longer have jurisdiction.

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

November 1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision were
placed under CARL coverage is hereby SET ASIDE.
SO ORDERED.
Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero,
Nocon, Melo, Quiason, Puno and Vitug, JJ., concur.

# Footnotes
1 National Housing Authority and Human Settlements Regulatory Commission;
see C.T. Torres v. Hibionada, G.R. No. 80916, 9 November 1990, 191 SCRA 268.
2 Date of effectivity of R.A. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988.
3 Annex "H", Petition; Rollo, p. 33.
4 Annex "A", Petition; Rollo, p. 26.
5 Annex "C", Petition; Rollo, p. 28.
6 Annex "E", Petition; Rollo, p. 30.
7 Annexes "B", "D" and "F", Petition; Rollo, pp. 27, 29 and 31.
8 Complaint, p. 3; Rollo, p. 68.
9 DARAB Resolution, 16 December 1991, p. 8; Rollo, p. 82.
10 Renamed Housing and Land Use Regulatory Board (HLURB) per E.O. No. 90,
dated 17 December 1986.
11 Annexes "A" and "C", Petition; Rollo, pp. 26 and 28.
12 Annex "B", Petition; Rollo, p. 27.
13 Annexes "D" and "E", petition; Rollo, pp. 29-30.

14 National Power Corporation v. Presiding Judge, RTC, Br. XXV, G.R. No.
72477, 16 October 1990, 190 SCRA 477.
15 Comment, p. 8; Rollo, p. 63.
16 Sec. 3 (c), R.A. 6657.
17 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.
18 DAR Administrative Order No. 1, Series of 1990.
19 Opinion No. 181, Series of 1990.
20 Rocamora v. RTC-Cebu, Br. VIII, G.R. No. 65037, 23 November 1988, 167
SCRA 615.

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.
SO ORDERED.
Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
** Penned by Justice Jorge R. Coquia and concurred in by Justices Josue N.
Bellosillo and Venancio D. Aldecoa, Jr. of the Fourth Division.


READ
THIS
FOR
HACIENDA
http://sc.judiciary.gov.ph/jurisprudence/2011/november2011/171101.htm

roXAS & CO, INC.,

G.R. No. 149548

Respondent.

x------------------------------------x
ROXAS

& CO., INC.,

Petitioner,

- versus -

DAMBA-NFSW,
Respondent.
x------------------------------------x
G.R. No. 167505
DAMBA-NFSW REPRESENTED BY
LAURO V. MARTIN,

Present:

Petitioner,
PUNO, C.J.,
- versus -

CARPIO,
CORONA,

LUISITA

CARPIO MORALES,
ROXAS & CO., INC.,

CHICO-NAZARIO,
Respondent.

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

VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,

DAMBA-NFSW,
Petitioner,

PERALTA,
BERSAMIN,
DEL CASTILLO,

- versus -

ABAD, and
ROXAS & CO., INC.,

VILLARAMA, JJ.

Respondent.
Promulgated:

December 4, 2009

G.R. No. 167540

G.R. No. 167543

G.R. No. 167845

G.R. No. 169163

G.R. No. 179650

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

DECISION
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
threehaciendas 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.

xxxx

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.

xxxx

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 forconversion 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

THE MUNICIPALITY 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
and Nasugbu 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 on October 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 Appeals which 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 ofJune 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 on July 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 NONAGRICULTURAL 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 nonagricultural 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 on15 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 not automatically 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 nonagricultural 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 CebuCity and Municipalities of Argao and Dalaguete in Cebu Province 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 is
implemented 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 said Act, several towns and cities encompassing the
whole Philippineswere 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-9999142-97 FOR CARP EXEMPTION IN HACIENDA PALICO SUBJECT OF G.R.
NO. 179650CANNOT 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 landsprior to June 15, 1988,
the date of effectivity of CARL.

xxxx

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. T60034. 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
(Lot 125-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)

xxxx

[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 ofOctober 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
BE GRANTED.

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.

5.

Location and vicinity maps of subject landholdings;

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.

xxxx

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-9999-00898 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 in Roxas 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-9999008-98 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 nonagricultural 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 ASIDE the 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 the September 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 farmerbeneficiaries 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.

G.R. No. 127820 July 20, 1998

MUNICIPALITY OF PARAAQUE, petitioner,

vs.
V.M. REALTY CORPORATION, respondent.

