Agrarian Law Pointers

Midterm Examinations

I. Revolutionary Kind of Expropriation

a. Association of Small Land Owners v Hon. Secretary

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

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

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

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

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

b. CONFED v DAR

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

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.

II. RA 3844

a. Abolition of Shared Tenancy

SECTION 4. Abolition of Agricultural Share Tenancy. Agricultural share tenancy, as herein

defined, is hereby declared to be contrary to public policy and shall be abolished: Provided, That
existing share tenancy contracts may continue in force and effect in any region or locality, to be

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 governed in the meantime by the pertinent provisions of Republic Act Numbered Eleven
hundred and ninety-nine (RA 1199), as amended, until the end of the agricultural year when the
National Land Reform Council proclaims that all the government machineries and agencies in
that region or locality relating to leasehold envisioned in this Code are operating, unless such
contracts provide for a shorter period or the tenant sooner exercise his option to elect the
leasehold system:

Provided, further, That in order not to jeopardize international commitments, lands devoted to
crops covered by marketing allotments shall be made the subject of a separate proclamation that
adequate provisions, such as the organization of cooperatives, marketing agreements, or other
similar workable arrangements, have been made to insure efficient management on all matters
requiring synchronization of the agricultural with the processing phases of such crops:

Provided, furthermore, That where the agricultural share tenancy contract has ceased to be
operative by virtue of this Code, or where such a tenancy contract has been entered into in
violation of the provisions of this Code and is, therefore, null and void, and the tenant continues
in possession of the land for cultivation, there shall be presumed to exist a leasehold relationship
under the provisions of this Code, without prejudice to the right of the landowner and the former
tenant to enter into any other lawful contract in relation to the land formerly under tenancy
contract, as long as in the interim the security of tenure of the former tenant under Republic Act
Numbered Eleven hundred and ninety-nine (RA 1199), as amended, and as provided in this
Code, is not impaired: Provided, finally, That if a lawful leasehold tenancy contract was entered
into prior to the effectivity of this Code, the rights and obligations arising therefrom shall
continue to subsist until modified by the parties in accordance with the provisions of this Code.

b. Security of Tenure

SECTION 7. Tenure of Agricultural Leasehold Relation. The agricultural leasehold relation

once established shall confer upon the agricultural lessee the right to continue working on the
landholding until such leasehold relation is extinguished. The agricultural lessee shall be entitled
to security of tenure on his landholding and cannot be ejected therefrom unless authorized by the
Court for causes herein provided.

c. Grounds to Extinguish

SECTION 8. Extinguishment of Agricultural Leasehold Relation. The agricultural leasehold

relation established under this Code shall be extinguished by:
(1) Abandonment of the landholding without the knowledge of the agricultural lessor;
(2) Voluntary surrender of the landholding by the agricultural lessee, written notice of
which shall be served three months in advance; or
(3) Absence of the persons under Section nine to succeed to the lessee, in the event of
death or permanent incapacity of the lessee.

d. Coderias vs Chioco

SC Ruling
The Court grants the Petition.

Petitioner availed of the remedy of Petition for Review on Certiorari, but claimed that the CA
committed grave abuse of discretion, which accusation properly pertains to an original Petition
for Certiorari under Rule 65. However, this should not affect his case for the CA committed a
glaring error on a question of law which must be reversed.

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It must be recalled from the facts that the farm has been placed under the coverage of RA 3844.
It is also undisputed that a tenancy relation existed between Chioco and petitioner. In fact, a CLT
had been issued in favor of the petitioner; thus, petitioner already had an expectant right to the
farm.31 A CLT serves as "a provisional title of ownership over the landholding while the lot
owner is awaiting full payment of just compensation or for as long as the tenant-farmer is an
amortizing owner. This certificate proves inchoate ownership of an agricultural land primarily
devoted to rice and corn production. It is issued in order for the tenant-farmer to acquire the land
he was tilling."32Since the farm is considered expropriated and placed under the coverage of the
land reform law,33 Chioco had no right to evict petitioner and enter the property. More
significantly, Chioco had no right to claim that petitioners cause of action had prescribed.

x x x The Land Reform Code forges by operation of law, between the landowner and the farmer
be he a leasehold tenant or temporarily a share tenant a vinculum juris with certain vital
consequences, such as security of tenure of the tenant and the tenant's right to continue in
possession of the land he works despite the expiration of the contract or the sale or transfer of the
land to third persons, and now, more basically, the farmer's pre-emptive right to buy the land he
cultivates under Section 11 of the Code, as well as the right to redeem the land, if sold to a third
person without his knowledge, under Section 12 of this Code.

To strengthen the security of tenure of tenants, Section 10 of R.A. No. 3844 provides that the
agricultural leasehold relation shall not be extinguished by the sale, alienation or transfer of the
legal possession of the landholding. With unyielding consistency, we have held that transactions
involving the agricultural land over which an agricultural leasehold subsists resulting in change
of ownership, such as the sale or transfer of legal possession, will not terminate the rights of the
agricultural lessee who is given protection by the law by making such rights enforceable against
the transferee or the landowner's successor in interest. x x x

In addition, Section 7 of the law enunciates the principle of security of tenure of the tenant, such
that it prescribes that the relationship of landholder and tenant can only be terminated for causes
provided by law. x x x Security of tenure is a legal concession to agricultural lessees which they
value as life itself and deprivation of their landholdings is tantamount to deprivation of their only
means of livelihood. Perforce, the termination of the leasehold relationship can take place only
for causes provided by law. x x x

The CA has failed to recognize this vinculum juris, this juridical tie that exists between the
petitioner and Chioco, which the latter is bound to respect.

Under Section 8 of RA 3844, the agricultural leasehold relation shall be extinguished only under
any of the following three circumstances, to wit: "(1) abandonment of the landholding without
the knowledge of the agricultural lessor; (2) voluntary surrender of the landholding by the
agricultural lessee, written notice of which shall be served three months in advance; or (3)
absence of the persons under Section 9 to succeed the lessee x x x." None of these is obtaining in
this case. In particular, petitioner cannot be said to have abandoned the landholding. It will be
recalled that Chioco forcibly ejected him from the property through threats and intimidation. His
house was bulldozed and his crops were destroyed. Petitioner left the farm in 1980 and returned
only in 1993 upon learning of Chiocos death. Two years after, or in 1995, he filed the instant
Petition.

Indeed, Section 38 of RA 3844 specifically provides that "an action to enforce any cause of
action under this Code shall be barred if not commenced within three years after such cause of
action accrued." In this case, we deem it proper to reckon petitioners cause of action to have

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 accrued only upon his knowledge of the death of Chioco in 1993, and not at the time he was
forcibly ejected from the landholding in 1980. For as long as the intimidation and threats to
petitioners life and limb existed, petitioner had a cause of action against Chioco to enforce the
recognition of this juridical tie. Since the threats and intimidation ended with Chiocos death,
petitioners obligation to file a case to assert his rights as grantee of the farm under the agrarian
laws within the prescriptive period commenced. These rights, as enumerated above, include the
right to security of tenure, to continue in possession of the land he works despite the expiration
of the contract or the sale or transfer of the land to third persons, the pre-emptive right to buy the
land, as well as the right to redeem the land, if sold to a third person without his knowledge.

Petitioner may not be faulted for acting only after Chioco passed away for his life and the lives
of members of his family are not worth gambling for a piece of land. The bulldozing of his house
his castle is only an example of the fate that could befall them. Under the circumstances, it is
therefore understandable that instead of fighting for the farm, petitioner opted to leave and keep
his family safe. Any man who cherishes his family more than the most valuable material thing in
his life would have done the same.

e. Section 9

SECTION 9. Agricultural Leasehold Relation Not Extinguished byDeath or Incapacity of the

Parties. In case of death or permanent incapacity of theagricultural lessee to work his
landholding, the leasehold shall continue between theagricultural lessor and the person who can
cultivate the landholding personally, chosen by the agricultural lessor within one month from
such death or permanentincapacity, from among the following: (a) the surviving spouse; (b) the
eldest directdescendant by consanguinity; or (c) the next eldest descendant or descendants in the
order of their age: Provided, That in case the death or permanent incapacity of theagricultural
lessee occurs during the agricultural year, such choice shall be exercisedat the end of that
agricultural year: Provided, further, That in the event theagricultural lessor fails to exercise his
choice within the periods herein provided, thepriority shall be in accordance with the order
herein established.

In case of death or permanent incapacity of the agricultural lessor, theleasehold shall bind his
legal heirs.

f. Grounds to Dispossess

SECTION 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to

the period or future surrender, of the land, anagricultural lessee shall continue in the enjoyment
and possession of his landholdingexcept when his dispossession has been authorized by the
Court in a judgment that isfinal and executory if after due hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family willpersonally cultivate
the landholding or will convert the landholding, if suitablylocated, into residential, factory,
hospital or school site or other useful nonagriculturalpurposes: Provided; That the agricultural
lessee shall be entitled todisturbance compensation equivalent to five years rental on his
landholding inaddition to his rights under Sections twenty-five and thirty-four, except whenthe
land owned and leased by the agricultural lessor, is not more than fivehectares, in which case
instead of disturbance compensation the lessee may beentitled to an advanced notice of at least
one agricultural year before ejectmentproceedings are filed against him: Provided, further, That
should the landholder not cultivate the land himself for three years or fail to substantially carry
outsuch conversion within one year after the dispossession of the tenant, it shall bepresumed that

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 he acted in bad faith and the tenant shall have the right to demandpossession of the land and
recover damages for any loss incurred by himbecause of said dispossessions.

(2) The agricultural lessee failed to substantially comply with any of theterms and conditions of
the contract or any of the provisions of this Code unlesshis failure is caused by fortuitous event
or force majeure;

(3) The agricultural lessee planted crops or used the landholding for apurpose other than what
had been previously agreed upon;

(4) The agricultural lessee failed to adopt proven farm practices asdetermined under paragraph 3
of Section twenty-nine;

(5) The land or other substantial permanent improvement thereon issubstantially damaged or
destroyed or has unreasonably deteriorated through thefault or negligence of the agricultural
lessee;

(6) The agricultural lessee does not pay the lease rental when it falls due:Provided, That if the
non-payment of the rental shall be due to crop failure tothe extent of seventy-five per centum as
a result of a fortuitous event, the non-paymentshall not be a ground for dispossession, although
the obligation to paythe rental due that particular crop is not thereby extinguished; or

(7) The lessee employed a sub-lessee on his landholding in violation of theterms of paragraph 2
of Section twenty-seven.

g. Non-payment of Rental as a Ground to Dispossess

i. Sta. Ana v Carpo

On the issue of whether the petitioner, as an agricultural tenant, failed to pay her lease
rentals when the same fell due as to warrant her dispossession of the subject land.

SCs Ruling

Under Section 37 of Republic Act No. 3844,[40] as amended, coupled with the fact that
the respondents are the complainants themselves, the burden of proof to show the
existence of a lawful cause for the ejectment of the petitioner as an agricultural lessee
rests upon the respondents as agricultural lessors.[41] This proceeds from the principle
that a tenancy relationship, once established, entitles the tenant to security of tenure.
Petitioner can only be ejected from the agricultural landholding on grounds provided by
law.[42] Section 36 of the same law pertinently provides:

Sec. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to

the period or future surrender, of the land, an agricultural lessee shall continue in the
enjoyment and possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after due hearing it is
shown that:
xxxx
(6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That
if the non-payment of the rental shall be due to crop failure to the extent of seventy-five
per centum as a result of a fortuitous event, the non-payment shall not be a ground for
dispossession, although the obligation to pay the rental due that particular crop is not
thereby extinguished;

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 xxxx

Respondents failed to discharge such burden. The agricultural tenant's failure to pay the
lease rentals must be willful and deliberate in order to warrant his dispossession of the
land that he tills. In an En Banc Decision by this Court in Roxas y Cia v. Cabatuando, et
al.,[43] we held that under our law and jurisprudence, mere failure of a tenant to pay the
landholder's share does not necessarily give the latter the right to eject the former when
there is lack of deliberate intent on the part of the tenant to pay. This ruling has not been
overturned.

The term deliberate is characterized by or results from slow, careful, thorough calculation
and consideration of effects and consequences.[44] The term willful, on the other hand, is
defined as one governed by will without yielding to reason or without regard to
reason.[45]

These factual circumstances negate the PARAD findings of Marcianos and petitioner's
deliberate and willful intent not to pay lease rentals. Good faith was clearly demonstrated
by Marciano and petitioner when, because respondents refused to accept the proffered
payment, they even went to the point of seeking government intervention in order to
address their problems with respondents. Absent such deliberate and willful refusal to
pay lease rentals, petitioner's ejectment from the subject land is not justified.

ii. Natividad v Mariano

On the issue of whether the petitioner, as an agricultural tenant, failed to pay her lease
rentals when the same fell due as to warrant her dispossession of the subject land.

These allegations pose to us three essential points that we need to address. First, whether
Ernesto indeed made demands on the respondents for the payment of the lease rentals;
second, assuming that Ernesto made such demands, whether the respondents deliberately
failed or continuously refuse to pay the lease rentals; and third, whether the lease rentals
paid by the respondents to Corazon and Laureano are valid.

We rule in the NEGATIVE on the first point.

Our review of the records shows that Ernesto did not present any evidence, such as the
affidavit of the person or persons present at that time, to prove that he demanded from the
respondents the payment of the lease rentals. We, therefore, cannot accord any merit to
his claim that he made such demands. His allegation, absent any supporting evidence, is
nothing more than a hollow claim under the rule that he who alleges a fact has the burden
of proving it as mere allegation is not evidence.54 Thus, Ernesto should be deemed to
have made his demand only at the time he filed the petition for ejectment before the
PARAD. At this point, the respondents were not yet in delay55and could not be deemed
to have failed in the payment of their lease rentals.

We again rule in the NEGATIVE on the second point.

Non-payment of the lease rentals whenever they fall due is a ground for the ejectment of
an agricultural lessee under paragraph 6, Section 36 of R.A. No. 3844.56 In relation to
Section 2 of Presidential Decree (P.D.) No. 816,57deliberate refusal or continued refusal
to pay the lease rentals by the agricultural lessee for a period of two (2) years shall, upon

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 hearing and final judgment, result in the cancellation of the CLT issued in the agricultural
lessees favor.
The agricultural lessee's failure to pay the lease rentals, in order to warrant his
dispossession of the landholding, must be willful and deliberate and must have lasted for
at least two (2) years. The term "deliberate" is characterized by or results from slow,
careful, thorough calculation and consideration of effects and consequences, while the
term "willful" is defined, as one governed by will without yielding to reason or without
regard to reason.58 Mere failure of an agricultural lessee to pay the agricultural lessor's
share does not necessarily give the latter the right to eject the former absent a deliberate
intent on the part of the agricultural lessee to pay.59

In the present petition, we do not find the respondents alleged non-payment of the lease
rentals sufficient to warrant their dispossession of the subject property. The respondents
alleged non-payment did not last for the required two-year period. To reiterate our
discussion above, the respondents rental payments were not yet due and the respondents
were not in default at the time Ernesto filed the petition for ejectment as Ernesto failed to
prove his alleged prior verbal demands. Additionally, assuming arguendo that the
respondents failed to pay the lease rentals, we do not consider the failure to be deliberate
or willful. The receipts on record show that the respondents had paid the lease rentals for
the years 1988-1998. To be deliberate or willful, the non-payment of lease rentals must
be absolute, i.e., marked by complete absence of any payment. This cannot be said of the
respondents case. Hence, without any deliberate and willful refusal to pay lease rentals
for two years, the respondents ejectment from the subject property, based on this ground,
is baseless and unjustified.

Finally, we rule in the AFFIRMATIVE on the third point.

Ernesto purchased the subject property in 1988. However, he only demanded the payment
of the lease rentals in 1998. All the while, the respondents had been paying the lease
rentals to Corazon and Laureano. With no demand coming from Ernesto for the payment
of the lease rentals for ten years, beginning from the time he purchased the subject
property, the respondents thus cannot be faulted for continuously paying the lease rentals
to Corazon and Laureano. Ernesto should have demanded from the respondents the
payment of the lease rental soon after he purchased the subject property. His prolonged
inaction, whether by intention or negligence, in demanding the payment of the lease
rentals or asserting his right to receive such rentals, at the very least, led the respondents
to consider Corazon and Laureano to still be the authorized payees of the lease rentals,
given the absence of any objection on his part.

iii. Nieves vs Duldulao

(Note: The Court found that there is a willful and deliberate non-payment of the lessor
which amounted to their dispossession of the land. Also, the fortuitous even defense
should be substantiated by the lessee.)

The Court is impelled to agree with the DARAB that respondents herein willfully and
deliberately chose not to pay their leasehold rentals to the landowner when they fell due.
The term "willful" means "voluntary and intentional, but not necessarily malicious,"
while the term "deliberate" means that the act or omission is "intentional," "premeditated"
or "fully considered." These qualities the landowner herein had successfully established
in relation to respondents default in this case. Accordingly, their dispossession from the
subject land is warranted under the law.

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 In the present case, petitioner seeks the dispossession of respondents from the subject
land on the ground of non-payment of leasehold rentals based on item 6, Section 36 of
RA 3844. While respondents indeed admit that they failed to pay the full amount of their
respective leasehold rentals as they become due, they claim that their default was on
account of the debilitating effects of calamities like flashfloods and typhoons. This latter
assertion is a defense provided under the same provision which, if successfully
established, allows the agricultural lessee to retain possession of his landholding. The
records of this case are, however, bereft of any showing that the aforestated claim was
substantiated by any evidence tending to prove the same. Keeping in mind that bare
allegations, unsubstantiated by evidence, are not equivalent to proof, the Court cannot
therefore lend any credence to respondents fortuitous event defense.

Respondents failure to pay leasehold rentals to the landowner also appears to have been
willful and deliberate. They, in fact, do not deny and therefore admit the landowners
assertion that their rental arrearages have accumulated over a considerable length of time,
i.e., from 1985 to 2005 but rely on the fortuitous event defense, which as above-
mentioned, cannot herein be sustained.

h. Period of Redemption

i. SECTION 12. Lessee's Right of Redemption. In case the landholding is sold to a third
person without the knowledge of the agricultural lessee, the latter shall have the right to
redeem the same at a reasonable price and consideration: Provided, That the entire
landholding sold must be redeemed: Provided, further, That where these are two or more
agricultural lessees, each shall be entitled to said right of redemption only to the extent of
the area actually cultivated by him. The right of redemption under this Section may be
exercised within two years from the registration of the sale, and shall have priority over
any other right of legal redemption.

ii. SECTION 19. Registry of Agricultural Leasehold Contracts. The Municipal Treasurer
of the municipality wherein the land is situated shall keep a record of all such contracts
drawn and executed within his jurisdiction, to be known as "Registry of Agricultural
Leasehold Contracts". He shall keep this registry together with a copy of each contract
entered therein, and make annotations on said registry of all subsequent acts relative to
each contract, such as its renewal, novation, cancellation, etc. No registration fees or
documentary stamps shall be required in the registration of said contracts or of any
subsequent acts relative thereto.

iii. Po v Dampal

(Note: Issue is on prescription on the right of redemption by the lessee.)

