STA. ROSA REALTY DEVELOPMENT CORPORATION, petitioner, vs.

COURT OF
APPEALS
The case before the Court is a petition for review on certiorari of the decision of the Court
of Appeals[1] affirming the decision of the Department of Agrarian Reform Adjudication
Board[2] (hereafter DARAB) ordering the compulsory acquisition of petitioners property under
the Comprehensive Agrarian Reform Program (CARP).
Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the
registered owner of two parcels of land, situated at Barangay Casile, Cabuyao, Laguna covered
by TCT Nos. 81949 and 84891, with a total area of 254.6 hectares. According to petitioner, the
parcels of land are watersheds, which provide clean potable water to the Canlubang community,
and that ninety (90) light industries are now located in the area.[3]
Petitioner alleged that respondents usurped its rights over the property, thereby destroying
the ecosystem. Sometime in December 1985, respondents filed a civil case[4] with the Regional
Trial Court, Laguna, seeking an easement of a right of way to and from Barangay Casile. By way
of counterclaim, however, petitioner sought the ejectment of private respondents.
In October 1986 to August 1987, petitioner filed with the Municipal Trial Court, Cabuyao,
Laguna separate complaints for forcible entry against respondents.[5]
After the filing of the ejectment cases, respondents petitioned the Department of Agrarian
Reform (DAR) for the compulsory acquisition of the SRRDC property under the CARP.
On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao, Laguna
issued a notice of coverage to petitioner and invited its officials or representatives to a
conference on August 18, 1989.[6] During the meeting, the following were present:
representatives of petitioner, the Land Bank of the Philippines, PARCCOM, PARO of Laguna,
MARO of Laguna, the BARC Chairman of Barangay Casile and some potential farmer
beneficiaries, who are residents of Barangay Casile, Cabuyao, Laguna. It was the consensus and
recommendation of the assembly that the landholding of SRRDC be placed under compulsory
acquisition.
On August 17, 1989, petitioner filed with the Municipal Agrarian Reform Office (MARO),
Cabuyao, Laguna a Protest and Objection to the compulsory acquisition of the property on the
ground that the area was not appropriate for agricultural purposes. The area was rugged in terrain
with slopes of 18% and above and that the occupants of the land were squatters, who were not
entitled to any land as beneficiaries.[7]
On August 29, 1989, the farmer beneficiaries together with the BARC chairman answered
the protest and objection stating that the slope of the land is not 18% but only 5-10% and that the
land is suitable and economically viable for agricultural purposes, as evidenced by the
Certification of the Department of Agriculture, municipality of Cabuyao, Laguna.[8]
On September 8, 1989, MARO Belen dela Torre made a summary investigation report and
forwarded the Compulsory Acquisition Folder Indorsement (CAFI) to the Provincial Agrarian
Reform Officer (hereafter, PARO).[9]
 On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the
compulsory acquisition to the Secretary of Agrarian Reform.
On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land
Acquisition and Development, DAR forwarded two (2) Compulsory Acquisition Claim Folders
covering the landholding of SRRDC, covered by TCT Nos. T-81949 and T-84891 to the
President, Land Bank of the Philippines for further review and evaluation.[10]
On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago sent two
(2) notices of acquisition[11] to petitioner, stating that petitioners landholdings covered by TCT
Nos. 81949 and 84891, containing an area of 188.2858 and 58.5800 hectares, valued at
P4,417,735.65 and P1,220,229.93, respectively, had been placed under the Comprehensive
Agrarian Reform Program.
On February 6, 1990, petitioner SRRDC in two letters[12] separately addressed to Secretary
Florencio B. Abad and the Director, Bureau of Land Acquisition and Distribution, sent its formal
protest, protesting not only the amount of compensation offered by DAR for the property but
also the two (2) notices of acquisition.
On March 17, 1990, Secretary Abad referred the case to the DARAB for summary
proceedings to determine just compensation under R. A. No. 6657, Section 16.
On March 23, 1990, the LBP returned the two (2) claim folders previously referred for
review and evaluation to the Director of BLAD mentioning its inability to value the SRRDC
landholding due to some deficiencies.
On March 28, 1990, Executive Director Emmanuel S. Galvez wrote Land Bank President
Deogracias Vistan to forward the two (2) claim folders involving the property of SRRDC to the
DARAB for it to conduct summary proceedings to determine the just compensation for the land.
On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines stating that its
property under the aforesaid land titles were exempt from CARP coverage because they had been
classified as watershed area and were the subject of a pending petition for land conversion.
On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2) claim
folders (CACFs) to the Executive Director of the DAR Adjudication Board for proper
administrative valuation.Acting on the CACFs, on September 10, 1990, the Board promulgated a
resolution asking the office of the Secretary of Agrarian Reform (DAR) to first resolve two (2)
issues before it proceeds with the summary land valuation proceedings.[13]
The issues that need to be threshed out were as follows: (1) whether the subject parcels of
land fall within the coverage of the Compulsory Acquisition Program of the CARP; and (2)
whether the petition for land conversion of the parcels of land may be granted.
On December 7, 1990, the Office of the Secretary, DAR, through the Undersecretary for
Operations (Assistant Secretary for Luzon Operations) and the Regional Director of Region IV,
submitted a report answering the two issues raised. According to them, firstly, by virtue of the
issuance of the notice of coverage on August 11, 1989, and notice of acquisition on December
12, 1989, the property is covered under compulsory acquisition. Secondly, Administrative Order
No. 1, Series of 1990, Section IV D also supports the DAR position on the coverage of the said
property. During the consideration of the case by the Board, there was no pending petition for
land conversion specifically concerning the parcels of land in question.
On February 19, 1991, the Board sent a notice of hearing to all the parties interested, setting
the hearing for the administrative valuation of the subject parcels of land on March 6,
1991. However, on February 22, 1991, Atty. Ma. Elena P. Hernandez-Cueva, counsel for
SRRDC, wrote the Board requesting for its assistance in the reconstruction of the records of the
case because the records could not be found as her co-counsel, Atty. Ricardo Blancaflor, who
originally handled the case for SRRDC and had possession of all the records of the case was on
indefinite leave and could not be contacted. The Board granted counsels request and moved the
hearing to April 4, 1991.
On March 18, 1991, SRRDC submitted a petition to the Board for the latter to resolve
SRRDCs petition for exemption from CARP coverage before any administrative valuation of
their landholding could be had by the Board.
On April 4, 1991, the initial DARAB hearing of the case was held and subsequently,
different dates of hearing were set without objection from counsel of SRRDC. During the April
15, 1991 hearing, the subdivision plan of subject property at Casile, Cabuyao, Laguna was
submitted and marked as Exhibit 5 for SRRDC. At the hearing on April 23, 1991, the Land Bank
asked for a period of one month to value the land in dispute.
At the hearing on April 23, 1991, certification from Deputy Zoning Administrator Generoso
B. Opina was presented. The certification issued on September 8, 1989, stated that the parcels of
land subject of the case were classified as industrial Park per Sanguniang Bayan Resolution No.
45-89 dated March 29, 1989.[14]
To avert any opportunity that the DARAB might distribute the lands to the farmer
beneficiaries, on April 30, 1991, petitioner filed a petition[15] with DARAB to disqualify private
respondents as beneficiaries. However, DARAB refused to address the issue of beneficiaries.
In the meantime, on January 20, 1992, the Regional Trial Court, Laguna, Branch 24,
rendered a decision,[16] finding that private respondents illegally entered the SRRDC property,
and ordered them evicted.
On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum directing the
Land Bank of the Philippines to open a trust account in favor of SRRDC, for P5,637,965.55, as
valuation for the SRRDC property.
On December 19, 1991, DARAB promulgated a decision, the decretal portion of which
reads:

WHEREFORE, based on the foregoing premises, the Board hereby orders:

1. The dismissal for lack of merit of the protest against the compulsory coverage of
the landholdings of Sta. Rosa Realty Development Corporation (Transfer Certificates
of Title Nos. 81949 and 84891 with an area of 254.766 hectares) in Barangay Casile,
Municipality of Cabuyao, Province of Laguna under the Comprehensive Agrarian
Reform Program is hereby affirmed;
2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty Development
Corporation the amount of Seven Million Eight Hundred Forty-One Thousand, Nine
Hundred Ninety Seven Pesos and Sixty-Four centavos (P7,841,997.64) for its
landholdings covered by the two (2) Transfer Certificates of Title mentioned
above. Should there be a rejection of the payment tendered, to open, if none has yet
been made, a trust account for said amount in the name of Sta. Rosa Realty
Development Corporation;

3. The Register of Deeds of the Province of Laguna to cancel with dispatch Transfer
certificate of Title Nos. 84891 and 81949 and new one be issued in the name of the
Republic of the Philippines, free from liens and encumbrances;

4 The Department of Environment and Natural Resources either through its Provincial
Office in Laguna or the Regional Office, Region IV, to conduct a final segregation
survey on the lands covered by Transfer certificate of Title Nos. 84891 and 81949 so
the same can be transferred by the Register of Deeds to the name of the Republic of
the Philippines;

5. The Regional Office of the Department of Agrarian Reform through its Municipal
and Provincial Agrarian Reform Office to take immediate possession on the said
landholding after Title shall have been transferred to the name of the Republic of the
Philippines, and distribute the same to the immediate issuance of Emancipation
Patents to the farmer-beneficiaries as determined by the Municipal Agrarian Reform
Office of Cabuyao, Laguna.[17]

On January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision in
Civil Case No. B-2333[18] ruling that respondents were builders in bad faith.
On February 6, 1992, petitioner filed with the Court of Appeals a petition for review of the
DARAB decision.[19] On November 5, 1993, the Court of Appeals promulgated a decision
affirming the decision of DARAB. The decretal portion of the Court of Appeals decision reads:

WHEREFORE, premises considered, the DARAB decision dated September 19, 1991
is AFFIRMED, without prejudice to petitioner Sta. Rosa Realty Development
Corporation ventilating its case with the Special Agrarian Court on the issue of just
compensation.[20]

Hence, this petition.[21]

On December 15, 1993, the Court issued a Resolution which reads:

G. R. Nos. 112526 (Sta. Rosa Realty Development Corporation vs. Court of Appeals,
et. al.) Considering the compliance, dated December 13, 1993, filed by counsel for
petitioner, with the resolution of December 8, 1993 which required petitioner to post a
cash bond or surety bond in the amount of P1,500,000.00 Pesos before issuing a
temporary restraining order prayed for, manifesting that it has posted a CASH BOND
in the same amount with the Cashier of the Court as evidenced by the attached official
receipt no. 315519, the Court resolved to ISSUE the Temporary Retraining Order
prayed for.

The Court therefore, resolved to restrain: (a) the Department of Agrarian Reform
Adjudication Board from enforcing its decision dated December 19, 1991 in DARAB
Case No. JC-R-IV-LAG-0001, which was affirmed by the Court of Appeals in a
Decision dated November 5, 1993, and which ordered, among others, the Regional
Office of the Department of Agrarian Reform through its Municipal and Provincial
Reform Office to take immediate possession of the landholding in dispute after title
shall have been transferred to the name of the Republic of the Philippines and to
distribute the same through the immediate issuance of Emancipation Patents to the
farmer-beneficiaries as determined by the Municipal Agrarian Officer of Cabuyao,
Laguna, (b) The Department of Agrarian Reform and/or the Department of Agrarian
Reform Adjudication Board, and all persons acting for and in their behalf and under
their authority from entering the properties involved in this case and from introducing
permanent infrastructures thereon; and (c) the private respondents from further
clearing the said properties of their green cover by the cutting or burning of trees and
other vegetation, effective today until further orders from this Court.[22]

The main issue raised is whether the property in question is covered by CARP despite the
fact that the entire property formed part of a watershed area prior to the enactment of R. A. No.
6657.
Under Republic Act No. 6657, there are two modes of acquisition of private land:
compulsory and voluntary. In the case at bar, the Department of Agrarian Reform sought the
compulsory acquisition of subject property under R. A. No. 6657, Section 16, to wit:

Sec. 16. Procedure for Acquisition of Private Lands. For purposes of acquisition of
private lands, the following procedures shall be followed:

a.) After having identified the land, the landowners and the beneficiaries, the DAR shall send its
notice to acquire the land to the owners thereof, by personal delivery or registered mail, and
post the same in a conspicuous place in the municipal building and barangay hall of the
place where the property is located. Said notice shall contain the offer of the DAR to pay
corresponding value in accordance with the valuation set forth in Sections 17, 18, and other
pertinent provisions hereof.
b.) Within thirty (30) days from the date of the receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR of
his acceptance or rejection of the offer.
 c.) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase
price of the land within thirty (30) days after he executes and delivers a deed of transfer in
favor of the government and other muniments of title.
d.) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land requiring the landowner, the LBP
and other interested parties to submit fifteen (15) days from receipt of the notice. After the
expiration of the above period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for decision.
e.) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the
DAR of the compensation in cash or in LBP bonds in accordance with this act, the DAR
shall make immediate possession of the land and shall request the proper Register of Deeds
to issue Transfer Certificate of Titles (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the redistribution of the land to the
qualified beneficiaries.
f.) Any party who disagrees with the decision may bring the matter to the court [23] of proper
jurisdiction for final determination of just compensation.
In compulsory acquisition of private lands, the landholding, the landowners and farmer
beneficiaries must first be identified. After identification, the DAR shall send a notice of
acquisition to the landowner, by personal delivery or registered mail, and post it in a conspicuous
place in the municipal building and barangay hall of the place where the property is located.
Within thirty (30) days from receipt of the notice of acquisition, the landowner, his
administrator or representative shall inform the DAR of his acceptance or rejection of the offer.
If the landowner accepts, he executes and delivers a deed of transfer in favor of the
government and surrenders the certificate of title. Within thirty (30) days from the execution of
the deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase
price. If the landowner accepts, he executes and delivers a deed of transfer in favor of the
government and surrenders the certificate of title. Within thirty days from the execution of the
deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase price. If
the landowner rejects the DARs offer or fails to make a reply, the DAR conducts summary
administrative proceedings to determine just compensation for the land. The landowner, the LBP
representative and other interested parties may submit evidence on just compensation within
fifteen days from notice. Within thirty days from submission, the DAR shall decide the case and
inform the owner of its decision and the amount of just compensation.
Upon receipt by the owner of the corresponding payment, or, in case of rejection or lack of
response from the latter, the DAR shall deposit the compensation in cash or in LBP bonds with
an accessible bank. The DAR shall immediately take possession of the land and cause the
issuance of a transfer certificate of title in the name of the Republic of the Philippines. The land
shall then be redistributed to the farmer beneficiaries. Any party may question the decision of the
DAR in the special agrarian courts (provisionally the Supreme Court designated branches of the
regional trial court as special agrarian courts) for final determination of just compensation.
The DAR has made compulsory acquisition the priority mode of land acquisition to hasten
the implementation of the Comprehensive Agrarian Reform Program (CARP). Under Sec. 16 of
the CARL, the first step in compulsory acquisition is the identification of the land, the
landowners and the farmer beneficiaries. However, the law is silent on how the identification
process shall be made. To fill this gap, on July 26, 1989, the DAR issued Administrative Order
No. 12, series of 1989, which set the operating procedure in the identification of such lands. The
procedure is as follows:

A. The Municipal Agrarian Reform Officer (MARO), with the assistance of the
pertinent Barangay Agrarian Reform Committee (BARC), shall:

1. Update the masterlist of all agricultural lands covered under the CARP in his area of
responsibility; the masterlist should include such information as required under the attached
CARP masterlist form which shall include the name of the landowner, landholding area,
TCT/OCT number, and tax declaration number.
2. Prepare the Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or
landholding covered under Phase I and II of the CARP except those for which the
landowners have already filed applications to avail of other modes of land acquisition. A
case folder shall contain the following duly accomplished forms:

a) CARP CA Form 1MARO investigation report

b) CARP CA Form No 2 Summary investigation report findings and evaluation

c) CARP CA Form 3Applicants Information sheet

d) CARP CA Form 4 Beneficiaries undertaking

e) CARP CA Form 5 Transmittal report to the PARO

The MARO/BARC shall certify that all information contained in the above-mentioned
forms have been examined and verified by him and that the same are true and correct.