PANGANIBAN, J.:
A local government unit (LGU), like the Municipality of Paraaque, cannot authorize an
expropriation of private property through a mere resolution of its lawmaking body. The Local
Government Code expressly and clearly requires an ordinance or a local law for the purpose. A
resolution that merely expresses the sentiment or opinion of the Municipal Council will not
suffice. On the other hand, the principle of res judicata does not bar subsequent proceedings for
the expropriation of the same property when all the legal requirements for its valid exercise are
complied with.
Statement of the Case
These principles are applied by this Court in resolving this petition for review on certiorari of
the July 22, 1996 Decision 1 of the Court of Appeals 2 in CA GR CV No. 48048, which
affirmed in toto 3 the Regional Trial Court's August 9, 1994 Resolution. 4 The trial court
dismissed the expropriation suit as follows:
The right of the plaintiff to exercise the power of eminent domain is not disputed.
However, such right may be exercised only pursuant to an Ordinance (Sec. 19,
R.A No. 7160). In the instant case, there is no such ordinance passed by the
Municipal Council of Paraaque enabling the Municipality, thru its Chief
Executive, to exercise the power of eminent domain. The complaint, therefore,
states no cause of action.
Assuming that plaintiff has a cause of action, the same is barred by a prior
judgment. On September 29, 1987, the plaintiff filed a complaint for
expropriation involving the same parcels of land which was docketed as Civil
Case No. 17939 of this Court (page 26, record). Said case was dismissed with
prejudice on May 18, 1988 (page 39, record). The order of dismissal was not
appealed, hence, the same became final. The plaintiff can not be allowed to
pursue the present action without violating the principle of [r]es [j]udicata. While
defendant in Civil Case No. 17939 was Limpan Investment Corporation, the
doctrine of res judicata still applies because the judgment in said case (C.C. No.
17939) is conclusive between the parties and their successors-in-interest (Vda. de
Buncio vs. Estate of the late Anita de Leon). The herein defendant is the

successor-in-interest of Limpan Investment Corporation as shown by the "Deed of

Assignment Exchange" executed on June 13, 1990.
WHEREFORE, defendant's motion for reconsideration is hereby granted. The
order dated February 4, 1994 is vacated and set aside.
This case is hereby dismissed. No pronouncement as to costs.
SO ORDERED. 5
Factual Antecedents
Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, 6 the Municipality of
Paraaque filed on September 20, 1993, a Complaint for expropriation 7 against Private
Respondent V.M. Realty Corporation over two parcels of land (Lots 2-A-2 and 2-B-1 of
Subdivision Plan Psd-17917), with a combined area of about 10,000 square meters, located at
Wakas, San Dionisio, Paraaque, Metro Manila, and covered by Torrens Certificate of Title No.
48700. Allegedly, the complaint was filed "for the purpose of alleviating the living conditions of
the underprivileged by providing homes for the homeless through a socialized housing
project." 8 Parenthetically, it was also for this stated purpose that petitioner, pursuant to
its Sangguniang Bayan Resolution No. 577, Series of 1991, 9 previously made an offer to enter
into a negotiated sale of the property with private respondent, which the latter did not accept. 10
Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati,
Branch 134, issued an Order dated January 10, 1994, 11 giving it due course. Acting on
petitioner's motion, said court issued an Order dated February 4, 1994, 12 authorizing petitioner to
take possession of the subject property upon deposit with its clerk of court of an amount
equivalent to 15 percent of its fair market value based on its current tax declaration.
On February 21, 1994, private respondent filed its Answer containing affirmative defenses and a
counterclaim, 13alleging in the main that (a) the complaint failed to state a cause of action
because it was filed pursuant to a resolution and not to an ordinance as required by RA 7160 (the
Local Government Code); and (b) the cause of action, if any, was barred by a prior judgment
or res judicata. On private respondent's motion, its Answer was treated as a motion to
dismiss. 14 On March 24, 1991, 15 petitioner filed its opposition, stressing that the trial court's
Order dated February 4, 1994 was in accord with Section 19 of RA 7160, and that the principle
of res judicata was not applicable.
Thereafter, the trial court issued its August 9, 1994 Resolution 16 nullifying its February 4, 1994
Order and dismissing the case. Petitioner's motions for reconsideration and transfer of venue