SCs Ruling
In its disquisition, the DARAB held that absence of written notice to the tenant of the
sale, as well as to the DAR, is indispensable, particularly in view of Sec. 12 of Republic
Act No. 3844, as amended by Republic Act No. 6389, which mandates that the 180-day
period must be reckoned from the notice in writing upon registration of the sale.

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 Sec. 12 of Republic Act No. 3844 or the Agricultural Land Reform Code of 1963, as
amended by Republic Act No. 6389, otherwise known as the Code of Agrarian Reforms
of the Philippines, provides:

Sec. 12. Lessees right of redemption. In case the landholding is sold to a third person
without the knowledge of the agricultural lessee, the latter shall have the right to redeem
the same at a reasonable price and consideration: Provided, That where there are two or
more agricultural lessees, each shall be entitled to said right of redemption only to the
extent of the area actually cultivated by him. The right of redemption under this Section
may be exercised within one hundred eighty days from notice in writingwhich shall be
served by the vendee on all lessees affected and the Department of Agrarian Reform upon
the registration of the sale, and shall have priority over any other right of legal
redemption. The redemption price shall be the reasonable price of the land at the time of
the sale.

The admitted lack of written notice on Dampal and the DAR thus tolled the running of
the prescriptive period. Petitioners contention that Dampal must be considered to have
had constructive knowledge thereof fails in light of the express requirement for notice to
be in writing.

i. Reclassification of Land as Ground to Extinguish Leasehold

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

Since in this case, there is neither a final order of conversion by the DAR nor a court judgment
authorizing the tenants ejectment on the ground of reclassification, as a result of the landowners
court action, there is no legal basis to make respondent liable to paydisturbance compensation.
Accordingly, the Court of Appeals committed no error in ordering the dismissal of the complaint
before the DARAB.

j. Crisostomo v Victoria

(For resolution is the issue of whether respondent Martin P. Victoria is a bona fide tenant of the
disputed portion.)

SCs Ruling
Section 6 of Republic Act No. 3844, otherwise known as the Agricultural Land Reform Code,
identifies the recognized parties in an agricultural leasehold relation:

SECTION 6. Parties to Agricultural Leasehold Relation. The agricultural leasehold relation

shall be limited to the person who furnishes the landholding, either as owner, civil law lessee,
usufructuary, or legal possessor, and the person who personally cultivates the same.

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 Proceeding from Section 6 of the Agricultural Land Reform Code, the Court of Appeals
capitalized on Hipolito's supposed status as "legal possessor" of the disputed portion, a status that
was deemed to emanate from his having been the lessee. Thus, the Court of Appeals concluded
that "Hipolito, as the legal possessor, could legally allow [respondent] to work and till the
landholding"19 thereby making respondent a tenant whose security of tenure petitioner must
now respect.

The Court of Appeals is in error. Hipolito's status as the acknowledged tenant did not clothe him
with the capacity to designate respondent as a tenant.

This court has settled that tenancy relations cannot be an expedient artifice for vesting in the
tenant rights over the landholding which far exceed those of the landowner. It cannot be a means
for vesting a tenant with security of tenure, such that he or she is effectively the landowner.Even
while agrarian reform laws are pieces of social legislation, landowners are equally entitled to
protection. In Calderon v. Dela Cruz:
It is true that RA 3844 is a social legislation designed to promote economic and social stability
and must be interpreted liberally to give full force and effect to its clear intent. This liberality in
interpretation, however, should not accrue in favor of actual tillers of the land, the tenant-
farmers, but should extend to landowners as well. . . . The landowners deserve as much
consideration as the tenants themselves in order not to create an economic dislocation, where
tenants are solely favored but the landowners become impoverished.

k. Velasquez v Sps. Cruz

The core of this dispute is the question of whom between the DARAB and the RTC, has
jurisdiction over the case.

Section 50 of R.A. No. 6657 provides:

Section 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters involving the implementation of agrarian reform, except those
falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).
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Rule II, Section 1(1.1) of the DARAB 2003 Rules of Procedure:

Jurisdiction of the Board and its Adjudicators

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

1.1 The rights and obligations of persons, whether natural or juridical, engaged in the
management, cultivation, and use of all agricultural lands covered by Republic Act (RA) No.
6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), and other related
agrarian laws;
Based on the above-cited rules, only DARAB can adjudicate an agrarian dispute.

Section 3(d) of R.A. No. 6657 defines an agrarian dispute in this wise:

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 (d) Agrarian dispute refers to any controversy relating to tenurial arrangements, whether
leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including
disputes concerning farmworkers' associations or representation of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under R.A. 6657 and
other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and
other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of
farm operator and beneficiary, landowner and tenant, or lessor and lessee.For DARAB to have
jurisdiction over the case, there must be tenancy relationship between the parties.

Tenancy relationship is a juridical tie which arises between a landowner and a tenant once they
agree, expressly or impliedly, to undertake jointly the cultivation of a land belonging to the
landowner, as a result of which relationship the tenant acquires the right to continue working on
and cultivating the land. The existence of a tenancy relationship cannot be presumed and
allegations that one is a tenant do not automatically give rise to security of tenure.

In order for a tenancy agreement to arise, it is essential to establish all its indispensable elements,
viz.: (1) the parties are the landowner and the tenant or agricultural lessee; (2) the subject matter
of the relationship is an agricultural land; (3) there is consent between the parties to the
relationship; (4) the purpose of the relationship is to bring about agricultural production; (5) there
is personal cultivation on the part of the tenant or agricultural lessee; and (6) the harvest is shared
between the landowner and the tenant or agricultural lessee. All these requisites are necessary to
create a tenancy relationship, and the absence of one or more requisites will not make the alleged
tenant a de facto tenant.[12]

The Court of Appeals anchored its ruling on the absence of the consent and sharing of harvests
as indispensable elements of a tenancy relationship. We agree with the appellate court's
disquisition. The appellate court held in this wise:

It appears that the element of consent and sharing of harvests are clearly lacking. [Petitioner]
merely alleged that he was verbally asked by all the heirs of Guillerma Coronel to continue
working on the land. The fact that [petitioner] was allowed to stay on the property does not mean
that [respondents] impliedly recognized the existence of a leasehold relation with [petitioner].
Occupancy and continued possession of the land will not ipso facto make one a de jure tenant.

To reiterate, the RTC retains jurisdiction over the instant action for recovery of possession.

l. Heirs of Tan v Pollescas

The Ruling of the Court

The petition lacks merit.No ground for dispossession of landholding

Section 7 of RA 3844 as amended provides that once there is a leasehold relationship, as in the
present case, the landowner cannot eject the agricultural tenant from the land unless authorized
by the court for causes provided by law.[27] RA 3844 as amended expressly recognizes and
protects an agricultural leasehold tenants right to security of tenure.

In the instant case, the Tan Heirs seek Reynaldas ejectment from the Land on the ground of non-
payment of lease rental.

11
 The Court agrees with the Court of Appeals that for non-payment of the lease rental to be a valid
ground to dispossess the agricultural lessee of the landholding, the amount of the lease rental
must first of all be lawful. If the amount of lease rental claimed exceeds the limit allowed by law,
non-payment of lease rental cannot be a ground to dispossess the agricultural lessee of the
landholding.

Section 34 of RA 3844 as amendedmandates that not x x x more than 25%of the average normal
harvest shall constitute the just and fair rental for leasehold. In this case, the Tan Heirs demanded
Reynalda to deliver 2/3 of the harvest as lease rental, which clearly exceeded the 25% maximum
amount prescribed by law. Therefore, the Tan Heirs cannot validly dispossess Reynalda of the
landholding for non-payment of rental precisely because the lease rental claimed by the Tan
Heirs is unlawful.

Even assuming Reynalda agreed to deliver 2/3 of the harvest as lease rental, Reynalda is not
obliged to pay such lease rental for being unlawful. There is no legal basis to demand payment of
such unlawful lease rental. The courts will not enforce payment of a lease rental that violates the
law. There was no validly fixed lease rental demandable at the time of the harvests. Thus,
Reynalda was never in default.

Reynalda and the Tan Heirs failed to agree on a lawful lease rental. Accordingly, the DAR must
first fix the provisional lease rental payable by Reynalda to the Tan Heirs pursuant to the second
paragraph of Section 34 of RA 3844 as amended. Until the DAR has fixed the provisional lease
rental, Reynalda cannot be in default in the payment of lease rental since such amount is not yet
determined. There can be no delay in the payment of an undetermined lease rental because it is
impossible to pay an undetermined amount. That Reynalda is not yet in default in the payment of
the lease rental is a basic reason why she cannot be lawfully ejected from the Land for non-
payment of rental.

III. Presidential Decree 27(Decreeing the Emancipation of Tenants from the Bondage of the Soil,
Transferring to them the Ownership of the Land They Till and Providing the Instruments and
Mechanism Therefor)

a. Suppletory Application of Just Compensation

For the purpose of determining the cost of the land to be transferred to the tenant-farmer
pursuantto this Decree, the value of the land shall be equivalent to two and one-half (2 1/2) times
theaverage harvest of three normal crop years immediately preceding the promulgation of
thisDecree;

The total cost of the land, including interest at the rate of six (6) per centum per annum, shall
bepaid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations;

In case ofdefault, the amortization due shall be paid by the farmers cooperative in which the
defaultingtenant-farmer is a member, with the cooperative having a right of recourse against him;

The government shall guaranty such amortizations with shares of stock in government-owned
andgovernment-controlled corporations;

12
IV. Comprehensive Agrarian Reform Law, as amended
a. Date of Effectivity

June 15, 1988 which is the date of effectivity of the CARL and cut-off period for automatic
reclassifications or rezoning of agricultural lands that no longer require any DAR conversion
clearance or authority.

b. Agricultural Activity vis--vis raising of livestock

i. Luz Farms v DAR

On the Constitutional Meaning of Agriculture

The transcripts of the deliberations of the Constitutional Commission of 1986 on the

meaning of the word "agricultural," clearly show that it was never the intention of the
framers of the Constitution to include livestock and poultry industry in the coverage of
the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166
of R.A. 3844, as laud devoted to any growth, including but not limited to crop lands,
saltbeds, fishponds, idle and abandoned land (Record, CONCOM, August 7, 1986, Vol.
III, p. 11).

The intention of the Committee is to limit the application of the word "agriculture."
Commissioner Jamir proposed to insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and residential
properties because all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because the Committee
contemplated that agricultural lands are limited to arable and suitable agricultural lands
and therefore, do not include commercial, industrial and residential lands (Record,
CONCOM, August 7, 1986, Vol. III, p. 30).

ii. Republic v Lopez

Ruling of the SC
In Luz Farms v. Secretary of the Department of Agrarian Reform,[13] the Court declared
unconstitutional the CARL provisions that included lands devoted to livestock under the
coverage of the CARP. The transcripts of the deliberations of the Constitutional
Commission of 1986 on the meaning of the word "agricultural" showed that it was never
the intention of the framers of the Constitution to include the livestock and poultry
industry in the coverage of the constitutionally mandated agrarian reform program of the
government. Thus, lands devoted to the raising of livestock, poultry and swine have been
classified as industrial, not agricultural, and thus exempt from agrarian reform.

The Lopez lands of SNLABC are actually and directly being used for livestock and are
thus exempted from the coverage of the CARL.

Under the rules then prevailing, it was the Municipal Agrarian Reform Officer (MARO)
who was primarily responsible for investigating the legal status, type and areas of the
land sought to be excluded; and for ascertaining whether the area subject of the
application for exemption had been devoted to livestock-raising as of 15 June 1988. The
MAROs authority to investigate has subsequently been replicated in the current DAR
guidelines regarding lands that are actually, directly and exclusively used for livestock
raising. As the primary official in charge of investigating the land sought to be exempted

13
 as livestock land, the MAROs findings on the use and nature of the land, if supported by
substantial evidence on record, are to be accorded greater weight, if not finality.

Verily, factual findings of administrative officials and agencies that have acquired
expertise in the performance of their official duties and the exercise of their primary
jurisdiction are generally accorded not only respect but, at times, even finality if such
findings are supported by substantial evidence. The Court generally accords great respect,
if not finality, to factual findings of administrative agencies because of their special
knowledge and expertise over matters falling under their jurisdiction.

In the instant case, the MARO in its ocular inspectionfound on the Lopez lands several
heads of cattle, carabaos, horses, goats and pigs, some of which were covered by several
certificates of ownership. There were likewise structures on the Lopez lands used for its
livestock business, structures consisting of two chutes where the livestock were kept
during nighttime. The existence of the cattle prior to the enactment of the CARL was
positively affirmed by the farm workers and the overseer who were interviewed by the
MARO.

The Limot lands of SNLABC are not actually and directly being used for livestock and
should thus be covered by the CARL.

In contrast, the Limot lands were found to be agricultural lands devoted to coconut trees
and rubber and are thus not subject to exemption from CARP coverage.

In the Report dated 06 April 1994, the team that conducted the inspection found that the
entire Limot lands were devoted to coconuts (41.5706 hectares) and rubber (8.000
hectares) and recommended the denial of the application for exemption. Verily, the Limot
lands were actually, directly and exclusively used for agricultural activities, a fact that
necessarily makes them subject to the CARP. These findings of the inspection team were
given credence by the DAR Regional Director who denied the application, and were even
subsequently affirmed by the DAR Secretary and the Court of Appeals.

c. Holy Trinity v Dela Cruz

The Dakila property was not an agricultural land within the coverage of R.A. No. 6657 or
P.D. No. 27

The CA declared that the Dakila property as an agricultural land; and that there was no valid
reclassification under Municipal Resolution No. 16-98 because the law required an ordinance,
not a resolution.

We agree in part with the CA.

Under Republic Act No. 7160, local government units, such as the Municipality of Malolos,
Bulacan, are vested with the power to reclassify lands. However, Section 20, Chapter II, Title I
of Republic Act No. 7160 ordains:

Section 20. Reclassification of Lands. (a) A city or municipality may, through an ordinance
passed by the sanggunian after conducting public hearings for the purpose, authorize the
reclassification of agricultural lands and provide for the manner of their utilization or disposition
in the following cases: (1) when the land ceases to be economically feasible and sound for
agricultural purposes as determined by the Department of Agriculture or (2) where the land shall

14
have substantially greater economic value for residential, commercial, or industrial purposes, as
determined by the sanggunian concerned: x x x. (Emphasis supplied)

Clearly, an ordinance is required in order to reclassify agricultural lands, and such may only be
passed after the conduct of public hearings.

The petitioner claims the reclassification on the basis of Municipal Resolution No. 16-98. Given
the foregoing clarifications, however, the resolution was ineffectual for that purpose. A
resolution was a mere declaration of the sentiment or opinion of the lawmaking body on a
specific matter that was temporary in nature, and differed from an ordinance in that the latter was
a law by itself and possessed a general and permanent character.49 We also note that the
petitioner did not show if the requisite public hearings were conducted at all. In the absence of
any valid and complete reclassification, therefore, the Dakila property remained under the
category of an agricultural land.

Nonetheless, the Dakila property was not an agricultural land subject to the coverage of
Republic Act No. 6657 or Presidential Decree No. 27.

Verily, the basic condition for land to be placed under the coverage of Republic Act No. 6657 is
that it must either be primarily devoted to or be suitable for agriculture.50 Perforce, land that is
not devoted to agricultural activity is outside the coverage of Republic Act No. 6657. An
agricultural land, according to Republic Act No. 6657, is one that is devoted to agricultural
activity and not classified as mineral, forest, residential, commercial or industrial
land.Agricultural activity includes the cultivation of the soil, planting of crops, growing of fruit
trees, raising livestock, poultry or fish, including the harvesting of such farm products; and other
farm activities and practices performed by a farmer in conjunction with such farming operations
done by persons whether natural or juridical.

Consequently, before land may be placed under the coverage of Republic Act No. 6657, two
requisites must be met, namely: (1) that the land must be devoted to agricultural activity; and
(2) that the land must not be classified as mineral, forest, residential, commercial or industrial
land. Considering that the Dakila property has not been classified as mineral, forest, residential,
commercial or industrial, the second requisite is satisfied. For the first requisite to be met,
however, there must be a showing that agricultural activity is undertaken on the property.

It is not difficult to see why Republic Act No. 6657 requires agricultural activity in order to
classify land as agricultural. The spirit of agrarian reform laws is not to distribute lands per
se, but to enable the landless to own land for cultivation. This is why the basic qualification
laid down for the intended beneficiary is to show the willingness, aptitude and ability to
cultivate and make the land as productive as possible. This requirement conforms with the
policy direction set in the 1987 Constitution to the effect that agrarian reform laws shall be
founded on the right of the landless farmers and farmworkers to own, directly or collectively, the
lands they till. In Luz Farms v. Secretary of the Department of Agrarian Reform, we even said
that the framers of the Constitution limited agricultural lands to the arable and suitable
agricultural lands.

Here, no evidence was submitted to show that any agricultural activity like cultivation of the
land, planting of crops, growing of fruit trees, raising of livestock, or poultry or fish, including
the harvesting of such farm products, and other farm activities and practices were being
performed on the Dakila property in order to subject it to the coverage of Republic Act No. 6657.
We take particular note that the previous tenants had themselves declared that they were
voluntarily surrendering their tenancy rights because the land was not conducive to farming by

15
 reason of its elevation, among others. Also notable is the second Whereas Clause of Municipal
Resolution No. 16-98, which mentioned that the Dakila property was not fit for agricultural use
due to lack of sufficient irrigation and that it was more suitable for residential use, thus:

WHEREAS, after an ocular inspection of the subject lots and matured deliberation, the
Sangguniang Bayan found merit in the request for the following reasons, thus:

1. The properties are untenanted;

2. That they are not fitted [sic] for agricultural use for lack of sufficient irrigation;
3. There are improvements already introduce[d] on the property by its owner like construction of
subdivision roads;
4. Lack of oppositor to the intend[ed] subdivision project on the properties by its owner;
5. That they are more suitable for residential use considering their location viz-a-viz (sic) with
(sic) the residential lots in the area.

The terse statement by the OIC-Regional Director that the Dakila property would still be subject
to Republic Act No. 6657 should Presidential Decree No. 27 be inapplicable59 did not meet the
requirements under Republic Act No. 6657. Section 7 of Republic Act No. 6657 identified rice
and corn lands subject to Presidential Decree No. 27 for priority distribution in the first phase
and implementation of the CARP. Insofar as the interplay of these two laws was concerned, the
Court has said that during the effectivity of the Republic Act No. 6657 and in the event of
incomplete acquisition under Presidential Decree No. 27, the former should apply, with the
provisions of the latter and Executive Order No. 22860having only suppletory effect.

d. Definition of Agricultural Land

i. Natalia Realty v DAR

On Complying with Requisites of Law for Convertion of the Land

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. And, in all permits granted to
petitioners, the Commission stated invariably therein that the applications were in
"conformance" or "conformity" or "conforming" to 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.