3. Send notice of coverage and a letter of invitation to a conference/meeting to the landowner

covered by the Compulsory Case Acquisition Folder. Invitations to the said conference
meeting shall also be sent to the prospective farmer-beneficiaries, the BARC representatives,
the Land Bank of the Philippines (LBP) representative, and the other interested parties to
discuss the inputs to the valuation of the property.

He shall discuss the MARO/BARC investigation report and solicit the views,
objection, agreements or suggestions of the participants thereon. The landowner shall
also ask to indicate his retention area. The minutes of the meeting shall be signed by
all participants in the conference and shall form an integral part of the CACF.

4. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO).

B. The PARO shall:

 1. Ensure the individual case folders are forwarded to him by his MAROs.
2. Immediately upon receipt of a case folder, compute the valuation of the land in accordance
with A.O. No. 6, series of 1988. The valuation worksheet and the related CACF valuation
forms shall be duly certified correct by the PARO and all the personnel who participated in
the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO through ocular inspection and
verification of the property. This ocular inspection and verification shall be mandatory when
the computed value exceeds P500,000 per estate.
4. Upon determination of the valuation, forward the case folder, together with the duly
accomplished valuation forms and his recommendations, to the Central Office.

The LBP representative and the MARO concerned shall be furnished a copy each of
his report.

C. DAR Central Office, specifically through the Bureau of Land Acquisition and
Distribution (BLAD), shall:

1. Within three days from receipt of the case folder from the PARO, review, evaluate and
determine the final land valuation of the property covered by the case folder. A summary
review and evaluation report shall be prepared and duly certified by the BLAD Director and
the personnel directly participating in the review and final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized representative, a notice of
acquisition (CARP Form 8) for the subject property. Serve the notice to the landowner
personally or through registered mail within three days from its approval. The notice shall
include among others, the area subject of compulsory acquisition, and the amount of just
compensation offered by DAR.
3. Should the landowner accept the DARs offered value, the BLAD shall prepare and submit to
the Secretary for approval the order of acquisition. However, in case of rejection or non-
reply, the DAR Adjudication Board (DARAB) shall conduct a summary administrative
hearing to determine just compensation, in accordance with the procedures provided under
Administrative Order No. 13, series of 1989. Immediately upon receipt of the DARABs
decision on just compensation, the BLAD shall prepare and submit to the Secretary for
approval the required order of acquisition.
4. Upon the landowners receipt of payment, in case of acceptance, or upon deposit of payment
in the designated bank, in case of rejection or non-response, the Secretary shall immediately
direct the pertinent Register of Deeds to issue the corresponding Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. Once the property is transferred, the
DAR, through the PARO, shall take possession of the land for redistribution to qualified
beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform
Officer (MARO) keep an updated master list of all agricultural lands under the CARP in his area
of responsibility containing all the required information. The MARO prepares a Compulsory
Acquisition Case Folder (CACF) for each title covered by CARP. The MARO then sends the
landowner a Notice of Coverage and a letter of invitation to a conference/ meeting over the land
covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries, the
representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of the parties. At the meeting,
the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer
(PARO) who shall complete the valuation of the land. Ocular inspection and verification of the
property by the PARO shall be mandatory when the computed value of the estate exceeds
P500,000.00. Upon determination of the valuation, the PARO shall forward all papers together
with his recommendation to the Central Office of the DAR. The DAR Central Office,
specifically, the Bureau of Land Acquisition and Distribution (BLAD) shall prepare, on the
signature of the Secretary or his duly authorized representative, a notice of acquisition of the
subject property. From this point, the provisions of R. A. No. 6657, Section 16 shall apply.
For a valid implementation of the CARP Program, two notices are required: (1) the notice of
coverage and letter of invitation to a preliminary conference sent to the landowner, the
representative of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to
DAR A. O. No. 12, series of 1989; and (2) the notice of acquisition sent to the landowner under
Section 16 of the CARL.
The importance of the first notice, that is, the notice of coverage and the letter of invitation
to a conference, and its actual conduct cannot be understated. They are steps designed to comply
with the requirements of administrative due process. The implementation of the CARL is an
exercise of the States police power and the power of eminent domain. To the extent that the
CARL prescribes retention limits to the landowners, there is an exercise of police power for the
regulation of private property in accordance with the Constitution. But where, to carry out such
regulation, the owners are deprived of lands they own in excess of the maximum area allowed,
there is also a taking under the power of eminent domain. The taking contemplated is not mere
limitation of the use of the land. What is required is the surrender of the title to and physical
possession of the excess and all beneficial rights accruing to the owner in favor of the farmer
beneficiary.
In the case at bar, DAR has executed the taking of the property in question. However,
payment of just compensation was not in accordance with the procedural requirement. The law
required payment in cash or LBP bonds, not by trust account as was done by DAR.
In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform, we
held that The CARP Law, for its part, conditions the transfer of possession and ownership of the
land to the government on receipt of 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.[24]
Consequently, petitioner questioned before the Court of Appeals DARABs decision ordering
the compulsory acquisition of petitioners property.[25] Here, petitioner pressed the question of
whether the property was a watershed, not covered by CARP.
Article 67 of the Water Code of the Philippines (P. D. No. 1067) provides:

Art. 67. Any watershed or any area of land adjacent to any surface water or overlying
any ground water may be declared by the Department of Natural resources as a
protected area. Rules and Regulations may be promulgated by such Department to
prohibit or control such activities by the owners or occupants thereof within the
protected area which may damage or cause the deterioration of the surface water or
ground water or interfere with the investigation, use, control, protection, management
or administration of such waters.

Watersheds may be defined as an area drained by a river and its tributaries and enclosed by a
boundary or divide which separates it from adjacent watersheds. Watersheds generally are
outside the commerce of man, so why was the Casile property titled in the name of SRRDC? The
answer is simple. At the time of the titling, the Department of Agriculture and Natural Resources
had not declared the property as watershed area. The parcels of land in Barangay Casile were
declared as PARK by a Zoning Ordinance adopted by the municipality of Cabuyao in 1979, as
certified by the Housing and Land Use Regulatory Board. On January 5, 1994, the Sangguniang
Bayan of Cabuyao, Laguna issued a Resolution[26] voiding the zoning classification of the land at
Barangay Casile as Park and declaring that the land is now classified as agricultural land.
The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an
exercise of its police power, not the power of eminent domain. A zoning ordinance is defined as
a local city or municipal legislation which logically arranges, prescribes, defines and apportions
a given political subdivision into specific land uses as present and future projection of needs.[27]
In Natalia Realty, Inc. v. Department of Agrarian Reform[28] we held that lands classified as
non-agricultural prior to the effectivity of the CARL may not be compulsorily acquired for
distribution to farmer beneficiaries.
However, more than the classification of the subject land as PARK is the fact that
subsequent studies and survey showed that the parcels of land in question form a vital part of a
watershed area.[29]
Now, petitioner has offered to prove that the land in dispute is a watershed or part of the
protected area for watershed purposes. Ecological balances and environmental disasters in our
day and age seem to be interconnected. Property developers and tillers of the land must be aware
of this deadly combination. In the case at bar, DAR included the disputed parcels of land for
compulsory acquisition simply because the land was allegedly devoted to agriculture and was
titled to SRRDC, hence, private and alienable land that may be subject to CARP.
However, the scenario has changed, after an in-depth study, survey and reassessment. We
cannot ignore the fact that the disputed parcels of land form a vital part of an area that need to be
protected for watershed purposes. In a report of the Ecosystems Research and Development
Bureau (ERDB), a research arm of the DENR, regarding the environmental assessment of the
Casile and Kabanga-an river watersheds, they concluded that:

The Casile barangay covered by CLOA in question is situated in the heartland of both
watersheds. Considering the barangays proximity to the Matangtubig waterworks, the
activities of the farmers which are in conflict with proper soil and water conservation
practices jeopardize and endanger the vital waterworks. Degradation of the land
would have double edge detrimental effects. On the Casile side this would mean direct
siltation of the Mangumit river which drains to the water impounding reservoir
below. On the Kabanga-an side, this would mean destruction of forest covers which
acts as recharged areas of the Matang Tubig springs. Considering that the people have
little if no direct interest in the protection of the Matang Tubig structures they couldnt
care less even if it would be destroyed.

The Casile and Kabanga-an watersheds can be considered a most vital life support
system to thousands of inhabitants directly and indirectly affected by it. From these
watersheds come the natural God-given precious resource water. x x x x x

Clearing and tilling of the lands are totally inconsistent with sound watershed
management. More so, the introduction of earth disturbing activities like road building
and erection of permanent infrastructures.Unless the pernicious agricultural activities
of the Casile farmers are immediately stopped, it would not be long before these
watersheds would cease to be of value. The impact of watershed degredation threatens
the livelihood of thousands of people dependent upon it. Toward this, we hope that an
acceptable comprehensive watershed development policy and program be
immediately formulated and implemented before the irreversible damage finally
happens.

Hence, the following are recommended:

7.2 The Casile farmers should be relocated and given financial assistance.

7.3 Declaration of the two watersheds as critical and in need of immediate

rehabilitation.

7.4 A comprehensive and detailed watershed management plan and program be

formulated and implemented by the Canlubang Estate in coordination with pertinent
government agencies.[30]

The ERDB report was prepared by a composite team headed by Dr. Emilio Rosario, the
ERDB Director, who holds a doctorate degree in water resources from U.P. Los Banos in 1987;
Dr. Medel Limsuan, who obtained his doctorate degree in watershed management from Colorado
University (US) in 1989; and Dr. Antonio M. Dano, who obtained his doctorate degree in Soil
and Water management Conservation from U.P. Los Banos in 1993.
Also, DENR Secretary Angel Alcala submitted a Memorandum for the President dated
September 7, 1993 (Subject: PFVR HWI Ref.: 933103 Presidential Instructions on the Protection
of Watersheds of the Canlubang Estates at Barrio Casile, Cabuyao, Laguna) which reads:

It is the opinion of this office that the area in question must be maintained for
watershed purposes for ecological and environmental considerations, among
others. Although the 88 families who are the proposed CARP beneficiaries will be
affected, it is important that a larger view of the situation be taken as one should also
consider the adverse effect on thousands of residents downstream if the watershed will
not be protected and maintained for watershed purposes.

The foregoing considered, it is recommended that if possible, an alternate area be

allocated for the affected farmers, and that the Canlubang Estates be mandated to
protect and maintain the area in question as a permanent watershed reserved.[31]

The definition does not exactly depict the complexities of a watershed. The most important
product of a watershed is water which is one of the most important human necessity. The
protection of watersheds ensures an adequate supply of water for future generations and the
control of flashfloods that not only damage property but cause loss of lives. Protection of
watersheds is an intergenerational responsibility that needs to be answered now.
Another factor that needs to be mentioned is the fact that during the DARAB hearing,
petitioner presented proof that the Casile property has slopes of 18% and over, which exempted
the land from the coverage of CARL. R. A. No. 6657, Section 10, provides:

Section 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 appurtenent 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 coverage of this Act.