were denied by the trial court in a Resolution dated December 2, 1994. 17 Petitioner then
appealed to Respondent Court, raising the following issues:
1. Whether or not the Resolution of the Paraaque Municipal
Council No. 93-95, Series of 1993 is a substantial compliance of
the statutory requirement of Section 19, R.A. 7180 [sic] in the
exercise of the power of eminent domain by the plaintiff-appellant.
2. Whether or not the complaint in this case states no cause of
action.
3. Whether or not the strict adherence to the literal observance to
the rule of procedure resulted in technicality standing in the way of
substantial justice.
4. Whether or not the principle of res judicata is applicable to the
present case. 18
As previously mentioned, the Court of Appeals affirmed in toto the trial court's Decision.
Respondent Court, in its assailed Resolution promulgated on January 8, 1997, 19 denied
petitioner's Motion for Reconsideration for lack of merit.
Hence, this appeal. 20
The Issues
Before this Court, petitioner posits two issues, viz.:
1. A resolution duly approved by the municipal council has the same force and
effect of an ordinance and will not deprive an expropriation case of a valid cause
of action.
2. The principle of res judicata as a ground for dismissal of case is not applicable
when public interest is primarily involved. 21
The Court's Ruling
The petition is not meritorious.
First Issue:
Resolution Different from an Ordinance

Petitioner contends that a resolution approved by the municipal council for the purpose of
initiating an expropriation case "substantially complies with the requirements of the
law" 22 because the terms "ordinance" and "resolution" are synonymous for "the purpose of
bestowing authority [on] the local government unit through its chief executive to initiate the
expropriation proceedings in court in the exercise of the power of eminent domain." 23 Petitioner
seeks to bolster this contention by citing Article 36, Rule VI of the Rules and Regulations
Implementing the Local Government Code, which provides. "If the LGU fails to acquire a
private property for public use, purpose, or welfare through purchase, the LGU may expropriate
said property through a resolution of the Sanggunian authorizing its chief executive to initiate
expropriation proceedings." 24 (Emphasis supplied.)
The Court disagrees. The power of eminent domain is lodged in the legislative branch of
government, which may delegate the exercise thereof to LGUs, other public entities and public
utilities. 25 An LGU may therefore exercise the power to expropriate private property only when
authorized by Congress and subject to the latter's control and restraints, imposed "through the
law conferring the power or in other legislations." 26 In this case, Section 19 of RA 7160, which
delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise.
It provides as follows:
Sec. 19. Eminent Domain. A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, or purpose, or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has been previously
made to the owner, and such offer was not accepted: Provided, further, That the
local government unit may immediately take possession of the property upon the
filing of the expropriation proceedings and upon making a deposit with the proper
court of at least fifteen percent (15%) of the fair market value of the property
based on the current tax declaration of the property to be
expropriated: Provided,finally, That, the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at
the time of the taking of the property. (Emphasis supplied)
Thus, the following essential requisites must concur before an LGU can exercise the power of
eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local
chief executive, in behalf of the LGU, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare,
or for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III
of the Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the
property sought to be expropriated, but said offer was not accepted. 27
In the case at bar, the local chief executive sought to exercise the power of eminent domain
pursuant to a resolution of the municipal council. Thus, there was no compliance with the first
requisite that the mayor be authorized through an ordinance. Petitioner cites Camarines Sur vs.
Court of Appeals 28 to show that a resolution may suffice to support the exercise of eminent
domain by an LGU. 29 This case, however, is not in point because the applicable law at that time
was BP 337, 30 the previous Local Government Code, which had provided that a mere resolution
would enable an LGU to exercise eminent domain. In contrast, RA 7160, 31 the present Local
Government Code which was already in force when the Complaint for expropriation was filed,
explicitly required an ordinance for this purpose.
We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are
synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a
resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific
matter. 32 An ordinance possesses a general and permanent character, but a resolution is
temporary in nature. Additionally, the two are enacted differently a third reading is necessary
for an ordinance, but not for a resolution, unless decided otherwise by a majority of all
the Sanggunianmembers. 33
If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it
would have simply adopted the language of the previous Local Government Code. But Congress
did not. In a clear divergence from the previous Local Government Code, Section 19 of RA 7160
categorically requires that the local chief executive act pursuant to an ordinance. Indeed,
"[l]egislative intent is determined principally from the language of a statute. Where the language
of a statute is clear and unambiguous, the law is applied according to its express terms, and
interpretation would be resorted to only where a literal interpretation would be resorted to only
where a literal interpretation would be either impossible or absurd or would lead to an
injustice." 34 In the instant case, there is no reason to depart from this rule, since the law requiring
an ordinance is not at all impossible, absurd, or unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or
private right of the people. 35 Accordingly, the manifest change in the legislative language
from "resolution" under BP 337 to "ordinance" under RA 7160 demands a strict construction.