On Definition of Agricultural Lands

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

16
 lands" are only those lands which are "arable and suitable agricultural lands" and "do not
include commercial, industrial and residential lands."

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

ii. Alangilan v OP

Pertinent Facts
Petitioner is the owner/developer of a 17.4892-hectare land in Barangays Alangilan and
Patay in Batangas City (Alangilan landholding). On August 7, 1996, petitioner filed an
Application and/or Petition for Exclusion/Exemption from Comprehensive Agrarian
Reform Program (CARP) Coverage of the Alangilan landholding with the Municipal
Agrarian Reform Office (MARO) of the Department of Agrarian Reform (DAR). It
averred that, in 1982, the Sangguniang Bayan of Batangas City classified the subject
landholding as reserved for residential under a zoning ordinance (1982 Ordinance), which
was approved by the Human Settlement Regulatory Commission. It further alleged that,
on May 17, 1994, the Sangguniang Panglungsod of Batangas City approved the City
Zoning Map and Batangas Comprehensive Zoning and Land Use Ordinance (1994
Ordinance), reclassifying the landholding as residential-1. Petitioner thus claimed
exemption of its landholding from the coverage of the CARP. In support of its
application, petitioner submitted a certification dated October 31, 1995 of Zoning
Administrator Delia O. Malaluan. On May 6, 1997, then DAR Secretary Ernesto Garilao
issued an Order] denying petitioners application for exemption.

17
 Issue
W/O Alangilan landholding is subject to the coverage of the comprehensive agrarian
reform law, notwithstanding that the property has been converted to non-agricultural uses
by the Zoning Ordinance of the city of Batangas prior to the law.

SCs Ruling

Indeed, lands devoted to non-agricultural activity are outside the coverage of CARL.
These include lands previously converted into non-agricultural uses prior to the
effectivity of the CARL on June 15, 1988. Unfortunately, petitioner failed to convince us
that the Alangilan landholding ceased to be agricultural at the time of the effectivity of
the CARL.

It is beyond cavil that the Alangilan landholding was classified as agricultural, reserved
for residential in 1982, and was reclassified as residential-1 in 1994. However, contrary
to petitioners assertion, the term reserved for residential does not change the nature of
the land from agricultural to non-agricultural. As aptly explained by the DAR Secretary,
the term reserved for residential simply reflects the intended land use. It does not
denote that the property has already been reclassified as residential, because the phrase
reserved for residential is not a land classification category.

Indubitably, at the time of the effectivity of the CARL in 1988, the subject landholding
was still agricultural. This was bolstered by the fact that the Sangguniang Panlalawigan
had to pass an Ordinance in 1994, reclassifying the landholding as residential-1. If,
indeed, the landholding had already been earmarked for residential use in 1982, as
petitioner claims, then there would have been no necessity for the passage of the 1994
Ordinance.

Petitioner cannot take refuge in our ruling in Natalia. The case is not on all fours with the
instant case. In Natalia, the entire property was converted into residential use in 1979 and
was developed into a low-cost housing subdivision in 1982. Thus, the property was no
longer devoted to agricultural use at the time of the effectivity of the CARL.

In this case, however, petitioner failed to establish that the subject landholding had
already been converted into residential use prior to June 15, 1988. We also note that the
subject landholding was still being utilized for agricultural activities at the time of the
filing of the application for exemption. The ocular inspection, jointly conducted by the
MARO, PARO and RARO, disclosed that the landholding was planted with mangoes and
coconuts.

iii. Heirs of Deleste v LBP

SCs Ruling
Pertinently, after an assiduous study of the records of the case, We agree with petitioners
that the subject property, particularly Lot No. 1407, is outside the coverage of the
agrarian reform program in view of the enactment by the City of Iligan of its local zoning
ordinance, City Ordinance No. 1313.

18
 It is undeniable that the local government has the power to reclassify agricultural into
non-agricultural lands. In Pasong Bayabas Farmers Association, Inc. v. CA, this Court
held that pursuant to Sec. 3 of Republic Act No. (RA) 2264, amending the Local
Government Code, municipal and/or city councils are empowered to adopt zoning and
subdivision ordinances or regulations in consultation with the National Planning
Commission. It was also emphasized therein that [t]he power of the local government to
convert or reclassify lands [from agricultural to non-agricultural lands prior to the
passage of RA 6657] is not subject to the approval of the [DAR].

Most Important Note in the Case

However, Natalia should be cautiously applied in light of Administrative Order 04, Series
of 2003, which outlines the rules on the Exemption on Lands from CARP Coverage
under Section (3) of Republic Act No. 6657, and Department of Justice (DOJ) Opinion
No. 44, Series of 1990. It reads:

I. Prefatory Statement

Republic Act (RA) 6657 or the Comprehensive Agrarian Reform Law (CARL), Section
3, Paragraph (c) defines agricultural land as referring to land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land.

Department of Justice Opinion No. 44, Series of 1990, (or DOJ Opinion 44-1990 for
brevity) and the case of Natalia Realty versus Department of Agrarian Reform (12
August 2993, 225 SCRA 278) opines that with respect to the conversion of agricultural
land covered by RA 6657 to non-agricultural uses, the authority of the Department of
Agrarian Reform (DAR) to approve such conversion may be exercised from the date of
its effectivity, on 15 June 1988. Thus, all lands that are already classified as commercial,
industrial or residential before 15 June 1988 no longer need any conversion clearance.

However, the reclassification of lands to non-agricultural uses shall not operate to

divest tenant[-]farmers of their rights over lands covered by Presidential Decree (PD)
No. 27, which have been vested prior to 15 June 1988.

As emphasized, the reclassification of lands to non-agricultural cannot be applied to

defeat vested rights of tenant-farmers under Presidential Decree No. 27.

iv. LBP v Estate of Araneta

The Courts Ruling

We find the petitions partly meritorious.

Classification of the Doronilla Property

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

19
eventually generated covering 73 hectares, with about 75 CLTs actually distributed to the
tenant-beneficiaries. However, upon the issuance of Proclamation 1637, all activities
related to the OLT were stopped.[31]

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

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

Based on the foregoing, it is clear that the undeveloped portions of the

Antipolo Hills Subdivison cannot in any language be considered as
agricultural lands. These lots were intended for residential use. They
ceased to be agricultural lands upon approval of their inclusion in the
Lungsod Silangan Reservation. x x x

xxxx

Since the NATALIA lands were converted prior to 15, June 1988, respondent DAR is
bound by such conversion. It was therefore error to include the undeveloped portions of
the Antipolo Hills Subdivision within the coverage of CARL.[32] (Emphasis added;
italics in the original.)

Guided by the foregoing doctrinal pronouncement, the key date to reckon, as a

preliminary matter, is the precise time when Doronillas Lot 23, now Aranetas property,
ceased to be agricultural. This is the same crucial cut-off date for considering the
existence of private rights of farmers, if any, to the property in question. This, in turn,
means the date when Proclamation 1637 establishing LS Townsite was issued: April 18,
1977. From then on, the entire Lot 23 was, for all intents and purposes, considered
residential, exempted ordinarily from land reform, albeit parts of the lot may still be
actually suitable for agricultural purposes. Both the Natalia lands, as determined in
Natalia Realty, Inc., and the Doronilla property are situated within the same area covered
by Proclamation 1637; thus, the principles regarding the classification of the land within
the Townsite stated in Natalia Realty, Inc. apply mutatis mutandis to the instant case.

20
Applicability of PD 27, RA 6657
and Proclamation 1637 to the Doronilla Estate

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

When it took effect on June 15, 1988, RA 6657 became the prevailing agrarian reform
law. This is not to say, however, that its coming into effect necessarily impeded the
operation of PD 27, which, to repeat, covers only rice and corn land. Far from it, for RA
6657, which identifies rice and corn land under PD 27 as among the properties the DAR
shall acquire and distribute to the landless,[33] no less provides that PD 27 shall be of
suppletory application. We stated in Land Bank of the Philippines v. Court of Appeals,
We cannot see why Sec. 18 of R.A. 6657 should not apply to rice and corn lands under
P.D. 27. Section 75 of R.A. 6657 clearly states that the provisions of P.D. 27 and E.O.
228 shall only have a suppletory effect.[34]

All told, the primary governing agrarian law with regard to agricultural lands, be they of
private or public ownership and regardless of tenurial arrangement and crops produced, is
now RA 6657. Section 3(c) of RA 6657 defines agricultural lands as lands devoted to
agricultural activity as defined in the Act and not classified as mineral, forest, residential,
commercial or industrial land. The DAR itself refers to agricultural lands as:

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

At the time of the effectivity of RA 6657 on June 15, 1998, the process of agrarian
reform on the Doronilla property was, however, to reiterate, far from complete. In fact,
the DAR sent out a Notice of Acquisition to Araneta only on December 12, 1989, after
the lapse of around 12 years following its discontinuance of all activities incident to the
OLT.

Proclamation 1637, a martial law and legislative-powers issuance, partakes the nature of
a law. In Natalia Realty, Inc., the Court in fact considered and categorically declared
Proclamation 1637 a special law, since it referred specifically to the LS Townsite
Reservation.[36] As such, Proclamation 1637 enjoys, so Natalia Realty, Inc. intones,
applying basic tenets of statutory construction, primacy over general laws, like RA 6657.

In light of the foregoing legal framework, the question that comes to the fore is whether
or not the OLT coverage of the Doronilla property after June 15, 1988, ordered by DAR
pursuant to the provisions of PD 27 and RA 6657, was still valid, given the classificatory
effect of the townsite proclamation.

21
 To restate a basic postulate, the provisions of RA 6657 apply only to agricultural lands
under which category the Doronilla property, during the period material, no longer falls,
having been effectively classified as residential by force of Proclamation 1637. It ceased,
following Natalia Realty, Inc., to be agricultural land upon approval of its inclusion in the
LS Townsite Reservation pursuant to the said reclassifying presidential issuance. In this
regard, the Court cites with approval the following excerpts from the appealed CA
decision:

v. Davao New Town v Sps. Saliga

Issue
Whether the property had been reclassified from agricultural to non-agricultural uses
prior to June 15, 1988 so as to remove it from the coverage of R.A. No. 6657.

SCs Ruling
The subject property had beenreclassified as non-agricultural priorto June 15, 1988;
hence, they are nolonger covered by R.A. No. 6657

At the core of the controversy is the questioned reclassification of the property to non-
agricultural uses. This issue is intertwined with and on which depends the resolution of
the issue concerning the claimed agricultural leasehold relationship.

In reversing the PARAD and holding that the property was still agricultural, the DARAB
considered the Comprehensive Development Plan (approved by the HSRC through Board
Resolution R-39-4 dated July 31, 1980) and Davao City Ordinance No. 363, series of
1982 (adopting the Comprehensive Development Plan) as invalid reclassification
measures. It gave as reason the absence of the requisite certification from the HLURB
and the approval of the DAR. In the alternative, and citing P.D. No. 27, in relation with
R.A. No. 6657, as basis, the DARAB considered the alleged reclassification ineffective
so as to free the property from the legal effects of P.D. No. 27 that deemed it taken under
the governments operation land transfer (OLT) program as of October 21, 1972.

We differ from, and cannot accept, the DARABs position.

We hold that the property had been reclassified to non-agricultural uses and was,
therefore, already outside the coverage of the Comprehensive Agrarian Reform Law
(CARL) after it took effect on July 15, 1988.

1. Power of the local government units to reclassify lands from agricultural to

nonagricultural uses; the DAR approval is not required

Indubitably, the City Council of Davao City has the authority to adopt zoning resolutions
and ordinances. Under Section 3 of R.A. No. 226430 (the then governing Local
Government Code), municipal and/or city officials are specifically empowered to "adopt
zoning and subdivision ordinances or regulations in consultation with the National
Planning Commission."

In Pasong Bayabas Farmers Asso., Inc. v. Court of Appeals, the Court held that this
power of the local government units to reclassify or convert lands to non-agricultural uses
is not subject to the approval of the DAR. There, the Court affirmed the authority of the

22
Municipal Council of Carmona to issue a zoning classification and to reclassify the
property in dispute from agricultural to residential through the Councils Kapasiyahang
Bilang 30, as approved by the HSRC.

In the subsequent case of Junio v. Secretary Garilao, this Court clarified, once and for all,
that "with respect to areas classified and identified as zonal areas not for agricultural uses,
like those approved by the HSRC before the effectivity of RA 6657 on June 15, 1988, the
DARs clearance is no longer necessary for conversion." The Court in that case declared
the disputed landholding as validly reclassified from agricultural to residential pursuant
to Resolution No. 5153-A of the City Council of Bacolod.
Citing the cases of Pasong Bayabas Farmers Asso., Inc. and Junio, this Court arrived at
significantly similar ruling in the case of Agrarian Reform Beneficiaries Association
(ARBA) v. Nicolas.

Based on these considerations, we hold that the property had been validly reclassified as
non-agricultural land prior to June 15, 1988. We note the following facts established in
the records that support this conclusion:
(1) the Davao City Planning and Development Board prepared the
Comprehensive Development Plan for the year 1979-2000 in order to
provide for a comprehensive zoning plan for Davao City;
(2) the HSRC approved this Comprehensive Development Plan through
Board Resolution R-39-4 dated July 31, 1980;
(3) the HLURB confirmed the approval per the certification issued on
April 26, 2006;37
(4) the City Council of Davao City adopted the Comprehensive
Development Plan through its Resolution No. 894 and City Ordinance
No. 363, series of 1982;38
(5) the Office of the City Planning and Development Coordinator, Office
of the Zoning Administrator expressly certified on June 15, 1995 that
per City Ordinance No. 363, series of 1982 as amended by S.P.
Resolution No. 2843, Ordinance No. 561, series of 1992, the property
(located in barangay Catalunan Pequeo) is within an
"urban/urbanizing" zone;39
(6) the Office of the City Agriculturist confirmed the above classification
and further stated that the property is not classified as prime
agricultural land and is not irrigated nor covered by an irrigation
project as certified by the National Irrigation Administration, per the
certification issued on December 4, 1998;40 and
(7) the HLURB, per certification dated May 2, 1996, quoted the April 8,
1996 certification issued by the Office of the City Planning and
Development Coordinator stating that "the Mintal District which
includes barangay Catalunan Pequeo, is identified as one of the
urbaning [sic] district centers and priority areas and for development
and investments in Davao City."

23
e. Agrarian Dispute

i. Section 50-A
Exclusive Jurisdiction on Agrarian Dispute Sec. 19 of RA 9700 amending Sec. 50-A of
RA 6657

Section 19. Section 50 of Republic Act No. 6657, as amended, is hereby further amended
by adding Section 50-A to read as follows:

SEC. 50-A. Exclusive Jurisdiction on Agrarian Dispute. No court or prosecutors

office shall take cognizance of cases pertaining to the implementation of the CARP
except those provided under Section 57 of Republic Act No. 6657, as amended. If there is
an allegation from any of the parties that the case is agrarian in nature and one of the
parties is a farmer, farmworker, or tenant, the case shall be automatically referred by the
judge or the prosecutor to the DAR which shall determine and certify within fifteen (15)
days from referral whether an agrarian dispute exists: Provided, That from the
determination of the DAR, an aggrieved party shall have judicial recourse. In cases
referred by the municipal trial court and the prosecutors office, the appeal shall be with
the proper regional trial court, and in cases referred by the regional trial court, the appeal
shall be to the Court of Appeals.

In cases where regular courts or quasi-judicial bodies have competent jurisdiction,

agrarian reform beneficiaries or identified beneficiaries and/or their associations shall
have legal standing and interest to intervene concerning their individual or collective
rights and/or interests under the CARP.

The fact of non-registration of such associations with the Securities and Exchange
Commission, or Cooperative Development Authority, or any concerned government
agency shall not be used against them to deny the existence of their legal standing and
interest in a case filed before such courts and quasi-judicial bodies.

ii. DAR AO No. 3

SECTION 1. Prefatory Statement. Section 19 of Republic Act (R.A.) No. 9700

provides:

"SEC. 19. Section 50 of Republic Act No. 6657, as amended, is hereby further
amended by adding Section 50-A to read as follows:

"SEC. 50-A. Exclusive Jurisdiction on Agrarian Dispute. No court or prosecutor's

office shall take cognizance of cases pertaining to the implementation of the CARP
except those provided under Section 57 of Republic Act No. 6657, as amended. If there is
an allegation from any of the parties that the case is agrarian in nature and one of the
parties is a farmer, farmworker, or tenant, the case shall be automatically referred by the
judge or the prosecutor to the DAR which shall determine and certify within fifteen (15)
days from referral whether an agrarian dispute exists: Provided, That from the
determination of the DAR, an aggrieved party shall have judicial recourse. In cases
referred by the municipal trial court and the prosecutor's office, the appeal shall be with
the proper regional trial court and in cases referred by the regional trial court, the appeal
shall be to the Court of Appeals.

24
"In cases where regular courts or quasi-judicial bodies have competent jurisdiction,
agrarian reform beneficiaries or identified beneficiaries and/or their associations shall
have legal standing and interest to intervene concerning their individual or collective
rights and/or interests under the CARP.

"The fact of non-registration of such associations with the Securities and Exchange
Commission, or Cooperative Development Authority, or any concerned government
agency shall not be used against them to deny the existence of their legal standing and
interest in a case filed before such courts and quasi-judicial bodies.""

Whether or not a case is agrarian in nature is discussed in the case of DAR vs. Roberto
Cuenca, et al., (G.R. No. 154112, 23 September 2004) where the Supreme Court held
that: "All controversies on the implementation of the Comprehensive Agrarian Reform
Program (CARP) fall under the jurisdiction of the Department of Agrarian Reform
(DAR), even though they raise questions that are also legal or constitutional in nature. All
doubts should be resolved in favor of the DAR, since the law has granted it special and
original authority to hear and adjudicate agrarian matters."

From the foregoing, it is therefore declared that the Department of Agrarian Reform
(DAR) shall have exclusive jurisdiction on all cases that are agrarian in nature.

SECTION 2. Cases Covered. These guidelines shall apply to the procedure on

the referral of cases which are agrarian in nature to the DAR by the Prosecutor's Office,
the Municipal Circuit Trial Court, Municipal Trial Court, Metropolitan Trial Court and
the Regional Trial Court (MCTC, MTC, MeTC, and RTC, respectively), whether it be
criminal or civil in nature, except those involving issues of just compensation or the
prosecution of criminal offenses as provided for by Section 57 of R.A. No. 6657, as
amended by R.A. No. 9700.

SECTION 3. When Automatic Referral Shall Be Made. The referral to the

DAR of a case by the Prosecutor's Office, MCTC, MTC, MeTC, or RTC, shall be made
in accordance with Department of Justice (DOJ) Circular No. 40, dated 10 June 2010,
Supreme Court Office of the Court Administrator (OCA) Circular No. 62-2010, dated 28
April 2010, and other related circulars and issuances.