Hence, during the hearing at DARAB, there was proof showing that the disputed parcels of
land may be excluded from the compulsory acquisition coverage of CARP because of its very
high slopes.
To resolve the issue as to the true nature of the parcels of land involved in the case at bar,
the Court directs the DARAB to conduct a re-evaluation of the issue.
IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of Appeals in
CA-G. R. SP No. 27234.
In lieu thereof, the Court REMANDS the case to the DARAB for re-evaluation and
determination of the nature of the parcels of land involved to resolve the issue of its coverage by
the Comprehensive Land Reform Program.
In the meantime, the effects of the CLOAs issued by the DAR to supposed farmer
beneficiaries shall continue to be stayed by the temporary restraining order issued on December
15, 1993, which shall remain in effect until final decision on the case.
 No costs.
SO ORDERED.
Roxas and Co., Inc. vs Court of Appeals
GR 127876
December 17, 1999

Facts:
This case involves three haciendas in Nasugbu Batangas owned by
petitioner and the validity of the acquisition of these by the government
under RA 6657 or the Comprehensive Agrarian Reform Law of 9188.
Petitioner Roxas and Co. is a domestic corporation and is the registered
owner of three haciendas, namely Hacienda Palico, Banilad and Caylaway.
The events of this case occurred during the incumbency of then President
Aquino, in the exercise of legislative power, the President signed on July
22, 1987, Proclamation No. 131 instituting a Comprehensive Agrarian
Reform Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the program. Congress
passed Republic Act No. 6657; the Act was signed by the President on
June 10, 1988 and took effect on June 15, 1988. Before the law’s
effectivity, petitioner filed with respondent DAR a voluntary offer to sell
Hacienda Caylaway pursuant to the provisions of EO No. 229. Haciendas
Palico and Banilad were later placed under compulsory acquisition by
respondent DAR in accordance with the CARL. Petitioner was informed
that 1,023.999 hectares of its land in Hacienda Palico were subject to
immediate acquisition and distribution by the government under the CARL.
Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR
for conversion of Haciendas Palico and Banilad from agricultural to non
agricultural lands under the provisions of the CARL. Despite
petitioner’s application for conversion, respondent DAR proceeded
with the acquisition of the two Haciendas. The Land Bank of the
Philippines trust accounts as compensation for Hacienda Palico were
replaced by respondent DAR with cash and LBP bonds. On October 22,
1993, from the title of the Hacienda, respondent DAR registered
Certificate of Land Ownership Award No. 6654. On October 30, 1993,
CLOA’s were distributed to farmer beneficiaries. On December 18, 1991,
the LBP certified certain amounts in cash and LBP bonds had
been earmarked as compensation for petitioner’s land in Hacienda
Banilad. On May 4, 1993, petitioner applied for conversion of both
Haciendas Palico and Banilad. Hacienda Caylaway was voluntarily offered
for sale to the government on May 6, 1988 before the effectivity of the
CARL. Nevertheless, on August 6, 1992, petitioner, through its President,
Eduardo Roxas, sent a letter to the Secretary of respondent DAR
withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of
Nasugbu, Batangas allegedly authorized the reclassification of Hacienda
Caylaway from agricultural to non-agricultural. As a result, petitioner
informed respondent DAR that it was applying for conversion of Hacienda
Caylaway from agricultural to other uses. Respondent DAR
Secretary informed petitioner that a reclassification of the land would not
exempt it from agrarian reform. On August 24, 1993, petitioner instituted a
case with respondent DAR Adjudication Board praying for the cancellation
of the CLOA’s issued by respondent DAR in the name of the farmers.
Petitioner alleged that the Municipality of Nasugbu, where the haciendas
are located, had been declared a tourist zone, that the land is not suitable
for agricultural production, and that the Sangguniang Bayan of
Nasugbu had reclassified the land to non-agricultural. Respondent
DARAB held that the case involved the prejudicial question of whether the
property was subject to agrarian reform; hence, this question should be
submitted to the Office of the Secretary of Agrarian Reform for
determination. Petitioner filed a petition with the CA. It questioned
the expropriation of its properties under the CARL and the denial of due
process in the acquisition of its landholdings. Meanwhile, the petition for
conversion of the three haciendas was denied. Petitioner’s petition was
dismissed by the CA. Hence, this recourse.

Issue:
Whether or not the acquisition proceedings over the haciendas were valid
and in accordance with the law.

Held:
No, for a valid implementation of the CAR Program, two notices are
required first the Notice of Coverage and letter of invitation to a preliminary
conference sent to the landowner, the representatives of the BARC, LBP,
farmer beneficiaries and other interested parties and second, the Notice of
Acquisition sent to the landowner under Section 16 of the CARL. The
importance of the first notice, the Notice of Coverage and the letter of
invitation to the conference, and its actual conduct cannot be understated.
They are steps designed to comply with the requirements of
administrative due process. The implementation of the CARL is an exercise
of the State’s police power and the power of eminent domain. To the extent
that the CARL prescribes retention limits to the landowners, there is an
exercise of police power for the regulation of private property in accordance
with the Constitution. But where, to carry out such regulation, the owners
are deprived of lands they own in excess of the maximum area allowed,
there is also a taking under the power of eminent domain. In this case,
respondent DAR claims that it sent a letter of invitation to petitioner
corporation, through Jaime Pimentel, the administrator of Hacienda Palico
but he was not authorized as such by the corporation. The SC stressed
that the failure of respondent DAR to comply with the requisites of due
process in the acquisition proceedings does not give the SC the power to
nullify the CLOA’s already issued to the farmer beneficiaries. The Court
said, to assume the power is to short-circuit the administrative process,
which has yet to run its regular course. Respondent DAR must be given
the chance to correct its procedural lapses in the acquisition
proceedings. In Hacienda Palico alone, CLOA's were issued to
177 farmer beneficiaries in 1993. Since then until the present,
these farmers have been cultivating their lands. It goes against the
basic precepts of justice, fairness and equity to deprive these people,
through no fault of their own, of the land they till. The petition is granted in
part and the acquisition proceedings over the three haciendas are nullified
for respondent DAR's failure to observe due process.

HEIRS OF NICOLAS JUGALBOT VS CA

Petitioners, Heirs of Nicolas Jugalbot, represented by their attorney-in-fact Leonila

Jugalbot, assail the Decision[1] of the Court of Appeals dated October 19, 2005 in
CA-G.R. SP No. 81823 where the petitioners title to the disputed property, as
evidenced by Transfer Certificate of Title (TCT) No. E-103, was cancelled and the
previous title, TCT No. T-11543, was reinstated in the name of Virginia A.
Roa. The appellate court reversed the Decision[2] and Resolution[3] of the
Department of Agrarian Reform Adjudication Board (DARAB) Central Office in
DARAB Case No. 7966, affirming the Decision[4] of the Provincial Adjudicator
and the Order[5] denying the motion for reconsideration in DARAB Case No. X
(06-1358) filed in Misamis Oriental, for Cancellation of TCT No. E-103, Recovery
of Possession and Damages.

On September 28, 1997, an Emancipation Patent (EP) was issued to Nicolas

Jugalbot based on the latters claim that he was the tenant of Lot 2180-C of the
Subdivision plan (LRC) TSD-10465, subject property of the case at bar, with an
area of 6,229 square meters, located at Barangay Lapasan, Cagayan de Oro
City. The subject property was registered in the name of Virginia A. Roa under
Transfer Certificate of Title (TCT) No. T-11543, the same being issued on April 1,
1970 in the name of Virginia A. Roa married to Pedro N. Roa. The property was
originally registered in the name of Marcelino Cabili from whom Virginia A. Roa
purchased the same sometime in 1966.[6]

Nicolas Jugalbot alleged that he was a tenant of the property continuously since the
1950s. On a Certification dated January 8, 1988 and issued by Department of
Agrarian Reform (DAR) Team Leader Eduardo Maandig, the subject property was
declared to be tenanted as of October 21, 1972 and primarily devoted to rice and
corn. On March 1, 1988, the Emancipation Patent was registered with the Register
of Deeds and Nicolas Jugalbot was issued TCT No. E-103.[7]

On August 10, 1998, the heirs of Virginia A. Roa, herein private respondents, filed
before the DARAB Provincial Office of Misamis Oriental a Complaint for
Cancellation of Title (TCT No. E-103), Recovery of Possession and Damages
against Nicolas Jugalbot, docketed as DARAB Case No. X (06-1358).[8]

On October 23, 1998, a Decision was rendered by the DARAB Provincial

Adjudicator dismissing private respondents complaint and upholding the validity
of the Emancipation Patent. Private respondents motion for reconsideration was
denied.[9]

On appeal, the DARAB Central Office affirmed the Provincial Adjudicators

decision on the sole ground that private respondents right to contest the validity of
Nicolas Jugalbots title was barred by prescription. It held that an action to
invalidate a certificate of title on the ground of fraud prescribes after the expiration
of one year from the decree of registration.[10]

On November 10, 2003, the DARAB denied private respondents motion for
reconsideration,[11] hence they filed a petition for review before the Court of
Appeals which was granted. The appellate court reversed the Decision and
Resolution of the DARAB Central Office on four grounds: (1) the absence of a
tenancy relationship; (2) lack of notice to Virginia Roa by the DAR; (3) the area of
the property which was less than one hectare and deemed swampy, rainfed and
kangkong-producing; and (4) the classification of the subject property as
residential, which is outside the coverage of Presidential Decree No. 27.

Hence, this petition for review on certiorari under Rule 45.

The sole issue for determination is whether a tenancy relationship exists between
petitioners Heirs of Nicolas Jugalbot, and private respondents, Heirs of Virginia A.
Roa, under Presidential Decree No. 27. Simply stated, are petitioners de
jure tenants of private respondents?

As clearly laid down in Qua v. Court of Appeals[12] and subsequently in Benavidez

v. Court of Appeals,[13] the doctrine is well-settled that the allegation that an
agricultural tenant tilled the land in question does not automatically make the case
an agrarian dispute. It is necessary to first establish the existence of a tenancy
relationship between the party litigants. The following essential requisites must
concur in order to establish a tenancy relationship: (a) the parties are the landowner
and the tenant; (b) the subject matter is agricultural land; (c) there is consent; (d)
the purpose is agricultural production; (e) there is personal cultivation by the
tenant; and (f) there is a sharing of harvests between the parties.[14]

Valencia v. Court of Appeals[15] further affirms the doctrine that a tenancy

relationship cannot be presumed. Claims that one is a tenant do not automatically
give rise to security of tenure. The elements of tenancy must first be proved in
order to entitle the claimant to security of tenure. There must be evidence to prove
the allegation that an agricultural tenant tilled the land in question. Hence, a
perusal of the records and documents is in order to determine whether there is
substantial evidence to prove the allegation that a tenancy relationship does exist
between petitioner and private respondents. The principal factor in determining
whether a tenancy relationship exists is intent.[16]

Tenancy is not a purely factual relationship dependent on what the alleged

tenant does upon the land. It is also a legal relationship, as ruled in Isidro v. Court
of Appeals.[17] The intent of the parties, the understanding when the farmer is
installed, and their written agreements, provided these are complied with and are
not contrary to law, are even more important.[18]
Petitioners allege that they are bona fide tenants of private respondents under
Presidential Decree No. 27. Private respondents deny this, citing inter alia, that
Virginia A. Roa was not given a notice of coverage of the property subject matter
of this case; that Virginia A. Roa and the private respondents did not have any
tenant on the same property; that the property allegedly covered by Presidential
Decree No. 27 was residential land; that the lot was paraphernal property of
Virginia A. Roa; and the landholding was less than seven (7) hectares.

The petition is devoid of merit.

The petitioners are not de jure tenants of private respondents under Presidential
Decree No. 27 due to the absence of the essential requisites that establish a tenancy
relationship between them.

Firstly, the taking of subject property was done in violation of constitutional

due process. The Court of Appeals was correct in pointing out that Virginia A. Roa
was denied due process because the DAR failed to send notice of the impending
land reform coverage to the proper party. The records show that notices were
erroneously addressed and sent in the name of Pedro N. Roa who was not the
owner, hence, not the proper party in the instant case. The ownership of the
property, as can be gleaned from the records, pertains to Virginia A. Roa. Notice
should have been therefore served on her, and not Pedro N. Roa.

Spouses Estonina v. Court of Appeals[19] held that the presumption under

civil law that all property of the marriage belongs to the conjugal partnership
applies only when there is proof that the property was acquired during the
marriage. Otherwise stated, proof of acquisition during the marriage is a
condition sine qua non for the operation of the presumption in favor of the
conjugal partnership.[20] In Spouses Estonina, petitioners were unable to present
any proof that the property in question was acquired during the marriage of
Santiago and Consuelo Garcia. The fact that when the title over the land in
question was issued, Santiago Garcia was already married to Consuelo as
evidenced by the registration in the name of Santiago Garcia married to Consuelo
Gaza, does not suffice to establish the conjugal nature of the property.[21]
In the instant case, the Court of Appeals correctly held that the phrase married to
appearing in certificates of title is no proof that the properties were acquired during
the spouses coverture and are merely descriptive of the marital status of the person
indicated therein. The clear import from the certificate of title is that Virginia is the
owner of the property, the same having been registered in her name alone, and
being married to Pedro N. Roa was merely descriptive of her civil status.[22] Since
no proof was adduced that the property was acquired during the marriage of Pedro
and Virginia Roa, the fact that when the title over the land in question was issued,
Virginia Roa was already married to Pedro N. Roa as evidenced by the registration
in the name of Virginia A. Roa married to Pedro N. Roa, does not suffice to
establish the conjugal nature of the property.

In addition, the defective notice sent to Pedro N. Roa was followed by a

DAR certification signed by team leader Eduardo Maandig on January 8, 1988
stating that the subject property was tenanted as of October 21, 1972 and primarily
devoted to rice and corn despite the fact that there was no ocular inspection or any
on-site fact-finding investigation and report to verify the truth of the allegations of
Nicolas Jugalbot that he was a tenant of the property. The absence of such ocular
inspection or on-site fact-finding investigation and report likewise deprives
Virginia A. Roa of her right to property through the denial of due process.

By analogy, Roxas & Co., Inc. v. Court of Appeals[23] applies to the case at
bar since there was likewise a violation of due process in the implementation of the
Comprehensive Agrarian Reform Law when the petitioner was not notified of any
ocular inspection and investigation to be conducted by the DAR before acquisition
of the property was to be undertaken. Neither was there proof that petitioner was
given the opportunity to at least choose and identify its retention area in those
portions to be acquired.[24] Both in the Comprehensive Agrarian Reform Law and
Presidential Decree No. 27, the right of retention and how this right is exercised, is
guaranteed by law.

Since land acquisition under either Presidential Decree No. 27 and the
Comprehensive Agrarian Reform Law govern the extraordinary method of
expropriating private property, the law must be strictly construed. Faithful
compliance with legal provisions, especially those which relate to the procedure
for acquisition of expropriated lands should therefore be observed. In the instant
case, no proper notice was given to Virginia A. Roa by the DAR. Neither did the
DAR conduct an ocular inspection and investigation. Hence, any act committed by
the DAR or any of its agencies that results from its failure to comply with the
proper procedure for expropriation of land is a violation of constitutional due
process and should be deemed arbitrary, capricious, whimsical and tainted with
grave abuse of discretion.

Secondly, there is no concrete evidence on record sufficient to establish that

Nicolas Jugalbot or the petitioners personally cultivated the property under
question or that there was sharing of harvests, except for their self-serving
statements. Clearly, there is no showing that Nicolas Jugalbot or any of his farm
household cultivated the land in question. No proof was presented except for their
self-serving statements that they were tenants of Virginia A. Roa. Independent
evidence, aside from their self-serving statements, is needed to prove personal
cultivation, sharing of harvests, or consent of the landowner, and establish a
tenancy relationship.

