G.R. No.

100091 October 22, 1992

CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR. LEONARDO A. CHUA, petitioner,
vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, THE COURT OF APPEALS and ALVIN OBRIQUE,
REPRESENTING BUKIDNON FREE FARMERS AGRICULTURAL LABORERS ORGANIZATION (BUFFALO), respondents.

CAMPOS, JR., J.:

This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to nullify the proceedings and decision of the Department of
Agrarian Reform Adjudication Board (DARAB for brevity) dated September 4, 1989 and to set aside the decision the decision * of the Court
of Appeals dated August 20, 1990, affirming the decision of the DARAB which ordered the segregation of 400 hectares of suitable, compact
and contiguous portions of the Central Mindanao University (CMU for brevity) land and their inclusion in the Comprehensive Agrarian Reform
Program (CARP for brevity) for distribution to qualified beneficiaries, on the ground of lack of jurisdiction.

This case originated in a complaint filed by complainants calling themselves as the Bukidnon Free Farmers and Agricultural Laborers
Organization (BUFFALO for brevity) under the leadership of Alvin Obrique and Luis Hermoso against the CMU, before the Department of
Agrarian Reform for Declaration of Status as Tenants, under the CARP.

From the records, the following facts are evident. The petitioner, the CMU, is an agricultural educational institution owned and run by the
state located in the town of Musuan, Bukidnon province. It started as a farm school at Marilang, Bukidnon in early 1910, in response to the
public demand for an agricultural school in Mindanao. It expanded into the Bukidnon National Agricultural High School and was transferred to
its new site in Managok near Malaybalay, the provincial capital of Bukidnon.

In the early 1960's, it was converted into a college with campus at Musuan, until it became what is now known as the CMU, but still primarily
an agricultural university. From its beginning, the school was the answer to the crying need for training people in order to develop the
agricultural potential of the island of Mindanao. Those who planned and established the school had a vision as to the future development of
that part of the Philippines. On January 16, 1958 the President of the Republic of the Philippines, the late Carlos P. Garcia, "upon the
recommendation of the Secretary of Agriculture and Natural Resources, and pursuant to the provisions of Section 53, of Commonwealth Act
No. 141, as amended", issued Proclamation No. 476, withdrawing from sale or settlement and reserving for the Mindanao Agricultural
College, a site which would be the future campus of what is now the CMU. A total land area comprising 3,080 hectares was surveyed and
registered and titled in the name of the petitioner under OCT Nos. 160, 161 and 162. 1

In the course of the cadastral hearing of the school's petition for registration of the aforementioned grant of agricultural land, several tribes
belonging to cultural communities, opposed the petition claiming ownership of certain ancestral lands forming part of the tribal reservations.
Some of the claims were granted so that what was titled to the present petitioner school was reduced from 3,401 hectares to 3,080 hectares.

In the early 1960's, the student population of the school was less than 3,000. By 1988, the student population had expanded to some 13,000
students, so that the school community has an academic population (student, faculty and non-academic staff) of almost 15,000. To cope with
the increase in its enrollment, it has expanded and improved its educational facilities partly from government appropriation and partly by self-
help measures.

True to the concept of a land grant college, the school embarked on self-help measures to carry out its educational objectives, train its
students, and maintain various activities which the government appropriation could not adequately support or sustain. In 1984, the CMU
approved Resolution No. 160, adopting a livelihood program called "Kilusang Sariling Sikap Program" under which the land resources of the
University were leased to its faculty and employees. This arrangement was covered by a written contract. Under this program the faculty and
staff combine themselves to groups of five members each, and the CMU provided technical know-how, practical training and all kinds of
assistance, to enable each group to cultivate 4 to 5 hectares of land for the lowland rice project. Each group pays the CMU a service fee and
also a land use participant's fee. The contract prohibits participants and their hired workers to establish houses or live in the project area and
to use the cultivated land as a collateral for any kind of loan. It was expressly stipulated that no landlord-tenant relationship existed between
the CMU and the faculty and/or employees. This particular program was conceived as a multi-disciplinary applied research extension and
productivity program to utilize available land, train people in modern agricultural technology and at the same time give the faculty and staff
opportunities within the confines of the CMU reservation to earn additional income to augment their salaries. The location of the CMU at
Musuan, Bukidnon, which is quite a distance from the nearest town, was the proper setting for the adoption of such a program. Among the
participants in this program were Alvin Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao, Danilo Vasquez, Aronio Pelayo and other
complainants. Obrique was a Physics Instructor at the CMU while the others were employees in the lowland rice project. The other
complainants who were not members of the faculty or non-academic staff CMU, were hired workers or laborers of the participants in this
program. When petitioner Dr. Leonardo Chua became President of the CMU in July 1986, he discontinued the agri-business project for the
production of rice, corn and sugar cane known as Agri-Business Management and Training Project, due to losses incurred while carrying on
the said project. Some CMU personnel, among whom were the complainants, were laid-off when this project was discontinued. As Assistant
Director of this agri-business project, Obrique was found guilty of mishandling the CMU funds and was separated from service by virtue of
Executive Order No. 17, the re-organization law of the CMU.

Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project called CMU-Income Enhancement Program (CMU-
IEP) to develop unutilized land resources, mobilize and promote the spirit of self-reliance, provide socio-economic and technical training in
actual field project implementation and augment the income of the faculty and the staff.
Under the terms of a 3-party Memorandum of Agreement 2 among the CMU, the CMU-Integrated Development Foundation (CMU-IDF) and
groups or "seldas" of 5 CMU employees, the CMU would provide the use of 4 to 5 hectares of land to a selda for one (1) calendar year. The
CMU-IDF would provide researchers and specialists to assist in the preparation of project proposals and to monitor and analyze project
implementation. The selda in turn would pay to the CMU P100 as service fee and P1,000 per hectare as participant's land rental fee. In
addition, 400 kilograms of the produce per year would be turned over or donated to the CMU-IDF. The participants agreed not to allow their
hired laborers or member of their family to establish any house or live within vicinity of the project area and not to use the allocated lot as
collateral for a loan. It was expressly provided that no tenant-landlord relationship would exist as a result of the Agreement.

Initially, participation in the CMU-IEP was extended only to workers and staff members who were still employed with the CMU and was not
made available to former workers or employees. In the middle of 1987, to cushion the impact of the discontinuance of the rice, corn and
sugar cane project on the lives of its former workers, the CMU allowed them to participate in the CMU-IEP as special participants.

Under the terms of a contract called Addendum To Existing Memorandum of Agreement Concerning Participation To the CMU-Income
Enhancement Program, 3 a former employee would be grouped with an existing selda of his choice and provided one (1) hectare for a
lowland rice project for one (1) calendar year. He would pay the land rental participant's fee of P1,000.00 per hectare but on a charge-to-crop
basis. He would also be subject to the same prohibitions as those imposed on the CMU employees. It was also expressly provided that no
tenant-landlord relationship would exist as a result of the Agreement.

The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those whose contracts were not renewed were served
with notices to vacate.

The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane project, the loss of jobs due to termination or
separation from the service and the alleged harassment by school authorities, all contributed to, and precipitated the filing of the complaint.

On the basis of the above facts, the DARAB found that the private respondents were not tenants and cannot therefore be beneficiaries under
the CARP. At the same time, the DARAB ordered the segregation of 400 hectares of suitable, compact and contiguous portions of the CMU
land and their inclusion in the CARP for distribution to qualified beneficiaries.

The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the Court of Appeals, raised the following issues:

1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for Declaration of Status of Tenants and coverage of land
under the CARP.

2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse of discretion amounting to lack of jurisdiction in
dismissing the Petition for Review on Certiorari and affirming the decision of DARAB.

In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants Obrique, et al. claimed that they are tenants of the
CMU and/or landless peasants claiming/occupying a part or portion of the CMU situated at Sinalayan, Valencia, Bukidnon and Musuan,
Bukidnon, consisting of about 1,200 hectares. We agree with the DARAB's finding that Obrique, et. al. are not tenants. Under the terms of
the written agreement signed by Obrique, et. al., pursuant to the livelihood program called "Kilusang Sariling Sikap Program", it was
expressly stipulated that no landlord-tenant relationship existed between the CMU and the faculty and staff (participants in the project). The
CMU did not receive any share from the harvest/fruits of the land tilled by the participants. What the CMU collected was a nominal service
fee and land use participant's fee in consideration of all the kinds of assistance given to the participants by the CMU. Again, the agreement
signed by the participants under the CMU-IEP clearly stipulated that no landlord-tenant relationship existed, and that the participants are not
share croppers nor lessees, and the CMU did not share in the produce of the participants' labor.

In the same paragraph of their complaint, complainants claim that they are landless peasants. This allegation requires proof and should not
be accepted as factually true. Obrique is not a landless peasant. The facts showed he was Physics Instructor at CMU holding a very
responsible position was separated from the service on account of certain irregularities he committed while Assistant Director of the Agri-
Business Project of cultivating lowland rice. Others may, at the moment, own no land in Bukidnon but they may not necessarily be so
destitute in their places of origin. No proof whatsoever appears in the record to show that they are landless peasants.

The evidence on record establish without doubt that the complainants were originally authorized or given permission to occupy certain areas
of the CMU property for a definite purpose to carry out certain university projects as part of the CMU's program of activities pursuant to its
avowed purpose of giving training and instruction in agricultural and other related technologies, using the land and other resources of the
institution as a laboratory for these projects. Their entry into the land of the CMU was with the permission and written consent of the owner,
the CMU, for a limited period and for a specific purpose. After the expiration of their privilege to occupy and cultivate the land of the CMU,
their continued stay was unauthorized and their settlement on the CMU's land was without legal authority. A person entering upon lands of
another, not claiming in good faith the right to do so by virtue of any title of his own, or by virtue of some agreement with the owner or with
one whom he believes holds title to the land, is a squatter. 4 Squatters cannot enter the land of another surreptitiously or by stealth, and
under the umbrella of the CARP, claim rights to said property as landless peasants. Under Section 73 of R.A. 6657, persons guilty of
committing prohibited acts of forcible entry or illegal detainer do not qualify as beneficiaries and may not avail themselves of the rights and
benefits of agrarian reform. Any such person who knowingly and wilfully violates the above provision of the Act shall be punished with
imprisonment or fine at the discretion of the Court.

In view of the above, the private respondents, not being tenants nor proven to be landless peasants, cannot qualify as beneficiaries under
the CARP.
The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals, segregating 400 hectares from the CMU land is
primarily based on the alleged fact that the land subject hereof is "not directly, actually and exclusively used for school sites, because the
same was leased to Philippine Packing Corporation (now Del Monte Philippines)".

In support of this view, the Board held that the "respondent University failed to show that it is using actually, really, truly and in fact, the
questioned area to the exclusion of others, nor did it show that the same is directly used without any intervening agency or person", 5 and
"there is no definite and concrete showing that the use of said lands are essentially indispensable for educational purposes". 6 The reliance
by the respondents Board and Appellate Tribunal on the technical or literal definition from Moreno's Philippine Law Dictionary and Black's
Law Dictionary, may give the ordinary reader a classroom meaning of the phrase "is actually directly and exclusively", but in so doing they
missed the true meaning of Section 10, R.A. 6657, as to what lands are exempted or excluded from the coverage of the CARP.

The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, are as follows:

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

More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No reclassification of
forest of mineral lands to agricultural lands shall be undertaken after the approval of this Act until Congress, taking into
account ecological, developmental and equity considerations, shall have determined by law, the specific limits of the
public domain;

(b) All lands of the public domain in excess of the specific limits ad determined by Congress in the preceding
paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and

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

Sec. 10 EXEMPTIONS AND EXCLUSIONS. Lands actually, directly and exclusively used and found to be
necessary for parks, wildlife, forest reserves, reforestration, fish sanctuaries and breeding grounds,
watersheds and mangroves, national defense, school sites and campuses including experimental farm
stations operated by public or private schools for educational purposes, seeds and seedlings research and
pilot production centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually
worked by the inmates, government and private research and quarantine centers and all lands with eighteen
percent (18%) slope and over, except those already developed shall be exempt from the coverage of this
Act. (Emphasis supplied).

The construction given by the DARAB to Section 10 restricts the land area of the CMU to its present needs or to a land area presently,
actively exploited and utilized by the university in carrying out its present educational program with its present student population and
academic facility overlooking the very significant factor of growth of the university in the years to come. By the nature of the CMU, which is
a school established to promote agriculture and industry, the need for a vast tract of agricultural land and for future programs of expansion is
obvious. At the outset, the CMU was conceived in the same manner as land grant colleges in America, a type of educational institution which
blazed the trail for the development of vast tracts of unexplored and undeveloped agricultural lands in the Mid-West. What we now know as
Michigan State University, Penn State University and Illinois State University, started as small land grant colleges, with meager funding to
support their ever increasing educational programs. They were given extensive tracts of agricultural and forest lands to be developed to
support their numerous expanding activities in the fields of agricultural technology and scientific research. Funds for the support of the
educational programs of land grant colleges came from government appropriation, tuition and other student fees, private endowments and
gifts, and earnings from miscellaneous sources. 7 It was in this same spirit that President Garcia issued Proclamation No. 476, withdrawing
from sale or settlement and reserving for the Mindanao Agricultural College (forerunner of the CMU) a land reservation of 3,080 hectares as
its future campus. It was set up in Bukidnon, in the hinterlands of Mindanao, in order that it can have enough resources and wide open
spaces to grow as an agricultural educational institution, to develop and train future farmers of Mindanao and help attract settlers to that part
of the country.

In line with its avowed purpose as an agricultural and technical school, the University adopted a land utilization program to develop and
exploit its 3080-hectare land reservation as follows: 8

No. of Hectares Percentage

a. Livestock and Pasture 1,016.40 33

b. Upland Crops 616 20

 c. Campus and Residential sites 462 15

d. Irrigated rice 400.40 13

e. Watershed and forest reservation 308 10

f. Fruit and Trees Crops 154 5

g. Agricultural
Experimental stations 123.20 4

3,080.00 100%

The first land use plan of the CARP was prepared in 1975 and since then it has undergone several revisions in line with changing economic
conditions, national economic policies and financial limitations and availability of resources. The CMU, through Resolution No. 160 S. 1984,
pursuant to its development plan, adopted a multi-disciplinary applied research extension and productivity program called the "Kilusang
Sariling Sikap Project" (CMU-KSSP). The objectives 9 of this program were:

1. Provide researches who shall assist in (a) preparation of proposal; (b) monitor project implementation; and (c) collect
and analyze all data and information relevant to the processes and results of project implementation;

2. Provide the use of land within the University reservation for the purpose of establishing a lowland rice project for the
party of the Second Part for a period of one calendar year subject to discretionary renewal by the Party of the First
Part;

3. Provide practical training to the Party of the Second Part on the management and operation of their lowland project
upon request of Party of the Second Part; and

4. Provide technical assistance in the form of relevant livelihood project specialists who shall extend expertise on
scientific methods of crop production upon request by Party of the Second Part.

In return for the technical assistance extended by the CMU, the participants in a project pay a nominal amount as service fee. The self-
reliance program was adjunct to the CMU's lowland rice project.

The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils., Inc.) was leased long before the CARP was
passed. The agreement with the Philippine Packing Corporation was not a lease but a Management and Development Agreement, a joint
undertaking where use by the Philippine Packing Corporation of the land was part of the CMU research program, with the direct participation
of faculty and students. Said contracts with the Philippine Packing Corporation and others of a similar nature (like MM-Agraplex) were made
prior to the enactment of R.A. 6657 and were directly connected to the purpose and objectives of the CMU as an educational institution. As
soon as the objectives of the agreement for the joint use of the CMU land were achieved as of June 1988, the CMU adopted a blue print for
the exclusive use and utilization of said areas to carry out its own research and agricultural experiments.

As to the determination of when and what lands are found to be necessary for use by the CMU, the school is in the best position to resolve
and answer the question and pass upon the problem of its needs in relation to its avowed objectives for which the land was given to it by the
State. Neither the DARAB nor the Court of Appeals has the right to substitute its judgment or discretion on this matter, unless the evidentiary
facts are so manifest as to show that the CMU has no real for the land.

It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the Court of Appeals in its Decision dated August
20, 1990, is not covered by the CARP because:

(1) It is not alienable and disposable land of the public domain;

(2) The CMU land reservation is not in excess of specific limits as determined by Congress;

(3) It is private land registered and titled in the name of its lawful owner, the CMU;

(4) It is exempt from coverage under Section 10 of R.A. 6657 because the lands are actually, directly and exclusively
used and found to be necessary for school site and campus, including experimental farm stations for educational
purposes, and for establishing seed and seedling research and pilot production centers. (Emphasis supplied).

Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the DARAB is limited only to matters involving the
implementation of the CARP. More specifically, it is restricted to agrarian cases and controversies involving lands falling within the coverage
of the aforementioned program. It does not include those which are actually, directly and exclusively used and found to be necessary for,
among such purposes, school sites and campuses for setting up experimental farm stations, research and pilot production centers, etc.

Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it involving a portion of the CMU's titled school
site, as the portion of the CMU land reservation ordered segregated is actually, directly and exclusively used and found by the school to be
necessary for its purposes. The CMU has constantly raised the issue of the DARAB's lack of jurisdiction and has questioned the
respondent's authority to hear, try and adjudicate the case at bar. Despite the law and the evidence on record tending to establish that the
fact that the DARAB had no jurisdiction, it made the adjudication now subject of review.

Whether the DARAB has the authority to order the segregation of a portion of a private property titled in the name of its lawful owner, even if
the claimant is not entitled as a beneficiary, is an issue we feel we must resolve. The quasi-judicial powers of DARAB are provided in
Executive Order No. 129-A, quoted hereunder in so far as pertinent to the issue at bar:

Sec. 13. AGRARIAN REFORM ADJUDICATION BOARD There is hereby created an Agrarian Reform
Adjudication Board under the office of the Secretary. . . . The Board shall assume the powers and functions with
respect to adjudication of agrarian reform cases under Executive Order 229 and this Executive Order . . .

Sec. 17. 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
including implementation of Agrarian Reform.

Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:

The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform matters and shall have
original jurisdiction over all matters involving the implementation of agrarian reform. . . .

Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A. 6657. There is no doubt that the DARAB has
jurisdiction to try and decide any agrarian dispute in the implementation of the CARP. An agrarian dispute is defined by the same
law as any controversy relating to tenurial rights whether leasehold, tenancy stewardship or otherwise over lands devoted to
agriculture. 10

In the case at bar, the DARAB found that the complainants are not share tenants or lease holders of the CMU, yet it ordered the "segregation
of a suitable compact and contiguous area of Four Hundred hectares, more or less", from the CMU land reservation, and directed the DAR
Regional Director to implement its order of segregation. Having found that the complainants in this agrarian dispute for Declaration of
Tenancy Status are not entitled to claim as beneficiaries of the CARP because they are not share tenants or leaseholders, its order for the
segregation of 400 hectares of the CMU land was without legal authority. w do not believe that the quasi-judicial function of the DARAB
carries with it greater authority than ordinary courts to make an award beyond what was demanded by the complainants/petitioners, even in
an agrarian dispute. Where the quasi-judicial body finds that the complainants/petitioners are not entitled to the rights they are demanding, it
is an erroneous interpretation of authority for that quasi-judicial body to order private property to be awarded to future beneficiaries. The
order segregation 400 hectares of the CMU land was issued on a finding that the complainants are not entitled as beneficiaries, and on an
erroneous assumption that the CMU land which is excluded or exempted under the law is subject to the coverage of the CARP. Going
beyond what was asked by the complainants who were not entitled to the relief prayed the complainants who were not entitled to the relief
prayed for, constitutes a grave abuse of discretion because it implies such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction.

The education of the youth and agrarian reform are admittedly among the highest priorities in the government socio-economic programs. In
this case, neither need give way to the other. Certainly, there must still be vast tracts of agricultural land in Mindanao outside the CMU land
reservation which can be made available to landless peasants, assuming the claimants here, or some of them, can qualify as CARP
beneficiaries. To our mind, the taking of the CMU land which had been segregated for educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority and jurisdiction granted by law to the DARAB.

The decision in this case is of far-reaching significance as far as it concerns state colleges and universities whose resources and research
facilities may be gradually eroded by misconstruing the exemptions from the CARP. These state colleges and universities are the main
vehicles for our scientific and technological advancement in the field of agriculture, so vital to the existence, growth and development of this
country.

It is the opinion of this Court, in the light of the foregoing analysis and for the reasons indicated, that the evidence is sufficient to sustain a
finding of grave abuse of discretion by respondents Court of Appeals and DAR Adjudication Board. We hereby declare the decision of the
DARAB dated September 4, 1989 and the decision of the Court of Appeals dated August 20, 1990, affirming the decision of the quasi-judicial
body, as null and void and hereby order that they be set aside, with costs against the private respondents.

SO ORDERED

G.R. No. 158228 March 23, 2004

DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, ROBERTO M.
PAGDANGANAN,petitioner,
vs.
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS), respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari seeks to set aside the decision1 of the Court of Appeals dated
October 29, 2002 in CA-G.R. SP No. 64378, which reversed the August 30, 2000 decision of the
Secretary of Agrarian Reform, as well as the Resolution dated May 7, 2003, which denied
petitioners motion for reconsideration.