DOJ Circular No. 40 states:

"When a complaint for a felony or a criminal offense is filed before the Office of the City
or Provincial Prosecutor, the investigating prosecutor shall refer the case to the Provincial
Agrarian Reform Officer (PARO) who has jurisdiction over the place of the incident
when:

(a) there is an allegation by any of the parties (e.g., allegation in the complaint,
affidavit or counter-affidavit, etc.) that the case is agrarian in nature or an agrarian
dispute and one of the parties is a tenant, lessee, farmer-beneficiary, farmer, or
farmworker; or

(b) the case pertains to the implementation of the CARP except those provided under
Section 57 of Republic Act No. 6657, as amended."

"When the case is subject of inquest and there is an allegation by any of the parties that
the case is agrarian in nature or an agrarian dispute and one of them is a farmer,

25
farmworker or tenant, or involves the implementation of the CARP, the inquest
prosecutor shall immediately refer the case to the PARO and release the respondent for
further preliminary investigation. The above allegations must be written, made under
oath, and the party making such allegations signs the Minutes of the Inquest."

OCA Circular No. 62-2010, on the other hand, directs all courts and judges concerned to
"refer all cases before it alleged to involve an agrarian dispute to the DAR".

For easy reference, copies of DOJ Circular No. 40 dated 10 June 2010 and OCA Circular
No. 62-2010 shall be attached hereto.

SECTION 4. To Whom Shall Referral Be Made. If the case to be referred to

the DAR by the Prosecutor's Office, MCTC, MTC, MeTC, or RTC is not directly
referred to the Provincial Agrarian Reform Office (PARO) of the place where the
agricultural land subject of the case is located, the receiving DAR Office shall transmit it
to him within twenty-four (24) hours from its receipt of the referral.

SECTION 5. Issues to Be Determined. Upon referral, the PARO may only give
a ruling as to two issues:

(1) Whether or not the cause of action of the pending case with the referring Court or
Office of the Public Prosecutor is agrarian in nature, the jurisdiction of which is lodged
exclusively with the DAR; or

(2) Whether or not a matter within the exclusive jurisdiction of the DAR is a
prejudicial question to the issue pending with the referring Court or Office of the Public
Prosecutor.

No other issue may be adjudicated or determined by the PARO.

SECTION 6. Procedures.

1. Upon receipt of the records of the case, the PARO shall, on the same day,
immediately assign the said case to the Chief of the Legal Division of the DAR
Provincial Office concerned for the conduct of a summary investigation proceedings for
the sole purpose of determining whether or not an agrarian dispute exists or if the case is
agrarian in nature. The Chief of the DAR Legal Division concerned may assign the case
to a DAR lawyer or legal officer for the purpose of conducting the said summary
proceeding or fact-finding investigation.

2. The Chief of the DAR Legal Division, or the DAR lawyer or legal officer
assigned shall, within three (3) days from receipt of the case referred from the PARO,
personally or in such a manner that will ensure the receipt thereof (e.g., commercial
couriers, fax, electronic mail, phone call, etc.), serve upon each party to the case a notice
stating therein the hour, date, and place of the proceedings. The summary proceedings
shall be held, as far as practicable, in the municipality or barangay where the agricultural
landholding is located or where the biggest portion of the landholding is located if the
land overlaps two (2) or more municipalities or barangays. The parties shall be required
to present their witnesses, documentary evidence, or any object evidence to support their
respective positions as to the existence of an agrarian dispute on whether the case is
agrarian in nature. The Chief of the DAR Legal Division, or the DAR lawyer or legal
officer assigned shall require the Agrarian Reform Program Technologist (ARPT) of the

26
place where the subject agricultural landholding is located to submit his comments
thereto.

3. The said notice shall likewise require the parties to submit their respective
verified position papers, attaching thereto all their evidence, within five (5) non-
extendible days from receipt of such notice.

4. After the conclusion of the summary proceedings and the submission of all
position papers, or upon the expiration of the five (5) day period as provided herein, the
matter or issue shall be deemed submitted for resolution. No other pleading or motion
shall thereafter be received or given due course.

5. Within three (3) days from the time the matter or issue is deemed to be submitted
for resolution, the Chief of the DAR Legal Division, or the DAR lawyer or legal officer
assigned, shall, after a thorough examination of the testimonies of the parties and his/her
witnesses, the respective verified position papers, and the documentary evidence thus
submitted, submit his/her report to the PARO. The report shall indicate his/her initial
findings of the facts and circumstances of the case and as to whether an agrarian dispute
exists or not or on whether the case is agrarian in nature. The position papers, transcript
of stenographic notes, and the entire records of the case shall be attached to the report.

The determination by the DAR as to whether an agrarian dispute exists or not, or on

whether the case is agrarian in nature, shall be done through a summary proceeding
involving a strictly factual investigation. No motion for extension of time or any similar
pleading of a dilatory character shall be entertained nor given due course. To this end, the
Chief of the Legal Division, or the DAR lawyer or legal officer assigned, shall exert all
reasonable means to ascertain the facts based on the testimonies and evidence presented.
They may verify the position papers submitted by the parties, ascertaining that the
concerned party is the one causing the preparation thereof, and that the allegations therein
are true based on personal knowledge or authentic records and documents.

To preclude conflict of interest, in no case should the DAR lawyer serving as counsel for
the farmer-beneficiary be assigned as the hearing officer. Moreover, no hearing officer
should handle a case involving a relative within the fourth degree of consanguinity or
affinity who is a party thereto.

SECTION 8. Prima Facie Presumption of an Existence of Agrarian Dispute or

that the Case is Agrarian in Nature. The presence of any of the following facts or
circumstances shall automatically give rise to a prima facie presumption that an agrarian
dispute exists or that the case is agrarian in nature:

(a) A previous determination by the DAR that an agrarian dispute exists or that the
case is agrarian in nature, or the existence of a pending action with the DAR, whether an
Agrarian Law Implementation (ALI) case or a case before the DAR Adjudication Board
(DARAB), which involves the same landholding;

(b) A previous determination by the National Labor Relations Commission or its

Labor Arbiters that the farmworker is/was an employee of the complainant;

(c) A notice of coverage was issued or a petition for coverage under any agrarian
reform program was filed on the subject landholding; or

27
 (d) Other analogous circumstances.

If there is a prima facie presumption that an agrarian dispute exists or that the case is
agrarian in nature, the burden of proving the contrary shall be on the party alleging the
same.

SECTION 9. Facts Tending to Prove that a Case is Agrarian in Nature. In

addition to the instances mentioned in Section 7 hereof, the Chief of the Legal Division,
or the DAR lawyer or legal officer assigned, in determining whether the case is agrarian
in nature, shall be guided by the following facts and circumstances:

1. Existence of a tenancy relationship;

2. The land subject of the case is agricultural;

3. Cause of action involves ejectment or removal of a farmer, farmworker, or tenant;

4. The crime alleged arose out of or is in connection with an agrarian dispute (i.e.,
theft or qualified theft of farm produce, estafa, malicious mischief, illegal trespass, etc.),
Provided, that the prosecution of criminal offenses penalized by R.A. No. 6657, as
amended, shall be within the original and exclusive jurisdiction of the Special Agrarian
Courts;

5. The land subject of the case is covered by a Certificate of Land Ownership Award
(CLOA), Emancipation Patent (EP), or other title issued under the agrarian reform
program, and that the case involves the right of possession, use, and ownership thereof;
or

6. The civil case filed before the court of origin concerns the ejectment of
farmers/tenants/farmworkers, enforcement or rescission of contracts arising from,
connected with, or pertaining to an Agribusiness Ventures Agreement (AVA), and the
like.

The existence of one or more of the foregoing circumstances may be sufficient to justify
a conclusion that the case is agrarian in nature. The Chief of the Legal Division, or the
DAR lawyer or legal officer assigned, shall accordingly conclude that the case is agrarian
in nature cognizable by the DAR, and thus recommend that the referred case is not proper
for trial.

SECTION 10. DAR Certification. The PARO shall issue the Certification
within forty-eight (48) hours from receipt of the report of the Chief of the Legal Division,
DAR lawyer, or legal officer concerned. Such Certification shall state whether or not the
referred case is agrarian in nature, as follows:

iii. Isidro v CA

Topics Discussed:Jurisdiction; Requirements in Agrarian Dispute;

SCs Ruling
It is well settled jurisprudence that a court does not lose its jurisdiction over an unlawful
detainer case by the simple expedient of a party raising as a defense therein the alleged
existence of a tenancy relationship between the parties. 11 The court continues to have

28
the authority to hear the evidence for the purpose precisely of determining whether or not
it has jurisdiction. And upon such hearing, if tenancy is shown to be the real issue, the
court should dismiss the case for lack of jurisdiction.

The MTC dismissed the unlawful detainer complaint primarily on the ground that the
subject land is agricultural and therefore the question at issue is agrarian. In this
connection, it is well to recall that Section 1, Rule II of the Revised Rules of Procedure,
13 provides that the Agrarian Reform Adjudication Board shall have primary jurisdiction,
both original and appellate, to determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of the
Comprehensive Agrarian Reform Program under Republic Act No. 6657, Executive
Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as amended by Republic Act No.
6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules
and regulations.

An agrarian dispute refers to any controversy relating to tenurial arrangements, whether

leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including
disputes concerning farmworkers associations or representation of persons in negotiating,
fixing, maintaining, changing or seeking to arrange terms and conditions of such tenurial
arrangements. It includes any controversy relating to compensation of lands acquired
under Republic Act No. 6657 and other terms and conditions of transfer of ownership
from landowners to farmworkers, tenants and other agrarian reform beneficiaries,
whether the disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor or lessee.

It is irrefutable in the case at bar that the subject land which used to be an idle, swampy
land was converted by the petitioner into a fishpond. And it is settled that a fishpond is an
agricultural land. An agricultural land refers to the land devoted to agricultural activity as
defined in Republic Act No. 6657 15 and not classified as mineral, forest, residential,
commercial or industrial land. 16 Republic Act No. 6657 defines agricultural activity as
the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock,
poultry or fish, including the harvesting of such farm products, and other farm activities,
and practices performed by a farmer in conjunction with such farming operations done by
persons whether natural or judicial.

But a case involving an agricultural land does not automatically make such case an
agrarian dispute upon which the DARAB has jurisdiction.The mere fact that the land is
agricultural does not ipso facto make the possessor an agricultural lessee of tenant. The
law provides for conditions or requisites before he can qualify as one and the land being
agricultural is only one ofthem. 18 The law states that an agrarian dispute must be a
controversy relating to a tenurial arrangement over lands devoted to agriculture. And as
previously mentioned, such arrangement may be leasehold, tenancy or stewardship.

Tenancy is not a purely factual relationship dependent on what the alleged tenant does
upon the land. It is also a legal relationship. The intent of the parties, the understanding
when the farmer is installed, and their written agreements, provided these are complied
with and are not contrary to law, are even more important.

The essential requisites of a tenancy relationship are: (1) the parties are the landowner
and the tenant; (2) the subject matter is agricultural land; (3) there is consent; (4) the
purpose is agricultural production; (5) there is personal cultivation by the tenant; and (6)
there is a sharing of harvests between the parties. All these requisites must concur in

29
 order to create a tenancy relationship between the parties. The absence of one does not
make an occupant of a parcel of land, or a cultivator thereof, or a planter thereon, a de
jure tenant. Unless a person establishes his status as a de jure tenant, he is not entitled to
security of tenure nor is he covered by the Land Reform Program of the government
under existing tenancy laws (Caballes v. DAR, et al., G.R. No. 78214, December 5,
1988).

Furthermore, an agricultural lessee as defined in Sec. 116(2) of Republic Act No. 3844, is
a person who, by himself and with the aid available from within his immediate farm
household, cultivates the land belonging to, or possessed by, another with the latter's
consent for purposes of production, for a price certain in money or in produce or both. An
agricultural lessor, on the other hand, is a natural or judicial person who, either as owner,
civil law lessee, usufructuary, or legal possessor lets or grants to another the cultivation
and use of his land for a price certain.

Based on the statutory definitions of a tenant or a lessee, it is clear that there is no

tenancy or agricultural/leasehold relationship existing between the petitioner and the
private respondent. There was no contract or agreement entered into by the petitioner
with the private respondent nor with the overseer of the private respondent, for petitioner
to cultivate the land for a price certain or to share his harvests. Petitioner has failed to
substantiate his claim that he was paying rent for the use of the land.

Whether or not private respondent knew of the conversion by petitioner of the idle,
swampy land into a fishpond is immaterial in this case. The fact remains that the
existence of all the requisites of a tenancy relationship was not proven by the
petitioner. And in the absence of a tenancy relationship, the complaint for unlawful
detainer is properly within the jurisdiction of the Municipal Trial Court, as provided
in Sec. 33 of Batas Pambansa Blg. 129.

iv. Bejasa v CA

There was no proof that they shared the harvests.

Reynaldo Bejasa testified that as consideration for the possession of the land, he agreed
to deliver the landowners share (1/5 of the harvest) to Malabanan. Only Reynaldo Bejasas
word was presented to prove this. Even this is cast into suspicion. At one time Reynaldo
categorically stated that 25% of the harvest went to him, that 25% was for Malabanan and
50% went to the landowner, Candelaria. Later on he stated that the landowners share was
merely one fifth.

In Chico v. Court of Appeals, we faulted private respondents for failing to prove sharing
of harvests since "no receipt, or any other evidence was presented." We added that "Self
serving statements ... are inadequate; proof must be adduced."
Candelaria and the Bejasas. Between them, there is no tenancy relationship. Candelaria as
landowner never gave her consent.

The Bejasas admit that prior to 1984, they had no contact with Candelaria. They
acknowledge that Candelaria could argue that she did not know of Malabanans
arrangement with them. True enough Candelaria disavowed any knowledge that the
Bejasas during Malabanans lease possessed the land. However, the Bejasas claim that this
defect was cured when Candelaria agreed to lease the land to the Bejasas for P20,000.00
per annum, when Malabanan died in 1983. We do not agree. In a tenancy agreement,
consideration should be in the form of harvest sharing. Even assuming that Candelaria

30
 agreed to lease it out to the Bejasas for P20,000 per year, such agreement did not create a
tenancy relationship, but a mere civil law lease.

v. Almuete v Andres

The action filed by petitioners before the trial court was for recovery of possession and
reconveyance of title. The issue to be resolved was who between petitioner Rodrigo
Almuete and respondent Marcelo Andres has a better right to the subject property
considering that both of them are awardees of the same property. It was thus a
controversy relating to ownership of the farmland, which is beyond the ambit of the
phrase agrarian dispute. No juridical tie of landowner and tenant was alleged between
petitioners and respondent, let alone that which would so characterize the relationship as
an agrarian dispute. In fact, petitioner and respondent were contending parties for the
ownership of the same parcel of land.

vi. Nicorp Devt. v De Leon

The other pieces of evidence submitted by respondent likewise do not prove the alleged
tenancy relationship. The summary report of the Philippine Crop Insurance Corporation,
the official receipts issued by the National Food Authority and the certificate of
membership in Bacoor Agricultural Multi-Purpose Cooperative,[29] only prove that
respondent and her family engaged in agricultural activities but not necessarily her
alleged status as tenant of the De Leon sisters. Besides, these documents are not even in
the name of respondent but were issued in favor of her daughter Dolores.

That respondent was allowed to cultivate the property without opposition, does not mean
that the De Leon sisters impliedly recognized the existence of a leasehold relation with
respondent. Occupancy and continued possession of the land will not ipso facto make one
a de jure tenant. The principal factor in determining whether a tenancy relationship exists
is intent. Tenancy is not a purely factual relationship dependent on what the alleged
tenant does upon the land but is, moreso, a legal relationship. Thus, the intent of the
parties, the understanding when the farmer is installed, and their written agreements,
provided these are complied with and are not contrary to law, are more important.

vii. Sps. Fajardo v Flores

The issue in this case is whether it is MTC or the DARAB which has jurisdiction over the
case.

There is no dispute that, on June 28, 1991, the parties executed an agreement,
denominated as KASUNDUAN NG PAGHAHATI NG LUPA AT PAGTATALAGA
NG DAAN UKOL SA MAGKABILANG PANIG. Therein, it was admitted that Jesus
Fajardo was the tiller of the land. This Kasunduan was subsequently followed by another
agreement, KASUNDUAN SA HATIAN SA LUPA, whereby an area of 10,923 sq m of
Lot No. 2351 was given to petitioners. The portion of the land where petitioners house is
erected is the subject of the instant case for unlawful detainer. Respondent argues that
this portion is not included in the deed of partition, while petitioners insist that it is.

We agree with the RTC when it clearly pointed out in its Order dated December 10, 2002
that the resolution of this case hinges on the correct interpretation of the contracts
executed by the parties. The issue of who has a better right of possession over the subject
land cannot be determined without resolving first the matter as to whom the subject

31
 property was allotted. Thus, this is not simply a case for unlawful detainer, but one that is
incapable of pecuniary estimation, definitely beyond the competence of the MTC.

More importantly, the controversy involves an agricultural land, which petitioners have
continuously and personally cultivated since the 1960s. In the Kasunduan, it was
admitted that Jesus Fajardo was the tiller of the land. Being agricultural lessees,
petitioners have a right to a home lot and a right to exclusive possession thereof by virtue
of Section 24, R.A. No. 3844 of the Agricultural Land Reform Code.[12] Logically,
therefore, the case involves an agrarian dispute, which falls within the contemplation of
R.A. No. 6657, or the Comprehensive Agrarian Reform Law.

In the case at bar, petitioners claim that the tenancy relationship has been terminated by
the Kasulatan is of no moment. As long as the subject matter of the dispute is the legality
of the termination of the relationship, or if the dispute originates from such relationship,
the case is cognizable by the DAR, through the DARAB. The severance of the tenurial
arrangement will not render the action beyond the ambit of an agrarian dispute.

viii. Estate of Pastor Samson v Susano

Issue:So was Macario a de jure tenant in the subject landholding entitled to security of
tenure?

On this score, we answer in the negative.

R.A. No. 1199,[58] otherwise known as the Agricultural Tenancy Act of the Philippines,
defines a tenant as a person who, himself and with the aid available from within his
immediate farm household, cultivates the land belonging to, or possessed by, another,
with the latters consent for purposes of production, sharing the produce with the
landholder under the share tenancy system, or paying the landholder a price certain or
ascertainable in produce or in money or both, under a leasehold tenancy system.[59]

For a tenancy relationship to exist between the parties, the following essential elements
must be shown: (1) the parties are the landowner and the tenant; (2) the subject matter is
agricultural land; (3) there is consent between the parties; (4) the purpose is agricultural
production; (5) there is personal cultivation by the tenant; and (6) there is sharing of the
harvests between the parties.[60] The presence of all of these elements must be proved by
substantial evidence.[61]

Petitioner estate of Pastor Samson contends that the elements of consent and sharing of
harvest are lacking since Macarios occupancy and possession of the subject land was
only by mere tolerance.