Furthermore, in the findings of fact of the Court of Appeals, it was

undisputed that Nicolas Jugalbot was a soldier in the United States Army from
June 15, 1946 to April 27, 1949[25] and upon retirement, migrated to the United
States and returned to the Philippines sometime in 1998.[26] It was established that
Jugalbots wife Miguela and daughter Lilia P. Jugalbot are residents of 17623
Grayland Avenue, Artesia, California, U.S.A., where Nicolas Jugalbot spent his
retirement.[27] Thus, the DAR, in particular its team leader Eduardo Maandig,
haphazardly issued a certification dated January 8, 1988 that the subject property
was tenanted as of October 21, 1972 by Nicolas Jugalbot and primarily devoted to
rice and corn without the benefit of any on-site fact-finding investigation and
report. This certification became the basis of the emancipation patent and
subsequently, TCT No. E-103 issued on March 1, 1988, which was less than two
months from the issuance of the unsubstantiated DAR certification. Coincidentally,
October 21, 1972 is the date Presidential Decree No. 27 was signed into law.

Neither was there any evidence that the landowner, Virginia A. Roa, freely
gave her consent, whether expressly or impliedly, to establish a tenancy
relationship over her paraphernal property.
 As declared in Castillo v. Court of Appeals,[28] absent the element of
personal cultivation, one cannot be a tenant even if he is so designated in the
written agreement of the parties.[29]

In Berenguer, Jr. v. Court of Appeals,[30] we ruled that the respondents self-

serving statements regarding their tenancy relations could not establish the claimed
relationship. The fact alone of working on anothers landholding does not raise a
presumption of the existence of agricultural tenancy. Substantial evidence does not
only entail the presence of a mere scintilla of evidence in order that the fact of
sharing can be established; there must be concrete evidence on record adequate
enough to prove the element of sharing.[31] We further observed in Berenguer, Jr.:

With respect to the assertion made by respondent Mamerto

Venasquez that he is not only a tenant of a portion of the petitioners
landholding but also an overseer of the entire property subject of this
controversy, there is no evidence on record except his own claim in
support thereof. The witnesses who were presented in court in an effort
to bolster Mamertos claim merely testified that they saw him working on
the petitioners landholding. More importantly, his own witnesses even
categorically stated that they did not know the relationship of Mamerto
and the petitioner in relation to the said landholding. x x x The fact
alone of working on anothers landholding does not raise a
presumption of the existence of agricultural tenancy. Other factors
must be taken into consideration like compensation in the form of
lease rentals or a share in the produce of the landholding involved.
(Underscoring supplied)

xxxx

In the absence of any substantial evidence from which it can be

satisfactorily inferred that a sharing arrangement is present between the
contending parties, we, as a court of last resort, are duty-bound to correct
inferences made by the courts below which are manifestly mistaken or
absurd. x x x

Without the essential elements of consent and sharing, no tenancy

relationship can exist between the petitioner and the private
respondents. (Underscoring supplied)[32]
 Bejasa v. Court of Appeals[33] likewise held that to prove sharing of harvests,
a receipt or any other evidence must be presented as self-serving statements are
deemed inadequate. Proof must always be adduced.[34] In addition

The Bejasas admit that prior to 1984, they had no contact with
Candelaria. They acknowledge that Candelaria could argue that she did
not know of Malabanans arrangement with them. True enough
Candelaria disavowed any knowledge that the Bejasas during
Malabanans lease possessed the land. However, the Bejasas claim that
this defect was cured when Candelaria agreed to lease the land to the
Bejasas for P20,000.00 per annum, when Malabanan died in 1983. We
do not agree. In a tenancy agreement, consideration should be in the
form of harvest sharing. Even assuming that Candelaria agreed to lease it
out to the Bejasas for P20,000 per year, such agreement did not create a
tenancy relationship, but a mere civil law lease.[35]

Thirdly, the fact of sharing alone is not sufficient to establish a tenancy

relationship. In Caballes v. Department of Agrarian Reform,[36] we restated the
well-settled rule that all the requisites must concur in order to create a tenancy
relationship between the parties and the absence of one or more requisites does not
make the alleged tenant a de factotenant as contradistinguished from a de
jure tenant. This is so because unless a person has established his status as a de
jure tenant he is not entitled to security of tenure nor is he covered by the Land
Reform Program of the Government under existing tenancy laws. [37] The security
of tenure guaranteed by our tenancy laws may be invoked only by tenants de jure,
not by those who are not true and lawful tenants.[38]

As reiterated in Qua,[39] the fact that the source of livelihood of the alleged tenants
is not derived from the lots they are allegedly tenanting is indicative of non-
agricultural tenancy relationship.[40]

Finally, it is readily apparent in this case that the property under dispute is
residential property and not agricultural property. Zoning Certification No. 98-084
issued on September 3, 1998 clearly shows that the subject property Lot 2180-C
covered by TCT No. T-11543 with an area of 6,229 square meters and owned by
Virginia A. Roa is located within the Residential 2 District in accordance with
paragraph (b), Section 9, Article IV of Zoning Ordinance No. 880, Series of 1979
issued by the City Planning and Development Office of Cagayan de Oro
City.[41] To bolster the residential nature of the property, it must also be noted that
no Barangay Agrarian Reform Council was organized or appointed by the DAR
existed in Barangay Lapasan, Cagayan de Oro City, as all lands have been
classified as residential or commercial, as certified by Barangay Captain of
Lapasan.[42]

In Gonzales v. Court of Appeals,[43] we held that an agricultural leasehold cannot

be established on land which has ceased to be devoted to cultivation or farming
because of its conversion into a residential subdivision. Petitioners were not
agricultural lessees or tenants of the land before its conversion into a residential
subdivision in 1955. Not having been dispossessed by the conversion of the land
into a residential subdivision, they may not claim a right to reinstatement.[44]

This Court in Spouses Tiongson v. Court of Appeals[45] succinctly ruled that the
land surrounded by a residential zone is always classified as residential. The areas
surrounding the disputed six hectares are now dotted with residences and,
apparently, only this case has kept the property in question from being developed
together with the rest of the lot to which it belongs. The fact that a caretaker plants
rice or corn on a residential lot in the middle of a residential subdivision in the
heart of a metropolitan area cannot by any strained interpretation of law convert it
into agricultural land and subject it to the agrarian reform program.[46]

Despite the apparent lack of evidence establishing a tenancy relationship between

petitioners and private respondents, the DARAB improperly recognized the
existence of such a relationship in complete disregard of the essential requisites
under Presidential Decree No. 27. DARAB committed grave abuse of discretion
amounting to lack of jurisdiction in issuing an Emancipation Patent to Nicolas
Jugalbot.

Once again, Benavidez v. Court of Appeals[47] is illustrative in its pronouncement

that an alleged agricultural tenant tilling the land does not automatically make the
case an agrarian dispute which calls for the application of the Agricultural Tenancy
Act and the assumption of jurisdiction by the DARAB. It is absolutely necessary to
first establish the existence of a tenancy relationship between the party
litigants. In Benavidez, there was no showing that there existed any tenancy
relationship between petitioner and private respondent. Thus, the case fell outside
the coverage of the Agricultural Tenancy Act; consequently, it was the Municipal
Trial Court and not the DARAB which had jurisdiction over the controversy
between petitioner and private respondent.[48]

Verily, Morta, Sr. v. Occidental[49] ruled that for DARAB to have

jurisdiction over a case, there must exist a tenancy relationship between the
parties. In order for a tenancy agreement to take hold over a dispute, it would be
essential to establish all the indispensable elements of a landlord-tenant
relationship:

The regional trial court ruled that the issue involved is tenancy-
related that falls within the exclusive jurisdiction of the DARAB. It
relied on the findings in DARAB Case No. 2413 that Josefina Opiana-
Baraclan appears to be the lawful owner of the land and Jaime
Occidental was her recognized tenant. However, petitioner Morta
claimed that he is the owner of the land. Thus, there is even a dispute as
to who is the rightful owner of the land, Josefina Opiana-Baraclan or
petitioner Morta. The issue of ownership cannot be settled by the
DARAB since it is definitely outside its jurisdiction. Whatever findings
made by the DARAB regarding the ownership of the land are not
conclusive to settle the matter. The issue of ownership shall be resolved
in a separate proceeding before the appropriate trial court between the
claimants thereof.[50]

At any rate, whoever is declared to be the rightful owner of the

land, the case cannot be considered as tenancy-related for it still fails to
comply with the other requirements. Assuming arguendo that Josefina
Opiana-Baraclan is the owner, then the case is not between the
landowner and tenant. If, however, Morta is the landowner, Occidental
cannot claim that there is consent to a landowner-tenant relationship
between him and Morta. Thus, for failure to comply with the above
requisites, we conclude that the issue involved is not tenancy-related
cognizable by the DARAB. [51]

In Vda. de Tangub v. Court of Appeals,[52] the jurisdiction of the Department

of Agrarian Reform is limited to the following: (a) adjudication of all matters
involving implementation of agrarian reform; (b) resolution of agrarian conflicts
and land tenure related problems; and (c) approval and disapproval of the
conversion, restructuring or readjustment of agricultural lands into residential,
commercial, industrial and other non-agricultural uses.[53]

To recapitulate, petitioners are not de jure tenants of Virginia A. Roa, to

which Presidential Decree No. 27 is found to be inapplicable; hence, the DARAB
has no jurisdiction over this case. The DARAB not only committed a serious error
in judgment, which the Court of Appeals properly corrected, but the former
likewise committed a palpable error in jurisdiction which is contrary to law and
jurisprudence. For all the foregoing reasons, we affirm the appellate court decision
and likewise hold that the DARAB gravely abused its discretion amounting to lack
of jurisdiction on the grounds that the subject matter of the present action is
residential, and not agricultural, land, and that all the essential requisites of a
tenancy relationship were sorely lacking in the case at bar.

On one final note, it may not be amiss to stress that laws which have for
their object the preservation and maintenance of social justice are not only meant
to favor the poor and underprivileged. They apply with equal force to those who,
notwithstanding their more comfortable position in life, are equally deserving of
protection from the courts. Social justice is not a license to trample on the rights of
the rich in the guise of defending the poor, where no act of injustice or abuse is
being committed against them.[54]

As the court of last resort, our bounden duty to protect the less privileged
should not be carried out to such an extent as to deny justice to landowners
whenever truth and justice happen to be on their side. For in the eyes of the
Constitution and the statutes, EQUAL JUSTICE UNDER THE LAW remains the
bedrock principle by which our Republic abides.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in

CA-G.R. SP No. 81823 promulgated on October 19, 2005 is AFFIRMED. The
Register of Deeds of Cagayan de Oro City is ordered to CANCEL Transfer
Certificate of Title No. E-103 for having been issued without factual and legal
basis, and REINSTATE Transfer Certificate of Title No. T-11543 in the name of
Virginia A. Roa. The city Assessors Office of Cagayan de Oro is likewise directed
to CANCEL Tax Declaration No. 80551 issued to Nicolas Jugalbot
and RESTORE Tax Declaration No. 270922 in the name of Virginia Angcod
Roa. The heirs of Nicolas Jugalbot, represented by Leonila B. Jugalbot or any
other person claiming a right or interest to the disputed lot through the latters title
are directed to VACATE the premises thereof and peaceably turn over its
possession to petitioners Heirs of Virginia A. Roa, represented by Lolita R.
Gorospe. No pronouncement as to costs.

SO ORDERED.

HEIRS OF FRANCISCO TANTOCO VS CA

Before this Court is a petition for review on certiorari under Rule 45 of the Rules
of Court seeking the annulment of the Decision, dated December 15, 2000, and
Resolution, dated May 25, 2001, of the Court of Appeals in CA-G.R. SP No.
54970 entitled Heirs of Francisco R. Tantoco, Sr. et al., vs. Hon. Department of
Agrarian Reform Adjudication Board (DARAB), Agrarian Reform Beneficiaries
Association of San Francisco, Gen. Trias, Cavite, et al.

Petitioners seek the cancellation of the collective Certificate of Land Ownership

Award (CLOA) or TCT No. CLOA-1424 issued by the Department of Agrarian
Reform (DAR) to the Agrarian Reform Beneficiaries Association (ARBA) of San
Francisco, Gen. Trias, Cavite, on the ground that TCT No. CLOA-1424 is null and
void for having been issued illegally and unlawfully. Consequently, petitioners
pray for the reinstatement of TCT No. T-402203 in their favor over the property
involved in this case.

The facts[1] of the case are as follows:

Francisco R. Tantoco, Sr., Marta R. Tantoco, Zosimo Tantoco, Margarita

R. Tantoco and Pacita R. Tantoco owned a vast tract of land with a total land area
of 106.5128 hectares in San Francisco, General Trias, Cavite. This land was
registered in their names under Transfer Certificate of Title (TCT) No. T-33404 of
the Register of Deeds for the Provinceof Cavite.
A portion of said property consisting of 9.6455 hectares was declared
exempt from the coverage of Presidential Decree (PD) No. 27, hence the
Certificates Land Transfer (CLTs) that had been previously issued to several
people were cancelled in an Order issued by then Minister of Agrarian
Reform Heherson T. Alvarez.

On April 21, 1989, petitioners donated 6.5218 hectares to Caritas de Manila, Inc.,
thereby leaving an estimated area of 100 hectares to their landholding under TCT
No. T-402203, which is now the subject matter of the controversy.

Meanwhile, the Department of Agrarian Reform (DAR) had been considering the
land in question for compulsory acquisition pursuant to Republic Act (R.A.) No.
6657, as amended, otherwise known as the Comprehensive Agrarian Reform Law
(CARL) of 1988.

On May 8, 1989, Francisco R. Tantoco, Sr., as owner and for and in behalf of the
other co-owners, wrote to DAR declaring the productive nature and agricultural
suitability of the land in dispute, and offering the same for acquisition under the
Voluntary Offer to Sell (VOS) scheme of the governments Comprehensive
Agrarian Reform Program (CARP). The land was offered for sale at P500,000 per
hectare or for a sum of P53,256,400.[2] According to petitioners, they never heard
anything from DAR thereafter.

It was only on June 25, 1993 that petitioners received a Notice of Land Valuation
from DAR valuing the land in question, which had now been accurately measured
to have a total land area of 99.3 hectares, in the amount of P4,826,742.35.