In controversy are Lot No. 2509 and Lot No. 817-D consisting of an aggregate area of 189.2462
hectares located at Hacienda Fe, Escalante, Negros Occidental and Brgy. Gen. Luna, Sagay,
Negros Occidental, respectively. On October 21, 1921, these lands were donated by the late
Esteban Jalandoni to respondent DECS (formerly Bureau of Education).2 Consequently, titles thereto
were transferred in the name of respondent DECS under Transfer Certificate of Title No. 167175.3

On July 15, 1985, respondent DECS leased the lands to Anglo Agricultural Corporation for 10
agricultural crop years, commencing from crop year 1984-1985 to crop year 1993-1994. The
contract of lease was subsequently renewed for another 10 agricultural crop years, commencing
from crop year 1995-1996 to crop year 2004-2005.4

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

After investigation, MARO Jacinto R. Piosa, sent a "Notice of Coverage" to respondent DECS,
stating that the subject lands are now covered by CARP and inviting its representatives for a
conference with the farmer beneficiaries.6 Then, MARO Piosa submitted his report to OIC-PARO
Stephen M. Leonidas, who recommended to the DAR Regional Director the approval of the
coverage of the landholdings.

On August 7, 1998, DAR Regional Director Dominador B. Andres approved the recommendation,
the dispositive portion of which reads:

WHEREFORE, all the foregoing premises considered, the petition is granted. Order is hereby
issued:

1. Placing under CARP coverage Lot 2509 with an area of 111.4791 hectares situated at
Had. Fe, Escalante, Negros Occidental and Lot 817-D with an area of 77.7671 hectares
situated at Brgy. Gen. Luna, Sagay, Negros Occidental;

2. Affirming the notice of coverage sent by the DAR Provincial Office, Negros Occidental
dated November 23, 1994;

3. Directing the Provincial Agrarian Reform Office of Negros Occidental and the Municipal
Agrarian Reform Officers of Sagay and Escalante to facilitate the acquisition of the subject
landholdings and the distribution of the same qualified beneficiaries.
SO ORDERED.7

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

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

Hence, the instant petition for review.

The pivotal issue to be resolved in this case is whether or not the subject properties are exempt from
the coverage of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1998 (CARL).

The general policy under CARL is to cover as much lands suitable for agriculture as
possible.10 Section 4 of R.A. No. 6657 sets out the coverage of CARP. It states that the program
shall:

" cover, regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture."

More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account, ecological,
developmental and equity considerations, shall have determined by law, the specific limits of
the public domain;

(b) All lands of the public domain in excess of the specific limits as determined by Congress
in the preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and

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

Section 3(c) thereof defines "agricultural land," as "land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial land." The term
"agriculture" or "agricultural activity" is also defined by the same law as follows:

Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil, planting
of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such
farm products, and other farm activities, and practices performed by a farmer in conjunction with
such farming operations done by persons whether natural or juridical.11

The records of the case show that the subject properties were formerly private agricultural lands
owned by the late Esteban Jalandoni, and were donated to respondent DECS. From that time until
they were leased to Anglo Agricultural Corporation, the lands continued to be agricultural primarily
planted to sugarcane, albeit part of the public domain being owned by an agency of the
government.12 Moreover, there is no legislative or presidential act, before and after the enactment of
R.A. No. 6657, classifying the said lands as mineral, forest, residential, commercial or industrial land.
Indubitably, the subject lands fall under the classification of lands of the public domain devoted to or
suitable for agriculture.

Respondent DECS sought exemption from CARP coverage on the ground that all the income
derived from its contract of lease with Anglo Agricultural Corporation were actually, directly and
exclusively used for educational purposes, such as for the repairs and renovations of schools in the
nearby locality.

Petitioner DAR, on the other hand, argued that the lands subject hereof are not exempt from the
CARP coverage because the same are not actually, directly and exclusively used as school sites or
campuses, as they are in fact leased to Anglo Agricultural Corporation. Further, to be exempt from
the coverage, it is the land per se, not the income derived therefrom, that must be actually, directly
and exclusively used for educational purposes.

We agree with the petitioner.

Section 10 of R.A. No. 6657 enumerates the types of lands which are exempted from the coverage
of CARP as well as the purposes of their exemption, viz:

xxxxxxxxx

c) Lands actually, directly and exclusively used and found to be necessary for national
defense, school sites and campuses, including experimental farm stations operated by public or
private schools for educational purposes, , shall be exempt from the coverage of this Act.13

xxxxxxxxx

Clearly, a reading of the paragraph shows that, in order to be exempt from the coverage: 1) the land
must be "actually, directly, and exclusively used and found to be necessary;" and 2) the purpose is
"for school sites and campuses, including experimental farm stations operated by public or private
schools for educational purposes."

The importance of the phrase "actually, directly, and exclusively used and found to be necessary"
cannot be understated, as what respondent DECS would want us to do by not taking the words in
their literal and technical definitions. The words of the law are clear and unambiguous. Thus, the
"plain meaning rule" or verba legis in statutory construction is applicable in this case. Where the
words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation.14

We are not unaware of our ruling in the case of Central Mindanao University v. Department of
Agrarian Reform Adjudication Board,15 wherein we declared the land subject thereof exempt from
CARP coverage. However, respondent DECS reliance thereon is misplaced because the factual
circumstances are different in the case at bar.

Firstly, in the CMU case, the land involved was not alienable and disposable land of the public
domain because it was reserved by the late President Carlos P. Garcia under Proclamation No. 476
for the use of Mindanao Agricultural College (now CMU).16 In this case, however, the lands fall under
the category of alienable and disposable lands of the public domain suitable for agriculture.
Secondly, in the CMU case, the land was actually, directly and exclusively used and found to be
necessary for school sites and campuses. Although a portion of it was being used by the Philippine
Packing Corporation (now Del Monte Phils., Inc.) under a "Management and Development
Agreement", the undertaking was that the land shall be used by the Philippine Packing Corporation as
part of the CMU research program, with direct participation of faculty and students. Moreover, the land
was part of the land utilization program developed by the CMU for its "Kilusang Sariling Sikap Project"
(CMU-KSSP), a multi-disciplinary applied research extension and productivity program.17Hence, the
retention of the land was found to be necessary for the present and future educational needs of the
CMU. On the other hand, the lands in this case were not actually and exclusively utilized as
school sites and campuses, as they were leased to Anglo Agricultural Corporation, not for
educational purposes but for the furtherance of its business. Also, as conceded by respondent
DECS, it was the income from the contract of lease and not the subject lands that was directly
used for the repairs and renovations of the schools in the locality.

Anent the issue of whether the farmers are qualified beneficiaries of CARP, we disagree with the
Court of Appeals finding that they were not.

At the outset, it should be pointed out that the identification of actual and potential beneficiaries
under CARP is vested in the Secretary of Agrarian Reform pursuant to Section 15, R.A. No. 6657,
which states:

SECTION 15. Registration of Beneficiaries. The DAR in coordination with the Barangay Agrarian
Reform Committee (BARC) as organized in this Act, shall register all agricultural lessees, tenants
and farmworkers who are qualified to be beneficiaries of the CARP. These potential beneficiaries
with the assistance of the BARC and the DAR shall provide the following data:

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

(b) owners or administrators of the lands they work on and the length of tenurial relationship;

(c) location and area of the land they work;

(d) crops planted; and

(e) their share in the harvest or amount of rental paid or wages received.

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

In the case at bar, the BARC certified that herein farmers were potential CARP beneficiaries of the
subject properties.18 Further, on November 23, 1994, the Secretary of Agrarian Reform through the
Municipal Agrarian Reform Office (MARO) issued a Notice of Coverage placing the subject
properties under CARP. Since the identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP,19 it behooves the courts to exercise
great caution in substituting its own determination of the issue, unless there is grave abuse of
discretion committed by the administrative agency. In this case, there was none.

The Comprehensive Agrarian Reform Program (CARP) is the bastion of social justice of poor
landless farmers, the mechanism designed to redistribute to the underprivileged the natural right to
toil the earth, and to liberate them from oppressive tenancy. To those who seek its benefit, it is the
means towards a viable livelihood and, ultimately, a decent life. The objective of the State is no less
certain: "landless farmers and farmworkers will receive the highest consideration to promote social
justice and to move the nation toward sound rural development and industrialization."20

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

SO ORDERED.

G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON.

BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines
Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN, respondents.

The Provincial Attorney for petitioners.

Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J.:

In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551
entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked to
decide whether the expropriation of agricultural lands by local government units is subject, to the
prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian reform
program.

On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed
Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate
property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and
non-traditional agricultural crops and a housing project for provincial government employees.

The "WHEREAS" clause o:f the Resolution states:

WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive

Development plan, some of the vital components of which includes the establishment
of model and pilot farm for non-food and non-traditional agricultural crops, soil testing
and tissue culture laboratory centers, 15 small scale technology soap making, small
scale products of plaster of paris, marine biological and sea farming research
center,and other progressive feasibility concepts objective of which is to provide the
necessary scientific and technology know-how to farmers and fishermen in
Camarines Sur and to establish a housing project for provincial government
employees;
 WHEREAS, the province would need additional land to be acquired either by
purchase or expropriation to implement the above program component;

WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial

Capitol Site ideally suitable to establish the same pilot development center;

WHEREFORE . . . .

Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis
R.Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and
Efren N. San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the
Regional Trial Court, Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.

Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession. The
San Joaquins failed to appear at the hearing of the motion.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered
for their property. In an order dated December 6, 1989, the trial court denied the motion to dismiss
and authorized the Province of Camarines Sur to take possession of the property upon the deposit
with the Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to
answer for damages that private respondents may suffer in the event that the expropriation cases do
not prosper. The trial court issued a writ of possession in an order dated January18, 1990.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur
to take possession of their property and a motion to admit an amended motion to dismiss. Both
motions were denied in the order dated February 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No. 129,
Series of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the complaints
for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i) denying the motion
to dismiss and (ii) allowing the Province of Camarines Sur to take possession of the property subject
of the expropriation and the order dated February 26, 1990, denying the motion to admit the
amended motion to dismiss, be set aside. They also asked that an order be issued to restrain the
trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction.

In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to initiate
the expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P. Blg. 337)
and that the expropriations are for a public purpose.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that
under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the approval
by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of
eminent domain. However, the Solicitor General expressed the view that the Province of Camarines
Sur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate
the lands of petitioners for use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to
take possession of private respondents' lands and the order denying the admission of the amended
motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after
the Province of Camarines Sur shall have submitted the requisite approval of the Department of
Agrarian Reform to convert the classification of the property of the private respondents from
agricultural to non-agricultural land.
Hence this petition.

It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for the
property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.

The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss
the complaints. However, when the Court of Appeals ordered the suspension of the proceedings
until the Province of Camarines Sur shall have obtained the authority of the Department of Agrarian
Reform to change the classification of the lands sought to be expropriated from agricultural to non-
agricultural use, it assumed that the resolution is valid and that the expropriation is for a public
purpose or public use.

Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or
"public use" for which the power of eminent domain may be exercised. The old concept was that the
condemned property must actually be used by the general public (e.g. roads, bridges, public plazas,
etc.) before the taking thereof could satisfy the constitutional requirement of "public use". Under the
new concept, "public use" means public advantage, convenience or benefit, which tends to
contribute to the general welfare and the prosperity of the whole community, like a resort complex for
tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v.
Guerrero, 154 SC.RA 461 [1987]).

The expropriation of the property authorized by the questioned resolution is for a public
purpose. The establishment of a pilot development center would inure to the direct benefit
and advantage of the people of the Province of Camarines Sur. Once operational, the center
would make available to the community invaluable information and technology on
agriculture, fishery and the cottage industry. Ultimately, the livelihood of the farmers,
fishermen and craftsmen would be enhanced. The housing project also satisfies the public
purpose requirement of the Constitution. As held in Sumulong v. Guerrero, 154 SCRA 461,
"Housing is a basic human need. Shortage in housing is a matter of state concern since it
directly and significantly affects public health, safety, the environment and in sum the
general welfare."

It is the submission of the Province of Camarines Sur that its exercise of the power of eminent
domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No.
6657), particularly Section 65 thereof, which requires the approval of the Department of Agrarian
Reform before a parcel of land can be reclassified from an agricultural to a non-agricultural land.

The Court of Appeals, following the recommendation of the Solicitor General, held that the Province
of Camarines Sur must comply with the provision of Section 65 of the Comprehensive Agrarian
Reform Law and must first secure the approval of the Department of Agrarian Reform of the plan to
expropriate the lands of the San Joaquins.

In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the
Philippine Tourism Authority can expropriate lands covered by the "Operation Land Transfer" for use
of a tourist resort complex. There was a finding that of the 282 hectares sought to be expropriated,
only an area of 8,970 square meters or less than one hectare was affected by the land reform
program and covered by emancipation patents issued by the Ministry of Agrarian Reform. While the
Court said that there was "no need under the facts of this petition to rule on whether the public
purpose is superior or inferior to another purpose or engage in a balancing of competing public
interest," it upheld the expropriation after noting that petitioners had failed to overcome the showing
that the taking of 8,970 square meters formed part of the resort complex. A fair and reasonable
reading of the decision is that this Court viewed the power of expropriation as superior to the power
to distribute lands under the land reform program.

The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by
stressing the fact that local government units exercise such power only by delegation. (Comment,
pp. 14-15; Rollo, pp. 128-129)

It is true that local government units have no inherent power of eminent domain and can exercise it
only when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US 439, 74 L.ed.
950, 50 SCt. 360). It is also true that in delegating the power to expropriate, the legislature may
retain certain control or impose certain restraints on the exercise thereof by the local governments
(Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated
power may be a limited authority, it is complete within its limits. Moreover, the limitations on the
exercise of the delegated power must be clearly expressed, either in the law conferring the power or
in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the
Local Government Code, which provides:

A local government unit may, through its head and acting pursuant to a resolution of
its sanggunian exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.

Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first
secure the approval of the Department of Land Reform for the conversion of lands from
agricultural to non-agricultural use, before they can institute the necessary expropriation
proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law
which expressly subjects the expropriation of agricultural lands by local government units to
the control of the Department of Agrarian Reform. The closest provision of law that the Court
of Appeals could cite to justify the intervention of the Department of Agrarian Reform in
expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law, which reads:

Sec. 65. Conversion of Lands. After the lapse of five (5) years from its
award, when the land ceases to be economically feasible and sound for,
agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial
purposes, the DAR, upon application of the beneficiary or the landowner, with
due notice to the affected parties, and subject to existing laws, may authorize
the reclassification or conversion of the land and its disposition: Provided,
That the beneficiary shall have fully paid his obligation.

The opening, adverbial phrase of the provision sends signals that it applies to lands
previously placed under the agrarian reform program as it speaks of "the lapse of five (5)
years from its award."

The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive
Order No. 129-A, Series of 1987, cannot be the source of the authority of the Department of
Agrarian Reform to determine the suitability of a parcel of agricultural land for the purpose to
which it would be devoted by the expropriating authority. While those rules vest on the
Department of Agrarian Reform the exclusive authority to approve or disapprove conversions
of agricultural lands for residential, commercial or industrial uses, such authority is limited to
the applications for reclassification submitted by the land owners or tenant beneficiaries.

Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or
constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d.
241).

To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc,
without first applying for conversion of the use of the lands with the Department of Agrarian Reform,
because all of these projects would naturally involve a change in the land use. In effect, it would then
be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose
or public use.

Ordinarily, it is the legislative branch of the local government unit that shall determine whether the
use of the property sought to be expropriated shall be public, the same being an expression of
legislative policy. The courts defer to such legislative determination and will intervene only when a
particular undertaking has no real or substantial relation to the public use (United States Ex Rel
Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex rel Twin City
Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR 585).

There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not
embrace the sovereign unless the sovereign is specially mentioned as subject thereto (Alliance of
Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]). The Republic of
the Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers,
cannot be bound by provisions of law couched in general term.

The fears of private respondents that they will be paid on the basis of the valuation declared in the
tax declarations of their property, are unfounded. This Court has declared as unconstitutional the
Presidential Decrees fixing the just compensation in expropriation cases to be the value given to the
condemned property either by the owners or the assessor, whichever was lower ([Export Processing
Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held in Municipality of Talisay v. Ramirez, 183
SCRA 528 [1990], the rules for determining just compensation are those laid down in Rule 67 of the
Rules of Court, which allow private respondents to submit evidence on what they consider shall be
the just compensation for their property.

WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set
aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take
possession of private respondents' property; (b) orders the trial court to suspend the expropriation
proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the
Department of Agrarian Reform to convert or reclassify private respondents' property from
agricultural to non-agricultural use.

The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court,
denying the amended motion to dismiss of the private respondents.

SO ORDERED.

ROXAS & COMPANY, INC., G.R. No. 149548

Petitioner,

- versus -

DAMBA-NFSW and the

DEPARTMENT OF AGRARIAN
REFORM,*
Respondents. G.R. No. 167505

x------------------------------------x
Present:
DAMAYAN NG MGA
MANGGAGAWANG BUKID SA
ASYENDA ROXAS-NATIONAL PUNO, C.J.,
FEDERATION OF SUGAR WORKERS
(DAMBA-NFSW), CARPIO,

Petitioner, CORONA,
CARPIO MORALES,

- versus - CHICO-NAZARIO,
VELASCO, JR.,

SECRETARY OF THE DEPT. OF NACHURA,

AGRARIAN REFORM, ROXAS & Co., LEONARDO-DE CASTRO,
INC. AND/OR ATTY. MARIANO BRION,
AMPIL,
PERALTA,
Respondents.
BERSAMIN,
DEL CASTILLO,
x-----------------------------------x ABAD, and
VILLARAMA, JJ.

Promulgated:

December 4, 2009

KATIPUNAN NG MGA G.R. No. 167540

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

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

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

DEPARTMENT OF LAND REFORM,

FORMERLY DEPARTMENT OF
AGRARIAN REFORM (DAR),
Petitioner, G.R. No. 167543

- versus -

ROXAS & CO, INC.,

Respondent.

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

- versus -

G.R. No. 167845

DAMBA-NFSW,
 Respondent.

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

DAMBA-NFSW REPRESENTED BY
LAURO V. MARTIN,
Petitioner,
- versus -

G.R. No. 169163

ROXAS & CO., INC.,
Respondent.

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

DAMBA-NFSW,
Petitioner,

- versus -

ROXAS & CO., INC., G.R. No. 179650

Respondent.

x----------------------------------------------------------------------------------------x
 DECISION
CARPIO MORALES, J.

The main subject of the seven consolidated petitions is the application of

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

. . . Roxas & Co. is a domestic corporation and is the registered

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

xxxx

On July 27, 1987, the Congress of the Philippines formally

convened and took over legislative power from the President. This
Congress passed Republic Act No. 6657, the Comprehensive Agrarian
Reform Law (CARL) of 1988. The Act was signed by the President
on June 10, 1988 and took effect on June 15, 1988.
 Before the laws effectivity, on May 6, 1988, [Roxas & Co.] filed
with respondent DAR a voluntary offer to sell [VOS] Hacienda
Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico
and Banilad were later placed under compulsory acquisition by DAR in
accordance with the CARL.

xxxx

Nevertheless, on August 6, 1992, [Roxas & Co.], through its

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

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

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

DECLARING THE MUNICIPALITIES OF MARAGONDON

AND TERNATE IN CAVITE PROVINCE AND
THE MUNICIPALITY OF NASUGBU IN BATANGAS AS A TOURIST ZONE,
AND FOR OTHER PURPOSES
 WHEREAS, certain areas in the sector comprising the
Municipalities of Maragondon and Ternate in Cavite Province
and Nasugbu in Batangas have potential tourism value after being
developed into resort complexes for the foreign and domestic market;
and

WHEREAS, it is necessary to conduct the necessary studies and

to segregate specific geographic areas for concentrated efforts of
both the government and private sectors in developing their tourism
potential;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

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

The PTA shall identify well-defined geographic areas within

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

Any duly established military reservation existing within the

zone shall be excluded from this proclamation.

All proclamation, decrees or executive orders inconsistent

herewith are hereby revoked or modified accordingly. (emphasis and
underscoring supplied).
 The incidents which spawned the filing of the petitions in G.R. Nos. 149548,
167505, 167845, 169163 and 179650 are stated in the dissenting opinion of Justice
Minita Chico-Nazario, the original draft of which was made the basis of the Courts
deliberations.
Essentially, Roxas & Co. filed its application for conversion of its
three haciendas from argricultural to non-agricultural on the assumption that the
issuance of PP 1520 which declared Nasugbu, Batangas as a tourism zone,
reclassified them to non-agricultural uses. Its pending application notwithstanding,
the Department of Agrarian Reform (DAR) issued Certificates of Land Ownership
Award (CLOAs) to the farmer-beneficiaries in the three haciendas including CLOA
No. 6654 which was issued on October 15, 1993 covering 513.983 hectares, the
subject of G.R. No. 167505.