Respondents, however, counter that there was implied tenancy because Pastor accepted
his share of the production for a considerable length of time. To prove their contention,
respondents presented the affidavits executed by three farmers from adjoining
landholdings, namely Santiago Pacheco, Apolinario Francisco, and Damaso Matias,
stating that they knew Macario to be a tenant of Pastor since 1959 and that Macario
religiously paid his share of the produce to Pastor.

The estate of Pastor Samson argues that the said affidavits are insufficient to establish the
existence of a tenancy relationship since the affiants failed to provide details as to what

32
 the agreed rental was. No concrete evidence was presented by the respondents to prove
their claim.

We agree with said petitioner.

The question of whether a tenancy relationship exists is basically a question of fact

which, as a general rule, is beyond the scope of a petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure, as amended. The question of whether there
was an implied tenancy and sharing are basically questions of fact and the findings of the
Court of Appeals and the Boards a quo are, generally, entitled to respect and
nondisturbance, as long as they are supported by substantial evidence. Such findings of
fact may be reviewed by the Court when the conclusion is a finding grounded entirely on
speculation, surmises or conjectures, or if the findings of fact are conclusions without
citation of specific evidence on which they are based.

In the case at bar, while the RARAD, DARAB and the CA are unanimous in their
conclusion that an implied tenancy relationship existed between Pastor Samson and
Macario Susano, no specific evidence was cited to support such conclusion other than
their observation that Pastor failed to protest Macarios possession and cultivation over the
subject land for more than 30 years. Contrary to what is required by law, however, no
independent and concrete evidence were adduced by respondents to prove that there was
indeed consent and sharing of harvests between Pastor and Macario.

It has been repeatedly held that occupancy and cultivation of an agricultural land will not
ipso facto make one a de jure tenant. Independent and concrete evidence is necessary to
prove personal cultivation, sharing of harvest, or consent of the landowner. Substantial
evidence necessary to establish the fact of sharing cannot be satisfied by a mere scintilla
of evidence; there must be concrete evidence on record adequate to prove the element of
sharing. To prove sharing of harvests, a receipt or any other credible evidence must be
presented, because self-serving statements are inadequate. Tenancy relationship cannot
be presumed; the elements for its existence are explicit in law and cannot be done away
with by conjectures. Leasehold relationship is not brought about by the mere congruence
of facts but, being a legal relationship, the mutual will of the parties to that relationship
should be primordial. For implied tenancy to arise it is necessary that all the essential
requisites of tenancy must be present.

ix. Reyes v Heirs of Floro

Reyes relies on the certifications from the MARO and Bautista, the alleged original
owner, manifesting that he was a tenant of the subject land to prove that a tenancy
relationship exists.

This is untenable.

The MARO certification is merely preliminary and does not bind the courts as conclusive
evidence that Reyes is a lessee who cultivates the land for purposes of agricultural
production. In Bautista v. Araneta, we held that certifications issued by administrative
agencies or officers that a certain person is a tenant are merely provisional and not
conclusive on the courts. Here, the certification from Bautista has little evidentiary value,
without any corroborative evidence. The certification was not notarized and Bautista was
not even presented as a witness. Similarly, Reyes was not included as a legitimate and

33
 properly registered agricultural tenant in the supposed Deed of Absolute Sale with
Agricultural Tenants Conformity which Bautista executed in favor of Zenaida.

Further, the genuineness of the agricultural leasehold contract that Zenaida entered into
with Reyes is doubtful. The records show that respondent heirs submitted two
documentary evidence with the PARAD which the provincial adjudicator disregarded: (1)
a MARO Certification dated 9 May 2005 manifesting that there is no copy on file, with
the Municipal Land Reform Office of Malolos, Bulacan, of the supposed leasehold
contract; and (2) a Pagpapatunay41 dated 8 June 2004 from the Punong Barangay of
Malolos, Bulacan attesting that since the year 1995 until the date of the affidavit, the
subject land was not being used for farming, cultivation or any agricultural purpose.
These evidence can only mean that the leasehold contract was falsified.

x. Davao New Town v Sps. Saliga

Issue:
Whether an agricultural leasehold or tenancy relationship exists between DNTDC and the
respondents.

Ruling:
No tenancy relationship exists betweenDNTDC and the respondents; thetenancy
relationship between therespondents and Eugenio ceasedwhen the property was
reclassified.

In Solmayor v. Arroyo,50 the Court outlined the essential requisites of a tenancy

relationship, all of which must concur for the relationship to exist, namely:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.

The absence of any of these requisites does not make an occupant a cultivator, or a
planter, a de jure tenant. Consequently, a person who is not a de jure tenant is not entitled
to security of tenure nor covered by the land reform program of the government under
any existing tenancy laws.

In this case, we hold that no tenancy relationship exists between DNTDC, as the owner of
the property, and the respondents, as the purported tenants; the second essential requisite
as outlined above the subject is agricultural land is lacking. To recall, the property
had already been reclassified as non-agricultural land. Accordingly, the respondents are
not de jure tenants and are, therefore, not entitled to the benefits granted to agricultural
lessees under the provisions of P.D. No. 27, in relation to R.A. No. 6657.

We note that the respondents, through their predecessors-in-interest, had been tenants of
Eugenio as early as 1965. Under Section 7 of R.A. No. 3844, once the leasehold relation
is established, the agricultural lessee is entitled to security of tenure and acquires the right
to continue working on the landholding. Section 10 of this Act further strengthens such
tenurial security by declaring that the mere expiration of the term or period in a leasehold
contract, or the sale, alienation or transfer of the legal possession of the landholding shall
not extinguish the leasehold relation; and in case of sale or transfer, the purchaser or

34
 transferee is subrogated to the rights and obligations of the landowner/lessor. By the
provisions of Section 10, mere expiration of the five-year term on the respondents lease
contract could not have caused the termination of any tenancy relationship that may have
existed between the respondents and Eugenio.

Still, however, we cannot agree with the position that the respondents are the tenants of
DNTDC. This is because, despite the guaranty, R.A. No. 3844 also enumerates the
instances that put an end to the lessees protected tenurial rights. Under Section 7 of R.A.
No. 3844, the right of the agricultural lessee to continue working on the landholding
ceases when the leasehold relation is extinguished or when the lessee is lawfully ejected
from the landholding. Section 853 enumerates the causes that terminate a relationship,
while Section 36 enumerates the grounds for dispossessing the agricultural lessee of the
landholding.

Notably, under Section 36(1) of R.A. No. 3844, as amended by Section 7 of R.A. No.
6389, declaration by the department head, upon recommendation of the National
Planning Commission, to be suited for residential, commercial, industrial or some other
urban purposes, terminates the right of the agricultural lessee to continue in its possession
and enjoyment. The approval of the conversion, however, is not limited to the authority
of the DAR or the courts. In the case of Pasong Bayabas Farmers Asso., Inc. v. Court of
Appeals, and again in Junio v. Secretary Garilao, the Court essentially explained that the
reclassification and conversion of agricultural lands to non-agricultural uses prior to the
effectivity of R.A. No. 6657, on June 15, 1988, was a coordinated effort of several
government agencies, such as local government units and the HSRC.

In effect, therefore, whether the leasehold relationship between the respondents and
Eugenio had been established by virtue of the provisions of R.A. No. 3844 or of the five-
year lease contract executed in 1981, this leasehold relationship had been terminated with
the reclassification of the property as non-agricultural land in 1982. The expiration the
five-year lease contract in 1986 could not have done more than simply finally terminate
any leasehold relationship that may have prevailed under the terms of that contract.

Consequently, when the DNTDC purchased the property in 1995, there was no longer
any tenancy relationship that could have subrogated the DNTDC to the rights and
obligations of the previous owner. We, therefore, disagree with the findings of the CA, as
it affirmed the DARAB that a tenancy relationship exists between DNTDC and the
respondents.

xi. Automat v Cruz

SCs Ruling:No agricultural tenancy relationship

There must be substantial evidence on the presence of all these requisites; otherwise,
there is no de jure tenant. Only those who have established de jure tenant status are
entitled to security of tenure and coverage under tenancy laws.41cralawred

Well-settled is the rule that he who alleges must prove. Respondent spouses filed the
petition before the PARAD, praying to be maintained in peaceful possession of the
property. They were the ones claiming they had a tenancy relationship with Automat.
Thus, they had the burden of proof to show that such relationship existed.

35
 On Being Actual tillers

On the first requisite, respondent spouses contend that the Municipal Agrarian Reform
Office (MARO) Officer Job A. Candanido issued a certification on October 18, 2000 that
respondent spouses are the actual tillers of the land.43 Three farmers of adjacent lands44
testified on the same fact that respondent spouses are the actual tillers.45 Irrigation
Superintendent Cesar Amador also issued a certification that respondent spouses paid the
irrigation service fees.

This court has held that a MARO certification concerning the presence or the absence
of a tenancy relationship between the contending parties, is considered merely
preliminary or provisional, hence, such certification does not bind the judiciary.

The amended certification does not bind this court. Several elements must be present
before the courts can conclude that a tenancy relationship exists. MARO certifications
are limited to factual determinations such as the presence of actual tillers. It cannot make
legal conclusions on the existence of a tenancy agreement.

On Being Not Agricultural Land

The land in this case cannot be considered as agricultural land.

First, it is undisputed that the DAR Region IV-A CALABARZON had already issued two
orders, both dated March 30, 2010, exempting the property from CARP coverage. These
orders were submitted before the Court of Appeals56 and raised again before this court.
The case at hand shows that the subject property is within the non-agricultural zone prior
to 15 June 1988.

Further, said lands reclassified to non-agricultural prior to June 15, 1988 ceased to be
considered as agricultural lands and removed from the coverage of the Comprehensive
Agrarian Reform Program.

xii. Caluzor v Llanillo

In establishing the tenancy relationship, therefore, independent evidence, not self-serving

statements, should prove, among others, the consent of the landowner to the relationship,
and the sharing of harvests.
The third and sixth elements of agricultural tenancy were not shown to be presented in
this case.

To prove the element of consent between the parties, the petitioner testified that Lorenzo
had allowed him to cultivate the land by giving to him the sketch30 of the lot31 in order
to delineate the portion for his tillage.

Yet, the sketch did not establish that Lorenzo had categorically taken the petitioner in as
his agricultural tenant. This element demanded that the landowner and the tenant should
have agreed to the relationship freely and voluntarily, with neither of them unduly
imposing his will on the other. The petitioner did not make such a showing of consent.

The sixth element was not also established. Even assuming that Lorenzo had verbally
permitted the petitioner to cultivate his land, no tenancy relationship between them
thereby set in because they had not admittedly discussed any fruit sharing scheme, with

36
 Lorenzo simply telling him simply that he would just ask his share from him. The
petitioner disclosed that he did not see Lorenzo again from the time he had received the
sketch until Lorenzos death.33 Although the petitioner asserted that he had continued
sharing the fruits of his cultivation through Ricardo, Lorenzos caretaker, even after
Lorenzos death, producing the list of produce to support his claim, the list did not
indicate Ricardos receiving the fruits listed therein. The petitioner did not also contain
Ricardos authority to receive Leonardos share.

We underscore that harvest sharing is a vital element of every tenancy. Common sense
dictated, indeed, that the petitioner, if he were the de jure tenant that he represented
himself to be, should fully know his arrangement with the landowner. But he did not
sufficiently and persuasively show such arrangement. His inability to specify the sharing
arrangement was inconceivable inasmuch as he had depended on the arrangement for his
own sustenance and that of his own family. The absence of the clear-cut sharing
agreement between him and Lorenzo could only signify that the latter had merely
tolerated his having tilled the land sans tenancy.

xiii. Ligtas v People

"Bakit niya babawiin ang aking saka?" tanong ni Tata Selo. "Dinaya ko na ba siya sa
partihan? Tinuso ko na ba siya? Siya ang may-ari ng lupa at kasama lang niya ako.
Hindi ba't kaya maraming nagagalit sa akin ay dahil sa ayaw kong magpamigay ng kahit
isang pinangko kung anihan?"

Hindi pa rin umaalis sa harap ng istaked si Tata Selo. Nakahawak pa rin siya sa rehas.
Nakatingin siya sa labas ngunit wala siyang sino mang tinitingnan.

"Binabawi po niya ang aking saka," sumbong ni Tata Selo. "Saan papo ako pupunta kung
wala na akong saka?"

Habang nakakapit sa rehas at nakatingin sa labas, sinasabi niyang lahat ay kinuha na sa

kanila, lahat, ay! ang lahat ay kinuha na sa kanila.
- "TataSelo" (1963) by Rogelio R. Sikat

The uncontested declaration of the Department of Agrarian Reform Adjudication Board

that Monico Ligtas was a tenant negates a finding of theft beyond reasonable doubt.
Tenants having rights to the harvest cannot be deemed to have taken their own produce.

The issue of tenancy, in that whether a person is an agricultural tenant or not, is generally
a question of fact.65 To be precise, however, the existence of a tenancy relationship is a
legal conclusion based on facts presented corresponding to the statutory elements of
tenancy.66

The Court of Appeals committed reversible error in its assailed Decision when it held that
all the essential elements of the crime of theft were duly proven by the prosecution
despite petitioner having been pronounced a bona fide tenant of the land from which he
allegedly stole. A review of the records of the case is, thus, proper to arrive at a just and
equitable resolution.

Petitioner claims that private complainant's filing of criminal charges was motivated by
ill will and revenge. The charges were designed to remove petitioner from the land he has
legitimately occupied as tenant. Telling is the fact that petitioner filed his Complaint

37
 before the DARAB on November 21, 2000, while the Information for Theft was filed on
December 8, 2000.

Petitioner argues that he has sufficiently established his status as private complainant's
tenant. The DARAB Decision is entitled to respect, even finality, as the Department of
Agrarian Reform is the administrative agency vested with primary jurisdiction and has
acquired expertise on matters relating to tenancy relationship.

The findings of the DARAB were also supported by substantial evidence. To require
petitioner to prove tenancy relationship through evidence other than the DARAB
Decision and the testimonies of the witnesses is absurd and goes beyond the required
quantum of evidence, which is substantial evidence.

Also, according to petitioner, the DARAB Decision has attained finality since private
complainant did not file an appeal. The DARAB's finding as to the parties' tenancy
relationship constitutes as res judicata.

On the other hand, respondent argues that the Court of Appeals correctly disregarded the
DARAB Decision.76 The trial court could not have taken judicial notice of the DARAB
Decision.

While the DARAB . . . ruled that petitioner is a bonafide tenant of Pacate, courts are not
authorized to take judicial notice of the contents of the records of other cases even when
such cases have been tried or are pending in the same court, and notwithstanding the fact
that both cases may have been heard or are actually pending before the same judge.

Moreover, according to respondent, petitioner invokes conflicting defenses: that there is a

legitimate tenancy relationship between him and private complainant and that he did not
take the abaca hemp. Nevertheless, respondent maintains that petitioner failed to prove all
the essential elements of a tenancy relationship between him and private complainant.
Private complainant did not consent to the alleged tenancy relationship. Petitioner also
failed to provide evidence as to any sharing of harvest between the parties.

We hold that a DARAB decision on the existence of a tenancy relationship is conclusive

and binding on courts if supported by substantial evidence.

xiv. DAR v Paramount Holdings

The Courts Ruling

The Court answers in the negative.

The jurisdiction of the DARAB is limited under the law, as it was created under
Executive Order (E.O.) No. 129-A specifically to assume powers and functions with
respect to the adjudication of agrarian reform cases under E.O. No. 229 and E.O. No.
129-A.22 Significantly, it was organized under the Office of the Secretary of Agrarian
Reform. The limitation on the authority of it to mere agrarian reform matters is only
consistent with the extent of DARs quasi-judicial powers under R.A. No. 6657 and E.O.
No. 229, which read:

SECTION 50 [of R.A. No. 6657]. Quasi-Judicial Powers of the DAR.The DAR is
hereby vested with the primary jurisdiction to determine and adjudicate agrarian reform
matters and shall have exclusive original jurisdiction over all matters involving the

38
implementation of agrarian reform except those falling under the exclusive jurisdiction of
the Department of Agriculture (DA) and the Department of Environment and Natural
Resources (DENR).

SECTION 17 [of E.O. No. 229]. Quasi-Judicial Powers of the DAR.The DAR is
hereby vested with quasi-judicial powers to determine and adjudicate agrarian reform
matters, and shall have exclusive original jurisdiction over all matters involving
implementation of agrarian reform, except those falling under the exclusive original
jurisdiction of the DENR and the Department of Agriculture (DA).

Thus, Sections 1 and 2, Rule II of the DARAB New Rules of Procedure, which was
adopted and promulgated on May 30, 1994 and came into effect on June 21, 1994,
identify the specific extent of the DARABs and PARADs jurisdiction, as they read:

SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction.The Board

shall have primary and exclusive jurisdiction, both original and appellate, to determine
and adjudicate all agrarian disputes involving the implementation of the Comprehensive
Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos.
228, 229 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389,
Presidential Decree No. 27 and other agrarian laws and their implementing rules and
regulations. Specifically, such jurisdiction shall include but not be limited to cases
involving the following:

a) The rights and obligations of persons, whether natural or juridical, engaged in the
management, cultivation and use of all agricultural lands covered by the CARP and other
agrarian laws;
b) The valuation of land, and the preliminary determination and payment of just
compensation, fixing and collection of lease rentals, disturbance compensation,
amortization payments, and similar disputes concerning the functions of the Land Bank
of the Philippines (LBP);
c) The annulment or cancellation of lease contracts or deeds of sale or their amendments
involving lands under the administration and disposition of the DAR or LBP;
d) Those cases arising from, or connected with membership or representation in compact
farms, farmers cooperatives and other registered farmers associations or organizations,
related to lands covered by the CARP and other agrarian laws;
e) Those involving the sale, alienation, mortgage, foreclosure, pre-emption and
redemption of agricultural lands under the coverage of the CARP or other agrarian laws;
f) Those involving the issuance, correction and cancellation of Certificates of Land
Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with
the Land Registration Authority;
g) Those cases previously falling under the original and exclusive jurisdiction of the
defunct Court of Agrarian Relations under Section 12 of Presidential Decree No. 946,
except sub-paragraph (q) thereof and Presidential Decree No. 815.

It is understood that the aforementioned cases, complaints or petitions were filed with the
DARAB after August 29, 1987.

Matters involving strictly the administrative implementation of Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 and other
agrarian laws as enunciated by pertinent rules shall be the exclusive prerogative of and
cognizable by the Secretary of the DAR.

39
Consistent with the aforequoted legal provisions, we emphasized in Heirs of Candido Del
Rosario v. Del Rosario23that the jurisdiction of the PARAD and the DARAB is only
limited to cases involving agrarian disputes, including incidents arising from the
implementation of agrarian laws. Section 3(d) of R.A. No. 6657 defines an agrarian
dispute in this manner:

(d) Agrarian dispute refers to any controversy relating to tenurial arrangements, whether
leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including
disputes concerning farmworkers associations or representation of persons in negotiating,
fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial
arrangements. It includes any controversy relating to compensation of lands acquired
under R.A. 6657 and other terms and conditions of transfer of ownership from
landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the
disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.