"No species of property is held by individuals with greater tenacity, and is guarded by the
Constitution and laws more sedulously, than the right to the freehold of inhabitants. When the
legislature interferes with that right and, for greater public purposes, appropriates the land of an
individual without his consent, the plain meaning of the law should not be enlarged by doubtful
interpretation." 36
Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a
resolution to authorize an LGU to exercise eminent domain. This is clearly misplaced, because
Section 19 of RA 7160, the law itself, surely prevails over said rule which merely seeks to
implement it. 37 It is axiomatic that the clear letter of the law is controlling and cannot be
amended by a mere administrative rule issued for its implementation. Besides, what the
discrepancy seems to indicate is a mere oversight in the wording of the implementing rules, since
Article 32, Rule VI thereof, also requires that, in exercising the power of eminent domain, the
chief executive of the LGU act pursuant to an ordinance.
In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the
Constitution, which provides that "territorial and political subdivisions shall enjoy local
autonomy." It merely upholds the law as worded in RA 7160. We stress that an LGU is created
by law and all its powers and rights are sourced therefrom. It has therefore no power to amend or
act beyond the authority given and the limitations imposed on it by law. Strictly speaking, the
power of eminent domain delegated to an LGU is in reality not eminent but "inferior" domain,
since it must conform to the limits imposed by the delegation, and thus partakes only of a share
in eminent domain. 38Indeed, "the national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it." 39
Complaint Does Not
State a Cause of Action
In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan passed
an ordinance on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and
ratified all the acts of its mayor regarding the subject expropriation. 40
This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such
an ordinance, but it did not present any certified true copy thereof. In the second place, petitioner
did not raise this point before this Court. In fact, it was mentioned by private respondent, and
only in passing. 41 In any event, this allegation does not cure the inherent defect of petitioner's
Complaint for expropriation filed on September 23, 1993. It is hornbook doctrine that
. . . in a motion to dismiss based on the ground that the complaint fails to state a
cause of action, the question submitted before the court for determination is the

sufficiency of the allegations in the complaint itself. Whether those allegations are
true or not is beside the point, for their truth is hypothetically admitted by the
motion. The issue rather is: admitting them to be true, may the court render a valid
judgment in accordance with the prayer of the complaint? 42
The fact that there is no cause of action is evident from the face of the Complaint for
expropriation which was based on a mere resolution. The absence of an ordinance authorizing
the same is equivalent to lack of cause of action. Consequently, the Court of Appeals committed
no reversible error in affirming the trial court's Decision which dismissed the expropriation suit.
Second Issue:
Eminent Domain Not Barred by Res Judicata
As correctly found by the Court of Appeals 43 and the trial court, 44 all the requisites for the
application of res judicataare present in this case. There is a previous final judgment on the
merits in a prior expropriation case involving identical interests, subject matter and cause of
action, which has been rendered by a court having jurisdiction over it.
Be that as it may, the Court holds that the principle of res judicata, which finds application in
generally all cases and proceedings, 45 cannot bar the right of the State or its agent to expropriate
private property. The very nature of eminent domain, as an inherent power of the State, dictates
that the right to exercise the power be absolute and unfettered even by a prior judgment or res
judicata. The scope of eminent domain is plenary and, like police power, can "reach every form
of property which the State might need for public use." 46 "All separate interests of individuals in
property are held of the government under this tacit agreement or implied reservation.
Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of
property, remains in the government, or in the aggregate body of the people in their sovereign
capacity; and they have the right to resume the possession of the property whenever the public
interest requires it." 47 Thus, the State or its authorized agent cannot be forever barred from
exercising said right by reason alone of previous non-compliance with any legal requirement.
While the principle of res judicata does not denigrate the right of the State to exercise eminent
domain, it does apply to specific issues decided in a previous case. For example, a final judgment
dismissing an expropriation suit on the ground that there was no prior offer precludes another
suit raising the same issue; it cannot, however, bar the State or its agent from thereafter
complying with this requirement, as prescribed by law, and subsequently exercising its power of
eminent domain over the same property. 48 By the same token, our ruling that petitioner cannot
exercise its delegated power of eminent domain through a mere resolution will not bar it from
reinstituting similar proceedings, once the said legal requirement and, for that matter, all others
are properly complied with. Parenthetically and by parity of reasoning, the same is also true of