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

It bears mentioning at this juncture that on April 18, 1982, the Sangguniang
Bayan of Nasugbu enacted Municipal Zoning Ordinance No. 4 (Nasugbu MZO No.
4) which was approved on May 4, 1983 by the Human Settlements Regulation
Commission, now the Housing and Land Use Regulatory Board (HLURB).
The records show that Sangguniang Bayan and Association of Barangay
Captains of Nasugbu filed before this Court petitions for intervention which were,
however, denied by Resolution of June 5, 2006 for lack of standing.[4]
 After the seven present petitions were consolidated and referred to the
Court en banc,[5] oral arguments were conducted on July 7, 2009.

The core issues are:

1. Whether PP 1520 reclassified in 1975 all lands in the Maragondon-

Ternate-Nasugbu tourism zone to non-agricultural use to exempt Roxas
& Co.s three haciendas in Nasugbu from CARP coverage;
2. Whether Nasugbu MSO No. 4, Series of 1982 exempted certain lots
in Hacienda Palico from CARP coverage; and

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

The Court shall discuss the issues in seriatim.

I. PP 1520 DID NOT AUTOMATICALLY CONVERT THE AGRICULTURAL LANDS IN

THE THREE MUNICIPALITIES INCLUDING NASUGBU TO NON-
AGRICULTURAL LANDS.

Roxas & Co. contends that PP 1520 declared the three municipalities as each
constituting a tourism zone, reclassified all lands therein to tourism and, therefore,
converted their use to non-agricultural purposes.
To determine the chief intent of PP 1520, reference to the whereas clauses is in
order. By and large, a reference to the congressional deliberation records would
provide guidance in dissecting the intent of legislation. But since PP 1520 emanated
from the legislative powers of then President Marcos during martial rule, reference
to the whereas clauses cannot be dispensed with.[6]

The perambulatory clauses of PP 1520 identified only certain areas in the

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

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

Thus, the DAR Regional Office VII, in coordination with the

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

While the above pronouncement in Franco is an obiter, it should not be ignored in

the resolution of the present petitions since it reflects a more rational and just
interpretation of PP 1520. There is no prohibition in embracing the rationale of
an obiter dictum in settling controversies, or in considering related proclamations
establishing tourism zones.

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

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

A. x x x x.

B. Proclamations declaring general areas such as whole

provinces, municipalities, barangays, islands or peninsulas as tourist
zones that merely:

(1) recognize certain still unidentified areas within the covered

provinces, municipalities, barangays, islands, or peninsulas to be with
potential tourism value and charge the Philippine Tourism Authority
with the task to identify/delineate specific geographic areas within the
zone with potential tourism value and to coordinate said areas
development; or
 (2) recognize the potential value of identified spots located
within the general area declared as tourist zone (i.e. x x x x) and direct
the Philippine Tourism Authority to coordinate said areas
development;

could not be regarded as effecting an automatic reclassification of

the entirety of the land area declared as tourist zone. This is so
because reclassification of lands denotes their allocation into some
specific use and providing for the manner of their utilization and
disposition (Sec. 20, Local Government Code) or the act of specifying
how agricultural lands shall be utilized for non-agricultural uses such
as residential, industrial, or commercial, as embodied in the land use
plan. (Joint HLURB, DAR, DA, DILG Memo. Circular Prescribing
Guidelines for MC 54, S. 1995, Sec.2)

A proclamation that merely recognizes the potential tourism value of

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

Moreover, to view these kinds of proclamation as a reclassification for

non-agricultural purposes of entire provinces, municipalities,
barangays, islands, or peninsulas would be unreasonable as it amounts
to an automatic and sweeping exemption from CARP in the name of
tourism development. The same would also undermine the land use
reclassification powers vested in local government units in conjunction
with pertinent agencies of government.
 C. There being no reclassification, it is clear that said
proclamations/issuances, assuming [these] took effect before June
15, 1988, could not supply a basis for exemption of the entirety of the
lands embraced therein from CARP coverage x x x x.

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

supplied)

The DARs reading into these general proclamations of tourism zones

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

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

Indubitably, these proclamations, particularly those pertaining to the

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

Relatedly, a reference to the Special Economic Zone Act of 1995[14] provides

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

Interestingly, then President Marcos also issued on September 26, 1972 PD

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

Given these martial law-era decrees and considering the socio-political

backdrop at the time PP 1520 was issued in 1975, it is inconceivable that PP 1520,
as well as other similarly worded proclamations which are completely silent on the
aspect of reclassification of the lands in those tourism zones, would nullify the gains
already then achieved by PD 27.

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

In remotely tying these two immediately-cited cases that involve specific and
defined townsite reservations for the housing program of the National Housing
Authority to the present petitions, Roxas & Co. cites Letter of Instructions No. 352
issued on December 22, 1975 which states that the survey and technical
description of the tourism zones shall be considered an integral part of PP
1520. There were, however, at the time no surveys and technical delineations yet
of the intended tourism areas.
 On hindsight, Natalia and Allarde find application in the petitions in G.R.
Nos. 179650 & 167505, which petitions are anchored on the extenuating effects
of Nasugbu MZO No. 4, but not in the petitions in G.R. Nos. 167540 & 167543
bearing on PP 1520, as will later be discussed.

Of significance also in the present petitions is the issuance on August 3,

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

It bears emphasis that a mere reclassification of an agricultural land

does not automatically allow a landowner to change its use since there is still that
process of conversion before one is permitted to use it for other purposes.[20]
Tourism Act, and not to PP 1520, for possible exemption.
II. ROXAS & CO.S APPLICATION IN DAR ADMINISTRATIVE CASE NO. A-9999-142-
97 FOR CARP EXEMPTION IN HACIENDA PALICO SUBJECT OF G.R. NO.
179650 CANNOT BE GRANTED IN VIEW OF DISCREPANCIES IN THE
LOCATION AND IDENTITY OF THE SUBJECT PARCELS OF LAND.

Since PP 1520 did not automatically convert Haciendas Caylaway,

Banilad and Palico into non-agricultural estates, can Roxas & Co. invoke in the
alternative Nasugbu MZO No. 4, which reclassified in 1982 the haciendas to non-
agricultural use to exclude six parcels of land in Hacienda Palico from CARP
coverage?

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

Roxas & Co.s contention fails.

To be sure, the Court had on several occasions decreed that a local

government unit has the power to classify and convert land from agricultural to
non-agricultural prior to the effectivity of the CARL.[23] In Agrarian Reform
Beneficiaries Association v. Nicolas,[24] it reiterated that

. . . the facts obtaining in this case are similar to those in Natalia

Realty. Both subject lands form part of an area designated for non-
agricultural purposes. Both were classified as non-agricultural
lands prior to June 15, 1988, the date of effectivity of CARL.

xxxx

In the case under review, the subject parcels of lands were

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

The DAR Secretary[26] denied the application for exemption of Roxas & Co.,
however, in this wise:
 Initially, CLUPPI-2 based [its] evaluation on the lot nos. as
appearing in CLOA No. 6654. However, for purposes of clarity and to
ensure that the area applied for exemption is indeed part of TCT No.
T-60034, CLUPPI-2 sought to clarify with [Roxas & Co.] the origin of
TCT No. T-60034. In a letter dated May 28, 1998, [Roxas & Co.]
explains that portions of TCT No. T-985, the mother title, was
subdivided into 125 lots pursuant to PD 27. A total of 947.8417 was
retained by the landowners and was subsequently registered under
TCT No. 49946. [[Roxas & Co.] further explains that TCT No. 49946
was further subdivided into several lots (Lot 125-A to Lot 125-P) with
Lot No. 125-N registered under TCT No. 60034. [A] review of the
titles, however, shows that the origin of T-49946 is T-783 and not T-
985. On the other hand, the origin of T-60034 is listed as 59946, and
not T-49946. The discrepancies were attributed by [Roxas & Co.] to
typographical errors which were acknowledged and initialled [sic]
by the ROD. Per verification, the discrepancies . . . cannot be
ascertained.[27] (emphasis and underscoring supplied)

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

The landholdings covered by the aforesaid titles do not

correspond to the Certification dated February 11, 1998 of the
[HLURB] , the Certification dated September 12, 1996 issued by the
Municipal Planning and Development Coordinator, and the
Certifications dated July 31, 1997 and May 27, 1997 issued by the
National Irrigation Authority. The certifications were issued for Lot
Nos. 21, 24, 28, 31, 32 and 34. Thus, it was not even possible to issue
exemption clearance over the lots covered by TCT Nos. 60019 to
60023.
 Furthermore, we also note the discrepancies between the
certifications issued by the HLURB and the Municipal Planning
Development Coordinator as to the area of the specific
lots.[28](emphasis and underscoring supplied)

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

In the instant case, a perusal of the documents before us

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

Moreover, [Roxas & Co.] failed to submit TCT 634 which it

claims covers DAR Lot Nos. 28, 32 and 24.(TSN, April 24, 2001, pp.
43-44)

xxxx

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

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

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

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

In granting the application, the DAR Secretary[30] examined anew the

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

While ordinarily findings of facts of quasi-judicial agencies are generally

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

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

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

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

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

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

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

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

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

In its application, Roxas & Co. submitted the following documents:

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

2. Secretarys Certificate dated September 2002 executed by

Mariano M. Ampil III, Corporate Secretary of Roxas &
Company, Inc., indicating a Board Resolution authorizing
him to represent the corporation in its application for
exemption with the DAR. The same Board Resolution
revoked the authorization previously granted to the Sierra
Management & Resources Corporation;

3. Photocopy of TCT No. 985 and its corresponding Tax

Declaration No. 0401;

4. Location and vicinity maps of subject landholdings;

5. Certification dated 10 July 1997 issued by Reynaldo

Garcia, Municipal Planning and Development Coordinator
(MPDC) and Zoning Administrator of Nasugbu, Batangas,
stating that the subject parcels of land are within the
Urban Core Zone as specified in Zone A. VII of Municipal
Zoning Ordinance No. 4, Series of 1982, approved by the
Human Settlements Regulatory Commission (HSRC), now
the Housing and Land Use Regulatory Board (HLURB), under
Resolution No. 123, Series of 1983, dated 4 May 1983;

6. Two (2) Certifications both dated 31 August 1998, issued

by Alfredo Tan II, Director, HLURB, Region IV, stating that
the subject parcels of land appear to be within the
Residential cluster Area as specified in Zone VII of
 Municipal Zoning Ordinance No. 4, Series of 1982,
approved under HSRC Resolution No. 123, Series of 1983,
dated 4 May 1983;[35]

x x x x (emphasis and underscoring supplied)

By Order of November 6, 2002, the DAR Secretary granted the application

for exemption but issued the following conditions:

1. The farmer-occupants within subject parcels of land shall

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

2. No development shall be undertaken within the subject

parcels of land until the appropriate disturbance
compensation has been paid to the farmer-occupants who
are determined by the PARAD to be entitled thereto. Proof
of payment of disturbance compensation shall be
submitted to this Office within ten (10) days from such
payment; and

3. The cancellation of the CLOA issued to the farmer-

beneficiaries shall be subject of a separate proceeding
before the PARAD of Batangas.[36]
 DAMBA-NSFW moved for reconsideration but the DAR Secretary denied the
same and explained further why CLOA holders need not be informed of the pending
application for exemption in this wise:

As regards the first ground raised by [DAMBA-NSFW], it

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

xxxx

With regard [to] the allegation that oppositors-movants

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

Since subject landholding has been validly determined

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

Finally, this Office finds no substantial basis to reverse

the assailed Orders since there is substantial compliance by the
applicant with the requirements for the issuance of exemption
clearance under DAR AO 6 (1994).[37]

On DAMBA-NSFWs petition for certiorari, the Court of Appeals, noting that the
petition was belatedly filed, sustained, by Decision of December 20, 1994 and
Resolution of May 7, 2007,[38] the DAR Secretarys finding that Roxas & Co. had
substantially complied with the prerequisites of DAR AO 6, Series of 1994. Hence,
DAMBA-NFSWs petition in G.R. No. 167505.

The Court finds no reversible error in the Court of Appeals assailed issuances,
the orders of the DAR Secretary which it sustained being amply supported by
evidence.

IV. THE CLOAs ISSUED BY THE DAR in ADMINISTRATIVE CASE NO. A-9999-008-
98 SUBJECT OF G.R. No. 179650 TO THE FARMER-BENEFICIARIES
INVOLVING THE NINE PARCELS OF LAND IN HACIENDA PALICO MUST
BE CANCELLED.
 Turning now to the validity of the issuance of CLOAs in Hacienda Palico vis--
vis the present dispositions: It bears recalling that in DAR Administrative Case Nos.
A-9999-008-98 and A-9999-142-97 (G.R. No. 179650), the Court ruled for Roxas &
Co.s grant of exemption in DAR Administrative Case No. A-9999-008-98 but denied
the grant of exemption in DAR Administrative Case No. A-9999-142-97 for reasons
already discussed. It follows that the CLOAs issued to the farmer-beneficiaries in
DAR Administrative Case No. A-9999-008-98 must be cancelled.

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

. . . [t]he failure of respondent DAR to comply with the requisites

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

On the procedural question raised by Roxas & Co. on the appellate courts
relaxation of the rules by giving due course to DAMBA-NFSWs appeal in CA G.R. SP
No. 72198, the subject of G.R. No. 167845:
 Indeed, the perfection of an appeal within the statutory period is
jurisdictional and failure to do so renders the assailed decision final and
executory.[40] A relaxation of the rules may, however, for meritorious reasons, be
allowed in the interest of justice.[41] The Court finds that in giving due course to
DAMBA-NSFWs appeal, the appellate court committed no reversible
error. Consider its ratiocination:

x x x x. To deny [DAMBA-NSFW]s appeal with the PARAD will not

only affect their right over the parcel of land subject of this petition
with an area of 103.1436 hectares, but also that of the whole area
covered by CLOA No. 6654 since the PARAD rendered a Joint
Resolution of the Motion for Reconsideration filed by the [DAMBA-
NSFW] with regard to [Roxas & Co.]s application for partial and total
cancellation of the CLOA in DARAB Cases No. R-401-003-2001 to R-
401-005-2001 and No. 401-239-2001. There is a pressing need for an
extensive discussion of the issues as raised by both parties as the
matter of canceling CLOA No. 6654 is of utmost importance, involving
as it does the probable displacement of hundreds of farmer-
beneficiaries and their families. x x x x (underscoring supplied)

Unlike courts of justice, the DARAB, as a quasi-judicial body, is not bound to

strictly observe rules of procedure and evidence. To strictly enforce rules on
appeals in this case would render to naught the Courts dispositions on the other
issues in these consolidated petitions.
In the main, there is no logical recourse except to cancel the CLOAs issued
for the nine parcels of land identified as Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1
and 48-2 which are portions of TCT No. 985 covering 45.9771 hectares in Hacienda
Palico (or those covered by DAR Administrative Case No. A-9999-008-98). As for the
rest of the CLOAs, they should be respected since Roxas & Co., as shown in the
discussion in G.R. Nos. 167540, 167543 and 167505, failed to prove that the other
lots in Hacienda Palico and the other two haciendas, aside from the above-
mentioned nine lots, are CARP-exempt.
 Conformably, Republic Act No. 3844 (R.A. No. 3844), as
[42]
amended, mandates that disturbance compensation be given to tenants of
parcels of land upon finding that (t)he landholding is declared by the department
head upon recommendation of the National Planning Commission to be suited for
residential, commercial, industrial or some other urban purposes.[43] In addition,
DAR AO No. 6, Series of 1994 directs the payment of disturbance compensation
before the application for exemption may be completely granted.

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

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

WHEREFORE,

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

2) The Court accordingly GRANTS the Motion for Reconsideration of the

Department of Agrarian Reform in G.R. No. 167543 and REVERSES and SETS
ASIDE its Resolution of July 20, 2005;
3) In G.R. No. 149548, the Court DENIES the petition for review of Roxas &
Co. for lack of merit;

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

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

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

7) In G.R. No. 169163, the Court SETS ASIDE the Decisions of the Provincial
Agrarian Reform Adjudicator in DARAB Case No. 401-239-2001 ordering the
cancellation of CLOA No. 6654 and DARAB Cases Nos. R-401-003-2001 to No. R-
401-005-2001 granting the partial cancellation of CLOA No. 6654. The CLOAs issued
for Lots No. 21 No. 24, No. 26, No. 31, No. 32 and No. 34 or those covered by DAR
Administrative Case No. A-9999-142-97) remain; and
 8) Roxas & Co. is ORDERED to pay the disturbance compensation of affected
farmer-beneficiaries in the areas covered by the nine parcels of lands in DAR
Administrative Case No. A-9999-008-98 before the CLOAs therein can be cancelled,
and is ENJOINED to strictly follow the mandate of R.A. No. 3844.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ,

GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR
B. CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.

It is true that PD 27 expressly ordered the emancipation of tenant-farmers as of October 21,

1972 and declared that he shall be deemed the owner of a portion of land consisting of a
family-sized farm except that no title to the land owned by him was to be actually issued to
him unless and until he had become a full-fledged member of a duly recognized farmers
cooperative. It was understood, however, that full payment of the just compensation also had
to be made first, conformably to the constitutional requirement.

CRUZ, J.:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life
on his way to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules
flung his adversary to the ground thinking him dead, but Antaeus rose even stronger to resume their
struggle. This happened several times to Hercules' increasing amazement. Finally, as they
continued grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never die
as long as any part of his body was touching his Mother Earth. Thus forewarned, Hercules then held
Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.

The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental
forces of life and death, of men and women who, like Antaeus need the sustaining strength of the
precious earth to stay alive.

"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this
precious resource among our people. But it is more than a slogan. Through the brooding centuries, it
has become a battle-cry dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the
well-being and economic security of all the people," 1 especially the less privileged. In 1973, the new
Constitution affirmed this goal adding specifically that "the State shall regulate the acquisition,
ownership, use, enjoyment and disposition of private property and equitably diffuse property
ownership and profits." 2 Significantly, there was also the specific injunction to "formulate and
implement an agrarian reform program aimed at emancipating the tenant from the bondage of the
soil." 3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted
one whole and separate Article XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:

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

Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already
been enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition
of private lands for distribution among tenant-farmers and to specify maximum retention limits for
landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the
valuation of still unvalued lands covered by the decree as well as the manner of their payment. This
was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive
agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its implementation.

Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The result, after almost a year of spirited
debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while considerably
changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar as
they are not inconsistent with its provisions. 4

The above-captioned cases have been consolidated because they involve common legal questions,
including serious challenges to the constitutionality of the several measures mentioned above. They
will be the subject of one common discussion and resolution, The different antecedents of each case
will require separate treatment, however, and will first be explained hereunder.

G.R. No. 79777

Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and
R.A. No. 6657.

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner
Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by
petitioner Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No.
228 as qualified farmers under P.D. No. 27.

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no private
property shall be taken for public use without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228.
The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure
to provide for retention limits for small landowners. Moreover, it does not conform to Article VI,
Section 25(4) and the other requisites of a valid appropriation.

In connection with the determination of just compensation, the petitioners argue that the same may
be made only by a court of justice and not by the President of the Philippines. They invoke the
recent cases of EPZA v. Dulay 5 andManotok v. National Food Authority. 6 Moreover, the just
compensation contemplated by the Bill of Rights is payable in money or in cash and not in the form
of bonds or other things of value.

In considering the rentals as advance payment on the land, the executive order also deprives the
petitioners of their property rights as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian problems on the owners only of
agricultural lands. No similar obligation is imposed on the owners of other properties.

The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners
of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due
process. Worse, the measure would not solve the agrarian problem because even the small farmers
are deprived of their lands and the retention rights guaranteed by the Constitution.

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the
earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform Council. 9 The determination of just
compensation by the executive authorities conformably to the formula prescribed under the
questioned order is at best initial or preliminary only. It does not foreclose judicial intervention
whenever sought or warranted. At any rate, the challenge to the order is premature because no
valuation of their property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.

Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in behalf
of landowners with landholdings below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As for the cases invoked by
the public respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while
what was decided in Gonzales was the validity of the imposition of martial law.

In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228
and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless,
this statute should itself also be declared unconstitutional because it suffers from substantially the
same infirmities as the earlier measures.

A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a
1. 83- hectare land, who complained that the DAR was insisting on the implementation of P.D. No.
27 and E.O. No. 228 despite a compromise agreement he had reached with his tenant on the
payment of rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the
basic amended petition that the above- mentioned enactments have been impliedly repealed by R.A.
No. 6657.

G.R. No. 79310

The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400
planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No.
229.

The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as
decreed by the Constitution belongs to Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on just compensation, due process,
and equal protection.

They also argue that under Section 2 of Proc. No. 131 which provides:

Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost
of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on Good Government and such other sources
as government may deem appropriate. The amounts collected and accruing to this special fund shall
be considered automatically appropriated for the purpose authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The money needed to cover the cost of the contemplated
expropriation has yet to be raised and cannot be appropriated at this time.

Furthermore, they contend that taking must be simultaneous with payment of just compensation as it
is traditionally understood, i.e., with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the
Philippines "shall compensate the landowner in an amount to be established by the government,
which shall be based on the owner's declaration of current fair market value as provided in Section 4
hereof, but subject to certain controls to be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in money but in any of several modes that
may consist of part cash and part bond, with interest, maturing periodically, or direct payment in
cash or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.

The petitioners also argue that in the issuance of the two measures, no effort was made to make a
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas that
can justify the application of the CARP to them. To the extent that the sugar planters have been
lumped in the same legislation with other farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been violated.