Basic is the rule that the "jurisdiction of a tribunal, including a quasi-judicial office or
government agency, over the nature and subject matter of a petition or complaint is
determined by the material allegations therein and the character of the relief prayed for
irrespective of whether the petitioner or complainant is entitled to any or all such
reliefs."24 Upon the Courts perusal of the records, it has determined that the PAROs
petition with the PARAD failed to indicate an agrarian dispute.

Specifically, the PAROs petition failed to sufficiently allege any tenurial or agrarian
relations that affect the subject parcels of land. Although it mentioned a pending petition
for coverage filed with DAR by supposed farmers-tillers, there was neither such claim as
a fact from DAR, nor a categorical statement or allegation as to a determined tenancy
relationship by the PARO or the Secretary of Agrarian Reform. The PAROs petition
merely states:

3.3 That the Provincial Office only came to know very recently about such transaction
when the Office received on two separate occasions a memorandum directive dated 22
October and 25 April 2002 from the Office of the DAR Secretary to investigate and if
warranted file a corresponding petition for nullification of such transaction anent the
petition for coverage of the actual occupants farmers-tillers led by spouses Josie and
Lourdes Samson who informed the Office of the DAR Secretary about such transaction. x
xx

It is also undisputed, that even the petition filed with the PARAD failed to indicate
otherwise, that the subject parcels of land had not been the subject of any notice of
coverage under the Comprehensive Agrarian Reform Program (CARP). Clearly, the
PAROs cause of action was merely founded on the absence of a clearance to cover the
sale and registration of the subject parcels of land, which were claimed in the petition to
be agricultural.

Given the foregoing, the CA correctly ruled that the DARAB had no jurisdiction over the
PAROs petition. While the Court recognizes the legal requirement for clearances in the
sale and transfer of agricultural lands, the DARABs jurisdiction over such disputes is
limited by the qualification under Rule II, Section 1, paragraphs (c) and (e) of the
DARAB New Rules of Procedure.

40
xv. DAR v Robles

Topics Discussed: Jurisdiction

SCs Ruling
The petition is meritorious.

In resolving the sole issue of whether or not the DARAB has jurisdiction over the DAR's
petition for annulment of deeds of sale and cancellation of titles, the Court is guided by
the following rules on jurisdiction laid down in Heirs of Julian dela Cruz v. Heirs of
Alberto Cruz:

It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or

government agency, over the nature and subject matter of a petition or complaint is
determined by the material allegations therein and the character of the relief prayed for,
irrespective of whether the petitioner or complainant is entitled to any or all such reliefs.
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law, and not by the consent or waiver of the parties where the court
otherwise would have no jurisdiction over the nature or subject matter of the action. Nor
can it be acquired through, or waived by, any act or omission of the parties. Moreover,
estoppel does not apply to confer jurisdiction to a tribunal that has none over the cause of
action. The failure of the parties to challenge the jurisdiction of the DARAB does not
prevent the court from addressing the issue, especially where the DARAB's lack of
jurisdiction is apparent on the face of the complaint or petition.

Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories
set up by the defendant or respondent in his answer or motion to dismiss. Jurisdiction
should be determined by considering not only the status or the relationship of the parties
but also the nature of the issues or questions that is the subject of the controversy. If the
issues between the parties are intertwined with the resolution of an issue within the
exclusive jurisdiction of the DARAB, such dispute must be addressed and resolved by the
DARAB. The proceedings before a court or tribunal without jurisdiction, including its
decision, are null and void, hence, susceptible to direct and collateral attacks.

xvi. Landicho v Limqueco

On Jurisdiction

The CA was of the view that the claims of the petitioners should have been filed with the
DAR Secretary following DAR Administrative Order No. 6, Series of 2000, which
provides:
SECTION 2. Cases Covered These Rules shall govern cases falling within the
exclusive jurisdiction of the DAR Secretary which shall include the following:

(q) Such other matters not mentioned above but strictly involving the administrative
implementation of RA 6657 and other agrarian laws, rules and regulations as determined
by the Secretary. (Emphasis supplied).28

First, DAR Administrative Order No. 6, Series of 2000 has already been repealed by
DAR Administrative Order No. 3, Series of 2003. Section 38, Rule VII of DAR
Administrative Order No. 3, Series of 2003 expressly provides "this order modifies or
repeals DAR-A0-6-2000 and all other issuances or portions thereof that are inconsistent

41
 herewith." Section 3, Rule I of the same administrative order recognizes that the
DARAB and the PARAD have exclusive original jurisdiction, among others, over
the annulment or cancellation of lease contracts or deeds of sale or their
amendments involving lands under the administration and disposition of the DAR
or Land Bank of the Philippines29and those cases involving the sale, alienation, pre-
emption and redemption of agricultural lands under the coverage of the CARL or
other agrarian laws.30

On Agrarian Dispute

Section 3(d) of the CARL defines an agrarian dispute as:

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

In this case, the petitions filed before the PARAD asking for the nullification of the
contracts of sale and recovery of the CLOAs did not contain any allegation of tenurial
relations constitutive of an agrarian dispute as the parties were not subjects of a
landowner and tenant relationship, or an allegation that they were lessors and lessees of
each other as reinforced by the categorical admission of the parties in their pleadings that
no such contract exists.35 These circumstances, however, do not mean that the
controversy is no longer agrarian in nature.

The second sentence of Section 3(d) of the CARL clearly provides that an agrarian
dispute also includes "any controversy relating to compensation of lands acquired under
the CARP law and other terms and conditions of transfer of ownership from landowner to
farmworkers, tenants, and other agrarian reform beneficiaries, whether the disputants
stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or
lessor and lessee."

Here, the controversy pertains to respondent's act of selling to a third person the lands
acquired by the petitioners under the CARP. Hence, the case is still an agrarian dispute
and within the jurisdiction of the DARAB and PARAD.

f. DAR v Woodland

THE ISSUE
The sole issue raised by petitioner is whether it can still issue Notices of Coverage after 15 June
1998.

In Secretary of Agrarian Reform v. Tropical Homes, lnc., we recognized the CARL as a "bastion
of social justice of poor landless farmers, the mechanism designed to redistribute to the
underprivileged the natural right to toil the earth, and to liberate them from oppressive tenancy."
To those who seek the law's benefit, it is the means towards a viable livelihood and ultimately, a
decent life.

The Court is guided by these principles in the resolution of the present Petition for Review on
Certiorari.

42
The agrarian reform program, being one of the immutable hallmarks of the 1987 Constitution,
must be faithfully implemented to meet the ends of social justice.1wphi1 The Court cannot
subscribe to Woodland's stance that the DAR's authority to issue notices of coverage and
acquisition ceased after the 10-year implementation period mentioned in Section 5 of the CARL.
Such a view runs afoul of the constitutional mandate firmly lodged in Article XIII, Section 4,
which seeks the just distribution of all agricultural lands to qualified farmers and farm workers to
free them from oppressive tenancy agreements.

The success of the CARP depends heavily on the adept implementation by the DAR. The
agency's primordial procedural tool for realizing the law's objectives is the issuance of Notices of
Coverage and Acquisition. For us to sustain Woodland's theory that the DAR can no longer issue
those notices after 15 June 1998 despite the enactment of R.A. 8532 would thwart the CARP's
purpose. As the Court ruled in Gonzales v. Court of Appeals:

[O]ur laws on agrarian reform were enacted primarily because of the realization that there is an
urgent need to alleviate the lives of the vast number of poor farmers in our country. Yet, despite
such laws, the majority of these farmers still live on a hand-to-mouth existence. This can be
attributed to the fact that these agrarian laws have never really been effectively implemented.
Woodland asserts that R.A. 8532 only amended R.A. 6657 insofar as the funding requirements
for the CARP are concerned. It disputes the extension of the DAR's authority to acquire and
distribute private agricultural lands.

The first paragraph of Section 63, as originally worded and as amended, used the phrase "this
Act" to refer to CARL as a whole.

Originally, the first paragraph of Section 63 reads:

SECTION 63. Funding Source. - The initial amount needed to implement this Act for the period
of ten (10) years upon approval hereof shall be funded from the Agrarian Reform Fund created
under Sections 20 and 21 of Executive Order No. 229. (Emphasis supplied)
As amended by R.A. 8532, the first paragraph of Section 63 stated:

SECTION 63. Funding Source. - The amount needed to implement this Act until the year 2008
shall be funded from the Agrarian Reform Fund. (Emphasis supplied)

In 2009, Congress again amended certain provisions of the CARL, including Section 63.24 The
latest revision of the first paragraph recites:

SECTION 63. Funding Source. - The amount needed to further implement the CARP as
provided in this Act, until June 30, 2014, upon expiration of funding under Republic Act No.
8532 and other pertinent laws, shall be funded from the Agrarian Reform Fund and other funding
sources in the amount of at least One hundred fifty billion pesos (150,000,000,000.00).
(Emphasis supplied)
Clearly, Section 63 refers to the implementation of the CARL in its entirety, not just the funding
source. Indeed, R.A. 8532 specifically amended Section 63 of R.A. 6657, but it does not follow
that only Section 63 had been affected by the amendment. The fact that Section 63 falls under the
chapter on "Financing" only emphasizes its general applicability. Hence, the phrase "until the
year 2008" used in R.A. 8532 unmistakably extends the DAR's authority to issue NOCs for
purposes of acquiring and distributing private agricultural lands.

Finally, R.A. 9700 extended the acquisition and distribution of all agricultural lands until 30 June
2014.25 The title alone of R.A. 9700 - An Act Strengthening the Comprehensive Agrarian

43
 Reform Program (CARP), Extending the Acquisition and Distribution of All Agricultural Lands,
Instituting Necessary Reforms, Amending for the Purpose Certain Provisions of Republic Act
No. 6657, Otherwise Known as the Comprehensive Agrarian Reform Law of 1988, As
Amended, and Appropriating Funds Therefor - reveals that the CARP was indeed extended from
1998 to 2008 via R.A. 8532. Had there been no prior extension from 1998 to 2008, how else
could the CARP have been extended by R.A. 9700 until 30 June 2014? There could have been an
extension only if the program sought to be extended had not expired.

g. Homestead Patent (Section 6, who can claim exemption)

Paragraph 2, Section 6. Provided, That landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the areas originally retained by them
thereunder: Provided, further, That original homestead grantees or their direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead.

h. Retention Limit of Landowner (Section 6)

i. What is not covered (Section 6-A)

SEC. 6-A. Exception to Retention Limits. Provincial, city and municipal

government units acquiring private agricultural lands by expropriation or other modes of
acquisition to be used for actual, direct and exclusive public purposes, such as roads and
bridges, public markets, school sites, resettlement sites, local government facilities,
public parks and barangay plazas or squares, consistent with the approved local
comprehensive land use plan, shall not be subject to the five (5)-hectare retention limit
under this Section and Sections 70 and 73(a) of Republic Act No. 6657, as amended:
Provided, That lands subject to CARP shall first undergo the land acquisition and
distribution process of the program: Provided, further, That when these lands have been
subjected to expropriation, the agrarian reform beneficiaries therein shall be paid just
compensation." "SEC. 6-B. Review of Limits of Land Size. Within six (6) months
from the effectivity of this Act, the DAR shall submit a comprehensive study on the land
size appropriate for each type of crop to Congress for a possible review of limits of land
sizes provided in this Act."

ii. How many hectares are not covered?

i. Award to Child of Landowner

Additional three hectares may be awarded to each child, subject to the following qualifications:
a. That the child is at least fifteen (15) years of age; and
b. That the child is actually tilling the land or directly managing the farm

j. Exemption from Coverage (Section 10

1. Under Section 10 , excluded from the coverage of the CARL are lands actually,
directly and exclusively used for:
(1) Parks;
(2) Wildlife;
(3) Forest reserves;
(4) Reforestation;
(5) Fish sanctuaries and breeding grounds;
(6) Watersheds and mangroves.

44
2. Private lands actually, directly and exclusively used for prawn farms and
fishponds shall be exempt from the coverage of this Act: Provided, That said
prawn farms and fishponds have not been distributed and Certificate of Land
Ownership Award (CLOA) issued to agrarian reform beneficiaries under the
Comprehensive Agrarian Reform Program.

3. In cases where the fishponds or prawn farms have been subjected to the
Comprehensive Agrarian Reform Law, by voluntary offer to sell, or commercial
farms deferment or notices of compulsory acquisition, a simple and absolute
majority of the actual regular workers or tenants must consent to the exemption
within one (1) year from the effectivity of this Act. When the workers or tenants
do not agree to this exemption, the fishponds or prawn farms shall be distributed
collectively to the worker beneficiaries or tenants who shall form a cooperative or
association to manage the same.
4. Likewise, excluded from the coverage the CARL are lands actually, directly and
exclusively used and found to be necessary for:
(1) National defense;
(2) School sites and campuses including experimental farm stations
operated by public or private schools for educational purposes;
(3) Seeds and seedling research and pilot production center;
(4) Church sites and convents appurtenant thereto;
(5) Mosque sites and Islamic centers appurtenant thereto;
(6) Communal burial grounds and cemeteries;
(7) Penal colonies and penal farms actually worked by the inmates; and
(8) Government and private research and quarantine centers.

5. All lands with eighteen percent (18%) slope and over which are not developed for
agriculture are exempted from the coverage of CARL.

*An eighteen percent slope is not equivalent to an eighteen degree angle.

Eighteen percent slope is obtained by having a 100 meter run and an 18 meter
rise.

In the case of Luz Farms v. Secretary of Agrarian Reform, the Supreme Court has
EXCLUDED AGRICULTURAL LANDS DEVOTED TO COMMERCIAL
LIVESTOCK, POULTRY AND SWINE RAISINGfrom the coverage of CARL.

The Supreme Court said:

"The transcripts of the deliberations of the Constitutional Commission of 1986 on

the meaning of the word "agricultural," clearly show that it was never the
intention of the framers of the Constitution to include livestock and poultry
industry in the coverage of the constitutionally-mandated agrarian reform
program of the Government.

"The Committee adopted the definition of "agricultural land" as defined under

Section 166 of RA 3844, as lands devoted to any growth, including but not
limited to crop lands, saltbeds, fishponds, idle andabandoned land (Record,
CONCOM, August 7, 1986, Vol. III, p. 11).

"The intention of the Committee is to limit the application of the word

"agriculture." Commissioner Jamir proposed to insert the word "ARABLE" to

45
distinguish this kind of agricultural land from such lands as commercial and
industrial lands and residential properties because all of them fall under the
general classification of the word "agricultural." This proposal, however, was not
considered because the Committee contemplated that agricultural lands are
limited to arable and suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record, CONCOM, August 7, 1986,
Vol. III, p. 30).

"In the interpellation, then Commissioner Regalado (now a Supreme Court

Justice), posed several questions, among others, quoted as follows:

"Line 19 refers to genuine reform program founded on the primary right of

farmers and farmworkers. I wonder if it means that leasehold tenancy is thereby
proscribed under this provision because it speaks of the primary right of farmers
and farmworkers to own directly or collectively the lands they till. As also
mentioned by Commissioner Tadeo, farmworkers include those who work in
piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up
a piggery or a poultry project and for that purpose hires farmworkers therein,
these farmworkers will automatically have the right to own eventually, directly or
ultimately or collectively, the land on which the piggeries and poultry projects
were constructed. (Record, CONCOM, August 2, 1986, p. 618).

"The question were answered and explained in the statement of the then
Commissioner Tadeo, quoted as follows:

"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan.

Ipinaaalam ko kay Commissioner Regalado na hindi namin inilagay ang
agricultural worker sa kadahilanang kasama rito ang piggery, poultry at livestock
workers. Ang inilagay namin dito ay farm worker kaya hindi kasama ang
piggery, poultry at livestock workers (Record, CONCOM, August , 1986, Vol. II,
p. 621).

"It is evident from the foregoing discussion that Section 11 of RA 6657 which
includes "private agricultural lands devoted to commercial livestock, poultry and
swine raising" in the definition of "commercial farms" is invalid, to the extent that
the aforecited agro-industrial activities are made to be covered by the agrarian
reform program of the State. There is simply no reason to include livestock and
poultry lands in the coverage of agrarian reform. (Rollo, p. 21).

"PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections

3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion of raising of
livestock, poultry and swine in its coverage as well as the Implementing Rules
and Guidelines promulgated in accordance therewith, are hereby DECLARED
null and void for being unconstitutional and the writ of preliminary injunction
issued is hereby MADE permanent."

46
k. Registration
i. Fortich v Corona

The fourth and final preliminary issue to be resolved is the motion for intervention filed
by alleged farmer-beneficiaries, which we have to deny for lack of merit. In their motion,
movants contend that they are the farmer-beneficiaries of the land in question, hence, are
real parties in interest. To prove this, they attached as Annex I in their motion a Master
List of Farmer-Beneficiaries. Apparently, the alleged master list was made pursuant to
the directive in the dispositive portion of the assailed Win-Win Resolution which directs
the DAR to carefully and meticulously determine who among the claimants are qualified
farmer-beneficiaries. However, a perusal of the said document reveals that movants are
those purportedly Found Qualified and Recommended for Approval. In other words,
movants are merely recommendee farmer-beneficiaries.

The rule in this jurisdiction is that a real party in interest is a party who would be
benefited or injured by the judgment or is the party entitled to the avails of the suit. Real
interest means a present substantial interest, as distinguished from a mere expectancy or a
future, contingent, subordinate or consequential interest.[59] Undoubtedly, movants
interest over the land in question is a mere expectancy. Ergo, they are not real parties in
interest.

ii. Concha v Rubio

The petition is meritorious.

Petitioners argue that the DARAB is not clothed with the power or authority to resolve
the issue involving the identification and selection of qualified farmer-beneficiaries since
the same is an Agrarian Law Implementation case, thus, an administrative function
falling within the jurisdiction of the DAR Secretary.[20]
Petitioners argument is well taken.

In Lercana v. Jalandoni, this Court was categorical in ruling that the identification and
selection of CARP beneficiaries are matters involving strictly the administrative
implementation of the CARP, a matter exclusively cognizable by the Secretary of the
Department of Agrarian Reform, and beyond the jurisdiction of the DARAB.

In addition, in Sta. Rosa Realty Development Corporation v. Amante,[23] this Court had
an occasion to discuss the jurisdiction of the DAR Secretary in the selection of farmer-
beneficiaries, to wit:

x x x Suffice it to say that under Section 15 of R.A. No. 6657, the identification of
beneficiaries is a matter involving strictly the administrative implementation of the
CARP, a matter which is exclusively vested in the Secretary of Agrarian Reform, through
its authorized offices. Section 15 reads:

SECTION 15. Registration of Beneficiaries. The DAR in coordination with the

Barangay Agrarian Reform Committee (BARC) as organized in this Act, shall register all
agricultural lessees, tenants and farm workers who are qualified to be beneficiaries of the
CARP. These potential beneficiaries with the assistance of the BARC and the DAR shall
provide the following data:

(a) names and members of their immediate farm household;

47
 (b) owners or administrators of the lands they work on and the length of tenurial
relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages received.