the principle of "law of the case." In Republic vs. De Knecht, 49 the Court ruled that the power of
the State or its agent to exercise eminent domain is not diminished by the mere fact that a prior
final judgment over the property to be expropriated has become the law of the case as to the
parties. The State or its authorized agent may still subsequently exercise its right to expropriate
the same property, once all legal requirements are complied with. To rule otherwise will not only
improperly diminish the power of eminent domain, but also clearly defeat social justice.
WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise
of its power of eminent domain over subject property. Costs against petitioner.
SO ORDERED.
Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur.
# Footnotes
1 Rollo, pp. 21-25.
2 Special Sixth Division, composed of J. Antonio M. Martinez (now an associate
justice of the Supreme Court), ponente and chairman; and JJ. Ricardo P. Galvez
and Hilarion L. Aquino, concurring.
3 See rollo, p. 25.
4 Penned by acting Presiding Judge Paul T. Arcangel.
5 Resolution of the Regional Trial Court, p. 2; rollo, p. 70.
6 Rollo, pp. 41-43.
7 Ibid., pp. 27-32.
8 Petitioner's Memorandum, p. 1; rollo, p. 184.
9 Rollo, pp. 37-38.
10 Complaint, p. 3; rollo, p. 29.
11 Rollo, p. 45.
12 Ibid., p. 47.

13 Ibid., pp. 48-51.

14 Private respondent's Memorandum, pp. 1-2; rollo, pp. 197-198.
15 Rollo, pp. 66-68.
16 Ibid., pp. 69-70.
17 Ibid., pp. 71-72.
18 Ibid., pp. 78-79.
19 Ibid., p. 26.
20 The case was deemed submitted for resolution on March 13, 1998, when the
Court received private respondent's Memorandum.
21 Petitioner's Memorandum, p. 3; rollo, p. 187.
22 Ibid., p. 4; rollo, p. 188.
23 Ibid.
24 Paragraph A.
25 Moday vs. Court of Appeals, 268 SCRA 586, 592, February 20, 1997.
26 Province of Camarines Sur vs. Court of Appeals, 222 SCRA 173, 179-180,
May 17, 1993, per Quiason, J.
27 Senator Aquilino Q. Pimentel, Jr., The Local Government Code of 1991: The
Key To National Development, 1993 ed., p. 110.
28 Supra.
29 Petitioner's Memorandum, p. 6; rollo, p. 189.
30 Approved on February 10, 1983 and published in 79 OG No. 7. See Maday vs.
Court of Appeals,supra, p. 593. Sec. 9 of BP 337 reads:
Sec. 9. Eminent Domain. A local government unit may, through
its head and acting pursuant to a resolution of its sanggunian,

exercise the right of eminent domain and institute condemnation

proceedings for public use or purpose.
31 Effective January 1, 1992.
32 Mascuana vs. Provincial Board of Negros Occidental, 79 SCRA 399, 405,
October 18, 1977;cited in private respondent's Memorandum, p. 5.
33 Art. 107, pars. a and c, Implementing Rules and Regulations of RA
7160; cited in Pimentel, Jr.,supra, pp. 163-164.
34 Azarcon vs. Sandiganbayan, 268 SCRA 747, 762, February 26, 1997, per
Panganiban, J.; citingRamirez vs. Court of Appeals, 248 SCRA 590, 596,
September 28, 1995.
35 City of Manila vs. Chinese Community of Manila, 40 Phil 349, 366 (1919),
and Arriete vs. Director of Public Works, 58 Phil 507, 511 (1933). See
also Bernas, Joaquin G., The 1987 Constitution of the Republic of the
Philippines: A Commentary, 1996 ed., p. 348.
36 Justice Isagani A. Cruz, Constitutional Law, 1993 ed., p. 59.
37 See Villa vs. Llanes Jr., 120 SCRA 81, 84 January 21, 1983, and Wise & Co.
vs. Meer, 78 Phil 655, 676 (1947). See also Art. 7, Civil Code of the Philippines.
38 Bernas, supra, pp. 348-349.
39 Magtajas vs. Pryce Properties, Corp., Inc., 234 SCRA 255, 272-273, July 20,
1994, per Cruz, J.
40 Rollo, pp. 81-82.
41 See private respondent's Memorandum, pp. 5-6; rollo, pp. 201-202.
42 Travel Wide Associated Sales (Phils.), Inc. vs. Court of Appeals, 199 SCRA
205, 210, July 15, 1991, per Cruz, J.; citing The Heirs of Juliana Clavano vs.
Genato, 80 SCRA 217, 222, October 28, 1977.
43 Decision, p. 5; rollo, p. 25.
44 Resolution of the Regional Trial Court, p. 2; rollo, p. 70.