A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention was filed, this time by Manuel
Barcelona, et al., representing coconut and riceland owners. Both motions were granted by the
Court.

NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that,
in any event, the appropriation is invalid because of uncertainty in the amount appropriated. Section
2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum authorized amount. This is
not allowed. Furthermore, the stated initial amount has not been certified to by the National
Treasurer as actually available.

Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
convincing evidence the necessity for the exercise of the powers of eminent domain, and the
violation of the fundamental right to own property.

The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of
the said land for an amount equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own valuation he is unjustly required to
immediately pay the corresponding taxes on the land, in violation of the uniformity rule.

In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality
in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as
explained in the "whereas" clauses of the Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP and a general survey on the people's
opinion thereon are not indispensable prerequisites to its promulgation.

On the alleged violation of the equal protection clause, the sugar planters have failed to show that
they belong to a different class and should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and scheduling the expropriation of
private agricultural lands later. From this viewpoint, the petition for prohibition would be premature.

The public respondent also points out that the constitutional prohibition is against the payment of
public money without the corresponding appropriation. There is no rule that only money already in
existence can be the subject of an appropriation law. Finally, the earmarking of fifty billion pesos as
Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
appropriated. The word "initial" simply means that additional amounts may be appropriated later
when necessary.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing
the constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:

(1) Only public lands should be included in the CARP;

(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
 (3) The power of the President to legislate was terminated on July 2, 1987; and

(4) The appropriation of a P50 billion special fund from the National Treasury did not
originate from the House of Representatives.

G.R. No. 79744

The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due
process and the requirement for just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.

On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on December 24, 1986, his petition
was denied without hearing. On February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion
moot and academic because they directly effected the transfer of his land to the private respondents.

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.

(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.

(3) The petitioner is denied the right of maximum retention provided for under the
1987 Constitution.

The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress
convened is anomalous and arbitrary, besides violating the doctrine of separation of powers. The
legislative power granted to the President under the Transitory Provisions refers only to emergency
measures that may be promulgated in the proper exercise of the police power.

The petitioner also invokes his rights not to be deprived of his property without due process of law
and to the retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of
the Constitution. He likewise argues that, besides denying him just compensation for his land, the
provisions of E.O. No. 228 declaring that:

Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972
shall be considered as advance payment for the land.

is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of
even small landowners in the program along with other landowners with lands consisting of seven
hectares or more is undemocratic.

In his Comment, the Solicitor General submits that the petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the
issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article
XVIII of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.

On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on
October 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he was
tilling. The leasehold rentals paid after that date should therefore be considered amortization
payments.

In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved
on December 14, 1987. An appeal to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and
corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate the
same. Their respective lands do not exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands.

According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be

ejected or removed from his farmholding until such time as the respective rights of
the tenant- farmers and the landowner shall have been determined in accordance
with the rules and regulations implementing P.D. No. 27.

The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the Court for a writ of mandamus to
compel the respondent to issue the said rules.

In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other purposes
from which they derive adequate income for their family. And even assuming that the petitioners do
not fall under its terms, the regulations implementing P.D. No. 27 have already been issued, to wit,
the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with
an accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December
29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners),
and DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to
Apply for Retention and/or to Protest the Coverage of their Landholdings under Operation Land
Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications for retention
under these measures, the petitioners are now barred from invoking this right.

The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise of
discretion which cannot be controlled through the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them
because they do not own more than seven hectares of agricultural land. Moreover, assuming
arguendo that the rules were intended to cover them also, the said measures are nevertheless not in
force because they have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the additional reason that a mere
letter of instruction could not have repealed the presidential decree.

Although holding neither purse nor sword and so regarded as the weakest of the three departments
of the government, the judiciary is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the fundamental law. This is the
reason for what some quarters call the doctrine of judicial supremacy. Even so, this power is not
lightly assumed or readily exercised. The doctrine of separation of powers imposes upon the courts
a proper restraint, born of the nature of their functions and of their respect for the other departments,
in striking down the acts of the legislative and the executive as unconstitutional. The policy, indeed,
is a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was done
or the law was enacted, earnest studies were made by Congress or the President, or both, to insure
that the Constitution would not be breached.

In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the Supreme
Court who took part in the deliberations and voted on the issue during their session en banc.11 And
as established by judge made doctrine, the Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a judicial inquiry into such a question are
first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question must have been opportunely raised
by the proper party, and the resolution of the question is unavoidably necessary to the decision of
the case itself. 12

With particular regard to the requirement of proper party as applied in the cases before us, we hold
that the same is satisfied by the petitioners and intervenors because each of them has sustained or
is in danger of sustaining an immediate injury as a result of the acts or measures complained
of. 13 And even if, strictly speaking, they are not covered by the definition, it is still within the wide
discretion of the Court to waive the requirement and so remove the impediment to its addressing and
resolving the serious constitutional questions raised.

In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking
only an indirect and general interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that "the transcendental importance to the
public of these cases demands that they be settled promptly and definitely, brushing aside, if we
must, technicalities of procedure." We have since then applied this exception in many other cases. 15

The other above-mentioned requisites have also been met in the present petitions.

In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution as God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make
the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as expressed in the Constitution.

It need only be added, to borrow again the words of Justice Laurel, that

... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of authority under
the Constitution and to establish for the parties in an actual controversy the rights
which that instrument secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which properly is the power of judicial
review under the Constitution. 16

The cases before us categorically raise constitutional questions that this Court must categorically
resolve. And so we shall.

II

We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.

The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law
has already been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on
that issue. As for the power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and
229, the same was authorized under Section 6 of the Transitory Provisions of the 1987 Constitution,
quoted above.

The said measures were issued by President Aquino before July 27, 1987, when the Congress of
the Philippines was formally convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature because E.O. No. 228 was issued on
July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on
July 22, 1987. Neither is it correct to say that these measures ceased to be valid when she lost her
legislative power for, like any statute, they continue to be in force unless modified or repealed by
subsequent law or declared invalid by the courts. A statute does not ipso facto become inoperative
simply because of the dissolution of the legislature that enacted it. By the same token, President
Aquino's loss of legislative power did not have the effect of invalidating all the measures enacted by
her when and as long as she possessed it.

Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically provided that they shall be suppletory to R.A.
No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some portions of the said
measures, like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and
21 of E.O. No. 229, have been incorporated by reference in the CARP Law. 18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the
requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No.
131 is not an appropriation measure even if it does provide for the creation of said fund, for that is
not its principal purpose. An appropriation law is one the primary and specific purpose of which is to
authorize the release of public funds from the treasury. 19 The creation of the fund is only incidental to
the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section
25(4) of Article VI, are not applicable. With particular reference to Section 24, this obviously could
not have been complied with for the simple reason that the House of Representatives, which now
has the exclusive power to initiate appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.

The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated
because they do not provide for retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in Section 6 of the
law, which in fact is one of its most controversial provisions. This section declares:

Retention Limits. Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case
shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1)
that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead.

The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short attention. It is settled that the title of the bill
does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title. 20

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever
name it was called, had the force and effect of law because it came from President Marcos. Such
are the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI
474 could not have repealed P.D. No. 27 because the former was only a letter of instruction. The
important thing is that it was issued by President Marcos, whose word was law during that time.

But for all their peremptoriness, these issuances from the President Marcos still had to comply with
the requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless published in
the Official Gazette in accordance with Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully challenged in that case. LOI 474 was
published, though, in the Official Gazette dated November 29,1976.)

Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus
cannot issue to compel the performance of a discretionary act, especially by a specific department of
the government. That is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.
 Whenever a duty is imposed upon a public official and an unnecessary and
unreasonable delay in the exercise of such duty occurs, if it is a clear duty imposed
by law, the courts will intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will require specific action. If
the duty is purely discretionary, the courts by mandamus will require action only. For
example, if an inferior court, public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a cause when the law
clearly gave it jurisdiction mandamus will issue, in the first case to require a decision,
and in the second to require that jurisdiction be taken of the cause. 22

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

III

There are traditional distinctions between the police power and the power of eminent domain that
logically preclude the application of both powers at the same time on the same subject. In the case
of City of Baguio v. NAWASA, 24for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held
that the power being exercised was eminent domain because the property involved was wholesome
and intended for a public use. Property condemned under the police power is noxious or intended for
a noxious purpose, such as a building on the verge of collapse, which should be demolished for the
public safety, or obscene materials, which should be destroyed in the interest of public morals. The
confiscation of such property is not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.

In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police
power in a famous aphorism: "The general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went
"too far" was a law prohibiting mining which might cause the subsidence of structures for human
habitation constructed on the land surface. This was resisted by a coal company which had earlier
granted a deed to the land over its mine but reserved all mining rights thereunder, with the grantee
assuming all risks and waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there
was a valid exercise of the police power. He said:

Every restriction upon the use of property imposed in the exercise of the police
power deprives the owner of some right theretofore enjoyed, and is, in that sense, an
abridgment by the State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals from dangers
threatened is not a taking. The restriction here in question is merely the prohibition of
a noxious use. The property so restricted remains in the possession of its owner. The
state does not appropriate it or make any use of it. The state merely prevents the
owner from making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious as it may because of further
changes in local or social conditions the restriction will have to be removed and
the owner will again be free to enjoy his property as heretofore.

Recent trends, however, would indicate not a polarization but a mingling of the police power and the
power of eminent domain, with the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police purpose has long been
accepted. 26 As for the power of expropriation, Prof. John J. Costonis of the University of Illinois
College of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which
sustained a zoning law under the police power) makes the following significant remarks:

Euclid, moreover, was decided in an era when judges located the Police and eminent
domain powers on different planets. Generally speaking, they viewed eminent
domain as encompassing public acquisition of private property for improvements that
would be available for public use," literally construed. To the police power, on the
other hand, they assigned the less intrusive task of preventing harmful externalities a
point reflected in the Euclid opinion's reliance on an analogy to nuisance law to
bolster its support of zoning. So long as suppression of a privately authored harm
bore a plausible relation to some legitimate "public purpose," the pertinent measure
need have afforded no compensation whatever. With the progressive growth of
government's involvement in land use, the distance between the two powers has
contracted considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to match that of the
police power's standard of "public purpose." 27

The Berman case sustained a redevelopment project and the improvement of blighted areas in the
District of Columbia as a proper exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:

If those who govern the District of Columbia decide that the Nation's Capital should
be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands
in the way.

Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear.

For the power of eminent domain is merely the means to the end. 28

In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S
Supreme Court sustained the respondent's Landmarks Preservation Law under which the owners of
the Grand Central Terminal had not been allowed to construct a multi-story office building over the
Terminal, which had been designated a historic landmark. Preservation of the landmark was held to
be a valid objective of the police power. The problem, however, was that the owners of the Terminal
would be deprived of the right to use the airspace above it although other landowners in the area
could do so over their respective properties. While insisting that there was here no taking, the Court
nonetheless recognized certain compensatory rights accruing to Grand Central Terminal which it
said would "undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he
called it, was explained by Prof. Costonis in this wise:

In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized
to transfer to neighboring properties the authorized but unused rights accruing to the site prior to the
Terminal's designation as a landmark the rights which would have been exhausted by the 59-
story building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its
losses at the Terminal site by constructing or selling to others the right to construct larger, hence
more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the maximum area allowed, there
is definitely a taking under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer-beneficiary. This is definitely an exercise not of the
police power but of the power of eminent domain.

Whether as an exercise of the police power or of the power of eminent domain, the several
measures before us are challenged as violative of the due process and equal protection clauses.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are
prescribed has already been discussed and dismissed. It is noted that although they excited many
bitter exchanges during the deliberation of the CARP Law in Congress, the retention limits finally
agreed upon are, curiously enough, not being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other claimed violations of due process in connection
with our examination of the adequacy of just compensation as required under the power of
expropriation.

The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657.
Significantly, they too have not questioned the area of such limits. There is also the complaint that
they should not be made to share the burden of agrarian reform, an objection also made by the
sugar planters on the ground that they belong to a particular class with particular interests of their
own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.

Classification has been defined as the grouping of persons or things similar to each other in certain
particulars and different from each other in these same particulars. 31 To be valid, it must conform to
the following requirements: (1) it must be based on substantial distinctions; (2) it must be germane to
the purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must apply
equally to all the members of the class. 32 The Court finds that all these requisites have been met by
the measures here challenged as arbitrary and discriminatory.

Equal protection simply means that all persons or things similarly situated must be treated alike both
as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that they
belong to a different class and entitled to a different treatment. The argument that not only
landowners but also owners of other properties must be made to share the burden of implementing
land reform must be rejected. There is a substantial distinction between these two classes of owners
that is clearly visible except to those who will not see. There is no need to elaborate on this matter.
In any event, the Congress is allowed a wide leeway in providing for a valid classification. Its
decision is accorded recognition and respect by the courts of justice except only where its discretion
is abused to the detriment of the Bill of Rights.

It is worth remarking at this juncture that a statute may be sustained under the police power only if
there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class require the interference of the State
and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals. 34 As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the method employed
to achieve the constitutional goal.

One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
expediency will not excuse constitutional shortcuts. There is no question that not even the strongest
moral conviction or the most urgent public need, subject only to a few notable exceptions, will
excuse the bypassing of an individual's rights. It is no exaggeration to say that a, person invoking a
right guaranteed under Article III of the Constitution is a majority of one even as against the rest of
the nation who would deny him that right.

That right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which
reaffirms the familiar rule that private property shall not be taken for public use without just
compensation.

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where the owner is willing to sell
under terms also acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the owner is unwilling to sell, or
cannot accept the price or other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the paramount authority of the State
over the interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored justification, as in the
case of the police power, that the welfare of the people is the supreme law.

But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed
no power is absolute). The limitation is found in the constitutional injunction that "private property
shall not be taken for public use without just compensation" and in the abundant jurisprudence that
has evolved from the interpretation of this principle. Basically, the requirements for a proper exercise
of the power are: (1) public use and (2) just compensation.

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should
first distribute public agricultural lands in the pursuit of agrarian reform instead of immediately
disturbing property rights by forcibly acquiring private agricultural lands. Parenthetically, it is not
correct to say that only public agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event, the decision to redistribute private
agricultural lands in the manner prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.

A becoming courtesy admonishes us to respect the decisions of the political departments when they
decide what is known as the political question. As explained by Chief Justice Concepcion in the case
of Taada v. Cuenco: 36
 The term "political question" connotes what it means in ordinary parlance, namely, a
question of policy. It refers to "those questions which, under the Constitution, are to
be decided by the people in their sovereign capacity; or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of
the government." It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure.

It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government." 37 Even so, this should not be construed as a license
for us to reverse the other departments simply because their views may not coincide with ours.

The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the
redistribution of private landholdings (even as the distribution of public agricultural lands is first
provided for, while also continuing apace under the Public Land Act and other cognate laws). The
Court sees no justification to interpose its authority, which we may assert only if we believe that the
political decision is not unwise, but illegal. We do not find it to be so.

In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:

Congress having determined, as it did by the Act of March 3,1909 that the entire St.
Mary's river between the American bank and the international line, as well as all of
the upland north of the present ship canal, throughout its entire length, was
"necessary for the purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation proceedings instituted
by the United States under that Act, and there is no room for judicial review of the
judgment of Congress ... .

As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the reason why
private agricultural lands are to be taken from their owners, subject to the prescribed maximum
retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary measures "to
encourage and undertake the just distribution of all agricultural lands to enable farmers who are
landless to own directly or collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.

The second requirement, i.e., the payment of just compensation, needs a longer and more
thoughtful examination.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's
gain but the owner's loss. 40 The word "just" is used to intensify the meaning of the word
"compensation" to convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 41

It bears repeating that the measures challenged in these petitions contemplate more than a mere
regulation of the use of private lands under the police power. We deal here with an actual taking of
private agricultural lands that has dispossessed the owners of their property and deprived them of all
its beneficial use and enjoyment, to entitle them to the just compensation mandated by the
Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following
conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more
than a momentary period; (3) the entry must be under warrant or color of legal authority; (4) the
property must be devoted to public use or otherwise informally appropriated or injuriously affected;
and (5) the utilization of the property for public use must be in such a way as to oust the owner and
deprive him of beneficial enjoyment of the property. All these requisites are envisioned in the
measures before us.

Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking
possession of the condemned property, as "the compensation is a public charge, the good faith of
the public is pledged for its payment, and all the resources of taxation may be employed in raising
the amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:

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

Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is
entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the
offer of the government to buy his land-

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

To be sure, the determination of just compensation is a function addressed to the courts of justice
and may not be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved
a challenge to several decrees promulgated by President Marcos providing that the just
compensation for property under expropriation should be either the assessment of the property by
the government or the sworn valuation thereof by the owner, whichever was lower. In declaring
these decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:

The method of ascertaining just compensation under the aforecited decrees

constitutes impermissible encroachment on judicial prerogatives. It tends to render
this Court inutile in a matter which under this Constitution is reserved to it for final
determination.

Thus, although in an expropriation proceeding the court technically would still have
the power to determine the just compensation for the property, following the
applicable decrees, its task would be relegated to simply stating the lower value of
the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under Rule
67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
taking of private property is seemingly fulfilled since it cannot be said that a judicial
 proceeding was not had before the actual taking. However, the strict application of
the decrees during the proceedings would be nothing short of a mere formality or
charade as the court has only to choose between the valuation of the owner and that
of the assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or fair.
Even a grade school pupil could substitute for the judge insofar as the determination
of constitutional just compensation is concerned.

xxx

In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.

This time, we answer in the affirmative.

xxx

It is violative of due process to deny the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro
and con have been presented, and after all factors and considerations essential to a
fair and just determination have been judiciously evaluated.

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other interested parties are nevertheless
allowed an opportunity to submit evidence on the real value of the property. But more importantly,
the determination of the just compensation by the DAR is not by any means final and conclusive
upon the landowner or any other interested party, for Section 16(f) clearly provides:

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

The determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said determination in
the exercise of what is admittedly a judicial function.

The second and more serious objection to the provisions on just compensation is not as easily
resolved.

This refers to Section 18 of the CARP Law providing in full as follows:

SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR
and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of the
landowner:

(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as the

excess hectarage is concerned Twenty-five
percent (25%) cash, the balance to be paid in
government financial instruments negotiable at any
time.

(b) For lands above twenty-four (24) hectares and up

to fifty (50) hectares Thirty percent (30%) cash, the
balance to be paid in government financial
instruments negotiable at any time.

(c) For lands twenty-four (24) hectares and below

Thirty-five percent (35%) cash, the balance to be paid
in government financial instruments negotiable at any
time.

(2) Shares of stock in government-owned or controlled corporations, LBP preferred

shares, physical assets or other qualified investments in accordance with guidelines
set by the PARC;

(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury

bill rates. Ten percent (10%) of the face value of the
bonds shall mature every year from the date of
issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;

(b) Transferability and negotiability. Such LBP bonds

may be used by the landowner, his successors-in-
interest or his assigns, up to the amount of their face
value, for any of the following:

(i) Acquisition of land or other real properties of the

government, including assets under the Asset
Privatization Program and other assets foreclosed by
government financial institutions in the same province
or region where the lands for which the bonds were
paid are situated;
 (ii) Acquisition of shares of stock of government-
owned or controlled corporations or shares of stock
owned by the government in private corporations;

(iii) Substitution for surety or bail bonds for the

provisional release of accused persons, or for
performance bonds;

(iv) Security for loans with any government financial

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

(v) Payment for various taxes and fees to

government: Provided, That the use of these bonds
for these purposes will be limited to a certain
percentage of the outstanding balance of the financial
instruments; Provided, further, That the PARC shall
determine the percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of

the original bondholder in government universities,
colleges, trade schools, and other institutions;

(vii) Payment for fees of the immediate family of the

original bondholder in government hospitals; and

(viii) Such other uses as the PARC may from time to

time allow.

The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
insofar as it requires the owners of the expropriated properties to accept just compensation therefor
in less than money, which is the only medium of payment allowed. In support of this contention, they
cite jurisprudence holding that:

The fundamental rule in expropriation matters is that the owner of the property
expropriated is entitled to a just compensation, which should be neither more nor
less, whenever it is possible to make the assessment, than the money equivalent of
said property. Just compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing expropriated has to
suffer by reason of the expropriation . 45 (Emphasis supplied.)

In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:

It is well-settled that just compensation means the equivalent for the value of the
property at the time of its taking. Anything beyond that is more, and anything short of
that is less, than just compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever gain would accrue to
the expropriating entity. The market value of the land taken is the just compensation
to which the owner of condemned property is entitled, the market value being that
 sum of money which a person desirous, but not compelled to buy, and an owner,
willing, but not compelled to sell, would agree on as a price to be given and received
for such property. (Emphasis supplied.)

In the United States, where much of our jurisprudence on the subject has been derived, the weight
of authority is also to the effect that just compensation for property expropriated is payable only in
money and not otherwise. Thus

The medium of payment of compensation is ready money or cash. The condemnor

cannot compel the owner to accept anything but money, nor can the owner compel
or require the condemnor to pay him on any other basis than the value of the
property in money at the time and in the manner prescribed by the Constitution and
the statutes. When the power of eminent domain is resorted to, there must be a
standard medium of payment, binding upon both parties, and the law has fixed that
standard as money in cash. 47 (Emphasis supplied.)