A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be
posted in the barangay hall, school or other public buildings in the barangay where it
shall be open to inspection by the public at all reasonable hours.

Meanwhile, Administrative Order No. 10 (Rules and Procedures Governing the

Registration of Beneficiaries), Series of 1989, provides:

Based on the foregoing, the conclusion is certain that the DARAB had no jurisdiction to
identify who between the parties should be recognized as the beneficiaries of the land in
dispute, as it was a purely administrative function of the DAR. The PARAD was, thus,
correct when it declared that it had no jurisdiction to resolve the dispute, to wit:
As earlier stated no other agency of government is empowered or authorized by law in
the selection and designation of farmer beneficiaries except the DAR being purely an
administrative function. The Adjudication Board is not clothed with power and authority
to rule on the selection of farmer beneficiaries. To do so would be an ultra vires act of
said Board, being administrative in character.[28]

It behooves this Court to ask why the DARAB granted affirmative relief to respondents,
when clearly the PARAD decision subject of appeal was categorical about its lack of
jurisdiction. A reading of the DARAB Decision, however, shows that no discussion of
the Boards jurisdiction was made. The failure of the DARAB to look into the
jurisdictional issue may, however, be attributed to the fact that petitioners did not raise
said issue before the DARAB. Nevertheless, this Court is of the opinion that the same
should not be an excuse for, nor should it warrant, the DARABs action, especially since a
plain reading of the PARAD Decision, as earlier stated, shows that it categorically
discussed the bodys lack of jurisdiction. The same holds true for the CA Decision, which
did not tackle the jurisdictional impediment hounding the petition notwithstanding that
petitioners raised said issue in their petition.

l. Ways in Distributing Lands to Qualified Beneficiaries under CARL

1. Land Transfer (Voluntarily Offer to Sell or Compulsory Acquisition)

(1) General rule: Lands shall be distributed directly to the individual
farmworker-beneficiaries.
(2) Exception: However, if it is not economically feasible and sound to
divide the land, then it shall be owned collectively by the farmworker-
beneficiaries through a workers' cooperative or association. [Section
29]
(3) In case the land is transferred to a cooperative or association, the
individual members of the cooperatives shall be provided with home
lots and small farm lots for their family use, to be taken from the land
owned by the cooperative. [Section 30]

48
 2. Capital Stock Transfer [Section 31]
(1) This is a non-land transfer. Corporations or associations which
voluntarily divest a proportion of their capital stock, equity or
participation in favor of their workers or other qualified beneficiaries
shall be deemed to have complied with CARL.
(2) Amount to be divested: Corporations owning agricultural lands may
give their qualified beneficiaries the right to repurchase such
proportion of the capital stock of the corporation that the agricultural
land, actually devoted to agricultural activities, bears in relation to the
company's total assets.

*Agricultural activity means the cultivation of the soil, planting of

crops, growing of fruit trees, raising of fish, including the harvesting
of such farm products, and other farm activities and practices
performed by a farmer in conjunction with such farming operations
done by persons whether natural or juridical [Section 3(b)].

3. Conditions of the Capital Stock Transfer.

(1) The books of the corporation shall be subject to periodic audit by
certified public accountants chosen by the beneficiaries;
(2) The beneficiaries shall be assured of at least one (1) representative in
the board of directors, or in a management or executive committee, if
one exists;
(3) Any share acquired by the beneficiaries shall have the same rights and
features as all other shares; and
(4) Any transfer of shares of stock by the original beneficiaries shall be
void ab initio unless said transaction is in favor of a qualified and
registered beneficiary within the same corporation.
(5) Period for Compliance: If within TWO (2) YEARS from the approval
of CARL or from the approval of the PARC of the plan for stock
distribution, the stock transfer is not made or realized, the agricultural
land shall be subject to compulsory coverage of the CARL.

m. Jurisdiction in Identification and Selection of Beneficiaries

SECTION 15. Registration of Beneficiaries. The DAR in coordination with the Barangay
Agrarian Reform Committee (BARC) as organized in this Act, shall register all agricultural
lessees, tenants and farm workers who are qualified to be beneficiaries of the CARP. xxx

A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted
in the barangay hall, school or other public buildings in the barangay where it shall be open to
inspection by the public at all reasonable hours.

Meanwhile, Administrative Order No. 10 (Rules and Procedures Governing the Registration of
Beneficiaries), Series of 1989, provides:

49
 Procedure for Registration

A. Pre-Registration Activities

1. Organization of BARCs DAR fieldmen shall effect the organization of a

Barangay Agrarian Reform Committee (BARC) in every barangay pursuant to
this Administrative Order;

n. Jurisdiction to Cancel Leasehold Contract

(An excerpt from DAR v Robles, G.R. No. 190482, December 09, 2015)

On the other hand, in the exercise of its quasi-judicial function, the DAR, through its
adjudication arm, i.e., the DARAB and its regional and provincial adjudication boards, adopted
the 2003 DARAB Rules of Procedure. Under Section 2, Rule II of the said Rules of Procedure,
the DARAB shall have exclusive appellate jurisdiction to review, reverse, modify, alter, or
affirm resolutions, orders, and decisions of its Adjudicators who have primary and exclusive
original jurisdiction over the following cases:

RULE II
Jurisdiction of the Board and its Adjudicators

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

1.3 The annulment or cancellation of lease contracts or deeds of sale or their amendments
involving lands under the administration and disposition of the DAR or Land Bank of the
Philippines (LBP);

o. Jurisdiction to Cancel CLOA

(An excerpt from DAR v Robles, G.R. No. 190482, December 09, 2015)

On the other hand, in the exercise of its quasi-judicial function, the DAR, through its
adjudication arm, i.e., the DARAB and its regional and provincial adjudication boards, adopted
the 2003 DARAB Rules of Procedure. Under Section 2, Rule II of the said Rules of Procedure,
the DARAB shall have exclusive appellate jurisdiction to review, reverse, modify, alter, or
affirm resolutions, orders, and decisions of its Adjudicators who have primary and exclusive
original jurisdiction over the following cases:

RULE II
Jurisdiction of the Board and its Adjudicators

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

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

50
p. Compulsory Acquisition(Procedure Under Section 16)

SEC. 16. Procedure for Acquisition of Private Lands. For purposes of

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

(a) After having identified the land, the landowners and the beneficiaries, the
DAR shall send its notice to acquire the land to the owners thereof, by personal
delivery or registered mail, and post the same in a conspicuous place in the
municipal building and barangay hall of the place where the property is located.
Said notice shall contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17, 18 and other pertinent
provisions hereof.

(b) Within thirty (30) days from the date of receipt of written notice by personal
delivery or registered mail, the landowners, his administrator or representative
shall inform the DAR of his acceptance or rejection of the former.

(c) If the landowner accepts the offer of the DAR, the LBP shall pay the
landowner the purchase price of the land within thirty (30) days after he executes
and delivers a deed of transfer in favor of the Government and surrenders the
Certificate of Title and other muniments of title.

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

(e) Upon receipt by the landowner of the corresponding payment or in case of

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

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

q. Just Compensation
1. Determination of Just Compensation.

In determining just compensation, the cost of acquisition of the land, the value of
the standing crop, the current: value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, the assessment
made by government assessors, and seventy percent (70%) of the zonal valuation
of the Bureau of Internal Revenue (BIR), translated into a basic formula by the
DAR shall be considered, subject to the final decision of the proper court. The
social and economic benefits contributed by the farmers and the farmworkers and
by the Government to the property as well as the nonpayment of taxes or loans

51
 secured from any government financing institution on the said land shall be
considered as additional factors to determine its valuation [Section 17].

2. Under EO 405 (1990), Land Bank of the Philippines shall be primarily

responsible for the determination of the land valuation and compensation.

3. Mode of Payment [Section 18]

a. Cash under the following scheme:

i. For lands above 50 hectares : 25%

ii. For lands above 24 and up to 50 : 30%
iii. For lands 24 and below : 35%
*In case of VOS, the landowner shall be entitled to an additional 5% cash
payment. [Section 19]

b. Balance in any of the following:

i. Shares of stock in government-owned or controlled corporations, LBP
preferred shares, physical assets or other qualified investments;
ii. Tax credits which can be used against any tax liability;
iii. Land Bank of the Philippines Bonds which shall have the following
features:
*Market interest rates aligned with 91-day treasury bill rates;
*Ten percent (10%) of the face value of the bonds shall mature every year
from the date of issuance until the tenth year; and
*Transferability and negotiability

ii. Preliminary Determination (As discussed by Atty. Capanas)

1. Association of Small Landowners v Sec. of DAR(Full and fair equivalent of
property taken from owner by expropriation; The word just is used to intensify
the meaning of the word compensation to convey the idea that the equivalent to
be rendered for the property to be taken shall be real, substantial, full, and ample.)
2. LBP v Dumlao
Important Notes:
(1) If just compensation was not settled prior the passage of RA No. 6657,
it should be computed in accordance with said law although the
property was acquired under PD No. 27.
(2) The determination made by the trial court which relied solely on the
formula prescribed by PD NO. 27 and E) No. 228, is grossly
erroneous. The amount of Php6, 912.50 per hectare, which is based on
the DAR valuation of the properties at the time of their taking in the
1970s, does not come close to a full and fair equivalent of the
property taken from the respondents.
3. Sps. Lee v LBP (Here the Court struck down an action of the lower court which
relied on the valuation of a certain land based on the valuation made by a private
company and did not adhere to the formula)

4. LBP v Yatco (Here the SC disagreed with the lower court that adapted a valuation
of the land from another expropriation case.)

5. LBP v Livioco (The land did not pass conversion approval.)

52
 Our Ruling
For purposes of just compensation, the fair market value of an expropriated
property is determined by its character and its price at the time of taking.[68]
There are three important concepts in this definition the character of the property,
its price, and the time of actual taking. Did the appellate court properly consider
these three concepts when it affirmed the trial courts decision? We find that it did
not.

As to the character of the property

The trial and appellate courts valued respondents property as a residential land
worth P700.00 per square meter. They considered the use for the property as
having changed from agricultural in 1988 (when Livioco offered it to DAR) to
residential by 2002 (allegedly due to the eruption of Mt. Pinatubo). Both courts
erred in treating the land as residential and accepting the change in the character
of the property, without any proof that authorized land conversion had taken
place.

In expropriation cases (including cases involving lands for agrarian reform), the
propertys character refers to its actual use at the time of taking,[69] not its
potential uses. Respondent himself admitted that his property was agricultural at
the time he offered it for sale to DAR in 1988. In his letter to the DAR in 1988,
respondent manifested that his land is agricultural and suitable for agricultural
purposes, although it stood adjacent to residential properties. Moreover, it has
been conclusively decided by final judgment in the earlier cases filed by
respondent that his property was validly acquired under RA 6657 and validly
distributed to agrarian reform beneficiaries. Since the coverage of RA 6657 only
extends to agricultural lands, respondents property should be conclusively treated
as an agricultural land and valued as such.

The lower courts erred in ruling that the character or use of the property has
changed from agricultural to residential, because there is no allegation or proof
that the property was approved for conversion to other uses by DAR. It is the
DAR that is mandated by law to evaluate and to approve land use conversions so
as to prevent fraudulent evasions from agrarian reform coverage. Even
reclassificationand plans for expropriation by local government units (LGUs) will
not ipso facto convert an agricultural property to residential, industrial or
commercial. Thus, in the absence of any DAR approval for the conversion of
respondents property or an actual expropriation by an LGU, it cannot be said that
the character or use of said property changed from agricultural to residential.
Respondents property remains agricultural and should be valued as such. Hence,
the CA and the trial court had no legal basis for considering the subject propertys
value as residential.

6. LBP v Kho (Cut-off Rule)

It is significant to stress, however, that DAR AO 1, series of 2010 which was

issued in line with Section 31 of RA 9700 80 empowering the DAR to provide the
necessary rules and regulations for its implementation, became effective only
subsequent to July 1, 2009. 81 Consequently, it cannot be applied in the
determination of just compensation for the subject land where the claim folders

53
 were undisputedly received by the LBP prior to July 1, 2009, 82 and, as such,
should be valued in accordance with Section 17 of RA 6657 prior to its further
amendment by RA 9700 pursuant to the cut-off date set under DAR AO 2, series
of 2009 83 (cut-off rule). Notably, DAR AO 1, series of 2010 did not expressly or
impliedly repeal the cut-off rule set under DAR AO 2, series of 2009, having
made no reference to any cut-off date with respect to land valuation for previously
acquired lands under PD 27 and EO 228 wherein valuation is subject to challenge
by landowners. Consequently, the application of DAR AO 1, series of 2010
should be, thus, limited to those where the claim folders were received on or
subsequent to July 1, 2009.

In this case, the Court has gone over the records and found that the RTC and the
CA neither considered the cut-off rule nor explained its reasons for deviating
therefrom. Since the claim folders were received by the LBP prior to July 1, 2009,
the RTC should have computed just compensation using pertinent DAR
regulations applying Section 17 of RA 6657 prior to its amendment by RA 9700
instead of adopting the new DAR issuance, absent any cogent justifications
otherwise. Therefore, as it stands, the RTC and the CA were duty-bound to utilize
the basic formula prescribed and laid down in pertinent DAR regulations existing
prior to the passage of RA 9700, to determine just compensation.

7. Alfonso v Heirs of Domingo

The Department of Agrarian Reform considers the following formula in

determining just compensation: 89

LV = (CNI x 60%) + (CS x 30%) + (MV x 10%)

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

The first component in the formula is Capitalized Net Income. 90 This refers to
the difference between annual gross sales and the total cost of operations
capitalized at the interest rate of 12%. This is the closest approximation of
the productivity of the land. 91 The annual gross product of the land is multiplied
by the average annual selling price. The cost of operation is subtracted from this
amount to obtain the Net Income. Net income is divided by the interest rate to
arrive at the Capitalized Net Income. In formula terms:
CNI = [(AGP x SP) - CO]/ 12%

Where:
CNI = Capitalized Net Income
AGP = Annual Gross Product
SP = Selling Price
CO = Cost of Operation
12% = Interest Rate

However, Capitalized Net Income in the Department of Agrarian Reform's

formula does not account for the discounted future income stream or the "net
present value." This is important because when a landowner lets go of his

54
 property, he is not only letting go of income for a year, but he is also letting go of
future income. It is possible that this is one major factor why landowners feel that
the Department of Agrarian Reform or Land Bank assessment of just
compensation is severely undervalued.

The second component is Comparable Sales. This component examines prices of

sales transactions of other parcels of land within the samebarangay that have the
same land use and topography. The Department of Agrarian Reform guidelines
recommend the average of at least three comparable sales transactions.

The problem with this is that they cannot fully account for the fact that prices per
unit of land fluctuate with the size of the total parcel. The Department of Agrarian
Reform also did not give guidelines stating that similar land transactions should
be alike in population density as well as the accessibility of the property in terms
of road networks and commercial centers. The requirement that it should be from
the same barangay is less important than land use, population density, and
accessibility factors. A more comparable land transaction might be situated in a
different province, which would be a better basis than a land transaction in the
same barangay where the property has different intrinsic and extrinsic land
conditions. This is a noticeable gap in the formula considering that land size,
population density, and accessibility are highly influential factors in price-setting.

At present, the judiciary's role as guardian of and final arbiter over transgressions
of fundamental rights remains. The judiciary cannot effectively exercise such a
role if its powers with respect to the determination of just compensation is
restricted by laws and issuances dictating how just compensation should be
determined.

We must, therefore, abandon our rulings in Land Bank of the Philippines v.

Spouses Banal and Land Bank of the Philippines v. Celada that executive and
legislative issuances providing for the proper determination of just compensation
must be adhered to by the courts. Mandating strict adherence to these executive
and legislative issuances is not only tantamount to an unwarranted abdication of
judicial authority, it also endangers rights against undue deprivation of property
and to just compensation.

While this case should be remanded to the Special Agrarian Court for the
determination of just compensation, the court should be allowed to deviate from
the Department of Agrarian Reform's formulas if it finds a different method of
valuation based on the evidence presented.

iii. Governing Law

iv. Payment of Interest
1. Apo Fruits v CA

Just Compensation from thePrism of the Element of Taking.

Apart from the requirement that compensation for expropriated land must be fair
and reasonable, compensation, to be "just," must also be made without delay. 12
Without prompt payment, compensation cannot be considered "just" if the
property is immediately taken as the property owner suffers the immediate
deprivation of both his land and its fruits or income.

55
This is the principle at the core of the present case where the petitioners were
made to wait for more than a decade after the taking of their property before they
actually received the full amount of the principal of the just compensation due
them. What they have not received to date is the income of their landholdings
corresponding to what they would have received had no uncompensated taking of
these lands been immediately made. This income, in terms of the interest on the
unpaid principal, is the subject of the current litigation.

We recognized in Republic v. Court of Appeals 14 the need for prompt payment

and the necessity of the payment of interest to compensate for any delay in the
payment of compensation for property already taken. We ruled in this case that:

The constitutional limitation of "just compensation" is considered to be the sum

equivalent to the market value of the property, broadly described to be the price
fixed by the seller in open market in the usual and ordinary course of legal action
and competition or the fair value of the property as between one who receives,
and one who desires to sell, i[f] fixed at the time of the actual taking by the
government. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final
compensation must include interest[s] on its just value to be computed from
the time the property is taken to the time when compensation is actually paid
or deposited with the court. In fine, between the taking of the property and
the actual payment, legal interest[s] accrue in order to place the owner in a
position as good as (but not better than) the position he was in before the
taking occurred.

In Apo Fruits, the Court had illuminated that the substantiality of the payments
made by the LBP is not the determining factor in the imposition of interest as
nothing less than full payment of just compensation is required. The value of the
landholdings themselves should be equivalent to the principal sum of the just
compensation due, and that interest is due and should be paid to compensate for
the unpaid balance of this principal sum after the taking has been completed, viz.:

[T]he interest involved in the present case "runs as a matter of law and follows as
a matter of course from the right of the landowner to be placed in as good a
position as money can accomplish, as of the date of taking."