On July 8, 1993, petitioners rejected the amount offered by DAR as compensation

for the subject property for being unreasonably below the fair market value of said
lot. Petitioners likewise withdrew their voluntary offer to sell adding that the land
is not suitable for agriculture anymore and that it had been classified in 1981 for
use by the Human Settlements Regulatory Commission (now HLURB) as land for
residential, commercial or industrial purposes. Nevertheless, petitioners expressed
that in the event that the DAR would still insist on acquiring the land, petitioners
will be exercising their right of retention over an area aggregating to 79 hectares,
divided among the co-owners at five (5) hectares each, and three (3) hectares each
to their thirteen (13) children qualified to be beneficiaries under the CARP. [3]
 In a letter dated July 16, 1993, after rejecting the aforestated land valuation,
petitioners requested that the offer of P4,826,742.35 for the subject property be
applied instead to their other irrigated landholding consisting of 9.25 hectares
in Brgy. Pasong Camachile, General Trias, Cavite which is covered by TCT No.
33407.[4]

In view of petitioners rejection of the offer, the DAR, through its Regional Director
Percival C. Dalugdug, requested the Land Bank of the Philippines (LBP) on July
22, 1993 to open a Trust Account in favor of petitioners for the amount of FOUR
MILLION EIGHT HUNDRED TWENTY-SIX AND SEVEN HUNDRED
FORTY-TWO AND THIRTY-TWO CENTAVOS (P4,826,742.32) representing
the assessed value of the subject property. [5]
A Certification was subsequently issued by the LBP Bonds Servicing
Department on July 27, 1993 stating that the sum of P4,826,742.35 in cash
(P1,834,162.10) and in bonds (P2,992,580.25) had been reserved or earmarked as
compensation for petitioners 99.3 hectares of land under the CARPs VOS
scheme.[6] The cash portion of P1,834, 162.10 was placed with the Trust
Department but no release of payment in cash or in bonds had been effected.[7]

Thereafter, or on August 30, 1993, the DAR issued a collective Certificate of Land
Ownership Award (CLOA) over the subject property to

private respondent Agrarian Reform Beneficiaries Association (ARBA) of San

Francisco, General Trias, Cavite.[8] Public respondent Register of Deeds
consequently issued TCT No. CLOA-1424 in favor of ARBA and its 53 members,
and accordingly cancelled petitioners TCT No. T-402203.

Upon learning of the cancellation of their TCT on the above property, petitioners
filed an action for Cancellation of TCT No. CLOA-1424, and the reinstatement of
their TCT No. T-402203 before the Adjudication Board for Region IV of the
Department of Agrarian Reform on November 11, 1994.[9]
Docketed as DARAB Case No. IV-Ca-003-94, the petition
alleged, inter alia, that the land in question was covered by an ongoing industrial
estate development site per land use plan of the Municipality of
General Trias, Cavite; that the land had been planted with sugar and declared as
such for taxation purposes under Tax Declaration No. 12502-A; that in an Order
dated September 1, 1986, of then Minister of Agrarian Reform Heherson Alvarez,
the same land was declared outside the ambit of PD No. 27; and that the property is
within the portion of Cavite that had been declared as an industrial zone in the
CALABARZON area, hence, the value of real properties included therein had
greatly appreciated.[10]

Petitioners alleged that as a result of the implementation of the CARL in June of

1988, and coupled with the knowledge that the area had been declared part of the
industrial zone of Cavite, persons unknown to petitioners began to claim to be
tenants or farmholders on said land, when in truth and in fact, petitioners never had
any tenant or farmworker at any time on their land, and neither did petitioners give
their consent for anyone to farm the same which is suitable for sugarcane,
residential or industrial purposes and not for rice or corn or other industrial
products.[11]

Petitioners added that due to the annoying persistence of DAR officials and
employees who kept on coming back to the residence of Francisco R. Tantoco, Sr.,
in QuezonCity, the latter was constrained to offer to sell the subject land under the
VOS scheme for P5 million originally per hectare; that, thereafter, petitioners did
not receive any reply from DAR, hence, they paid the real property tax due on the
land for 1994 on March 28, 1994; that, afterwards, their title to the land under TCT
No. T-402203 dated April 19, 1994 was cancelled without prior notice and in lieu
thereof, TCT No. CLOA-1424 dated August 30, 1993 was issued by the Register
of Deeds in favor of ARBA whose 53 members are not tenants and are unknown to
them and are likewise not qualified or are disqualified to be beneficiaries under
Republic Act (R.A.) No. 6657.[12]

Finally, petitioners claimed that some officials and employees of DAR

Region IV, the MARO of General Trias, Cavite, the Land Bank of the Philippines,
and the Register of Deeds of Cavite, with intent to gain, conspired with other
private persons and several members of ARBA to deprive petitioners of said land
or its fair market value or proceeds thereof, and committed the crime of
falsification of public documents by making it appear that the offer to sell was
at P500,000 per hectare instead of P5,000,000 per hectare; that the value of
adjacent lands to petitioners property were disregarded in determining just
compensation; that no notices were received and the alleged receipts of notice were
falsified; that no trust account was ever opened in favor petitioners and neither
payment in cash or bond was ever made by DAR; that ARBA and its members are
not actually tilling the land for productive farming and have not paid LBP the
assigned valuation of the land; and, that the former are negotiating to sell the land
to land developers and industrial companies, among others, in the hope of making
a windfall profit.

Thus, petitioners prayed for the cancellation of the TCT No. CLOA-1424, and that
TCT No-402203 in the name of petitioners should be reinstated. They likewise
prayed for the issuance of a preliminary injunction to restrain ARBA from
negotiating to sell the property in question to any interested parties.

ARBA, in its Answer, denied the allegations contained in the petition, maintaining
that the farmer beneficiaries listed in TCT No. CLOA-1424 are qualified
beneficiaries as provided for in Section 22 of RA No. 6657; that due process was
observed in the documentation and processing of the CARP coverage of subject
parcel of land in accordance with DAR Administrative Orders and that the
issuance of TCT No. CLOA-1424 was in accordance with the provisions of R.A.
No. 6657; and, that the subject property is classified as agricultural land, hence,
regardless of tenurial arrangement and commodity produced, the land is considered
to be within the coverage of the CARL or R.A. No. 6657.

In its Supplemental Answer of December 29, 1994, ARBA further stated that after
the land had been voluntarily offered for sale to DAR the only matter to be
determined is the just compensation to be given to the landowners. Therefore, the
only issue to be resolved is the valuation of the property and not the cancellation of
the CLOA.

In addition, ARBA posited that the injunctive relief prayed for in the petition is
unnecessary because the property is automatically subject to the prohibition against
transfer under R.A. No. 6657 which prohibition is indicated in TCT No. CLOA-
1424.

Incidentally, petitioner Francisco R. Tantoco, Sr., died during the course of

the proceedings on September 2, 1995, and was duly substituted by his surviving
heirs.[13]
 On June 17, 1997, the DAR Regional Adjudicator for Region IV, Fe Arche-
Manalang, rendered a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring the subject property more particularly described

in Paragraph 5 of the Petition as properly covered under the
VOS (Voluntary Offer to Sell) scheme of the governments
Comprehensive Agrarian Reform Program (CARP)
pursuant to the provisions of RA 6657, as amended,
without prejudice to the exercise by the Petitioners/co-
owners of their respective right of retention upon proper
application therefor;

2) Voiding and annulling TCT No. CLOA-1424 derived

from CLOA (Certificate of Land Ownership Award) No.
00193535 issued and registered on August 27, 1995 and
August 30, 1993, respectively, in the name of the
Respondent ARBA (Agrarian Reform Beneficiaries
Association) and its 53 Farmers-members;

3) Directing the Respondent Register of Deeds of Cavite to:

a) effect the immediate cancellation of TCT No.

CLOA-1424 mentioned in the preceding paragraph;

b) revalidate and reinstate TCT No. T-402203 in the

joint names of Petitioners/co-owners, subject to its
eventual coverage under CARP after the
Landowners retention areas have been properly
determined/segregated and/or expressly waived;

c) annotate at the back of Petitioners title, their

lawyers lien thereon equivalent to five percent (5%)
of the market value of the subject property as and by
way of an adverse claim.

4) Directing the local MARO (Municipal Agrarian Reform

Officer) of General Trias, Cavite and PARO (Provincial
Agrarian Reform Officer) of Cavite to:
 a) undertake another identification and screening
process and reallocate the
remaining CARPable areas to patented
qualified ARBs (Agrarian Reform Beneficiaries) in
the area;

b) generate individual CLOAS (Certificate of Land

Ownership Awards) in favor of such
identified ARBs.

5) Denying all other claims for lack of basis;

6) Without pronouncement as to cost.

SO ORDERED.[14]

From the aforestated decision, petitioners and respondent ARBA separately

appealed to the DAR Adjudication Board (DARAB) in Quezon City. Said appeals
were consolidated and docketed as DARAB Case No. 6385.

The issues were summarized by DARAB as follows:

1. Whether or not the property co-owned by Petitioners under Title No.

T-33404 located at San Francisco, General Trias, Cavite with an
original area of 106.5128 hectares was properly subjected to
CARP coverage pursuant to the provisions of RA 6657, as
amended, otherwise known as the Comprehensive Agrarian
Reform Law of 1988 (CARL);

2. In the affirmative, whether or not fatal infirmities or irregularities

were committed in the valuation of the subject property and its
subsequent titling and award in favor of Respondent ARBA;

3. Whether or not the Petitioners are entitled to the ancillary

remedy of injunction and other specific reliefs sought viz:
cancellation of TCT No. CLOA-1424 registered in the name of
Respondent ARBA on August 30, 1993 and reinstatement of TCT
No. 402203 in favor of Petitioners; [and,]
 4. Whether or not the Petitioners and private Respondent ARBA are
entitled to their separate claims for damages and attorneys fees.[15]
In resolving the controversy, DARAB condensed the issues posed by the
respective parties by addressing the question: Can a Collective Certificate of Land
Ownership Award validly issued pursuant to a Voluntary Offer to Sell scheme
acquisition of the Comprehensive Agrarian Reform Program (CARP) be cancelled
on the petition of the former owner on the mere suspicion that some of the names
listed therein are not really qualified farmer-beneficiaries?[16]

On July 1, 1998, the DARAB rendered its ruling modifying the appealed
decision of the Regional Adjudicator, to wit:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Affirming paragraphs 1, 5, and 6 (Nos. 1, 5 and 6) of

the dispositive portion of the decision dated June 17, 1997 of the
Honorable Adjudicator a quo but;

2) Reversing paragraph Nos. 2, 3 and 4 thereof;

3) Affirming the validity, legality and efficacy of TCT- CLOA No.

1424 issued to Respondent Agrarian Reform Beneficiaries
Association of San Francisco, Gen. Trias, Cavite.

SO ORDERED.[17]

Petitioners filed a Motion for Reconsideration and a Supplemental Motion for

Reconsideration which was denied by DARAB for lack of merit in a Resolution,
dated September 6, 1999, as no new matters were adduced by the movants which
will warrant a reversal of the Boards decision.[18]

Claiming that respondent DARAB acted with grave abuse of discretion in

rendering the aforementioned decision and resolution, petitioners appealed the
same to the Court of Appeals.

On December 15, 2000, the court a quo rendered its assailed decision,
the dispositive portion of which reads:
 WHEREFORE, the instant petition is hereby DENIED and is
accordingly DISMISSED for lack of merit.
SO ORDERED.[19]

Petitioners Motion for Reconsideration was likewise denied by the Court of

Appeals in a resolution dated May 25, 2001.[20]

Hence, this petition assigning the following errors:

I
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE
OF DISCRETION WHEN IT RENDERED THE QUESTIONED
DECISION DATED DECEMBER 15, 2000, IN COMPLETE
DISREGARD OF LAW AND UNDISPUTED FINDINGS OF FACTS
BY THE REGIONAL ADJUDICATOR IN HER DECISION DATED
JUNE 17, 1997.

II
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE
OF DISCRETION WHEN IT REVERSED THE DECISION OF THE
REGIONAL ADJUDICATOR A QUO DECLARING ALL
PROCEEDINGS BY DAR VOID FOR FAILURE TO OBSERVE DUE
PROCESS CONSIDERING THAT RESPONDENTS BLATANTLY
DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF
PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN
GIVING DUE NOTICE TO THE PETITONERS AND TO PROPERLY
IDENTIFY THE SPECIFIC AREAS FOR EACH LISTED FARMERS-
BENEFICIARIES OF RESPONDENT ARBA.