Part cash and deferred payments are not and cannot, in the nature of things, be
regarded as a reliable and constant standard of compensation. 48

"Just compensation" for property taken by condemnation means a fair equivalent in

money, which must be paid at least within a reasonable time after the taking, and it is
not within the power of the Legislature to substitute for such payment future
obligations, bonds, or other valuable advantage. 49(Emphasis supplied.)

It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in the
past solely in that medium. However, we do not deal here with the traditional excercise of the power
of eminent domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local
purpose.

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

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

Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering
the vast areas of land subject to expropriation under the laws before us, we estimate that hundreds
of billions of pesos will be needed, far more indeed than the amount of P50 billion initially
appropriated, which is already staggering as it is by our present standards. Such amount is in fact
not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to pay in cash and in full for the
lands they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP Law, particularly
the payment of the balance (if the owner cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of value. We may also suppose that what they
had in mind was a similar scheme of payment as that prescribed in P.D. No. 27, which was the law
in force at the time they deliberated on the new Charter and with which they presumably agreed in
principle.

The Court has not found in the records of the Constitutional Commission any categorical agreement
among the members regarding the meaning to be given the concept of just compensation as applied
to the comprehensive agrarian reform program being contemplated. There was the suggestion to
"fine tune" the requirement to suit the demands of the project even as it was also felt that they should
"leave it to Congress" to determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such innovations as "progressive
compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be expropriated was reached by the
Commission. 50

On the other hand, there is nothing in the records either that militates against the assumptions we
are making of the general sentiments and intention of the members on the content and manner of
the payment to be made to the landowner in the light of the magnitude of the expenditure and the
limitations of the expropriator.

With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our
decision on this issue, but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The Court is as acutely
anxious as the rest of our people to see the goal of agrarian reform achieved at last after the
frustrations and deprivations of our peasant masses during all these disappointing decades. We are
aware that invalidation of the said section will result in the nullification of the entire program, killing
the farmer's hopes even as they approach realization and resurrecting the spectre of discontent and
dissent in the restless countryside. That is not in our view the intention of the Constitution, and that is
not what we shall decree today.

Accepting the theory that payment of the just compensation is not always required to be made fully
in money, we find further that the proportion of cash payment to the other things of value constituting
the total payment, as determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in
money, primarily because the small landowner will be needing it more than the big landowners, who
can afford a bigger balance in bonds and other things of value. No less importantly, the government
financial instruments making up the balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his option, are also not unreasonable
because payment is made in shares of stock, LBP bonds, other properties or assets, tax credits, and
other things of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not
a little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly
hoped that these countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable share in the attainment of
the ideal of agrarian reform. Otherwise, our pursuit of this elusive goal will be like the quest for the
Holy Grail.

The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem
to be viable any more as it appears that Section 4 of the said Order has been superseded by Section
14 of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure
but does not provide, as the latter did, that in case of failure or refusal to register the land, the
valuation thereof shall be that given by the provincial or city assessor for tax purposes. On the
contrary, the CARP Law says that the just compensation shall be ascertained on the basis of the
factors mentioned in its Section 17 and in the manner provided for in Section 16.

The last major challenge to CARP is that the landowner is divested of his property even before
actual payment to him in full of just compensation, in contravention of a well- accepted principle of
eminent domain.

The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle
is consistent both here and in other democratic jurisdictions. Thus:

Title to property which is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's report
under the Local Improvement Act, is filed. 51

... although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made. 52 (Emphasis
supplied.)

In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the
decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was
held that "actual payment to the owner of the condemned property was a condition precedent to the
investment of the title to the property in the State" albeit "not to the appropriation of it to public use."
In Rexford v. Knight, 55 the Court of Appeals of New York said that the construction upon the statutes
was that the fee did not vest in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further
said that "both on principle and authority the rule is ... that the right to enter on and use the property
is complete, as soon as the property is actually appropriated under the authority of law for a public
use, but that the title does not pass from the owner without his consent, until just compensation has
been made to him."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:

If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted in
this jurisdiction is such as to afford absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner until compensation is paid ...
. (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972
and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually issued to him unless and until
he had become a full-fledged member of a duly recognized farmers' cooperative." It was understood,
however, that full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.

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

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

it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers' cooperatives and full payment of just compensation. Hence, it
was also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to
the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer of ownership after
full payment of just compensation), shall be considered as advance payment for the land."

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

Hence, the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as
recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should
counter-balance the express provision in Section 6 of the said law that "the landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead."

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by
the petitioners with the Office of the President has already been resolved. Although we have said
that the doctrine of exhaustion of administrative remedies need not preclude immediate resort to
judicial action, there are factual issues that have yet to be examined on the administrative level,
especially the claim that the petitioners are not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have
not yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are
entitled to the new retention rights provided for by R.A. No. 6657, which in fact are on the whole
more liberal than those granted by the decree.

The CARP Law and the other enactments also involved in these cases have been the subject of
bitter attack from those who point to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than perfect; indeed, they should be
continuously re-examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the pursuit of agrarian reform,
we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected difficulties.
This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as we venture
forward, and, if necessary, by our own mistakes. We cannot expect perfection although we should
strive for it by all means. Meantime, we struggle as best we can in freeing the farmer from the iron
shackles that have unconscionably, and for so long, fettered his soul to the soil.

By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform
program are removed, to clear the way for the true freedom of the farmer. We may now glimpse the
day he will be released not only from want but also from the exploitation and disdain of the past and
from his own feelings of inadequacy and helplessness. At last his servitude will be ended forever. At
last the farm on which he toils will be his farm. It will be his portion of the Mother Earth that will give
him not only the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at last can he
banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the music
and the dream."

WHEREFORE, the Court holds as follows:

1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
SUSTAINED against all the constitutional objections raised in the herein petitions.

2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.

3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are
retained and recognized.

4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
therein prescribed.

5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.

SO ORDERED.

G.R. No. 127198 May 16, 2005

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
HON. ELI G. C. NATIVIDAD, Presiding Judge of the Regional Trial Court, Branch 48, San
Fernando, Pampanga, and JOSE R. CAGUIAT represented by Attorneys-in-fact JOSE T.
BARTOLOME and VICTORIO MANGALINDAN, respondents.

DECISION
TINGA, J.:

This is a Petition for Review1 dated December 6, 1996 assailing the Decision2 of the Regional Trial
Court3 dated July 5, 1996 which ordered the Department of Agrarian Reform (DAR) and petitioner
Land Bank of the Philippines (Land Bank) to pay private respondents the amount of P30.00 per
square meter as just compensation for the States acquisition of private respondents properties
under the land reform program.

The facts follow.

On May 14, 1993, private respondents filed a petition before the trial court for the determination of
just compensation for their agricultural lands situated in Arayat, Pampanga, which were acquired by
the government pursuant to Presidential Decree No. 27 (PD 27). The petition named as respondents
the DAR and Land Bank. With leave of court, the petition was amended to implead as co-
respondents the registered tenants of the land.

After trial, the court rendered the assailed Decision the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of petitioners and against respondents,

ordering respondents, particularly, respondents Department of Agrarian Reform and the
Land Bank of the Philippines, to pay these lands owned by petitioners and which are the
subject of acquisition by the State under its land reform program, the amount of THIRTY
PESOS (P30.00) per square meter, as the just compensation due for payment for same
lands of petitioners located at San Vicente (or Camba), Arayat, Pampanga.

Respondent Department of Agrarian Reform is also ordered to pay petitioners the amount of
FIFTY THOUSAND PESOS (P50,000.00) as Attorneys Fee, and to pay the cost of suit.

SO ORDERED.4

DAR and Land Bank filed separate motions for reconsideration which were denied by the trial court
in its Order5dated July 30, 1996 for being pro forma as the same did not contain a notice of
hearing. Thus, the prescriptive period for filing an appeal was not tolled. Land Bank consequently
failed to file a timely appeal and the assailed Decision became final and executory.

Land Bank then filed a Petition for Relief from Order Dated 30 July 1996,6 citing excusable
negligence as its ground for relief. Attached to the petition for relief were two affidavits of merit
claiming that the failure to include in the motion for reconsideration a notice of hearing was due to
accident and/or mistake.7 The affidavit of Land Banks counsel of record notably states that "he
simply scanned and signed the Motion for Reconsideration for Agrarian Case No. 2005, Regional
Trial Court of Pampanga, Branch 48, not knowing, or unmindful that it had no notice of hearing"8 due
to his heavy workload.

The trial court, in its Order9 of November 18, 1996, denied the petition for relief because Land Bank
lost a remedy in law due to its own negligence.

In the instant petition for review, Land Bank argues that the failure of its counsel to include a notice
of hearing due to pressure of work constitutes excusable negligence and does not make the motion
for reconsideration pro forma considering its allegedly meritorious defenses. Hence, the denial of its
petition for relief from judgment was erroneous.
According to Land Bank, private respondents should have sought the reconsideration of the DARs
valuation of their properties. Private respondents thus failed to exhaust administrative remedies
when they filed a petition for the determination of just compensation directly with the trial court. Land
Bank also insists that the trial court erred in declaring that PD 27 and Executive Order No. 228 (EO
228) are mere guidelines in the determination of just compensation, and in relying on private
respondents evidence of the valuation of the properties at the time of possession in 1993 and not on
Land Banks evidence of the value thereof as of the time of acquisition in 1972.

Private respondents filed a Comment10 dated February 22, 1997, averring that Land Banks failure to
include a notice of hearing in its motion for reconsideration due merely to counsels heavy workload,
which resulted in the motion being declared pro forma, does not constitute excusable negligence,
especially in light of the admission of Land Banks counsel that he has been a lawyer since 1973 and
has "mastered the intricate art and technique of pleading."

Land Bank filed a Reply11 dated March 12, 1997 insisting that equity considerations demand that it
be heard on substantive issues raised in its motion for reconsideration.

The Court gave due course to the petition and required the parties to submit their respective
memoranda.12 Both parties complied.13

The petition is unmeritorious.

At issue is whether counsels failure to include a notice of hearing constitutes excusable negligence
entitling Land Bank to a relief from judgment.

Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides:

Sec. 1. Petition for relief from judgment, order, or other proceedings.When a judgment or
final order is entered, or any other proceeding is thereafter taken against a party in any court
through fraud, accident, mistake, or excusable negligence, he may file a petition in such
court and in the same case praying that the judgment, order or proceeding be set aside.

As can clearly be gleaned from the foregoing provision, the remedy of relief from judgment can only
be resorted to on grounds of fraud, accident, mistake or excusable negligence. Negligence to be
excusable must be one which ordinary diligence and prudence could not have guarded against.14

Measured against this standard, the reason profferred by Land Banks counsel, i.e., that his heavy
workload prevented him from ensuring that the motion for reconsideration included a notice of
hearing, was by no means excusable.

Indeed, counsels admission that "he simply scanned and signed the Motion for Reconsideration for
Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not knowing, or unmindful
that it had no notice of hearing" speaks volumes of his arrant negligence, and cannot in any manner
be deemed to constitute excusable negligence.

The failure to attach a notice of hearing would have been less odious if committed by a greenhorn
but not by a lawyer who claims to have "mastered the intricate art and technique of pleading."15

Indeed, a motion that does not contain the requisite notice of hearing is nothing but a mere scrap of
paper. The clerk of court does not even have the duty to accept it, much less to bring it to the
attention of the presiding judge.16 The trial court therefore correctly considered the motion for
reconsideration pro forma. Thus, it cannot be faulted for denying Land Banks motion for
reconsideration and petition for relief from judgment.

It should be emphasized at this point that procedural rules are designed to facilitate the adjudication
of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain
instances, we allow a relaxation in the application of the rules, we never intend to forge a weapon for
erring litigants to violate the rules with impunity. The liberal interpretation and application of rules
apply only in proper cases of demonstrable merit and under justifiable causes and circumstances.
While it is true that litigation is not a game of technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice. Party litigants and their counsel are well advised to abide by, rather than
flaunt, procedural rules for these rules illumine the path of the law and rationalize the pursuit of
justice.17

Aside from ruling on this procedural issue, the Court shall also resolve the other issues presented by
Land Bank, specifically as regards private respondents alleged failure to exhaust administrative
remedies and the question of just compensation.

Land Bank avers that private respondents should have sought the reconsideration of the DARs
valuation instead of filing a petition to fix just compensation with the trial court.

The records reveal that Land Banks contention is not entirely true. In fact, private respondents did
write a letter18 to the DAR Secretary objecting to the land valuation summary submitted by the
Municipal Agrarian Reform Office and requesting a conference for the purpose of fixing just
compensation. The letter, however, was left unanswered prompting private respondents to file a
petition directly with the trial court.

At any rate, in Philippine Veterans Bank v. Court of Appeals,19 we declared that there is nothing
contradictory between the DARs primary jurisdiction to determine and adjudicate agrarian reform
matters and exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, which includes the determination of questions of just compensation, and the original and
exclusive jurisdiction of regional trial courts over all petitions for the determination of just
compensation. The first refers to administrative proceedings, while the second refers to judicial
proceedings.

In accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR
to determine in a preliminary manner the just compensation for the lands taken under the agrarian
reform program, but such determination is subject to challenge before the courts. The resolution of
just compensation cases for the taking of lands under agrarian reform is, after all, essentially a
judicial function.20

Thus, the trial did not err in taking cognizance of the case as the determination of just compensation
is a function addressed to the courts of justice.

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

Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the
determination of just compensation, reads as follows:

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

It would certainly be inequitable to determine just compensation based on the guideline provided by
PD 27 and EO 228 considering the DARs failure to determine the just compensation for a
considerable length of time. That just compensation should be determined in accordance with RA
6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should
be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent
being real, substantial, full and ample.24

In this case, the trial court arrived at the just compensation due private respondents for their
property, taking into account its nature as irrigated land, location along the highway, market value,
assessors value and the volume and value of its produce. This Court is convinced that the trial court
correctly determined the amount of just compensation due private respondents in accordance with,
and guided by, RA 6657 and existing jurisprudence.

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.

G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., respondents.

G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian

Reform, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.
FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged should not
be carried out to such an extent as deny justice to the landowner whenever truth and justice happen
to be on his side.1 As eloquently stated by Justice Isagani Cruz:

. . . social justice or any justice for that matter is for the deserving, whether he
be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of
reasonable doubt, we are called upon to tilt the balance in favor of the poor, to whom
the Constitution fittingly extends its sympathy and compassion. But never is it
justified to prefer the poor simply because they are poor, or to reject the rich simply
because they are rich, for justice must always be served, for poor and rich alike,
according to the mandate of the law.2

In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.

Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R.
No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the
Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the
petitions were ordered consolidated.3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which
granted private respondents' Petition for Certiorari and Mandamus and ruled as follows:

WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is

hereby GRANTED:

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

declared null and void insofar as it provides for the opening of trust
accounts in lieu of deposits in cash or bonds;

b) Respondent Landbank is ordered to immediately deposit not

merely "earmark", "reserve" or "deposit in trust" with an accessible
bank designated by respondent DAR in the names of the following
petitioners the following amounts in cash and in government financial
instruments within the parameters of Sec. 18 (1) of RA 6657:

P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 AMADCOR;

c) The DAR-designated bank is ordered to allow the petitioners to

withdraw the above-deposited amounts without prejudice to the final
determination of just compensation by the proper authorities; and

d) Respondent DAR is ordered to

1) immediately conduct summary administrative proceedings to
determine the just compensation for the lands of the petitioners giving
 the petitioners 15 days from notice within which to submit evidence
and to 2) decide the cases within 30 days after they are submitted for
decision.4

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995,5 denying
their motion for reconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and
subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian
Reform Law (CARL, Republic Act No. 6657).

Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the
valuation and payment of compensation for their land pursuant to the provisions of
RA 6657, private respondents filed with this Court a Petition
for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of
19926 and DAR Administrative Order No. 9, Series of 1990,7 and sought to compel the
DAR to expedite the pending summary administrative proceedings to finally determine
the just compensation of their properties, and the Landbank to deposit in cash and
bonds the amounts respectively "earmarked", "reserved" and "deposited in trust
accounts" for private respondents, and to allow them to withdraw the same.

Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition
to respondent Court of Appeals for proper determination and disposition.

As found by respondent court , the following are undisputed:

Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer
certificates of title (TCTs) of petitioner Yap were totally cancelled by the
Registrar of Deeds of Leyte and were transferred in the names of farmer
beneficiaries collectively, based on the request of the DAR together with a
certification of the Landbank that the sum of P735,337.77 and P719,869.54 have
been earmarked for Landowner Pedro L. Yap for the parcels of lands covered
by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof TC-563 and
TC-562, respectively, in the names of listed beneficiaries (ANNEXES "C" & "D")
without notice to petitioner Yap and without complying with the requirement of
Section 16 (e) of RA 6657 to deposit the compensation in cash and Landbank
bonds in an accessible bank. (Rollo, p. 6).

The above allegations are not disputed by any of the respondents.

Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are
the owners of a parcel of land located at Laur, NUEVA ECIJA with an area of
18.5615 hectares covered by TCT No. NT-60359 of the registry of Deeds of Nueva
Ecija, registered in the name of the late Emiliano F. Santiago; that in November and
December 1990, without notice to the petitioners, the Landbank required and the
beneficiaries executed Actual tillers Deed of Undertaking (ANNEX "B") to pay rentals
to the LandBank for the use of their farmlots equivalent to at least 25% of the net
harvest; that on 24 October 1991 the DAR Regional Director issued an order
directing the Landbank to pay the landowner directly or through the establishment of
a trust fund in the amount of P135,482.12, that on 24 February 1992, the Landbank
reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX
 "E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they
signed the Actual Tiller's Deed of Undertaking committing themselves to pay rentals
to the LandBank (Rollo, p. 133).

The above allegations are not disputed by the respondents except that respondent
Landbank claims 1) that it was respondent DAR, not Landbank which required the
execution of Actual Tillers Deed of Undertaking (ATDU, for brevity); and 2) that
respondent Landbank, although armed with the ATDU, did not collect any amount as
rental from the substituting beneficiaries (Rollo, p. 99).

Petitioner Agricultural Management and Development Corporation (AMADCOR, for

brevity) alleges with respect to its properties located in San Francisco, Quezon
that the properties of AMADCOR in San Francisco, Quezon consist of a parcel of
land covered by TCT No. 34314 with an area of 209.9215 hectares and another
parcel covered by TCT No. 10832 with an area of 163.6189 hectares; that a
summary administrative proceeding to determine compensation of the property
covered by TCT No. 34314 was conducted by the DARAB in Quezon City without
notice to the landowner; that a decision was rendered on 24 November 1992
(ANNEX "F") fixing the compensation for the parcel of land covered by TCT No.
34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the
Landbank to pay or establish a trust account for said amount in the name of
AMADCOR; and that the trust account in the amount of P2,768,326.34 fixed in the
decision was established by adding P1,986,489.73 to the first trust account
established on 19 December 1991 (ANNEX "G"). With respect to petitioner
AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR
in Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay
with an area of 1,629.4578 hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were registered on 15 February 1988
but no action was taken thereafter by the DAR to fix the compensation for said land;
that on 21 April 1993, a trust account in the name of AMADCOR was established in
the amount of P12,247,217.83', three notices of acquisition having been previously
rejected by AMADCOR. (Rollo, pp. 8-9)

The above allegations are not disputed by the respondents except that respondent
Landbank claims that petitioner failed to participate in the DARAB proceedings (land
valuation case) despite due notice to it (Rollo, p. 100).8

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued
without jurisdiction and with grave abuse of discretion because it permits the opening of
trust accounts by the Landbank, in lieu of depositing in cash or bonds in an accessible bank
designated by the DAR, the compensation for the land before it is taken and the titles are cancelled
as provided under Section 16(e) of RA 6657.9 Private respondents also assail the fact that the DAR
and the Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their
names as landowners despite the clear mandate that before taking possession of the property, the
compensation must be deposited in cash or in bonds. 10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-
making power pursuant to Section 49 of RA 6657.11 Moreover, the DAR maintained that the issuance
of the "Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e) of
RA 6657 and the ruling in the case of Association of Small Landowners in the Philippines, Inc., et
al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).12
For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
"reserved/deposited" were also used.13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.14Petitioners filed a motion for reconsideration but respondent court denied the same.15

Hence, the instant petitions.

On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745
alleging that the appeal has no merit and is merely intended to delay the finality of the appealed
decision.16 The Court, however, denied the motion and instead required the respondents to file their
comments.17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative
Order No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit
in cash or in bonds, and (2) in holding that private respondents are entitled as a matter of right to the
immediate and provisional release of the amounts deposited in trust pending the final resolution of
the cases it has filed for just compensation.

Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section
16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the opening of a
trust account as a form of deposit. Thus, in opting for the opening of a trust account as the
acceptable form of deposit through Administrative Circular No. 9, petitioner DAR did not commit any
grave abuse of discretion since it merely exercised its power to promulgate rules and regulations in
implementing the declared policies of RA 6657.