45 Republic vs. Director of Lands, 39 SCRA 651, 657, September 11, 1980.
46 Bernas, supra, p. 349.
47 Ibid.
48 See National Power Corporation vs. Court of Appeals, 254 SCRA 577, March
11, 1996.
49 182 SCRA 142, 147-148, February 12, 1990.

CENTRAL MINDANAO UNIVERSITY,

Represented by Officer-In-Charge

G.R. No. 184869

Dr. Rodrigo L. Malunhao,

Petitioner,

Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,*
NACHURA,*
LEONARDO-DE CASTRO,*
- versus BRION,*
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,* and
SERENO,** JJ.
THE
HONORABLE
EXECUTIVE
SECRETARY,
THE
HONORABLE
SECRETARY OF THE DEPARTMENT OF
ENVIRONMENT
AND
NATURAL
RESOURCES, THE CHAIRPERSON AND
COMMISSIONERS OF THE NATIONAL
COMMISSION ON INDIGENOUS PEOPLES,
and THE LEAD CONVENOR OF THE
NATIONAL ANTI-POVERTY COMMISSION,
Respondents.
Promulgated:
September 21, 2010
x --------------------------------------------------------------------------------------- x

DECISION
ABAD, J.:

This case concerns the constitutionality of a presidential proclamation that

takes property from a state university, over its objections, for distribution to
indigenous peoples and cultural communities.
The Facts and the Case
Petitioner Central Mindanao University (CMU) is a chartered educational
institution owned and run by the State.[1] In 1958, the President issued Presidential
Proclamation 476, reserving 3,401 hectares of lands of the public domain in
Musuan, Bukidnon, as school site for CMU. Eventually, CMU obtained title in its
name over 3,080 hectares of those lands under Original Certificates of Title (OCTs)
0-160, 0-161, and 0-162. Meanwhile, the government distributed more than 300
hectares of the remaining untitled lands to several tribes belonging to the areas
cultural communities.
Forty-five years later or on January 7, 2003 President Gloria MacapagalArroyo issued Presidential Proclamation 310 that takes 670 hectares from CMUs
registered lands for distribution to indigenous peoples and cultural communities in
Barangay Musuan, Maramag, Bukidnon.
On April 3, 2003, however, CMU filed a petition for prohibition against
respondents Executive Secretary, Secretary of the Department of Environment and
Natural Resources, Chairperson and Commissioner of the National Commission on
Indigenous Peoples (NCIP), and Lead Convenor of the National Anti-Poverty
Commission (collectively, NCIP, et al) before the Regional Trial Court (RTC) of
Malaybalay City (Branch 9), seeking to stop the implementation of Presidential
Proclamation 310 and have it declared unconstitutional.
The NCIP, et al moved to dismiss the case on the ground of lack of
jurisdiction of the Malaybalay RTC over the action, pointing out that since the act
sought to be enjoined relates to an official act of the Executive Department done
in Manila, jurisdiction lies with the Manila RTC. The Malaybalay RTC denied the
motion, however, and proceeded to hear CMUs application for preliminary
injunction. Meanwhile, respondents NCIP, et al moved for partial reconsideration
of the RTCs order denying their motion to dismiss.