III
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE
OF DISCRETION WHEN IT FAILED TO RECOGNIZE THAT
PETITIONERS WERE BRAZENLY AND ILLEGALLY DEPRIVED
OF THEIR PROPERTY WITHOUT JUST COMPENSATION,
CONSIDERING THAT PETITIONERS WERE NOT PAID JUST
COMPENSATION BEFORE THEY WERE UNCEREMONIOUSLY
STRIPPED OF THEIR LANDHOLDING THROUGH THE DIRECT
 ISSUANCE OF TCT NO. CLOA -1424 TO RESPONDENT ARBA IN
GROSS VIOLATION OF R.A. 6657.
IV
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE
OF DISCRETION WHEN IT RENDERED ITS QUESTIONED
RESOLUTION DATED MAY 25, 2001, DENYING THE MOTION
FOR RECONSIDERATION DESPITE THE UNDISPUTED
FACTUAL FINDINGS OF FACTS ON RECORD AND OF
JURISPRUDENCE LAID DOWN BY THIS HONORABLE
SUPREME COURT IN G.R. NO. 127876 ENTITLED ROXAS & CO.,
INC. VS. HON. COURT OF APPEALS, ET AL. PROMULGATED
ON DECEMBER 17, 1999.[21]

In sum, the principal issue to be resolved is whether or not the CLOA that had been
issued by the DAR to ARBA may be cancelled based on the following grounds:

1. The land in question is exempt from the coverage of CARP by

reason of its inclusion in the industrial zone of CALABARZON;

2. The DAR failed to conform strictly to the procedure for the

acquisition of private agricultural lands laid down in RA 6657,
hence, violating due process and consequently denying petitioners
just compensation;

3. ARBA and all its members have not paid the amortizations for
the landholdings awarded to them as required under RA 6657 and
DAR Administrative Order No. 6, Series of 1993;

4. All 53 members of ARBA manifested their intent to negotiate for

payment of disturbance compensation in exchange for the
voluntary surrender of their rights over the awarded property
which is a prohibited transaction under Section 73 of R.A. No.
6657, as amended, and in gross violation of DAR Administrative
Order No. 2, Series of 1994; and,

5. The ARBs did not cultivate the awarded property to make it

productive in violation of Section 22[22] of the Act.
 At the outset, petitioners claim that the subject property had been classified
to be within the industrial zone of General Trias, Cavite even before
the effectivity of R.A. No. 6657 in 1988, therefore, it should be outside the
coverage of CARP.[23]

On this, the Court accords respect to the findings of the Regional

Adjudicator who has the primary jurisdiction and competence to establish the
agricultural character of the land in question which is properly within the coverage
of CARP, thus:

Even the petitioners own evidence serves to buttress and affirm

the inherent nature and character of the subject property as an
agricultural land. The same ha[d] been previously devoted to sugarcane
production but at the time it was considered for acquisition by the DAR
under the VOS scheme, it was found to be planted to various crops such
as rice, corn and camote.Petitioner Francisco R. Tantoco, Sr. himself in
his letter of intent dated May 8, 1989 declared that the land offered for
acquisition under [the] VOS was productive and suitable [for]
agricultural production. It seems rather peculiar that after all these years
when the subject property had already been awarded and distributed to
its intended beneficiaries, it is only now that petitioners are belatedly
heard to sing a different tune by claiming that the same had always been
industrial. Petitioners apparently relied on the flip-flopping certifications
of one Engr. Alfredo M. Tan II of the HLURB Region IV who could not
seem to make up his mind as to the exact zoning location of the subject
property. On July 10, 1990, he certified that the subject property is
within the Agricultural Zone based on the Municipalitys approved
Zoning Ordinance under HSRC Resolution No. 42-A-3 dated 09
February 1981. After the lapse of several years or on January 10, 1995to
be precise, in a dramatic turn-around, he suddenly became vague and
tentative. He then proceeded to certify that the same property appears to
be within the Industrial Area based on HSRC (now HLURB) Approved
Land Use Map of General Trias per HSRC Resolution No. R-42-A-3
dated February 11, 1981.(Vide, Exhibit R). A more classic display of
bureaucratic ineptitude and incompetence is hard to find and simply
boggles the mind. Thus, no weight of credence at all can be attributed to
either certification due to the vacillating tenor used which is not even
worth the paper it is written on. Petitioners heavy reliance on such an
irresolute document is rather pathetic and certainly misplaced.
Resolution Nos. 105 and 125 enacted by the
local Sangguniang Panlalawigan on March 25, 1988 and September 8,
1988, respectively are similarly rejected since there is no showing that
the same were duly approved by the HLURB (Housing and Land Use
Regulatory Board) or its preceding competent authorities prior to June
15, 1988 which is the date of effectivity of the CARL and cut-off period
for automatic reclassifications or rezoning of agricultural lands that no
longer require any DAR conversion clearance or authority. (Emphasis
supplied) Still, owners of such agricultural lands which have been
previously reclassified or rezoned to non-agricultural uses
by LGUs (Local Government Units) and approved by the HLURB
before June 15, 1988 are nonetheless required to secure exemption
clearances from the DAR based on Section 3 (c) of RA 6657, as
amended, and DOJ (Department of Justice) Opinion No. 44, series of
1990 (Vide, Dar Administrative Order No. 12, series of 1994 in relation
to Administrative Order No. 6, series of 1994). As stated in
the aforecited DOJ Opinion, the legal requirement for the DAR
clearance in cases of land use conversion from agricultural to non-
agricultural uses applies only to conversions made on or after June 15,
1988, the date of the agrarian reform laws effectivity. Prior thereto, the
powers of the HLURB and the Department of Finance to [re-categorize]
lands for land use and taxation purposes, respectively, were exclusive. It
is noted that the definition of agricultural land in RA 6657 excludes
lands which have previously been classified as mineral, forest,
residential, commercial and industrial areas. Viewed against this
context, the subject property cannot be considered [as] falling within the
category of reclassified lands as envisioned in Section 3(c) of RA 6657,
as amended, and so specified in the aforementioned DOJ
Opinion. (Emphasis supplied) Neither can petitioners hope [to] find any
relief from the Order of then Minister Heherson T. Alvarez dated
September 1, 1986 since it merely exempts the subject property from
OLT (Operation land Transfer) coverage pursuant to PD 27 which
embraces tenanted rice and corn lands only. If at all, the said Order even
serves to bolster the agricultural nature of the subject property because
of its long history as sugar land. Sugarcane production is certainly an
agricultural activity by any norm or standard. The law defines the term
as referring to the cultivation of the soil, planting of crops, growing of
fruit trees 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. The
scope and coverage of the CARL is so broad and all-embracing as to
 include all lands devoted to or suitable for agriculture regardless
of tenurial arrangement and commodity produced.[24]

xxx

The inarguable [sic] fact remains that independent of such choice

by the petitioners to voluntarily offer the subject property, the same
would still be under the CARL which allows landowners a retention
limit of only five (5) hectares and an additional three (3) hectares for
each qualified child who at the time of the effectivity of the law is: 1) at
least 15 years of age; and, 2) actually tilling the land or directly
managing the farm.[25]

As pointed out, the property in question can be properly subjected to CARP.

It was not re-classified nor converted from agricultural to non-agricultural use with
the approval of the HLURB prior to the effectivity of the Comprehensive Agrarian
Reform Law (CARL) on June 15, 1988.

Having established that the land in question can be properly subjected to

CARP, the next question is whether the DAR officials, in acquiring said property,
performed their functions properly and strictly in accordance with the law.

A perusal of the records reveal that the DAR officials or its employees failed
to comply strictly with the guidelines and operating procedures provided by law in
acquiring the property subject to CARP.

Firstly, there were certain inconsistencies in the manner of selection by the

DAR of the CARP beneficiaries who are members of ARBA. As found by the
Regional Adjudicator:

As to the screening and identification of qualified potential CARP

[b]eneficiaries, DAR field personnel are presumed to be properly guided
by existing law and implementing rules and regulations (Vide, Section
22 of R.A. 6657, as amended; DAR Administrative Order No. 10, series
of 1990). Redistribution of CARPable lands to the intended
[b]eneficiaries may be done collectively or individually, whatever is
economically feasible. In the instant case, however, all the
42 ARBs (Agrarian Reform Beneficiaries)/Applicants opted for
 individual ownership and the corresponding VOCF (Voluntary Offer
Claim Folder) apparently processed as such (Vide, Exhibits 26 UU to 26
DDD). But surprisingly, in some inexplicable manner, the assailed
CLOA (Certificate of Land Ownership Award) that was finally
generated turned out to be collective in favor of the [r]espondent ARBA
which failed to show notwithstanding the assurances of its counsel
(Vide, TSN, Hearing of February 23, 1995, pp. 18-19) that it is duly
registered with the appropriate government and non-government
agencies. Moreover, the collective title suddenly sprouted 53 names
when only 43 duly applied as [p]otential CARP [b]eneficiaries (Vide,
CARP Form No. 3; Exhibits 26 EEE to 26UUU; Exhibits V-57 to V-99.
What is even more mysterious is that among the 53 ARBs listed in the
aforementioned CLOA, only 29 accomplished the required application
forms and 30 signed the corresponding APFUS. There is thus no basis
for the MARO Certification of August 19, 1993 declaring all the 53
named FBs therein as having met all the qualifications for Potential
Beneficiaries under Section 22 of RA 6657 (Vide, Exhibits 27 to 27-F).
Such unfounded action by the said official can only be described as
whimsical and capricious. A re-screening is therefore imperative in order
to prevent a grave miscarriage of justice especially on the part of those
who applied and were excluded in the final award for no apparent reason
at all. Upon the other hand, the MARO Claim Folder Transmittal Memo
to the PARO dated May 15, 1991 carried a total of 42 signatories in the
corresponding Application to Purchase and Farmers Undertaking (Vide,
CARP Form No. 4, Exhibits 26-UU to 26-DD, Exhibits V-47 to V-56
inclusive). When called to the witness stand, the local MARO and
PARO could not adequately explain or justify the existence of such
discrepancies (Vide, TSN Hearing of February 23, 1995 pp. 62-64; 89-
92) which can only give rise to the speculation that verification and
validation was done arbitrarily or in a haphazard manner. In thus
committing a substantial deviation from the procedural mandate of the
law Respondent DAR official in effect tolerated the insidious actuations
of his subordinates who acted with grave abuse of discretion amounting
to lack of jurisdiction. The resultant CLOA therefore and its derivative
TCT is fatally flawed for having been issued without jurisdiction. The
same does not even reflect the fractional share of each ARB as required
in DAR Administrative Order No. 3, series of 1993.[26]

Secondly, the TCT No. CLOA-1424 was directly issued by the DAR in the name
of ARBA without: (a) payment of just compensation; and, (b) initial transfer of
title to the land in the name of the Republic of the Philippines, in contravention to
Section 16(e) of R.A. No. 6657 which states:
(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 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) The DAR shall thereafter proceed
with the redistribution of the land to the qualified beneficiaries.

As already mentioned, the DAR immediately issued the CLOA to ARBA without
first registering the property with the Registry of Deeds in favor of the Philippine
Government. This administrative irregularity was made even worse by the fact that
petitioners were not given just compensation which, under the law, is a prerequisite
before the property can be taken away from its owners.
The case of Roxas & Co., Inc. v. Court of Appeals,[27] illustrates that a
transfer of ownership over a property within the coverage of CARP can only be
effected when just compensation has been given to the owners, thus:

Respondent DAR issued Certificates of Land Ownership Award

(CLOA) to farmer beneficiaries over portions of petitioners land without
just compensation to petitioner. A Certificate of Land Ownership Award
(CLOA) is evidence of ownership of land by a beneficiary under R.A.
6657, the Comprehensive Agrarian Law of 1988. Before this may be
awarded to a farmer beneficiary, the land must first be acquired by the
State from the landowner and ownership transferred to the former. The
transfer of possession and ownership of the land to the government are
conditioned upon the receipt by the landowner of the corresponding
payment or deposit by DAR of the compensation with an accessible
bank. Until then, title remains with the landowner. There was no receipt
by petitioner of any compensation for any of the lands acquired by the
government.

In the instant case, the Notice of Land Valuation that was sent by the DAR to
petitioners on June 14, 1993, offered to compensate petitioners for their property in
the total amount of P4,826,742.35 based on the valuation made by the LBP. Said
amount was rejected by petitioners, prompting the DAR to open a Trust Account in
the aforestatedamount with the LBP in favor of petitioners. Pursuant to this, the
LBP certified that the amount of P4,826,742.35 had been reserved/earmarked to
cover the value of the subject property. This, however, did not operate to effect
payment for petitioners property in question as the law requires payment of just
compensation in cash or Land Bank of the Philippines (LBP) bonds, not by trust
account.[28]

This is in line with the pronouncement made by this Court in the case
of Land Bank of the Philippines v. Court of Appeals,[29] wherein it upheld the
decision of the Court of Appeals in ordering the LBP 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.[30]

A similar ruling was articulated by the Court in the aforementioned case

of Roxas v. Court of Appeals,[31] to wit:
The kind of compensation to be paid the landowner is also specific. The
law provides that the deposit must be made only in cash or LBP bonds.
Respondent DARs opening of trust account deposits in petitioners name
with the Land Bank of the Philippines does not constitute payment under
the law. Trust account deposits are not cash or LBP bonds. The
replacement of the trust account with cash or LBP bonds did not ipso
facto cure the lack of compensation; for essentially, the determination of
this compensation was marred by lack of due process. In fact, in the
entire acquisition proceedings, respondent DAR disregarded the basic
requirement of administrative due process. Under these circumstances,
the issuance of the CLOAs to farmer beneficiaries necessitated
immediate judicial action on the part of the petitioner.

In the implementation of the CARP, the Special Agrarian Courts which are
the Regional Trial Courts, are given original and exclusive jurisdiction over two
categories of cases, to wit: (1) all petitions for the determination of just
compensation to landowners; and, (2) the prosecution of all criminal offenses
under R.A. No. 6657.[32] What agrarian adjudicators are empowered to do is only to
determine in a preliminary manner the reasonable compensation to be paid to the
landowners, leaving to the courts the ultimate power to decide the question.[33]
 The New Rules of Procedure of the DARAB, which was adopted on May
30, 1994, provides that in the event a landowner is not satisfied with the decision
of an agrarian adjudicator, the landowner can bring the matter directly to the
Regional Trial Court sitting as a Special Agrarian Court. Thus, Rule XIII, Section
11 of the aforementioned Rules states:

Section 11. Land Valuation and Preliminary Determination and

Payment of Just Compensation. -- The decision of the Adjudicator on
land valuation and preliminary determination and payment of just
compensation shall not be appealable to the Board but shall be brought
directly to the Regional Trial Courts designated as Special Agrarian
Courts within fifteen (15) days from receipt of the notice thereof. Any
party shall be entitled to only one motion for reconsideration.

The procedure for the determination of the compensation for the landowners
under the land reform program was likewise outlined by this Court in Republic v.
Court of Appeals:[34]

Thus, under the law, the Land Bank of the Philippines is charged
with the initial responsibility of determining the value of the lands
placed under land reform and the compensation to be paid for their
taking.[35] Through notice sent to the landowner pursuant to [Section]
16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner
rejects the offer, a summary administrative proceeding is held [36] and
afterward the provincial (PARAD), the regional (RARAD), or the
central (DARAB) adjudicator, as the case may be, depending on the
value of the land, fixes the price to be paid for the land. If the landowner
does not agree to the price fixed, he may bring the matter to the RTC
acting as [a] Special Agrarian Court. This in essence is the procedure for
the determination of compensation cases under R.A. No. 6657.

Also, Section 17 of R.A. No. 6657 provides guidance on land valuation, to

wit:
Section 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 assessments made by the
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.

Simply put, just compensation is the fair market value or the price which a
buyer will pay without coercion and a seller will accept without
compulsion.[37] Evidently, the law recognizes that the lands exact value, or the just
compensation to be given the landowner, cannot just be assumed; it must be
determined with certainty before the land titles are transferred.[38] 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.