The contention is untenable. Section 16(e) of RA 6657 provides as follows:

Sec. 16. Procedure for Acquisition of Private Lands

xxx xxx xxx

(e) Upon receipt by the landowner of the corresponding payment or, in case of
rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. . . . (emphasis supplied)

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds".
Nowhere does it appear nor can it be inferred that the deposit can be made in any other form.
If it were the intention to include a "trust account" among the valid modes of deposit, that
should have been made express, or at least, qualifying words ought to have appeared from
which it can be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity
in Section 16(e) of RA 6657 to warrant an expanded construction of the term "deposit".

The conclusive effect of administrative construction is not absolute. Action of an administrative

agency may be disturbed or set aside by the judicial department if there is an error of law, a grave
abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the
letter or the spirit of a legislative enactment.18 In this regard, it must be stressed that the function of
promulgating rules and regulations may be legitimately exercised only for the purpose of carrying the
provisions of the law into effect. The power of administrative agencies is thus confined to
implementing the law or putting it into effect. Corollary to this is that administrative regulations
cannot extend
the law and amend a legislative enactment,19 for settled is the rule that administrative regulations
must be in harmony with the provisions of the law. And in case there is a discrepancy between the
basic law and an implementing rule or regulation, it is the former that prevails.20

In the present suit, the DAR clearly overstepped the limits of its power to enact rules and
regulations when it issued Administrative Circular No. 9. There is no basis in allowing the
opening of a trust account in behalf of the landowner as compensation for his property
because, as heretofore discussed, Section 16(e) of RA 6657 is very specific that the deposit
must be made only in "cash" or in "LBP bonds". In the same vein, petitioners cannot invoke
LRA Circular Nos. 29, 29-A and 54 because these implementing regulations cannot outweigh
the clear provision of the law. Respondent court therefore did not commit any error in
striking down Administrative Circular No. 9 for being null and void.

Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the final
valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation under
Section 16(e) of RA 6657 and payment of final compensation as provided under Section 1821 of the
same law. According to petitioners, the right of the landowner to withdraw the amount deposited in
his behalf pertains only to the final valuation as agreed upon by the landowner, the DAR and the
LBP or that adjudged by the court. It has no reference to amount deposited in the trust account
pursuant to Section 16(e) in case of rejection by the landowner because the latter amount is only
provisional and intended merely to secure possession of the property pending final valuation. To
further bolster the contention petitioners cite the following pronouncements in the case of
"Association of Small Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform".22

The last major challenge to CARP is that the landowner is divested of his property
even before actual payment to him in full of just compensation, in contravention of a
well-accepted principle of eminent domain.

xxx xxx xxx

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

xxx xxx xxx

Hence the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.

Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:
 . . . despite the "revolutionary" character of the expropriation envisioned under RA
6657 which led the Supreme Court, in the case of Association of Small Landowners
in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343), to conclude that
"payments of the just compensation is not always required to be made fully in
money" even as the Supreme Court admits in the same case "that the traditional
medium for the payment of just compensation is money and no other" the
Supreme Court in said case did not abandon the "recognized rule . . . that title to the
property expropriated shall pass from the owner to the expropriator only upon full
payment of the just compensation." 23 (Emphasis supplied)

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized payment
other than in cash. It did not, however, dispense with the settled rule that there must be full payment
of just compensation before the title to the expropriated property is transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA
6657 and determination of just compensation under Section 18 is unacceptable. To withhold the
right of the landowners to appropriate the amounts already deposited in their behalf as
compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and use of such properties,
is an oppressive exercise of eminent domain. The irresistible expropriation of private respondents'
properties was painful enough for them. But petitioner DAR rubbed it in all the more by withholding
that which rightfully belongs to private respondents in exchange for the taking, under an authority
(the "Association" case) that is, however, misplaced. This is misery twice bestowed on private
respondents, which the Court must rectify.

Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e)
and final compensation under Section 18 for purposes of exercising the landowners' right to
appropriate the same. The immediate effect in both situations is the same, the landowner is deprived
of the use and possession of his property for which he should be fairly and immediately
compensated. Fittingly, we reiterate the cardinal rule that:

. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be paid to
the owner of the land but also the payment of the land within a reasonable time from
its taking. Without prompt payment, compensation cannot be considered "just" for the
property owner is made to suffer the consequence of being immediately deprived of
his land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss. 24 (Emphasis supplied)

The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true
freedom of the farmer.25 But despite this, cases involving its implementation continue to multiply and
clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the
farmers from their bondage will be attained in due time. It must be stressed, however, that in the
pursuit of this objective, vigilance over the rights of the landowners is equally important because
social justice cannot be invoked to trample on the rights of property owners, who under our
Constitution and laws are also entitled to protection.26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit
and the appealed decision is AFFIRMED in toto.
SO ORDERED.

JOSEFINA S. LUBRICA, in her G.R. No. 170220

capacity as Assignee of FEDERICO
C. SUNTAY, NENITA SUNTAY
TAEDO and EMILIO A.M.
SUNTAY III,
Petitioners, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
LAND BANK OF THE PHILIPPINES,
Respondent. Promulgated:

November 20, 2006

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

DECISION
YNARES-SANTIAGO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails
the October 27, 2005 Amended Decision[1] of the Court of Appeals in CA-G.R. SP
No. 77530, which vacated its May 26, 2004 Decision affirming (a) the Order of the
Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special
Agrarian Court, in Agrarian Case Nos. R-1339 and R-1340, dated March 31, 2003
directing respondent Land Bank of the Philippines (LBP) to deposit the provisional
compensation as determined by the Provincial Agrarian Reform Adjudicator
(PARAD); (b) the May 26, 2003 Resolution denying LBPs motion for
reconsideration; and (c) the May 27, 2003 Order requiring Teresita V. Tengco, LBPs
Land Compensation Department Manager, to comply with the March 31, 2003
Order.
The facts of the case are as follows:
Petitioner Josefina S. Lubrica is the assignee [2] of Federico C. Suntay over certain
parcels of agricultural land located at Sta. Lucia, Sablayan, Occidental Mindoro,
with an area of 3,682.0285 hectares covered by Transfer Certificate of Title (TCT)
No. T-31 (T-1326)[3] of the Registry of Deeds of Occidental Mindoro. In 1972, a
portion of the said property with an area of 311.7682 hectares, was placed under the
land reform program pursuant to Presidential Decree No. 27 (1972)[4] and Executive
Order No. 228 (1987).[5] The land was thereafter subdivided and distributed to
farmer beneficiaries. The Department of Agrarian Reform (DAR) and the LBP fixed
the value of the land at P5,056,833.54 which amount was deposited in cash and
bonds in favor of Lubrica.

On the other hand, petitioners Nenita Suntay-Taedo and Emilio A.M. Suntay III
inherited from Federico Suntay a parcel of agricultural land located at Balansay,
Mamburao, Occidental Mindoro covered by TCT No. T-128[6] of the Register of
Deeds of Occidental Mindoro, consisting of two lots, namely, Lot 1 with an area of
45.0760 hectares and Lot 2 containing an area of 165.1571 hectares or a total of
210.2331 hectares. Lot 2 was placed under the coverage of P.D. No. 27 but only
128.7161 hectares was considered by LBP and valued the same at P1,512,575.05.
Petitioners rejected the valuation of their properties, hence the Office of the
Provincial Agrarian Reform Adjudicator (PARAD) conducted summary
administrative proceedings for determination of just compensation. On January 29,
2003, the PARAD fixed the preliminary just compensation at P51,800,286.43 for
the 311.7682 hectares (TCT No. T-31) and P21,608,215.28 for the 128.7161
hectares (TCT No. T-128).[7]

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

Petitioners filed separate Motions to Deposit the Preliminary Valuation Under

Section 16(e) of Republic Act (R.A.) No. 6657 (1988)[9] and Ad Cautelam Answer
praying among others that LBP deposit the preliminary compensation determined
by the PARAD.
On March 31, 2003, the trial court issued an Order [10] granting petitioners motion,
the dispositive portion of which reads:

WHEREFORE, Ms. Teresita V. Tengco, of the Land Compensation

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

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

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

Such deposit must be made with the Land Bank of

the Philippines, Manila within five (5) days from receipt of a copy of this
order and to notify this court of her compliance within such period.

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

SO ORDERED.[11]

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

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

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

On May 26, 2004, the Court of Appeals rendered a Decision[17] in favor of the
petitioners, the dispositive portion of which reads:
 WHEREFORE, premises considered, there being no grave abuse of
discretion, the instant Petition for Certiorari and Prohibition is DENIED.
Accordingly, the Order dated March 31, 2003, Resolution dated May 26,
2003, and Order dated May 27, 2003 are hereby AFFIRMED. The
preliminary injunction We previously issued is hereby LIFTED and
DISSOLVED.

SO ORDERED.[18]

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

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

Wherefore, in view of the prescription of a different formula in the case

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

SO ORDERED.[20]

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

Hence, this petition raising the following issues:

A. THE COURT A QUO HAS DECIDED THE CASE IN A WAY NOT

IN ACCORD WITH THE LATEST DECISION OF THE SUPREME
COURT IN THE CASE OF LAND BANK OF THE PHILIPPINES VS.
HON. ELI G.C. NATIVIDAD, ET AL., G.R. NO. 127198, PROM. MAY
16, 2005; and[22]

B. THE COURT A QUO HAS, WITH GRAVE GRAVE ABUSE OF

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

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

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

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

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

Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of

Appeals,[26] we held that expropriation of landholdings covered by R.A. No. 6657
take place, not on the effectivity of the Act on June 15, 1988, but on the payment of
just compensation.

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

Our ruling in Association of Small Landowners in the Philippines, Inc. v.

Secretary of Agrarian Reform[29] is instructive, thus:

It is true that P.D. No. 27 expressly ordered the emancipation of

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

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

All qualified farmer-beneficiaries are now deemed full

owners as of October 21, 1972 of the land they acquired by
virtue of Presidential Decree No. 27 (Emphasis supplied.)

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

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

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

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

RA 6657 includes PD 27 lands among the properties which the

DAR shall acquire and distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should
be adhered to.

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

Corollarily, we held in Land Bank of the Philippines v. Celada[33] that the

above provision was converted into a formula by the DAR through
Administrative Order No. 05, S. 1998, to wit:

Land Value (LV) = (Capitalized Net Income x 0.6) + (Comparable Sales

x 0.3) + (Market Value per Tax Declaration x 0.1)

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

WHEREFORE, premises considered, the petition is GRANTED. The assailed

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

SO ORDERED.

FIRST DIVISION

G.R. Nos. 201856-57, March 16, 2016

LAND BANK OF THE PHILIPPINES, Petitioner, v. CONCEPCION PADILLA-MUNSAYAC AND

BONIFACIO-MUNSAYAC, Respondents.

G.R. NO. 201871

DEPARTMENT OF AGRARIAN REFORM REP. BY SEC. NASSER C. PANGANDAMAN (NOW VIRGILIO

R. DELOS REYES), Petitioner, v. CONCEPCION PADILLA-MUNSAYAC AND BONIFACIO
MUNSAYAC, Respondents.

DECISION

SERENO, C.J.:

Before this Court are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision1 dated 14 September 2011 issued by the Ninth Division of the Court of Appeals (CA)
in CA-G.R. SP No. 109778 and CA-G.R. SP No. 109992. The CA affirmed therein the Decision2 and Order3 of
the Regional Trial Court (RTC) Branch 33, Guimba, Nueva Ecija.

Factual Antecedents

The Complaint was commenced principally to determine and fix just compensation for the parcels of land,
subject of this case.

As culled from the records, the facts of the case are as follows:

Benito Chioco and Constancio Padilla were the registered owners of Lot 1460, which had an area
of 53,342 square meters, and Lot 1464, with an area of 28,222 square meters. The lots, which
were situated in Barangay Parista, Lupao, Nueva Ecija, were covered by Transfer Certificate of
Title (TCT) No. 15365.4 The subject properties were transferred to Concepcion Padilla-Munsayac
and Jose Padilla by way of succession, as they were the children and only compulsory heirs of
Benito Chioco and Constancio Padilla.5 Later, by virtue of the Deed of Extrajudicial Partition and
Settlement of Properties with Waiver of Rights executed by Jose, his rights over the properties
were waived in favor of Concepcion.6

Pursuant to the government's agrarian reform program, the subject properties owned by respondents to the
extent of 8.0782 hectares (of the total area of 8.1563) were placed under Operation Land Transfer in
accordance with Presidential Decree (P.D.) No. 27/ Executive Order (E.O.) No. 228 on 21 October 1972.7

In accordance with the formula provided by P.D. 27 and E.O. 228, the Department of Agrarian Reform
(DAR) initially fixed the just compensation for the properties at P4,294.50 per hectare. This amount was
based on the fact that the value of the landholding was the average gross production (AGP) per hectare of
49.08 cavans of palay (as determined by the Barangay Committee on Land Production) multiplied by 2.5;
and the product was further multiplied by P35, which was the government support price (GSP) for one cavan
of 50 kilos of palay on 21 October 1972.8 In equation form: LV (Land Value) - 2.5 x AGP x GSP.9
Rejecting the DAR's valuation, respondents filed with the court a quo a Complaint for the determination of
just compensation dated 16 February 1999, docketed as Case No. 1030-G and entitled "Concepcion Padilla
Munsayac, et ah, Plaintiffs, vs. The Department Of Agrarian Reform, et al, Defendants."10

Respondents prayed for the appointment of commissioners to investigate and ascertain facts relative to the
dispute.11 The relevant part of the commissioner's report reads:

[T]he topography of the land is generally flat, devoted to rice production and accessible to all types of land
transportation. It is rainfed, however, the other landholdings being cultivated by the farmer beneficiaries
have deep wells which is the source of water. There is only one (1) cropping season. Adjacent lots to the
landholdings of the petitioners were sold at P180,000.00 per hectare and it can be mortgaged at P80,000.00
per hectare. The average harvest per hectare is ninety (90) cavans and there are no trees planted thereon.
There were seasons that tenant-beneficiaries planted vegetables but the produce was solely for home
consumption. A two-hectare portion of the subject land was sold for P300,000.00. The commissioners fixed
the just compensation of petitioners' land at P120,000.00 per hectare.12 ChanRobles Vi rtua lawlib rary

In their Complaint, respondents alleged that petitioners did not pay either just compensation for the
property previously awarded to beneficiaries or the rentals from 1972 to the present.13 It further averred
that petitioners had valued the property in question at P4,200 per hectare, which was not the just
compensation contemplated by law based on the fair market value of the property, which was PI20,000 to
P150,000 per hectare.14

Petitioners, in their Answer, argued that the valuation of the DAR was arrived at in accordance with P.D. 27
and/or E.O. 228, which by itself already provided the formula for the cost of the land, which was also the
compensation for the landowner.15

Adopting the recommendation of the commissioners, the court a quo issued its Decision16 dated 27 May
2009, ruling that the just compensation payable to respondents was P978,756; and that the applicable law
for the determination of just compensation was R.A. 6657, as P.D. 27 and E.O. 228 only had suppletory
application.17 The fallo of the RTC Decision reads:

WHEREFORE, judgment is hereby rendered:

1. Fixing the just compensation for plaintiffs' 8.1563 hectares land at PI 20,000.00 per hectare
or a total of P978756.00;

2. Ordering the defendant Land Bank of the Philippines to pay the above amount to the
plaintiffs] in cash and bonds in the manner provided by law.

SO ORDERED.18 ChanRoblesVi rtua lawlib rary

Petitioners' bid for a reconsideration of the adverse Decision failed, pursuant to the court a quo's,
Order19 dated 7 July 2009.

Petitioners LBP and DAR filed their appeal before the CA, which consolidated20 the two cases docketed as
CA-G.R. SP No. 109992 and CA-G.R. SP No. 109778. In its Decision21 dated 14 September 2011, the CA
denied the appeal for lack of merit and affirmed the RTC Decision.

Hence, these petitions before this Court.

On 18 July 2012, this Court resolved to consolidate G.R. Nos. 201856-57 and 201871, as both cases
assailed the same CA Decisions and Resolution.22

Ultimately, this Court is called upon to determine the issue of whether or not the CA committed a serious
error in law in upholding the RTC ruling.

Ruling of the Court

The Petitions are denied.

R.A. 6657, as amended by R.A. 9700,
is the applicable law in this case.

When the agrarian reform process under P.D. 27 remains incomplete and is overtaken by R.A. 6657, the
rule is that just compensation for the landowner if it has yet to be settled should be determined and
the process concluded under R.A. 6657, with P.D. 27 and E.O. 228 applying only suppletorily.23

Land Bank of the Philippines v. Natividad24 is instructive:

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

Under the factual circumstances of this case, the agrarian reform process is still incomplete as the
just compensation to be paid private respondents has yet to be settled. Considering the passage
of R.A. 6657 before the completion of this process, the just compensation should be determined
and the process concluded under the said law. Indeed, R.A. 6657 is the applicable law, with P.D.
27 and EO 228 having only suppletory effect, conformably with our ruling in Paris v. Alfeche.

xxxx

It would certainly be inequitable to determine just compensation based on the guideline provided by P.D. 27
and EO 228 considering the DAR's failure to determine just compensation for a considerable length of
time. That just compensation should be determined in accordance with R.A. 6657, and not P.D. 27
or EO 228, is especially imperative considering that just compensation should be the full and fair
equivalent of the property taken from its owner by the expropriator, the equivalent being real,
substantial, full and ample.25 (Emphases supplied)

The Court applied the ruling in Land Bank of the Philippines v. Natividad to its ruling in Meneses v. Secretary
of Agrarian Reform:26

As previously noted, the property was expropriated under the Operation Land Transfer scheme of P.D. No.
27 way back in 1972. More than 30 years have passed and petitioners are yet to benefit from it, while the
farmer-beneficiaries have already been harvesting its produce for the longest time. Events have rendered
the applicability of P.D. No. 27 inequitable. Thus, the provisions of R.A. No. 6657 should apply in
this case.27(Emphasis supplied)

Still, in Lubrica v. Land Bank of the Philippines,28 the Court also adhered to Land Bank of the Philippines v.
Natividad:

The Natividad case reiterated the Court's ruling in Office of the President v. Court of Appeals [413 Phil. 711]
that the expropriation of the landholding did not take place on the effectivity of P.D. No. 27 on October 21,
1972 but seizure would take effect on the payment of just compensation judicially determined.

Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals [489 SCRA 590], we
held that expropriation of landholdings covered by R.A. No. 6657 takes place, not on the effectivity of the
Act on June 15, 1988, but on the payment of just compensation.29 ChanRoblesVirtualawl ibra ry

This ruling was reiterated in a recent case, Holy Trinity Realty & Development Corp. v. Dela Cruz:30

The terse statement by the OIC-Regional Director that the Dakila property would still be subject to Republic
Act No. 6657 should Presidential Decree No. 27 be inapplicable did not meet the requirements under
Republic Act No. 6657. Section 7 of Republic Act No. 6657 identified rice and corn lands subject to
Presidential Decree No. 27 for priority distribution in the first phase and implementation of the CARP.

Insofar as the interplay of these two laws was concerned, the Court has said that during the effectivity
of the Republic Act No. 6657 and in the event of incomplete acquisition under Presidential Decree
No. 27, the former should apply, with the provisions of the latter and Executive Order No. 228
having only suppletory effect.31 (Citations omitted; emphasis supplied)

Indeed, R.A. 6657,32 which took effect on 15 June 1988, was enacted to promote social justice for landless
farmers and provide "a more equitable distribution and ownership of land with due regard for the rights of
landowners to just compensation and to the ecological needs of the nation."33 Section 4 thereof provides
that the Comprehensive Agrarian Reform Law shall cover all public and private agricultural lands, including
other lands of public domain suitable for agriculture. Pertinent to this provision is Section 75 of R.A. 6657,
which reads:

SECTION 75. Suppletory Application of Existing Legislation. The provisions of Republic Act No. 3844 as
amended, Presidential Decree Nos. 27 and 266 as amended, Executive Order Nos. 228 and 229, both Series
of 1987; and other laws not inconsistent with this Act shall have suppletory effect.

It is clear from the above that R.A. 6657 is the applicable law when the acquisition process under P.D. 27 is
still incomplete and is overtaken by the former's enactment. Petitioners, therefore, cannot insist on applying
P.D. 27; otherwise, Section 75 of R.A. 6657 would be rendered inutile.