Furthermore, the allegedly considerable payments made by the LBP to the

petitioners cannot be a proper premise in denying the landowners the interest due
them under the law and established jurisprudence. If the just compensation for the
landholdings is considerable, this compensation is not undue because the
landholdings the owners gave up in exchange are also similarly considerable x x
x. When the petitioners surrendered these sizeable landholdings to the
government, the incomes they gave up were likewise sizeable and cannot in any
way be considered miniscule. The incomes due from these properties, expressed
as interest, are what the government should return to the petitioners after the
government took over their lands without full payment of just compensation. In
other words, the value of the landholdings themselves should be equivalent to the
principal sum of the just compensation due; interest is due and should be paid to
compensate for the unpaid balance of this principal sum after taking has been

56
completed. This is the compensation arrangement that should prevail if such
compensation is to satisfy the constitutional standard of being "just."

xxxx

If the full payment of the principal sum of the just compensation is legally
significant at all under the circumstances of this case, the significance is only in
putting a stop to the running of the interest due because the principal of the just
compensation due has been paid. To close our eyes to these realities is to condone
what is effectively a confiscatory action in favor of the LBP.

x x x [T]he interest, however enormous it may be, cannot be inequitable and

unconscionable because it resulted directly from the application of law and
jurisprudence - standards that have taken into account fairness and equity in
setting the interest rates due for the use or forebearance of money.

xxxx

It would be utterly fallacious, too, to argue that this Court should tread lightly in
imposing liabilities on the LBP because this bank represents the government and,
ultimately, the public interest. Suffice it to say that public interest refers to what
will benefit the public, not necessarily the government and its agencies whose
task is to contribute to the benefit of the public. Greater public benefit will result
if government agencies like the LBP are conscientious in undertaking its tasks in
order to avoid the situation facing it in this case. Greater public interest would be
served if it can contribute to the credibility of the government's land reform
program through the conscientious handling of its part of this program.15
(Emphases and italics in the original, underscoring supplied.)

In the present case, the just compensation for the subject lands was finally fixed at
P2,398,487.24,16 while the payments made by the LBP only amounted to
P1,237,850.00.17 Hence, there remained an unpaid balance of the "principal sum
of the just compensation," warranting the imposition of interest.

In the recent case of LBP v. Santos, the Court reemphasized that just
compensation contemplates of just and timely payment, and elucidated that
"prompt payment" of just compensation encompasses the payment in full of the
just compensation to the landholders as finally determined by the courts. Hence,
the requirement of the law is not satisfied by the mere deposit by the LBP with
any accessible bank of the provisional compensation determined by it or by the
DAR, and its subsequent release to the landowner after compliance with the legal
requirements set forth bv RA 6657.

Accordingly, the LBP's Motion for Reconsideration should be denied with

finality.

II. With respect to the LBP's Motion for Clarification of the Date of Taking

That being said, the Court, in view of the LBP's alternative Motion for
Clarification, illumines that the interest shall be pegged at the rate of twelve
percent (12%) per annum (p.a.) on the unpaid balance, reckoned from the time of
taking,19 or the time when the landowner was deprived of the use and benefit of

57
 his property,20 such as when title is transferred to the Republic of the Philippines
(Republic), or emancipation patents are issued by the government,21 until June
30, 2013, and thereafter, at six percent (6%) p.a. until full payment.22 However,
while the LBP averred that the landowner's title was cancelled in favor of the
Republic,23 copies of the Republic's title/s was/were not attached to the records
of these consolidated cases. Accordingly, the Court hereby directs the LBP to
submit certified true copies of the Republic's title/s to the RTC upon remand of
these cases, and the latter to compute the correct amount of legal interests due to
the Heirs of Alfredo Hababag, Sr. reckoned from the date of the issuance of the
said titles/s.

2. LBP v Gallego
Now to the core issue of just compensation.
Citing Gabatin v. Land Bank of the Philippines, 28 petitioner LBP argues that
respondents' property was acquired under the effectivity of P.D. No. 27 and E.O.
No. 228; thus, the formula provided therein should apply in fixing just
compensation. Petitioner also pointed out the trial court's failure to take judicial
notice of the mandated Government Support Price of P35.00 per cavan for palay
at the time of taking in 1972.

The petition lacks merit.

The Court has already ruled on the applicability of agrarian laws, namely, P.D.
No. 27/E.O. No. 228 in relation to Republic Act (R.A.) No. 6657, in prior cases
concerning just compensation.

In Paris v. Alfeche, 29 the Court held that the provisions of R.A. No. 6657 are
also applicable to the agrarian reform process of lands placed under the coverage
of P.D. No. 27/E.O. No. 228, which has not been completed upon the effectivity
of R.A. No. 6657. Citing Land Bank of the Philippines v. Court of Appeals, 30
the Court in Paris held that P.D. No. 27 and E.O. No. 228 have suppletory effect
to R.A. No. 6657, to wit:

We cannot see why Sec. 18 of RA [No.] 6657 should not apply to rice and corn
lands under PD [No.] 27. Section 75 of RA [No.] 6657 clearly states that the
provisions of PD [No.] 27 and EO [No.] 228 shall only have a suppletory effect.
Section 7 of the Act also provides

Sec. 7. Priorities. The DAR, in coordination with the PARC shall plan and
program the acquisition and distribution of all agricultural lands through a period
of (10) years from the effectivity of this Act. Lands shall be acquired and
distributed as follows:

Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all
private lands voluntarily offered by the owners of agrarian reform; . . . and all
other lands owned by the government devoted to or suitable for agriculture, which
shall be acquired and distributed immediately upon the effectivity of this Act,
with the implementation to be completed within a period of not more than four (4)
years (emphasis supplied).

This eloquently demonstrates that RA [No.] 6657 includes PD [No.] 27 lands

among the properties which the DAR shall acquire and distribute to the landless.

58
And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of
the Act should be adhered to. In Association of Small Landowners of the
Philippines v. Secretary of Agrarian Reform[,] this Court applied the provisions
(of) RA 6657 to rice and corn lands when it upheld the constitutionality of the
payment of just compensation for PD [No.] 27 lands through the different modes
stated in Sec. 18. 31

Particularly, in Land Bank of the Philippines v. Natividad, 32 where the agrarian

reform process in said case "is still incomplete as the just compensation to be paid
private respondents has yet to be settled", the Court held therein that just
compensation should be determined and the process concluded under R.A. No.
6657.

The retroactive application of R.A. No. 6657 is not only statutory 34 but is also
founded on equitable considerations. In Lubrica v. Land Bank of the Philippines,
35 the Court declared that it would be highly inequitable on the part of the
landowners therein to compute just compensation using the values at the time of
taking in 1972, and not at the time of payment, considering that the government
and the farmer-beneficiaries have already benefited from the land although
ownership thereof has not yet been transferred in their names. The same equitable
consideration is applicable to the factual milieu of the instant case. The records
show that respondents' property had been placed under the agrarian reform
program in 1972 and had already been distributed to the beneficiaries but
respondents have yet to receive just compensation due them.

The Court of Appeals fixed the just compensation based on the current market
value of adjacent properties, citing the "peculiar circumstances" of the case. The
appellate court, however, failed to cite any legal or factual basis in support of its
conclusion. Quite the contrary, the law and jurisprudence on the determination of
just compensation of agrarian lands are settled; they are different from the thrust
of the appellate court.

For the purpose of determining just compensation, Section 17 of R.A. No. 6657
states:
SEC. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner,
the tax declarations, and the assessment made by government assessors shall be
considered. The social and economic benefits contributed by the farmers and the
farmworkers and by 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.

While the SAC is required to consider the acquisition cost of the land, the current
value of like properties, its nature, actual use and income, the sworn valuation by
the owner, the tax declaration and the assessments made by the government
assessors to determine just compensation, it is equally true that these factors have
been translated into a basic formula by the DAR pursuant to its rule-making
power under Section 49 of R.A. No. 6657. 36 In Land Bank of the Philippines v.
Celada, 37 the Court upheld the applicability of DAR Administrative Order
(A.O.) No. 5, series of 1998 in determining just compensation.

59
 Likewise, in Land Bank of the Philippines v. Banal, 38 the Court ruled that the
applicable formula in fixing just compensation is DAR A.O. No. 6, series of 1992,
as amended by DAR A.O. No. 11, series of 1994, then the governing regulation
applicable to compulsory acquisition of lands, in recognition of the DAR's rule-
making power to carry out the object of R.A. No. 6657. Because the trial court
therein based its valuation upon a different formula and did not conduct any
hearing for the reception of evidence, the Court ordered a remand of the case to
the SAC for trial on the merits.

The mandatory application of the aforementioned guidelines in determining just

compensation has been reiterated recently in Land Bank of the Philippines v. Lim,
39 where the Court ordered the remand of the case to the SAC for the
determination of just compensation strictly in accordance with DAR A.O. No. 6,
series of 1992, as amended.

In line with the pronouncement in Celada, respondents argue that the just
compensation should be based on DAR A.O. No. 5, series of 1998, which requires
values for Capitalized Net Income, Comparable Sales and Market Value. Thus,
respondents attached to the comment an appraisal report of the fair market value
of the properties. Using the figures therein, respondents arrived at the value of
P78,195,694.07 as just compensation.

The appraisal report, however, does not form part of the records of the case; thus,
it has no probative weight. Any evidence that a party desires to submit for the
consideration of the court must be formally offered by him, otherwise, it is
excluded and rejected. Evidence not formally offered before the trial court cannot
be considered on appeal, for to consider it at such stage will deny the other parties
their right to rebut it. 40 Although respondents are correct in asserting that DAR
A.O. No. 5, series of 1998 is the governing formula in determining the just
compensation in the case at bar, the evidence on record is not sufficient to
determine the parameters required under DAR A.O. No. 5, series of 1998. Hence,
the remand of the case to the appropriate court below is necessary also in order to
allow respondents to properly present their evidence and petitioner to submit
controverting evidence. This Court is not a trier of facts.

3. LBP v Avancea

SCs Ruling
We are not persuaded.
The CA found that the title to respondents spouses' land was canceled and a new
title was issued in the name of the Republic of the Philippines in December 1991,
but there was no showing that petitioner had made payments prior to the taking of
the land.

Thus, there was delay in the payment of just compensation which entitles the
respondents spouses to the payment of interest from the time the property was
transferred in the name of the government in December 1991 up to the time
petitioner deposited the valuation in the account of the respondents-spouses in
July 1996. We agree with the CA that petitioner should pay interest for the delay
in the payment of just compensation. However, such payment of interest should
be computed up to the full payment of just compensation.

60
 Petitioner argues that it had made a deposit on October 17, 1991, i.e., prior to the
cancellation of the title of the respondents-spouses, and submitted with us a
Certification dated October 22, 1991 issued by the petitioner's Bonds Servicing
Department stating that it had earmarked the sum of P1,877,516.09 in cash and in
LBP bonds as compensation for the parcel of lands covered by RT-2937 in the
name of respondents spouses on October 17, 1991 pursuant to RA 6657 through
voluntary offer. However, such certification was not among those that the
petitioner offered as evidence during the trial. 11 More importantly, We had
rejected the practice of earmarking funds and opening trust accounts for purposes
of effecting payment, hence, the law 12 requires payment of just compensation in
cash or Land Bank of the Philippines (LBP) bonds, not by trust account.

The certificate of title to respondents-spouses' land was canceled and a new

certificate was issued in the government's name in December 1991 without giving
the former just compensation for such taking. We have allowed the grant of
interest in expropriation cases where there is delay in the payment of just
compensation. 14 We recognize that the owner's loss is not only his property but
also its income-generating potential. 15 Thus, when property is taken, full
compensation of its value must immediately be paid to achieve a fair exchange for
the property and the potential income lost. 16 The rationale for imposing the
interest is to compensate the landowners for the income they would have made
had they been properly compensated for their properties at the time of the taking

Thus, the CA did not err in imposing interest on the just compensation which will
be determined after the remand of the case to the SAC. The interest should be
computed from December 1991 up to the full payment of just compensation and
not only up to the time petitioner deposited the valuation in 1996 as the CA ruled.
The concept of just compensation embraces not only the correct determination of
the amount to be paid to the owners of the land, but also payment within a
reasonable time from its taking. 20 Without prompt payment, compensation
cannot be considered "just" inasmuch as the property owner is made to suffer the
consequences of being immediately deprived of his land while being made to wait
for a decade or more before actually receiving the amount necessary to cope with
his loss.

The award of interest is imposed in the nature of damages for delay in payment
which, in effect, makes the obligation on the part of the government one of
forbearance to ensure prompt payment of the value of the land and limit the
opportunity loss of the owner. 22 The just compensation due respondents-spouses
shall earn legal interest at the rate of 12% per annum computed from the time of
taking in December 1991 until June 30, 2013. 23 And from July 1, 2013 until full
payment, the interest will be at the new legal rate of 6% per annum, in accordance
with the revisions governing the rate of interest established by Bangko Sentral ng
Pilipinas Monetary Board Circular No. 799, 24 Series of 2013. 25 The amount
which petitioner had already paid respondents-spouses by virtue of the RTC's
Order granting the issuance of the Writ of Execution dated October 2, 2000 shall
be deducted from the amount of the just compensation which will be awarded
after the remand of this case.

4. LBP v Hababag

61
 On the issue of interests, suffice it to state that the just compensation due to the
landowners for their expropriated property is treated as an effective forbearance
on the part of the State. 56 The rationale therefor, as enunciated in the case of Apo
Fruits Corporation v. LBP, is to compensate the landowners for the income they
would have made had they been properly compensated for their properties at the
time of the taking. In other words, the award of 12% interests is imposed in the
nature of damages for the delay in the payment of the full just compensation
award.

In the present case, the LBP had already made the corresponding deposit of their
offered valuation in the amount of P1,237,850.00 in cash and in bonds prior to the
DAR's possession of the property. 59 This amount is lower than the just
compensation awarded and, hence, in view of the above-stated principle, the
payment of interests remains in order insofar as the unpaid balance is concerned.

Anent the time of accrual, the interests should be computed from the time of the
taking of the subject lands. This is based on the principle that interest "runs as a
matter of law and follows from the right of the landowner to be placed in as good
position as money can accomplish, as of the date of the taking."

With respect to the rate of interests, the Court observes that from the time of the
taking up until June 30, 2013, the interest must be pegged at the rate of 12% p.a.
pursuant to Section 2 61 of Central Bank Circular No. 905, series of 1982, which
was the prevailing rule on interest rates during such period. From July 1, 2013
onwards and until full payment, the interest rate should then be pegged at the rate
of 6% p.a. pursuant to Bangko Sentral ng Pilipinas Circular No. 799, series of
2013, 62 which accordingly amended the old 12% p.a. interest rate.

5. PD 27 v RA 6657, as amended

62
LAND VALUE COMPUTATION (LBP v Dumlao)
Thursday, August 3, 2017
5:47 PM
LV = (CNIx0.6)+(CSx0.3)+(MVx0.1)

Where:

LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sale
MV = Market Value per Tax Declaration (changed by RA 9700)

NOTE: The date of taking of the subject land for purposes of computing just compensation should be reckoned from the issuance
dates of the emancipation patents. Also, the date of taking is the start where the government is liable to pay just compensation.

Factors (Section 17) - has been transformed into an administrative order. (Refer to the formula) It should also be noted that the
evidence presented with regard to the land in question should be considered in computing the value of the land for the purposes of
just compensation.

NOTE: Look at Section 7 of RA 9700.

Other Notes:

II. The following rules and regulations are hereby promulgated to amend certain provisions of
Administrative Order No. 17, series of 1989, as amended by Administrative Order No. 3, [s]eries
of 1991 which govern the valuation of lands subject of acquisition whether under voluntary offer to
sell (VOS) or compulsory acquisition (CA).
A. There shall be one basic formula for the valuation of lands covered by VOS or CA regardless of the
date of offer or coverage of the claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

The above formula shall be used if all the three factors are present, relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 2

A.4 In all the above, the computed value using the applicable formula or the Declared Value by
Landowner (DV), whichever is lower, shall be adopted as the Land Value. DV shall refer to the
amount indicated in the Landowner's offer or the Listasaka declaration, whichever is lower, in
case of VOS. In case of CA, this shall refer to the amount indicated in the Listasaka. Both LO's
offer and Listasaka shall be grossed-up using the immediately preceding semestral Regional
Consumer Price Index (RCPI), from the date of the offer or the date of Listasaka up to the date of
receipt of claimfolders by LBP from DAR for processing.

B. Capitalized Net Income (CNI) This shall refer to the difference between the gross sales (AGP x SP)
and total cost of operations (CO) capitalized at 12%.

63
Expressed in equation form:
(AGP x SP) - CO

CNI =

.12

Where:
CNI = Capitalized Net Income
AGP = One year's Average Gross Production immediately preceding the date of offer in case of
VOS or date of notice of coverage in case of CA.
SP = Selling Price shall refer to average prices for the immediately
preceding calendar year from the date of receipt of the claim folder by LBP for processing secured
from the Department of Agriculture (DA) and other appropriate regulatory bodies or in their
absence, from Bureau of Agricultural Statistics. If possible, SP data shall be gathered from
the barangay or municipality where the property is located. In the absence
thereof, SP may be secured within the province or region.
CO = Cost of Operations. Whenever the cost of operations could not be obtained or verified, an
assumed net income rate (NIR) of 20% shall be used. Landholdings planted to coconut which are
productive at the time of offer/coverage shall continue to use the
70% NIR. DAR and LBP shall continue to conduct joint industry studies to establish the applicable
NIR for each crop covered under CARP.
.12 = Capitalization Rate

B.1 Industry data on production, cost of operations and selling price shall be obtained from
government/private entities. Such entities shall include, but not limited to the Department of
Agriculture (DA), the Sugar Regulatory Authority (SRA), the Philippine Coconut Authority (PCA)
and other private persons/entities knowledgeable in the concerned industry.

B.2 The landowner shall submit a statement of net income derived from the land subject of
acquisition. This shall include among others, total production and cost of operations on a
per crop basis, selling price/s (farm gate) and such other data as may be required. These
data shall be validated/verified by the Department of Agrarian Reform and Land Bank of the
Philippines field personnel. The actual tenants/farmworkers of the subject property will be the
primary source of information for purposes of verification or if not available, the
tenants/farmworkers of adjoining property.
In case of failure by the landowner to submit the statement within three weeks from the
date of receipt of letter-request from the Municipal Agrarian Reform Office (MARO) or the
data stated therein cannot be verified/validated from the farmers, LBP may adopt any
available industry dataor in the absence thereof may conduct an industry study on the specific
crop which will be used in determining the production, cost and net income of the subject
landholding.
B.3 For landholdings planted to permanent crops which are introduced by the farmer-
beneficiaries, CNI shall be equal to 25% of the annual net income capitalized at 12%. (Emphasis
supplied.)

64
 LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

The above formula shall be used if all the three factors are present, relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 2
In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land within
the same estate under consideration or within the samebarangay or municipality (in that order)
approved by LBP within one (1) year from receipt of claimfolder.
A.4 When the land planted to permanent crops is not yet productive or not yet fruit-bearing at the time of
Field Investigation (FI), the land value shall be equivalent to the value of the land plus the
cumulative development cost (CDC) of the crop from land preparation up to the time of FI. In
equation form:
LV = (MV x 2) + CDC
||| (Alfonso v. Land Bank of the Philippines, G.R. Nos. 181912 & 183347, [November 29, 2016])

- S L C -

65