The determination of just compensation under Section 16(d)[39] of R.A. 6657

or the CARP Law, is not final or conclusive -- unless both the landowner and the
tenant-farmer accept the valuation of the property by the DAR, and the parties may
bring the dispute to court in order to determine the appropriate amount of
compensation, a task unmistakably within the prerogative of the court.[40]

Hence, petitioners recourse in this case is to bring the matter to the Regional
Trial Court acting as a Special Agrarian Court for the adjudication of just
compensation. Theprice or value of the land and its character at the time it was
taken by the Government will be the criteria for determining just compensation.[41]

As to the other grounds posited by petitioners for the cancellation of the

CLOA issued to ARBA, Section IV-B of DAR Administrative Order No. 2, Series
of 1994 enumerates some of the grounds for the cancellation of registered CLOAs,
namely:

1) Misuse or diversion of financial support services extended to

the ARBs (Section 37 of R.A. No. 6657);
2) Misuse of the land (Section 22 of R.A. No. 6657);

3) Material misrepresentation of the ARBs basic qualification as

provided under Section 22 of R.A. No. 6657, P.D. No. 27, and
other agrarian laws;
 4) Illegal conversion by the ARB (Section 73, Paragraph C and E of
R.A. No. 6657);

5) Sale, transfer, lease or other form of conveyance by a beneficiary of

the right to use or any other usufructuary right over the land
acquired by virtue of being a beneficiary in order to circumvent
the provisions of Section 73 of R.A. No. 6657, P.D. No. 27, and
other agrarian laws. However, if the land has been acquired
under P.D. No.27/E.O. No. 228, ownership may be transferred
after full payment of amortization by the beneficiary (Section 6 of
E.O. No. 228);

6) Default in the obligation to pay an aggregate of three (3) consecutive

amortization in case of voluntary land transfer/direct payment
scheme, except in cases of fortuitous events and
force majeure (Section 26 of R.A. No. 6657);

7) Failure of the ARBs to pay at least three (3) annual amortization to

the LBP, except in cases of fortuitous events and force majeure;
(Section 26 of R.A. No. 6657);

8) Neglect or abandonment of the awarded land continuously for a

period of two (2) calendar years as determined by the Secretary
or his authorized representatives (Section 22 of R.A. No. 6657);

9) The land is found to be exempt/excluded from P.D. No. 27/E.O. No.

228 or CARP coverage or to be part of the landowners retained
area as determined by the Secretary or his authorized
representative; and,

10) Other grounds that will circumvent laws related to the

implementation of agrarian reform program.

Petitioners ascribe the specific prohibited acts stated in Nos. 5, 7 and 8 of the
above Administrative Order to ARBA and its member-beneficiaries which the
Regional Adjudicator confirmed, thus:

What is worse is that except for certain sporadic plantings, the land has
been generally left to lie fallow and uncultivated even with the award of
the CLOA in Respondent ARBAs favor as revealed by the ocular
 inspection conducted on March 23, 1993 (Vide, TSN of same date).
Such neglect can only toll the death knell for erring ARBs who also have
been remiss in the payment of the annual amortization due which should
have commenced within one year from the date of CLOA registration
on August 30, 1993 (Vide, DAR Administrative Order NO. 6, series of
1993). In an undated instrument captioned as Authorization entered into
sometime in 1993 (Vide, Annex A, Petitioners Ex-Parte Manifestation,
etc. dated June 13, 1997, all the 53 FB-awardees manifested their intent
to negotiate for payment of disturbance compensation in exchange for
the voluntary surrender of their rights[42] which is a prohibited transaction
under Section 73 of RA 6657, as amended, and DAR Administrative
Order No. 02, series of 1994. Not only that. Strangely enough, in the
protracted hearings that were conducted in this case, not one CLOA
Beneficiary/ARBA member was presented to at least defend himself
orally or by means of countervailing documentary evidence.[43]

Based on the above, it is clear that the ARBA and its members have committed
acts to justify the revocation of the collective CLOA that had been issued by the
DAR to the latter. The doctrine of primary jurisdiction, however, does not warrant
a court to arrogate unto itself authority to resolve a controversy the jurisdiction
over which is initially lodged with an administrative body of special
competence.[44]

The failure of the DAR to comply with the requisites prescribed by law in the
acquisition proceedings does not give this Court the power to nullify the CLOA
that had been issued to ARBA. To assume the power is to short-circuit the
administrative process, which has yet to run its regular course. DAR must be given
a chance to correct its administrative and procedural lapses in the acquisition
proceedings.[45]

It is also worth noting at this juncture that the resolution of this case by the
Department of Agrarian Reform is to the best advantage of petitioners since it is in
a better position to resolve agrarian disputes, being the administrative agency
possessing the necessary expertise on the matter and vested with primary
jurisdiction to determine and adjudicate agrarian reform controversies. Further, the
proceedings therein are summary and the department is not bound by technical
rules of procedure and evidence, to the end that agrarian reform disputes and other
issues will be adjudicated in a just, expeditious and inexpensive action or
proceeding.[46]

WHEREFORE, in view of the foregoing, the petition is GRANTED and

the Decision dated December 15, 2000 and the Resolution dated May 25, 2001 of
the Court of Appeals in CA-G.R. SP No. 54970 are SET ASIDE. The case is
hereby REMANDED to respondent Department of Agrarian Reform Adjudication
Board (DARAB) for proper acquisition proceedings in accordance with the
applicable administrative procedure.

No pronouncement as to costs.

SO ORDERED.

LANDBANK OF PHILIPPINES v. JOSEFINA R. DUMLAO

For resolution is the Motion for Reconsideration[1] filed by petitioner Land

Bank of the Philippines on January 5, 2009 from the Decision[2] of this
Court dated November 27, 2008, affirming the February 16, 2005
Decision[3] of the Court of Appeals (CA).

We find that petitioner did not raise substantially new grounds to justify
the reconsideration sought. Petitioner merely reiterated the arguments
already passed upon by this Court. Thus, no cogent reason exists to warrant
a reconsideration of this Court's Decision.

This notwithstanding, we will discuss hereunder the arguments raised by

petitioner in its motion for reconsideration in order to put a closure to the
controversy.

Petitioner insists that the pronouncement in Gabatin v. Land Bank of the

Philippines[4] should guide the Court in settling the issue as to what
constitutes just compensation for the lands covered by Presidential Decree
(PD) No. 27.[5] Petitioner contends that in Gabatin, this Court applied the
formula prescribed in PD No. 27 and Executive Order (EO) No. 228[6] for
computing the Land Value (LV) of properties covered by PD No. 27.
Petitioner now insists that we use the same formula in the present case.
However, petitioner's reliance on Gabatin is clearly misplaced. It bears
noting that Gabatin revolved around two issues absent in the present
case: i.e., which amount is applicable in determining the Government
Support Price (GSP) for palay, and whether the same shall be pegged at the
time of the taking of the properties.[7] Petitioners in that case did not
question the applicability of the formula prescribed in PD No. 27 and in EO
No. 228, unlike respondents herein. Hence, Gabatin cannot apply to the
controversy in the case at bar.

Moreover, the determination of just compensation in cases of expropriation

is a judicial prerogative. In Export Processing Zone Authority v.
Dulay,[8] this Court succinctly, yet clearly, explained:

The determination of "just compensation" in eminent domain case is a

judicial function. The executive department or the legislature may make the
initial determinations, but when a party claims a violation of the guarantee
in the Bill of Rights that private property may not be taken for public use
without just compensation, no statute, decree, or executive order can
mandate that its own determination shall prevail over the court's findings.
Much less can the courts be precluded from looking into the "just-ness" of
the decreed compensation.[9]

Petitioner likewise maintains that this Court ruled that Republic Act (RA)
No. 6657 is the principal law governing the determination of just
compensation for lands acquired pursuant to PD No. 27[10] which, in effect,
gave RA No. 6657 a retroactive effect.[11]

Petitioner's conclusion unduly stretches the Court's pronouncement in its

November 27, 2008 Decision. What we simply said was:

Due to the divergent formulae or guidelines presented by these laws, [12] a

number of cases have already been brought to the Court regarding which
law applies in computing just compensation for landholdings acquired
under PD No. 27. On this score, the Court has repeatedly held that if just
compensation was not settled prior to the passage of RA No.
6657, it should be computed in accordance with said law,
although the property was acquired under PD No. 27.[13] (Emphasis
supplied)
At the risk of being repetitive, we explain again that Section 17 of RA No.
6657[14] is made to apply only if the amount of just compensation of lands
acquired through PD No. 27 remains unresolved despite the passage of RA
No. 6657. It is only in such a case, and to such extent only, that this
provision on the determination of just compensation in the Comprehensive
Agrarian Reform Law (CARL) of 1988 is made to apply retrospectively.

WHEREFORE, premises considered, the Motion for Reconsideration

filed by petitioner Land Bank of the Philippines is DENIED. The case
is REMANDED to the trial court for final determination of just
compensation long due the herein respondents.

SO ORDERED.

LAND BANK OF THE PHILIPPINES v. HEIRS OF SPOUSES JORJA RIGOR-SORIANO AND

MAGIN SORIANO, NAMELY: MARIVEL S. CARANDANG AND JOSEPH SORIANO

FACTS: Marivel Carandang and Joseph Soriano are the children of the late Sps. Jorja
Rigor- Soriano and Magin Soriano, the owners of the two parcels of land located in
Macabucod, Aliaga, Nueva Ecija. The properties became subject to Operation Land
Transfer (OLT) and were valued by the Land Bank and the Department of Agrarian
Reform (DAR) at P10,000.00/hectare. Contending that such valuation was too low
compared to existing valuations of agricultural lands, the heirs commenced an action
for just compensation. They asked that a final valuation of the properties be pegged
at P1,800,000.00, based on Administrative Order No. 61, Series of 1992 and R.A. No.
6657.

The RTC ordered Land Bank to pay the heirs the amount P1,227,571.10 as just
compensation.

Land Bank appealed to the CA. The CA denied the petition.

Hence, Land Bank appealed to the Supreme Court.

During the pendency of the appeal, both parties entered into an agreement re-
evaluating the cost of the parcels of land. Thus, Land Bank submitted a manifestation
informing the High Court that the parties have already filed their Joint Motion to
Approve submitting their Agreement dated November 29, 2012.

ISSUE:

Should the present appeal to the Supreme Court be dismissed?

HELD: The Agreement was a compromise that the parties freely and voluntarily
entered into for the purpose of finally settling their dispute in this case. Under Art.
2028 of the Civil Code, a compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced.
Accordingly, a compromise is either judicial, if the objective is to put an end to a
pending litigation, or extrajudicial, if the objective is to avoid a litigation.

As a contract, a compromise is perfected by mutual consent. However, a judicial

compromise, while immediately binding between the parties upon its execution, is
not executory until it is approved by the court and reduced to a judgment. The
validity of a compromise is dependent upon its compliance with the requisites and
principles of contracts dictated by law. Also, the terms and conditions of a
compromise must not be contrary to law, morals, good customs, public policy and
public order. A review of the terms of the Agreement, indicates that it is a judicial
compromise because the parties intended it to terminate their pending litigation by
fully settling their dispute.
LBP VS ORILLA CASE DIGEST
The Facts

This is an appeal via a petition[2] for review on certiorari under Rule 45 of the
Rules of Court of the Decision[3] of the Court of Appeals dated July 29, 2002 in
CA-G.R. SP No. 63691 entitled Land Bank of the Philippines v. Hon. Venancio J.
Amila, in his capacity as Presiding Judge, Regional Trial Court, Branch 3,
Tagbilaran City, Spouses Placido Orilla and Clara Dy Orilla. Said Decision
affirmed the Order[4] dated December 21, 2000 of the Regional Trial Court (RTC),
Branch 3, Tagbilaran City, sitting as a Special Agrarian Court (SAC) in Civil Case
No. 6085.

Spouses Placido and Clara Orilla (respondents) were the owners of Lot No. 1, 11-
12706, situated in Bohol, containing an area of 23.3416 hectares and covered by
Transfer Certificate of Title No. 18401. In the latter part of November 1996, the
Department of Agrarian Reform Provincial Agrarian Reform Office (DAR-PARO)
of Bohol sent respondents a Notice of Land Valuation and Acquisition dated
November 15, 1996 informing them of the compulsory acquisition of 21.1289
hectares of their landholdings pursuant to the Comprehensive Agrarian Reform
Law (Republic Act [RA] 6657) for P371,154.99 as compensation based on the
valuation made by the Land Bank of the Philippines (petitioner).

Respondents rejected the said valuation. Consequently, the Provincial Department

of Agrarian Reform Adjudication Board (Provincial DARAB) conducted a
summary hearing on the amount of just compensation. Thereafter, the Provincial
DARAB affirmed the valuation made by the petitioner.

Unsatisfied, respondents filed an action for the determination of just compensation

before the Regional Trial Court (as a Special Agrarian Court [SAC])
of Tagbilaran City. The case was docketed as Civil Case No. 6085 and was raffled
to Branch 3.

After trial on the merits, the SAC rendered a Decision[5] dated November 20, 2000,
the dispositive portion of which reads
 WHEREFORE, judgment is hereby rendered fixing the just
compensation of the land of petitioner subject matter of the instant action
at P7.00 per square meter, as only prayed for, which shall earn legal
interest from the filing of the complaint until the same shall have been
fully paid. Furthermore, respondents are hereby ordered to jointly and
solidarily indemnify the petitioners their expenses for attorneys fee and
contract fee in the conduct of the appraisal of the land by a duly licensed
real estate appraiser Angelo G. Fajardo of which petitioner shall submit a
bill of costs therefor for the approval of the Court.

SO ORDERED.[6]

On December 11, 2000, petitioner filed a Notice of Appeal.[7] Subsequently,

on December 15, 2000, respondents filed a Motion for Execution Pending
Appeal[8] pursuant to Section 2, Rule 39 of the 1997 Rules of Civil Procedure and
the consolidated cases of Landbank of the Philippines v. Court of Appeals, et
al.[9] and Department of Agrarian Reform v. Court of Appeals, et
al.[10] Respondents claimed that the total amount of P1,479,023.00 (equivalent
to P7.00 per square meter for 21.1289 hectares), adjudged by the SAC as just
compensation, could then be withdrawn under the authority of the aforementioned
case.

Meanwhile, on December 18, 2000, the DAR filed its own Notice of
Appeal[11] from the SAC Decision dated November 20, 2000. The DAR alleged in
its Notice that it received a copy of the SAC Decision only on December 6, 2000.