This Court is mindful of a new agrarian reform law, R.A. 9700, entitled "An Act Strengthening the
Comprehensive Agrarian Reform Program (CARP), Extending the Acquisition and Distribution of all
Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose Certain Provisions of Republic
Act No. 6657, Otherwise Known as the Comprehensive Agrarian Reform Law of 1988, as amended, and
Appropriating Funds Therefor." This law, which further amended R.A. 6657, was passed by the Congress on
01 July 2009.34 Notwithstanding this new law, R.A. 6657 is still applicable. The later is supported by R.A.
9700, Section 5 of which provides:

Section 5. Section 7 of Republic Act No. 6657, as amended, is hereby further amended to read as follows:

SEC. 7. Priorities. - The DAR, in coordination with the Presidential Agrarian Reform Council (PARC) shall plan
and program the final acquisition and distribution of all remaining unacquired and undistributed agricultural
lands from the effectivity of this Act until June 30, 2014. Lands shall be acquired and distributed as follows:

Phase One: During the five (5)-year extension period hereafter all remaining lands above fifty (50) hectares
shall be covered for purposes of agrarian reform upon the effectivity of this Act. All private agricultural lands
of landowners with aggregate landholdings in excess of fifty (50) hectares which have already been
subjected to a notice of coverage issued on or before December 10, 2008; rice and corn lands under
Presidential Decree No. 27; all idle or abandoned lands; all private lands voluntarily offered by the
owners for agrarian reform: Provided, That with respect to voluntary land transfer, only those submitted by
June 30, 2009 shall be allowed Provided, further, That after June 30, 2009, the modes of acquisition shall be
limited to voluntary offer to sell and compulsory acquisition: Provided, furthermore, That all previously
acquired lands wherein valuation is subject to challenge by landowners shall be completed and
finally resolved pursuant to Section 17 of Republic Act No. 6657, as amended x x x.35 (Emphases
supplied)

The word "challenge" shall refer to the expression of non-acceptance of valuation by the landowner through
the filing of a just compensation case in Court; a written protest or a similar instrument; or impliedly thru
noncompliance with the requirement to submit pre-payment/documentary requirements despite receipt of
notice or demand.36 Considering that the just compensation offered by the DAR or the LBP for the
acquisition of respondents' rice land is being challenged by the landowners, who are respondents in court, it
cannot be gainsaid that this case falls squarely within the ambit of Sec. 5 of R.A. 9700.

For purposes of determining the valuation

and the landowners' compensation involving
lands under P.D. 27 and E.O. 228, the
guidelines provided in Section 17 of
R.A. 6657, as amended by R.A. 9700,
may be applied.

Having established that R.A. 6657, as amended by R.A. 9700, is the applicable law in this case, we now
proceed to the determination of the appropriate just compensation for respondents. Note that we are here
determining only whether the CA committed serious errors in law in affirming the RTC determination of just
compensation. Respondents herein accept the formula adopted by the RTC.

Section 17, R.A. 6657, which is particularly relevant, providing as it does the guideposts for the
determination of just compensation, reads as follows:37

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

The RTC ruled:

After examining the evidence in the record as well as the location of the subject landholding, its use,
average gross production, and the prevailing land value in the locality vis-a-vis the DAR's and LBP's
valuation, this Court adopts the recommendation of Commissioners Esguerra and Wong that the just
compensation for the subject landholding be fixed at P120,000 per hectare. The Court notes that
the Commissioners took into consideration the different factors provided for in Section 17, R.A. 6657 such
as average gross production, current value, like properties, nature of the subject properties and actual use.
This Court sees no reason to reject the findings of the Commissioners. 38(Underscoring supplied)

The CA also held:

Again, this Court finds no errors on the part of the trial court in adopting the recommendation of the
commissioners:

In any expropriation proceedings and for purposes of determining the just compensation, it is almost always
expected that Commissioners are appointed. In the instant case as expected, Commissioners were
appointed.

Under Section 17 of R.A. 6657 is provided the following:

Sec. 17. Determination of Just Compensation. - In determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations and the assessment made by the government assessors shall be considered.

As shown in the Report of Commissioners, the amount of P120,000 per hectare was somehow based on the
above-quoted provision of the law.39 (Underscoring supplied)

The RTC, as affirmed by the CA, arrived at the just compensation for respondents' property after taking into
consideration the Commissioners' Report on the nature of the subject landholding, its use, average gross
production, and the prevailing value of the lands in the vicinity. This Court is convinced that the RTC
correctly determined the amount of just compensation for respondents in accordance with, and guided by,
R.A. 6657 and existing jurisprudence.

Petitioner asks that we reevaluate the RTC-appointed Panel of Commissioners' evidentiary basis for
determining the value of respondents' property. In effect, petitioner LBP is praying for the resolution of a
question of fact, which is improper in the instant Rule 45 Petition.

It is settled that a review on certiorari under a Rule 45 petition is generally limited to the review of legal
issues; the Court only resolves questions of law that have been properly raised by the parties during the
appeal and in the petition.40 It is not the function of this Court to analyze or weigh all over again evidence
already considered in the proceedings below, its jurisdiction being limited to reviewing only errors of law
that may have been committed by the lower court.41 The resolution of factual issues is the function of the
lower courts, whose findings on these matters are received with respect.42

The RTC's factual findings were supported by the report of the independent Panel of Commissioners and
were duly affirmed by the CA.43 Absent any allegation of irregularity or grave abuse of discretion, the factual
findings of the lower courts, will no longer be disturbed.44 Hence, the judicial determination of the value of
the expropriated portion amounting to P120,000 per hectare is affirmed.

It must also be noted that the date of the taking of the subject lot from respondents was 21 October 1972
and the landowners are still unpaid up to this date. For years, respondents have been deprived of the use
and enjoyment of their landholding without payment of just compensation. Although the purpose of P.D. 27
is the emancipation of tenants from the bondage of the soil and the transfer to them of the ownership of the
land they till, this noble purpose should not trample on the right of the landowners to be fairly and justly
compensated for the value of their property.45

Considering these circumstances, we grant legal interest on the just compensation for respondents where
there is a delay in payment,46 since the landowners' just compensation was considered an effective
forbearance on the part of the State. chanrobleslaw

WHEREFORE, the Petitions are DENIED. The consolidated Decision dated 14 September 2011 rendered by
the Court of Appeals in CA-G.R. SP No. 109992 and CA-G.R. SP No. 109778
is AFFIRMED with MODIFICATION. Legal interest on the award for just compensation shall run at the rate
of 12% inteiest per annum from 21 October 1972 until 30 June 2013. Thereafter, or beginning 1 July 2013
until fully paid, legal interest shall be at 6% per annum.

SO ORDERED. cralawlawlibra ry

G.R. No. 158464, August 02, 2016

JOCELYN S. LIMKAICHONG, Petitioner, v. LAND BANK OF THE PHILIPPINES, DEPARTMENT OF

AGRARIAN REFORM, REPRESENTED BY THE SECRETARY OF AGRARIAN REFORM, THROUGH THE
PROVINCIAL AGRARIAN REFORM OFFICER, Respondents.

DECISION

BERSAMIN, J.:

Being now assailed in this appeal are the decision promulgated by the Court of Appeals (CA) on November
22, 2002 (dismissing the petitioner's petition for certiorari for not being the proper remedy, thereby
affirming the dismissal of Civil Case No. 12558 by the trial court on the ground of the valuation by the
Department of Agrarian Reform (DAR) having already become final due to her failure as the landowner to
bring her action for judicial determination of just compensation within 15 days from notice of such
valuation),1 and the resolution promulgated on June 2, 2003 (denying her motion for reconsideration).2 c hanrobles law

Antecedents

The petitioner was the registered owner of agricultural lands with a total area of 19.6843 hectares situated
in Villegas, Guihulngan, Negros Oriental and covered by Original Certificate of Title No. (OCT) FV-34400,
OCT No. 34401, OCT No. 34402, and OCT No. 34403, all of the Register of Deeds of Negros Oriental. For
purposes of placing those lands within the coverage of Republic Act No. 6657 (R.A. No, 6657),3 the
Department of Agrarian Reform Adjudication Board (DARAB), Office of the Provincial Adjudicator, in
Dumaguete City sent to her in 1998 several Notices of Land Valuation and Acquisition by which her lands
were valued for acquisition by the DAR as follows: ChanRobles Vi rtua lawlib rary

1. OCT FV-34400- P177,074.93;4

2. OCTFV-34401- P171,061.11;5
3. OCTFV-34402- P167,626.62;6 and
4. OCTFV-34403- P140,611.65.7
After the petitioner rejected such valuation of her lands, the DARAB conducted summary administrative
proceedings for the determination of just compensation.8 On May 28, 1999, the DARAB issued its order
affirming the valuation of the lands upon finding the valuation consistent with existing administrative
guidelines on land valuation.9chan robles law

On August 19, 1999, the petitioner filed in the Regional Trial Court (RTC) in Dumaguete City a complaint for
the fixing of just compensation for her lands,10 impleading as defendant the Land Bank of the Philippines
(LBP) and the DAR, represented by the DAR Secretary, through the Dumaguete Provincial Agrarian Reform
Officer (PARO). Her complaint, docketed as Civil Case No. 12558, prayed that the DARAB valuation be set
aside and declared null and void, and that in its stead the price of her lands be fixed based on the fair
market value thereof.

After filing their answer, the respondents filed a manifestation and motion to dismiss,11 stating that the
petitioner's failure to timely appeal the May 28, 1999 DARAB order had rendered the order final and
executory pursuant to Section 5112 of R.A. No. 6657. They attached to the motion to dismiss a June 23,
2000 certification of finality issued by the Clerk of the DARAB,13 stating that the May 28, 1999 order had
become final and executory because there had been no appeal filed within the reglementary period provided
by law.

In her opposition to the respondents' motion to dismiss,14 the petitioner admitted that Civil Case No, 12558
was filed beyond the reglementary period, but insisted that the RTC sitting as special agrarian court (SAC)
was not barred from acquiring jurisdiction over the complaint for determination of just compensation,
because her cause of action was anchored on the respondents' violation of her right to due process and their
taking of her property without just compensation due to the DARAB valuation being too low and having been
arbitrarily arrived at. She claimed that the RTC as the SAC should accord her the same treatment it had
accorded to other landowners who had been given the chance to be heard on their claim for re-valuation
despite the belated filing of their complaints for just compensation.

On June 7, 2001, the RTC as the SAC granted the respondents' motion to dismiss.15 Citing Section 51 and
Section 5416 of R.A. No. 6657 and Section 11 of Rule XIII of the 1994 DARAB Rules of Procedure,17it held
that the petitioner's complaint should have been filed within 15 days from notice of the assailed order. It
dismissed her argument that the case was anchored on violations of her constitutional rights to due process
and just compensation, declaring that the controlling ruling was Philippine Veterans Bank v. Court of
Appeals,18 not Republic v. Court of Appeals.19 Thus, applying the ruling in Philippine Veterans Bank, the RTC
concluded that dismissal was proper because she had filed Civil Case No. 12558 beyond the statutory 15-
day period.

The petitioner moved for reconsideration,20 but to no avail.

Thus, on October 22, 2001, the petitioner brought her petition for certiorari in the CA assailing the dismissal
of Civil Case No. 12558.

On November 22, 2002, the CA rendered its decision affirming the dismissal of Civil Case No. 12558, opining
that because the June 7, 2001 order of the RTC dismissing Civil Case No. 12558 was a final order, the
petitioner's remedy was not the special civil action for certiorari but an appeal in the CA; that she chose the
wrong remedy because certiorari could not take the place of an appeal; and that the RTC thus committed no
grave abuse of discretion that warranted the issuance of the writ of certiorari.

Issue

The petitioner raises the following issue for resolution: C hanRobles Vi rt ual awlibra ry

WHETHER OR NOT ON THE QUESTION OF CONSTITUTIONAL RIGHT TO EQUAL PROTECTION OF LAW, THE
COURT OF APPEALS DECISION DATED NOVEMBER 22, 2002 RULING THAT THE PETITION
FOR CERTIORARI WAS NOT THE PROPER REMEDY IS CONTRARY TO THE LAW AND JURISPRUDENCE AS
APPLIED TO THE EVIDENCE ON RECORD.21 chanroblesvi rtua llawli bra ry

The petitioner argues that she is entitled to equal protection and treatment accorded by the very same trial
court to other landowners whose landholdings were placed under agrarian reform coverage, listing the cases
involving other landowners who had been given the chance to be heard on their claim for re-valuation by the
trial court.22 She justifies her resort to certiorari by claiming that the RTC, in dismissing Civil Case No.
12558, acted whimsically and arbitrarily, and gravely abused its discretion; and that certiorari was
necessary to prevent irreparable damage and injury to her resulting from the acquisition by the State of her
lands based on wrongful valuation and without paying her the proper and just compensation.
In their respective comments,23 the respondents counter that the petitioner's reliance on the equal
protection clause of the fundamental law is misplaced and bereft of legal and factual basis; that, on the
contrary, they faithfully performed their task in relation to her landholdings, and in accordance with the
agrarian laws and guidelines issued in furtherance thereof; that the final and executory DARAB valuation
should no longer be disturbed by her frivolous claim of lack of due process; that her failure to properly
observe the rules of procedure relative to reglementary periods should not be concealed by a trivial claim of
violation of her constitutional rights; that pursuant to Section 6024 of RA 6657, the decision became final
because an appeal by petition for review was not taken from the decision of the RTC as the SAC within 15
days from notice of the decision; and that there was no proof of service on the CA of a copy of the petition
as required by Section 3, Rule 45 of the Rules of Court and Circular No, 19-91, thereby warranting the
outright dismissal of the petition.

Ruling of the Court

The petition for review is meritorious.

Certiorari was a proper remedy despite the availability of appeal

The CA ruled that the proper remedy of the petitioner was not to bring the petition for certiorari but to
appeal the dismissal of Civil Case No. 12558 in accordance with the Rules of Court; and that appeal as her
proper remedy was already time-barred.

Ostensibly, the assailed dismissal by the RTC was an order that had finally disposed of Civil Case No. 12558;
hence, the petitioner's proper recourse therefrom was an appeal taken in due course because the order of
dismissal was a final disposition of the case.25 In that situation, certiorari would not have been appropriate.
cralawred

However, the petitioner would not be prevented from assailing the dismissal by petition
for certiorariprovided her resort complied with the requirements of the Rules of Court for the bringing of the
petition for certiorari. In that regard, the following requisites must concur for certiorari to prosper, namely:
(1) the writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial
functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plainj
speedy and adequate remedy in the ordinary course of law.26Without jurisdiction means that the court acted
with absolute lack of authority. There is excess of jurisdiction when the court transcends its power or acts
without any statutory authority, Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as to be equivalent to lack or excess of jurisdiction; in other words, power - is exercised in an
arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such exercise is so
patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the
duty enjoined or to act at all in contemplation of law.27 chanro bleslaw

Indeed, the Court has held that the availability of an appeal as a remedy is a bar to the bringing of the
petition for certiorari only where such appeal is in itself a sufficient and adequate remedy, in that it will
promptly relieve the petitioner from the injurious effects of the judgment or final order complained of.28The
Court does not hesitate or halt on its tracks in granting the writ of certiorari to prevent irreparable damage
and injury to a party in cases where the trial judge capriciously and whimsically exercised his judgment, or
where there may be a failure of justice;29 or where the assailed order is a patent nullity; or where the grant
of the writ of certiorari will arrest future litigations; or for certain considerations, such as public welfare and
public policy.30
cha nrob leslaw

Here, the petitioner laments that she had not been accorded equal protection and treatment by the trial
court which had awarded to other landowners a higher valuation of their property despite the belated filing
of their petitions. For sure, the petition for certiorari thereby plainly alleged that the RTC had committed
grave abuse of discretion by violating the petitioner's constitutional right to due process or equal protection.
Such a petition should not be forthwith dismissed but should be fully heard if only to ascertain and
determine if the very serious allegations were true.

II

Dismissal of petitioner's action was unfair and improper

Section 9, Article III of the 1987 Constitution provides that "[p]rivate property shall not be taken for public
use without just compensation." The determination of just compensation has been the subject of various
discordant rulings of the Court. Although some of the later rulings have supposedly settled the controversy
of whether the courts or the DAR should have the final say on just compensation, the conflict has continued,
and has caused some confusion to the Bench and the Bar, as well as to the other stakeholders in the
expropriation of agricultural landholdings.

Under existing law and regulation, respondent LBP is tasked with the responsibility of initially determining
the value of lands placed under land reform and the just compensation to be paid the landowners for their
taking.31 By way of notice sent to the landowner pursuant to Section 16(a)32 of R.A. No. 6657, the DAR
makes an offer to acquire the land sought to be placed under agrarian reform. If the concerned landowner
rejects the offer, a summary administrative proceeding is held, and thereafter the provincial adjudicator
(PARAD), the regional adjudicator (RARAD) or the central adjudicator (DARAB), as the case may be, fixes
the price to be paid for the land, based on the various factors and criteria as determined by law or
regulation. Should the landowner disagree with the valuation, he/she may bring the matter to the RTC
acting as the SAC.33 This is the procedure for the determination of just compensation under R.A. No,
6657.34chan robles law

There appears to be no question on the respondents' observance of the proper procedure for acquisition of
the petitioner's lands. The remaining issue concerns whether the trial court's dismissal of her petition
because of her failure to file it before the decision/order of the DARAB became final and executory pursuant
to Section 51 of R.A, No. 6657 was fair and proper.

We rule in the negative.

There have been divergent rulings on whether the courts or another agency of the government could
address the determination of just compensation in eminent domain, but the starting point is the landmark
1987 ruling in Export Processing Zone Authority (EPZA) v. Dulay,35 which resolved the challenge against
several decrees promulgated by President Marcos. The decrees provided certain measures to the effect that
the just compensation for property under expropriation should be either the assessment of the property by
the Government or the sworn valuation of the property by the owner, whichever was lower. In declaring the
decrees unconstitutional, the Court cogently held: ChanRobles Vi rt ualawlib ra ry

The method of ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under this
Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the power to determine
the just compensation for the property, following the applicable decrees, its task would be relegated to
simply stating the lower value of the property as declared either by the owner or the assessor. As a
necessary consequence, it would be useless for the court to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the due process clause in the taking of private property is
seemingly fulfilled since it cannot be said that a judicial proceeding was not had before the actual taking.
However, the strict application of the decrees during the proceedings would be nothing short of a mere
formality or charade as the court has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court cannot exercise its discretion or
independence in determining what is just and fair. Even a grade school pupil could substitute for the judge
insofar as the determination of constitutional just compensation is concerned.

xxxx

In the present petition, we are once again confronted with the same question of whether the courts under
P.D. No. 1533, which contains the same provision on just compensation as its predecessor decrees, still
have the power and authority to determine just compensation, independent of what is stated by the decree
and to this effect, to appoint commissioners for such purpose.

This time we answer in the affirmative.

xxxx

It is violative of due process to deny the owner the opportunity to prove that the valuation in the tax
documents is unfair or wrong. And it is repulsive to the basic concepts of justice and fairness to allow the
haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and considerations essential to a fair and
just determination have been judiciously evaluated.36 cha nrob lesvi rtua llawlib ra ry

The Court has reiterated EPZA v. Dulay in its later decisions, stressing that such determination was the
function of the courts of justice that no other branch or official of the Government could usurp.

Upon the effectivity of R.A, No, 6657 in 1988, the DAR, as the central implementing agency of the law,
promulgated the DARAB Rules of Procedures in 1989, 1994, 2003, and 2009 pursuant to the provisions of
Section 4937 and Section 5038 of R.A. No. 6657 vesting it with the power to issue rules and regulations,
whether substantive or procedural, to carry out the objects and purposes of the CARL, Moreover, Section 57
of the CARL defines the jurisdiction of the RTC sitting as the SAC, viz.: ChanRoblesVi rtua lawlib rary

Section 57. Special Jurisdiction - The Special Agrarian Courts shall have original and exclusive jurisdiction
over all petitions for the determination of just compensation to landowners, and the prosecution of all
criminal offenses under this Act. The Rules of Court shall apply to all proceedings before the Special Agrarian
Courts unless modified by this Act.

The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty
(30) days from submission of the case for decision.
Republic v. Court of Appeals,39 which was principally relied upon by the petitioner herein, reiterated that the
determination of just compensation for the taking of lands under the CARL was a power vested in the courts
and not in administrative agencies, clarifying that the jurisdiction of the SAC was not appellate but original
and exclusive, to wit:ChanRobles Vi rtua lawlib rary

Apart from the fact that only a statute can confer jurisdiction on courts and administrative agencies rules
of procedure cannot it is noteworthy that the New Rules of Procedure of the DARAB, which was adopted
on May 30, 1994, now provide that in the event a landowner is not satisfied with a decision of an agrarian
adjudicator, the landowner can bring the matter directly to the Regional Trial Court sitting as Special
Agrarian Court. Thus Rule XIII, 11 of the new rules provides: ChanRoble sVirtualawl ibra ry

11. Land Valuation and Preliminary Determination and Payment of Just Compensation. - The decision of the
Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be
appealable to the Board but shall be brought directly to the Regional Trial Courts designated as Special
Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only
one motion for reconsideration.
This is an acknowledgment by the DARAB that the decision of just compensation cases for the taking of
lands under R.A. No. 6657 is a power vested in the courts.

xxxx

xxx. In accordance with it, the private respondent's case was properly brought by it in the RTC, and it was
error for the latter court to have dismissed the case. In the terminology of 57, the RTC, sitting as a Special
Agrarian Court, has "original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners." It would subvert this "original and exclusive" jurisdiction of the RTC for the
DAR to vest original jurisdiction in compensation cases in administrative officials and make the RTC an
appellate court for the review of administrative decisions.