On October 27, 2003, after hearing the preliminary injunction incident, the
RTC issued a resolution granting NCIP, et als motion for partial reconsideration
and dismissed CMUs action for lack of jurisdiction. Still, the RTC ruled that
Presidential Proclamation 310 was constitutional, being a valid State act. The RTC
said that the ultimate owner of the lands is the State and that CMU merely held the
same in its behalf. CMU filed a motion for reconsideration of the resolution but
the RTC denied the same on April 19, 2004. This prompted CMU to appeal the
RTCs dismissal order to the Court of Appeals (CA) Mindanao Station.[2]
CMU raised two issues in its appeal: 1) whether or not the RTC deprived it
of its right to due process when it dismissed the action; and 2) whether or not
Presidential Proclamation 310 was constitutional.[3]
In a March 14, 2008 decision,[4] the CA dismissed CMUs appeal for lack of
jurisdiction, ruling that CMUs recourse should have been a petition for review
on certiorari filed directly with this Court, because it raised pure questions law
bearing mainly on the constitutionality of Presidential Proclamation 310. The CA
added that whether the trial court can decide the merits of the case based solely on
the hearings of the motion to dismiss and the application for injunction is also a
pure question of law.
CMU filed a motion for reconsideration of the CAs order of dismissal but it
denied the same,[5] prompting CMU to file the present petition for review.
The Issues Presented
The case presents the following issues:
1.
Whether or not the CA erred in not finding that the RTC erred in
dismissing its action for prohibition against NCIP, et al for lack of jurisdiction and
at the same time ruling that Presidential Proclamation 310 is valid and
constitutional;
2.
Whether or not the CA correctly dismissed CMUs appeal on the
ground that it raised purely questions of law that are proper for a petition for
review filed directly with this Court; and

3.
Whether or not Presidential Proclamation 310 is valid and
constitutional.
The Courts Rulings
One. The RTC invoked two reasons for dismissing CMUs action. The first
is that jurisdiction over the action to declare Presidential Proclamation 310 lies
with the RTC of Manila, not the RTC of Malaybalay City, given that such action
relates to official acts of the Executive done in Manila. The second reason,
presumably made on the assumption that the Malaybalay RTC had jurisdiction
over the action, Presidential Proclamation 310 was valid and constitutional since
the State, as ultimate owner of the subject lands, has the right to dispose of the
same for some purpose other than CMUs use.
There is nothing essentially wrong about a court holding on the one hand
that it has no jurisdiction over a case, and on the other, based on an assumption that
it has jurisdiction, deciding the case on its merits, both with the same results, which
is the dismissal of the action. At any rate, the issue of the propriety of the RTC
using two incompatible reasons for dismissing the action is academic. The CA
from which the present petition was brought dismissed CMUs appeal on some
technical ground.
Two. Section 9(3) of the Judiciary Reorganization Act of 1980 [6] vests in the
CA appellate jurisdiction over the final judgments or orders of the RTCs and quasijudicial bodies. But where an appeal from the RTC raises purely questions of law,
recourse should be by a petition for review on certiorari filed directly with this
Court. The question in this case is whether or not CMUs appeal from the RTCs
order of dismissal raises purely questions of law.
As already stated, CMU raised two grounds for its appeal: 1) the RTC
deprived it of its right to due process when it dismissed the action; and 2)
Presidential Proclamation 310 was constitutional. Did these grounds raise factual
issues that are proper for the CA to hear and adjudicate?
Regarding the first reason, CMUs action was one for injunction against the
implementation of Presidential Proclamation 310 that authorized the taking of

lands from the university. The fact that the President issued this proclamation
in Manila and that it was being enforced in Malaybalay City where the lands were
located were facts that were not in issue. These were alleged in the complaint and
presumed to be true by the motion to dismiss. Consequently, the CMUs remedy
for assailing the correctness of the dismissal, involving as it did a pure question of
law, indeed lies with this Court.
As to the second reason, the CMU claimed that the Malaybalay RTC
deprived it of its right to due process when it dismissed the case based on the
ground that Presidential Proclamation 310, which it challenged, was
constitutional. CMU points out that the issue of the constitutionality of the
proclamation had not yet been properly raised and heard. NCIP, et al had not yet
filed an answer to join issue with CMU on that score. What NCIP, et al filed was
merely a motion to dismiss on the ground of lack of jurisdiction of the Malaybalay
RTC over the injunction case. Whether the RTC in fact prematurely decided the
constitutionality of the proclamation, resulting in the denial of CMUs right to be
heard on the same, is a factual issue that was proper for the CA Mindanao Station
to hear and ascertain from the parties. Consequently, the CA erred in dismissing
the action on the ground that it raised pure questions of law.
Three. Since the main issue of the constitutionality of Presidential
Proclamation 310 has been raised and amply argued before this Court, it would
serve no useful purpose to have the case remanded to the CA Mindanao Station or
to the Malaybalay RTC for further proceedings. Ultimately, the issue of
constitutionality of the Proclamation in question will come to this Court however
the courts below decide it. Consequently, the Court should, to avoid delay and
multiplicity of suits, now resolve the same.
The key question lies in the character of the lands taken from
CMU. In CMU v. Department of Agrarian Reform Adjudication Board (DARAB),
[7]
the DARAB, a national government agency charged with taking both privatelyowned and government-owned agricultural lands for distribution to farmersbeneficiaries, ordered the segregation for this purpose of 400 hectares of CMU
lands. The Court nullified the DARAB action considering the inalienable character
of such lands, being part of the long term functions of an autonomous agricultural
educational institution. Said the Court:

The construction given by the DARAB to Section 10 restricts

the land area of the CMU to its present needs or to a land area
presently, actively exploited and utilized by the university in
carrying out its present educational program with its present
student population and academic facility overlooking the very
significant factor of growth of the university in the years to come. By
the nature of the CMU, which is a school established to promote
agriculture and industry, the need for a vast tract of agricultural
land for future programs of expansion is obvious. At the outset, the
CMU was conceived in the same manner as land grant colleges
in America, a type of educational institution which blazed the trail
for the development of vast tracts of unexplored and undeveloped
agricultural lands in the Mid-West. What we now know
as Michigan State University, Penn State University and Illinois Stat
e University, started as small land grant colleges, with meager
funding to support their ever increasing educational
programs. They were given extensive tracts of agricultural and
forest lands to be developed to support their numerous expanding
activities in the fields of agricultural technology and scientific
research. Funds for the support of the educational programs of land
grant colleges came from government appropriation, tuition and
other student fees, private endowments and gifts, and earnings from
miscellaneous sources. It was in this same spirit that President
Garcia issued Proclamation No. 476, withdrawing from sale or
settlement
and
reserving
for
the Mindanao AgriculturalCollege (forerunner of the CMU) a land
reservation of 3,080 hectares as its future campus. It was set up in
Bukidnon, in the hinterlands of Mindanao, in order that it can have
enough resources and wide open spaces to grow as an agricultural
educational institution, to develop and train future farmers
of Mindanao and help attract settlers to that part of the country.
xxxx
The education of the youth and agrarian reform are
admittedly among the highest priorities in the government socioeconomic programs. In this case, neither need give way to the other.
Certainly, there must still be vast tracts of agricultural land in
Mindanao outside the CMU land reservation which can be made
available to landless peasants, assuming the claimants here, or some

of them, can qualify as CARP beneficiaries. To our mind, the taking

of the CMU land which had been segregated for educational
purposes for distribution to yet uncertain beneficiaries is a gross
misinterpretation of the authority and jurisdiction granted by law to
the DARAB.
The decision in this case is of far-reaching significance as far
as it concerns state colleges and universities whose resources and
research facilities may be gradually eroded by misconstruing the
exemptions from the CARP. These state colleges and universities are
the main vehicles for our scientific and technological advancement in
the field of agriculture, so vital to the existence, growth and
development of this country.[8]

It did not matter that it was President Arroyo who, in this case, attempted by
proclamation to appropriate the lands for distribution to indigenous peoples and
cultural communities. As already stated, the lands by their character have become
inalienable from the moment President Garcia dedicated them for CMUs use in
scientific and technological research in the field of agriculture. They have ceased
to be alienable public lands.
Besides, when Congress enacted the Indigenous Peoples Rights Act (IPRA)
or Republic Act 8371[9] in 1997, it provided in Section 56 that property rights
within the ancestral domains already existing and/or vested upon its effectivity
shall be recognized and respected. In this case, ownership over the subject lands
had been vested in CMU as early as 1958. Consequently, transferring the lands in
2003 to the indigenous peoples around the area is not in accord with the IPRA.
Furthermore, the land registration court considered the claims of several
tribes belonging to the areas cultural communities in the course of the proceedings
for the titling of the lands in CMUs name. Indeed, eventually, only 3,080 hectares
were titled in CMUs name under OCTs 0-160, 0-161 and 0-162. More than 300
hectares were acknowledged to be in the possession of and subject to the claims of
those tribes.
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the March
14, 2008 decision and September 22, 2008 resolution of the Court of Appeals in

CA-G.R. SP 85456, andDECLARES Presidential Proclamation 310 as null and

void for being contrary to law and public policy.

SO ORDERED.