Consequently, although the new rules speak of directly appealing the decision of adjudicators to the RTCs
sitting as Special Agrarian Courts, it is clear from 57 that the original and exclusive jurisdiction to
determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the adjudicators and to
convert the original jurisdiction of the RTCs into appellate jurisdiction would be contrary to 57 and
therefore would be void. What adjudicators are empowered to do is only to determine in a preliminary
manner the reasonable compensation to be paid to landowners, leaving to the courts the ultimate power to
decide this question.40 chan roble svirtuallaw lib rary

In the January 18, 2000 ruling in Philippine Veterans Bank,41 the Court, through Justice Vicente V. Mendoza
who had penned Republic v. Court of Appeals, upheld the DARAB rule to the effect that the adjudicator's
preliminary determination of just compensation must be brought to the SAC within 15 days from receipt of
the notice thereof; otherwise, the parties would be concluded by the result. The Court then declared: ChanRoble sVirtualawli bra ry

As we held in Republic v. Court of Appeals, this rule is an acknowledgment by the DARAB that the power to
decide just compensation cases for the taking of lands under R.A. No, 6657 is vested in the courts. It is
error to think that, because of Rule XIII, 11, the original and exclusive jurisdiction given to the courts to
decide petitions for determination of just compensation has thereby been transformed into an appellate
jurisdiction. It only means that, in accordance with settled principles of administrative law, primary
jurisdiction is vested in the DAR as an administrative agency to determine in a preliminary manner the
reasonable compensation to be paid for the lands taken under the Comprehensive Agrarian Reform Program,
but such determination is subject to challenge in the courts.

The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the question is
first passed upon by the DAR, as the judicial proceedings are not a continuation of the administrative
determination. For that matter, the law may provide that the decision of the DAR is final and unappealable.
Nevertheless, resort to the courts cannot be foreclosed on the theory that courts are the guarantors of the
legality of administrative action.

Accordingly, as the petition in the Regional Trial Court was filed beyond the 15-day period provided in Rule
XIII, 11 of the Rules of Procedure of the DARAB, the trial court correctly dismissed the case and the Court
of Appeals correctly affirmed the order of dismissal.42
c han roblesv irt uallawl ib rary

However, in the 2007 ruling in Land Bank v. Suntay, the Court opined that the RTC erred in dismissing the
43

Land Bank's petition for determination of just compensation on the ground that it was filed beyond the 15-
day period provided in Section 11, Rule XIII of the DARAB New Rules of Procedure. This Court then
emphatically reminded that the SAC's jurisdiction over petitions for the determination of just compensation
was original and exclusive; that any effort to transfer such jurisdiction to the adjudicators of the DARAB and
to convert the original jurisdiction of the RTC into appellate jurisdiction was void for being contrary to R.A,
No. 6657; and that what DARAB adjudicators were empowered to do was only to determine in a preliminary
manner the reasonable compensation to be paid to the landowners, leaving to the courts the ultimate power
to decide this question.44
c hanrobles law

To purge any uncertainties brought about by the conflicting jurisprudence on the matter, this Court held in
its July 31, 2008 resolution in Land Bank v. Martinez:45
On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling in this
case that the agrarian reform adjudicator's decision on land valuation attains finality after the
lapse of the 15-day period stated in the DARAB Rules. The petition for the fixing of just
compensation should therefore, following the law and settled jurisprudence, be filed with the
SAC within the said period. This conclusion, as already explained in the assailed decision, is based on the
doctrines laid down in Philippine Veterans Bank v. Court of Appeals and Department of Agrarian Reform
Adjudication Board v. Lubrica.

xxxx

The Court notes that the Suntay ruling is based on Republic of the Philippines v. Court of Appeals, decided in
1996 also through the pen of Justice Vicente V. Mendoza. In that case, the Court emphasized that the
jurisdiction of the SAC is original and exclusive, not appellate. Republic, however, was decided at a time
when Rule XIII, Section 11 was not yet present in the DARAB Rules. Further, Republic did not discuss
whether the petition filed therein for the fixing of just compensation was filed out of time or not. The Court
merely decided the issue of whether cases involving just compensation should first be appealed to the
DARAB before the landowner can resort to the SAC under Section 57 of R.A. No. 6657.

To resolve the conflict in the rulings of the Court, we now declare herein, for the guidance of the bench and
the bar, that the better rule is that stated in Philippine Veterans Bank, reiterated in Lubrica and in the
August 14, 2007 Decision in this case. Thus, while a petition for the fixing of just compensation with
the SAC is not an appeal from the agrarian reform adjudicator's decision but an original action,
the same has to be filed within the 15-day period stated in the DARAB Rules; otherwise, the
adjudicator's decision will attain finality. This rule is not only in accord with law and settled
jurisprudence but also with the principles of justice and equity. Verily, a belated petition before the
SAC, e.g., one filed a month, or a year, or even a decade after the land valuation of the DAR adjudicator,
must not leave the dispossessed landowner in a state of uncertainty as to the true value of his
property.46 (Emphasis supplied)
In all of the foregoing rulings of the Court as well as in subsequent ones, it could not have been
overemphasized that the determination of just compensation in eminent domain is a judicial function.
However, the more recent jurisprudence uphold the preeminence of the pronouncement in Philippine
Veterans Bank to the effect that the parties only have 15 days from their receipt of the decision/order of the
DAR within which to invoke the original and exclusive jurisdiction of the SAC; otherwise, the decision/order
attains finality and immutability.
It remains uncontested that the petitioner filed her complaint in the RTC for the determination of just
compensation after more than two and a half months had already elapsed from the time the DARAB issued
the assailed valuation. Following the pronouncement in Philippine Veterans Banks, her failure to file the
complaint within the prescribed 15-day period from notice would have surely rendered the DARAB's
valuation order final and executory. As such, it would seem that there was sufficient ground for the dismissal
of the petitioner's complaint for having been filed out of time.

However, we cannot fairly and properly hold that the petitioner's complaint for the determination of just
compensation should be barred from being tried and decided on that basis. The prevailing rule at the time
she filed her complaint on August 19, 1999 was that enunciated in Republic v. Court of Appeals on October
30, 1996.47 The pronouncement in Philippine Veterans Bank was promulgated on January 18, 2000 when the
trial was already in progress in the RTC, At any rate, it would only be eight years afterwards that the Court
en banc unanimously resolved the jurisprudential conundrum through its declaration in Land Bank v.
Martinez that the better rule was that enunciated in Philippine Veterans Bank, The Court must, therefore,
prospectively apply Philippine Veterans Bank. The effect is that the petitioner's cause of action for the proper
valuation of her expropriated property should be allowed to proceed. Hence, her complaint to recover just
compensation was properly brought in the RTC as the SAC, whose dismissal of it upon the motion of Land
Bank should be undone.

WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the decision of the Court of
Appeals dated November 22, 2002; and DIRECT the Regional Trial Court, Branch 30, in Dumaguete City to
resume the proceedings in Civil Case No. 12558 for the determination of just compensation of petitioner
Jocelyn S. Limkaichong's expropriated property.

No pronouncement on costs of suit.

SO ORDERED. chanroblesvi rtua llawli bra ry

FIRST DIVISION

G.R. No. 214901, June 15, 2016

LAND BANK OF THE PHILIPPINES, Petitioner, v. APOLONIO KHO, REPRESENTED BY HIS HEIRS,
NAMELY: PERLA LUZ, KRYPTON, KOSELL, KYRIN, AND KELVIN, ALL SURNAMED KHO, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated August 29, 2014 of the
Court of Appeals of Cebu City (CA) in CA-G.R. SP No. 06365, which affirmed the Decision3 dated August 11,
2011 of the Regional Trial Court of Dumaguete City, Negros Oriental, Branch 32 (RTC), acting as a Special
Agrarian Court (SAC), in Civil Case No. 2007-14511, directing petitioner the Land Bank of the Philippines
(LBP) to: (a) pay respondents the remaining balance of the just compensation in the amount of
P1,353,008.26, with legal interest at the rate of 12% per annum (p.a.) from May 27, 2002 until fully paid;
(b) pay its share in the Commissioners' fees in the amount of P30,000.00; and (c) release the initial deposit
of P49,601.20 to respondents Apolonio Kho, represented by his heirs, namely: Perla Luz, Krypton, Kosell,
Kyrin, and Kelvin, all surnamed Kho (respondents).

The Facts

Apolonio was the registered owner of a parcel of land located at Lamogong, Manjuyod, Negros Oriental,
containing an area of 23.2885 hectares (has.), and covered by Transfer Certificate of Title (TCT) No. HT-
556. He was survived by his spouse Perla Luz Kho and his four (4) children, namely: Krypton, Kosell, Kelvin,
and Kyrin.4chanro bleslaw
A 22.9747-ha. portion of the said land (subject land) was placed under the Operation Land Transfer
Program5 pursuant to Presidential Decree No. (PD) 27.6 On December 6, 1993, Claims Processing Form No.
07 (NO) E093-0157 covering 10.9410 has. was approved by the LBP, which, together with the Department
of Agrarian Reform (DAR), offered as just compensation the amount of P25,269.327 in accordance
with8 Executive Order No. (EO) 228,9 series of 1987. On the other hand, Claims Processing Form No. 07
(NO) EO91-0588 covering the remaining area of 12.0337 has. was received by the LBP on September 19,
1997, which valued the land at P24,331.88.10 c hanro bles law

However, Apolonio rejected the valuations,11 prompting the LBP to deposit the said amounts in cash and
Agrarian Reform Bonds on December 8, 1993 and December 8, 1997 in his name.12 ch anroble slaw

After a summary administrative proceeding for the determination of just compensation, docketed as DARAB
Case No. VII-03-NO-03,13 the Office of the Provincial Adjudicator of the Department of Agrarian Reform
Adjudication Board (PARAD) issued an Order14 dated July 31, 2003, fixing the value of the subject land
at P109,748.3515 in accordance with EO 228 but set the Government Support Price (GSP) for corn
at P4.50/kilogram (kg) in 1993 and P6.00/kg in 1997, as certified by the National Food Authority
Provincial Manager of Negros Oriental, while the Average Gross Production (AGP) was fixed at 23
cavans/ha. as established by the Barangay Committee on Land Production of Brgy. Lamogong, Bindoy,
Negros Oriental.16cha nrob leslaw

Meanwhile, on May 27, 2002, TCT No. HT-556 was partially cancelled covering the subject land, and the
corresponding Emancipation Patents were issued transferring ownership to the beneficiaries.17 c han robles law

Disagreeing with the PARAD's computation, the LBP appealed to the Department of Agrarian Reform
Adjudication Board (DARAB),18 which dismissed the same in a Decision19 dated December 11, 2006, thereby
affirming in toto the PARAD's order.20 The LBP moved for reconsideration but the same was denied in a
Resolution dated August 18, 2007.21 chan robles law

Thus, on October 3, 2007,22 the LBP filed a petition23 for the determination of just compensation before the
RTC of Bais City, Negros Oriental, Branch 45, docketed as Civil Case No. 07-34-13.

Subsequently, in view of the passage of Republic Act No. (RA) 970024 and the issuance of the
implementing guidelines under DAR Administrative Order No. (AO) 1, series of 2010,25 respondents c ralawred

filed a Motion for Re-evaluation asking the court to direct the LBP to conduct a revaluation of the subject
land pursuant thereto,26 which the RTC granted in an Order27 dated February 22, 2010 (February 22, 2010
Order).

Thereafter, the case was transferred to the RTC of Dumaguete City, Branch 32, which was the designated
SAC, and was re-docketed as Civil Case No. 2007-14511.28 chan robles law

In compliance with the February 22, 2010 Order, the LBP submitted its Report29 dated October 12, 2010
fixing30 the just compensation for the subject land at P842,483.40.31 The LBP pegged the AGP at the rate
of 35 cavans/ha.,32 and the GSP at P13.00/kg33 based on certifications of the Municipal Agriculturist for
the cropping periods from July 2008 to June 2009.34 chan robles law

During trial, the LBP presented, among others, the testimony of Municipal Agriculture Officer (MAO) of
Manjuyod, Cheryl S. Baldado,35 regarding the rates of production and farmgate prices of various crops for
the years 2008 and 2009 in the Municipality of Manjuyod, and the certifications36 she had issued in relation
thereto. Respondents, on the other hand, did not present any witness37 but offered several documentary
evidence in support of their claim.38
chan roble slaw

In the course thereof, the RTC appointed three (3) Commissioners to assist in the determination of the just
compensation for the subject land.39 In their Appraisal Report40 as of December 10, 2010, the
Commissioners fixed the just compensation for the land at P1,402,609.46, taking into consideration the
valuation factors provided under Section 17 of RA 6657, as amended, and the formula provided under DAR
AO 1, series of 2010.41 In arriving at such value, the Commissioners used the following variables: (a)
the AGP for the period July 1, 2008 to June 30, 2009 was pegged at 65.71 cavans/ha.based on the AGP
data for corn in Lamogong that was secured from the MAO of Manjuyod;42 (b) the average selling price (SP)
for the same period was set at P11.54/kg43 or P577/cavan44 as determined by the National Food
Authority,45 and (c) the Market Value46 (MV) per tax declaration, which was grossed-up up to June 30,
2009,47 was computed at P959,900.60.48 A Narrative Report49 was submitted in amplification of the
foregoing variables which showed in detail their corresponding computations.
Meanwhile, on October 19, 2010, the LBP had deposited to the account of Apolonio its adjusted/revalued
computation for CF Nos. 07 (NO) EO91-0588 and 07 (NO) EO93-0157 in the amounts of P375/708.9850 and
P416,944.50, respectively.51 c hanro bl eslaw

The RTC Ruling

In a Decision52 dated August 11, 2011, the RTC adopted in toto the valuation submitted by the
Commissioners,53 and fixed the just compensation for the subject land at P1,402,609.4654 based on the
formula provided under DAR AO 1, series of 2010.55 It found the Commissioners' report to be
comprehensive and detailed,56 and the computation presented therein was reasonable and fair with all the
factors mentioned in Section 17 of RA 6657 duly considered.57 In contrast, it observed the LBP's revaluation
to be a mere mathematical computation without detailing the factors that were considered in arriving at the
final amount.58chanrobles law

However, the RTC, noting that the initial valuation of P49,601.20 deposited by the LBP in Apolonio's favor
has not yet been withdrawn, ordered that said amount be deducted from the just compensation award, and
released in favor of the respondents. In this regard, the RTC imposed a 12% annual legal interest on the
unpaid just compensation amounting to P1,353,008.26, reckoned from the time of taking on May 27, 2002,
when Apolonio's title (TCT No. HT-556) was partially cancelled, and the corresponding emancipation patents
issued to the beneficiaries, until full payment.59 chan roble slaw

Finally, considering that the appointment of the Commissioners was indispensable in the determination of
just compensation, and the respondents had already paid their share in the Commissioners' fees, the LBP
was ordered to pay its corresponding share in the amount of P30,000.00.60 chanrobles law

The LBP's motion for reconsideration61 was denied in an Order62 dated August 31, 2011, prompting it to
elevate its case to the CA.63 chanro bleslaw

The CA Ruling

In a Decision64 dated August 29, 2014, the CA dismissed the petition and affirmed the ruling of the RTC
directing the LBP to pay the balance of the just compensation in the amount of P1,353,008.26 with legal
interest of 12% p.a. from the date of taking on May 27, 2002, until fully paid, and to pay its share in the
Commissioners' fees.65 The CA agreed with the findings of the RTC that the Commissioners' computation
was in accordance with law,66 citing,67 however, the formula provided under DAR AO 5, series of
199868instead of DAR AO 1, series of 2010 that was adopted by the RTC in arriving at the valuation. It
likewise sustained the award of 12% annual legal interest on the unpaid just compensation69 considering the
delay in the release of the re-evaluated amount of P842,483.40.70 It also found the charge of
Commissioners' fees against the LBP to be in accordance with Section 16, Rule 141 of the Rules of Court,
and that the amount of P30,000.00 was fair and commensurate to the work performed by the
Commissioners.71 chan robles law

The LBP no longer filed a motion for reconsideration prior to the filing of the instant appeal.

The Issues Before the Court

The essential issues for the Court's resolution are whether or not the CA committed reversible error in
upholding the RTC Decision: (a) fixing the just compensation for the subject land; (i) citing the formula
provided under DAR AO 5, series of 1998, instead of AO 1, series of 2010 that was applied by the RTC; and
(ii) using the values from the MAO Certification adopted by the Commissioners; and (b) holding the LBP
liable for 12% annual legal interest on the unpaid just compensation, and for the Commissioners' fees.

The Court's Ruling

Case law dictates that when the acquisition process under PD 27 is still incomplete, such as in this case
where the just compensation due to the landowner has yet to be settled, just compensation should be
determined and the process concluded under RA 6657, as amended.72 chanro bleslaw

For purposes of determining just compensation, the fair market value of an expropriated
property is determined by its character and its price at the time of taking, or the time when the
landowner was deprived of the use and benefit of his property, such as when the title is transferred in the
name of the beneficiaries. In addition, the factors enumerated under Section 17 of RA 6657, as
amended, i.e., (a) the acquisition cost of the land, (b) the current value of like properties, (c) the nature
and actual use of the property, and the income therefrom, (d) the owner's sworn valuation, (e) the tax
declarations, (f) the assessment made by government assessors, (g) the social and economic benefits
contributed by the farmers and the farmworkers, and by the government to the property, and (h) the
nonpayment of taxes or loans secured from any government financing institution on the said land, if any,
must be equally considered.73 chan roble slaw

However, it bears pointing out that while Congress passed RA 9700 on August 7, 2009, further amending
certain provisions of RA 6657, as amended, among them, Section 17, and declaring "[t]hat all previously
acquired lands wherein valuation is subject to challenge by landowners shall be completed and finally
resolved pursuant to Section 17 of [RA 6657], as amended,"74 DAR AO 2, series of 2009, which is the
implementing rules of RA 9700, had clarified that the said law shall not apply to claims/cases where
the claim folders were received by the LBP prior to July 1, 2009.75 In such a situation, just
compensation shall be determined in accordance with Section 17 of RA 6657, as amended, prior to
its further amendment by RA 9700.76 chan roble slaw

Preliminarily, the Court notes that notwithstanding the CA's reference to the formula77 provided under DAR
AO 5, series of 1998, it still applied the formula under DAR AO 1, series of 2010 considering that it merely
affirmed the RTC's computation which utilized values78 corresponding to those prescribed therein, i.e., the
latest available gross production and selling prices for 12 months immediately preceding July 1, 2009,79 in
arriving at the capitalized net income (CNI).

It is significant to stress, however, that DAR AO 1, series of 2010 which was issued in line with Section 31 of
RA 970080 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 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 200983 (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.

Nonetheless, the RTC, acting as a SAC, is reminded that it is not strictly bound by the different formula
created by the DAR if the situations before it do not warrant their application.84 To insist on a rigid
application of the formula goes beyond the intent and spirit of the law, bearing in mind that the valuation of
property or the determination of just compensation is essentially a judicial function which is vested with the
courts, and not with administrative agencies. Therefore, the RTC must still be able to reasonably exercise its
judicial discretion in the evaluation of the factors for just compensation, which cannot be restricted by a
formula dictated by the DAR85 when faced with situations that do not warrant its strict application. However,
the RTC must explain and justify in clear terms the reason for any deviation from the prescribed factors and
formula.86 chanro bleslaw

Accordingly, while the parties did not raise as issue the improper application of DAR AO 1, series of 2010,
the Court finds a need to remand the case to the RTC for the determination of just compensation to ensure
compliance with the law, and to give everyone - the landowner, the farmers, and the State - their
due.87 To this end, the RTC is hereby directed to observe the following guidelines in the remand of the case:

1. Just compensation must be valued at the time of taking, or the time when the owner was
chanRoble svirtual Lawlib ra ry

deprived of the use and benefit of his property,88 in this case, when emancipation patents were issued in the
names of the farmer-beneficiaries on May 27, 2002.89 Hence, the evidence to be presented by the parties
before the trial court for the valuation of the subject land must be based on the values prevalent on such
time of taking for like agricultural lands.90 chan robles law

2. Just compensation must be arrived at pursuant to the guidelines set forth in Section 17 of RA
6657, as amended, prior to its amendment by RA 9700. However, the RTC is reminded that while it
should take into account the different formula created by the DAR in arriving at the just compensation for
the subject land, it is not strictly bound thereto if the situations before it do not warrant their
application.91 In any event, should the RTC find the said guidelines to be inapplicable, it must clearly explain
the reasons for deviating therefrom, and for using other factors or formula in arriving at the reasonable just
compensation for the acquired property.92 c han robles law

3. Interest may be awarded as may be warranted by the circumstances of the case and based on
prevailing jurisprudence. In previous cases, the Court has allowed the grant of legal interest in
expropriation cases where there is delay in the payment since the just compensation due to the landowners
was deemed to be an effective forbearance on the part of the State.93 Legal interest on the unpaid balance
shall be pegged at the rate of 12% p.a. from the time of taking on May 27, 2002 until June 30, 2013 only.
Thereafter, or beginning July 1, 2013, until fully paid, the just compensation due the landowners shall earn
interest at the new legal rate of 6% p.a.94 in line with the amendment introduced by BSP-MB Circular No.
799,95 series of 2013.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated August 29, 2014 of the Court of
Appeals of Cebu City in CA-G.R. SP No. 06365 is hereby REVERSED and SET ASIDE. Civil Case No. 2007-
14511 is REMANDED to the Regional Trial Court of Negros Oriental, Dumaguete City, Branch 32 for
reception of evidence on the issue of just compensation in accordance with the guidelines set in this
Decision. The trial court is directed to conduct the proceedings in said case with reasonable dispatch, and to
submit to the Court a report on its findings and recommended conclusions within sixty (60) days from notice
of this Decision.

SO ORDERED. chanRoblesvirt ual Lawlib rary