On December 21, 2000, the SAC issued an Order[12] granting the Motion for
Execution Pending Appeal, the decretal portion of which reads

WHEREFORE, the herein motion is granted and the petitioners are

hereby ordered to post bond equivalent to one-half of the amount due
them by virtue of the decision in this case. The respondent Land Bank of
the Philippines, is therefore, ordered to immediately deposit with any
accessible bank, as may be designated by respondent DAR, in cash or in
any governmental financial instrument the total amount due the
petitioner-spouses as may be computed within the parameters of Sec.
18(1) of RA 6657. Furthermore, pursuant to the Supreme Court
decisions in Landbank of the Philippines vs. Court of Appeals, et al. G.R.
 No. 118712, promulgated on October 6, 1995 and Department of
Agrarian Reform vs. Court of Appeals, et al., G.R. No. 118745,
promulgated on October 6, 1995, the petitioners may withdraw the same
for their use and benefit consequent to their right of ownership
thereof.[13]

On December 25, 2000, respondents filed a Motion for Partial

Reconsideration[14] of the amount of the bond to be posted, which was later denied
in an Order[15] dated January 11, 2001.

Petitioner filed a Motion for Reconsideration[16] on December 27, 2000, which was
likewise denied in an Order[17] dated December 29, 2000.

On March 13, 2001, petitioner filed with the Court of Appeals a special civil
action[18] for certiorari and prohibition under Rule 65 of the Rules of Court with
prayer for issuance of a temporary restraining order and/or preliminary
injunction. It questioned the propriety of the SAC Order granting the execution
pending appeal. Respondents and the presiding judge of the SAC, as nominal
party, filed their respective comments[19] on the petition.

In its Decision dated July 29, 2002, the Court of Appeals dismissed the petition on
the ground that the assailed SAC Order dated December 21, 2000 granting
execution pending appeal was consistent with justice, fairness, and equity, as
respondents had been deprived of the use and possession of their property pursuant
to RA 6657 and are entitled to be immediately compensated with the amount as
determined by the SAC under the principle of prompt payment of just
compensation.

Petitioner filed a Motion for Reconsideration of the Court of Appeals Decision, but
the same was denied in a Resolution dated February 5, 2003. Hence, this appeal.

Petitioner anchors its petition on the following grounds:

I. THE COURT OF APPEALS GRAVELY ERRED IN RULING

THAT THE RESPONDENTS WERE ENTITLED TO
EXECUTION PENDING APPEAL OF THE COMPENSATION
 FIXED BY THE SAC BASED ON THE PRINCIPLE OF
PROMPT PAYMENT OF JUST COMPENSATION, EVEN
THOUGH THE PRINCIPLE OF PROMPT PAYMENT IS
SATISFIED BY THE PAYMENT AND IMMEDIATE
RELEASE OF THE PROVISIONAL COMPENSATION
UNDER SECTION 16(E) OF RA 6657, UPON SUBMISSION
OF THE LEGAL REQUIREMENTS, IN ACCORDANCE WITH
THE RULING OF THIS HONORABLE COURT IN THE CASE
OF LAND BANK OF THE PHILIPPINES V. COURT OF
APPEALS, PEDRO L. YAP, ET AL., G.R. NO.
118712, OCTOBER 6, 1995 AND JULY 5, 1996, AND NOT BY
EXECUTION PENDING APPEAL OF THE COMPENSATION
FIXED BY THE SAC.
II. THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN UPHOLDING THE SAC ORDER FOR
EXECUTION PENDING APPEAL WHICH WAS ISSUED
WITHOUT ANY GOOD REASON RECOGNIZED UNDER
EXISTING JURISPRUDENCE AND PROPER HEARING AND
RECEPTION OF EVIDENCE IN VIOLATION OF SECTION
2(A), RULE 39 OF THE RULES OF COURT.

For its first ground, petitioner asserts that, according to our ruling in Land Bank
of the Philippines v. Court of Appeals,[20] the principle of prompt payment of just
compensation is already satisfied by the concurrence of two (2) conditions: (a) the
deposits made by petitioner in any accessible bank, equivalent to the DAR/LBP
valuation of the expropriated property as provisional compensation, must be in
cash and bonds as expressly provided for by Section 16(e) of RA 6657, not merely
earmarked or reserved in trust; and (b) the deposits must be immediately released
to the landowner upon compliance with the legal requirements under Section
16[21] of RA 6657, even pending the final judicial determination of just
compensation.

Anent the second ground, petitioner argues that the good reasons cited by the SAC,
as affirmed by the Court of Appeals, namely: (1) that execution pending appeal
would be in consonance with justice, fairness, and equity considering that the land
had long been taken by the DAR; (2) that suspending the payment of compensation
will prolong the agony that respondents have been suffering by reason of the
deprivation of their property; and (3) that it would be good and helpful to the
economy are not valid reasons to justify the execution pending appeal, especially
because the execution was granted without a hearing.

This appeal should be denied.

As the issues raised are interrelated, they shall be discussed jointly.

Execution of a judgment pending appeal is governed by Section 2(a) of Rule 39 of

the Rules of Court, to wit:

SEC. 2. Discretionary execution.

(a) Execution of a judgment or a final order pending appeal. -- On

motion of the prevailing party with notice to the adverse party filed in
the trial court while it has jurisdiction over the case and is in possession
of either the original record or the record on appeal, as the case may be,
at the time of the filing of such motion, said court may, in its discretion,
order execution of a judgment or final order even before the expiration
of the period to appeal.
xxxx
Discretionary execution may only issue upon good reasons to be
stated in a special order after due hearing.

As provided above, execution of the judgment or final order pending appeal is

discretionary. As an exception to the rule that only a final judgment may be
executed, it must be strictly construed. Thus, execution pending appeal should not
be granted routinely but only in extraordinary circumstances.

The Rules of Court does not enumerate the circumstances which would justify the
execution of the judgment or decision pending appeal. However, we have held that
good reasons consist of compelling or superior circumstances demanding urgency
which will outweigh the injury or damages suffered should the losing party secure
a reversal of the judgment or final order. The existence of good reasons is what
confers discretionary power on a court to issue a writ of execution pending
appeal. These reasons must be stated in the order granting the same. Unless they
are divulged, it would be difficult to determine whether judicial discretion has been
properly exercised.[22]

In this case, do good reasons exist to justify the grant by the SAC of the motion for
execution pending appeal? The answer is a resounding YES.

The expropriation of private property under RA 6657 is a revolutionary kind of

expropriation,[23] being a means to obtain social justice by distributing land to the
farmers, envisioning freedom from the bondage to the land they actually till. As an
exercise of police power, it puts the landowner, not the government, in a situation
where the odds are practically against him. He cannot resist it. His only consolation
is that he can negotiate for the amount of compensation to be paid for the property
taken by the government. As expected, the landowner will exercise this right to the
hilt, subject to the limitation that he can only be entitled to just
compensation. Clearly therefore, by rejecting and disputing the valuation of the
DAR, the landowner is merely exercising his right to seek just compensation.[24]

In this case, petitioner valued the property of respondents at P371,154.99 for the
compulsory acquisition of 21.1289 hectares of their landholdings. This amount
respondents rejected. However, the same amount was affirmed by the DAR after
the conduct of summary proceedings. Consequently, respondents brought the
matter to the SAC for the determination of just compensation. After presentation of
evidence from both parties, the SAC found the valuation of the LBP and the DAR
too low and pegged the just compensation due the respondents at P7.00 per square
meter, or a total of P1,479,023.00 for the 21.1289 hectares. In determining such
value, the SAC noted the following circumstances:

1. the nearest point of the land is about 1.5 kilometers from Poblacion
Ubay;
2. the total area of the land based on the sketch-map presented by the
MARO is 23.3416 hectares.
3. the land is generally plain, sandy loam, without stones, rocks or
[pebbles];
4. the land is adjoining the National Highway of Ubay-Trinidad, Bohol;
5. 11.4928 hectares of the land is devoted to planting rice, which
portion is rain-fed and produces 60-80 cavans of rice per hectare with
two (2) harvest seasons a year;
6. four (4) hectares is planted with 210 fruit-bearing coconut trees,
which private respondents used to receive a share of P1,500.00 per
harvest four (4) times a year;
7. five (5) hectares is cogonal but now most area is planted with
cassava;
8. the area is traversed with electricity providing electric power to some
occupants;
9. across the National Highway, about 200 meters away from the
landholding, is an irrigation canal of the National Irrigation
Administration (NIA);
10. the Ubay Airport is about two (2) kilometers from the landholding;
11. fruit trees like mangoes and jackfruits were also planted on the
property;
12. north of the landholding, about a kilometer away, is the seashore;
13. the market value of the land per Tax Declaration No. 45-002-00084
is P621,310.00 for the entire 23.2416 hectares but representing only
48% of the actual value of the property;
14. that the real estate appraiser Angelo Z. Fajardo appraised the land
at P80,000.00 per hectare for the Riceland and P30,000.00 for all
other portions thereof;
15. testimony of the representative from petitioner that the factors
considered in the appraisal of land are the cost of acquisition of the
land, the current value, its nature, its actual use and income, the
sworn valuation of the owner, and the assessment by the government
functionary concerned;
16. petitioners contention that the main basis for the valuation it made
was the very low price that the petitioners had paid for the land when
they acquired it along with other parcels from the Development Bank
of the Philippines in a foreclosure sale;
17. the testimony of the Municipal Agrarian Reform Officer for DAR
that it was contemplated that the property be disposed to farmer-
beneficiaries at a relatively higher price; and
18. the fact that Ubay town is a fast-growing municipality being a
consistent recipient of government projects and facilities in view of
its natural resources and favorable geographical locationBohol
Circumferential Road Improvement Project Phase I, the Leyte-Bohol
Interconnection Project Phase I, the Ilaya Reservior Irrigation Project,
the Metro San Pascual Rural and Waterworks System, the 250-
hectare Central Visayas Coconut Seeds Production Center, the
Philippine Carabao Center at the Ubay Stock Farm, and several other
public and private business facilities.[25]
 In light of these circumstances, the SAC found that the valuation made by
petitioner, and affirmed by the DAR, was unjustly way below the fair valuation of
the landholding at the time of its taking by the DAR. The SAC, mindful also of the
advanced age of respondents at the time of the presentation of evidence for the
determination of just compensation, deemed it proper to grant their motion for
execution pending appeal with the objective of ensuring prompt payment of just
compensation.

Contrary to the view of petitioner, prompt payment of just compensation is

not satisfied by the mere deposit with any accessible bank of the provisional
compensation determined by it or by the DAR, and its subsequent release to the
landowner after compliance with the legal requirements set by RA 6657.

Constitutionally, just compensation is the sum equivalent to the market value

of the property, broadly described as the price fixed by the seller in open market in
the usual and ordinary course of legal action and competition, or the fair value of
the property as between the one who receives and the one who desires to sell, it
being fixed at the time of the actual taking by the government.[26] Just
compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. It has been repeatedly stressed by this Court that the
true measure is not the takers gain but the owners loss. The word just is used to
modify the meaning of the word compensation to convey the idea that the
equivalent to be given for the property to be taken shall be real, substantial, full,
and ample.[27]

The concept of just compensation embraces not only the correct

determination of the amount to be paid to the owners of the land, but also payment
within a reasonable time from its taking. Without prompt payment, compensation
cannot be considered just inasmuch as the property owner is made to suffer the
consequences of being immediately deprived of his land while being made to wait
for a decade or more before actually receiving the amount necessary to cope with
his loss.[28]
 Put differently, while prompt payment of just compensation requires the
immediate deposit and release to the landowner of the provisional compensation as
determined by the DAR, it does not end there. Verily, it also encompasses the
payment in full of the just compensation to the landholders as finally determined
by the courts. Thus, it cannot be said that there is already prompt payment of just
compensation when there is only a partial payment thereof, as in this case.

While this decision does not finally resolve the propriety of the
determination of just compensation by the SAC in view of the separate appeal on
the matter, we find no grave abuse of discretion on the part of the SAC judge in
allowing execution pending appeal. The good reasons cited by the SACthat it
would be in consonance with justice, fairness, and equity, and that suspending
payment will prolong the agony of respondents suffered due to the deprivation of
their landare eloquently elucidated in the Comment filed by SAC Judge Venancio
J. Amila, as nominal party, on the petition for certiorari and prohibition of
petitioner before the Court of Appeals, viz.:

In addition to the Comment of private respondents, through counsel

Hilario C. Baril, which the undersigned has just received a copy today, it
is well to state here that respondent Placido Orilla is already an old man
just as his wife. The appealed Decision will show that Orilla was already
71 years old at the time he testified in this case and the transcripts would
further show that the money that he used in buying the DBP foreclosed
property herein subject of compulsory acquisition by the DAR came
from his retirement benefits evidently thinking that his investment would
afford him security and contentment in his old age. But, luckily or
unluckily, the land was taken from him by the DAR at a price so low that
he could not swallow, thus, he brought the issue to court. Yet, all along,
the land has been under the enjoyment of farmer-beneficiaries without
him yet being paid therefor. In the mind of the Court, if payment for the
land would be delayed further, it would not be long that death would
overtake him. What a misfortune to his long years of service to acquire
that hard-earned savings only to be deprived therefrom at the time when
he needed it most.[29]

The SAC, aware of the protracted proceedings of the appeal of its November
20, 2000 Decision, but without imputing any dilatory tactics on the part of
petitioner, thus deemed it proper, in its sound discretion, to grant the execution
pending appeal. Moreover, the execution of the judgment of the SAC was
conditioned on the posting of a bond by the respondents, despite pleas to reduce
the same, in the amount of one-half of the just compensation determined by the
said court or P739,511.50.

To reiterate, good reasons for execution pending appeal consist of

compelling or superior circumstances demanding urgency which will outweigh the
injury or damages suffered should the losing party secure a reversal of the
judgment or final order. In the case at bar, even with the procedural flaw in the
SACs grant of execution without a hearing, the injury that may be suffered by
respondents if execution pending appeal is denied indeed outweighs the damage
that may be suffered by petitioner in the grant thereof. As correctly pointed out by
respondents, the reversal of the November 20, 2000 SAC Decision, in the sense
that petitioner will pay nothing at all to respondents, is an impossibility,
considering the constitutional mandate that just compensation be paid for
expropriated property. The posting of the required bond, to our mind, adequately
insulates the petitioner against any injury it may suffer if the SAC determination of
just compensation is reduced.

Suffice it to say that, given the particular circumstances of this case, along
with the considerable bond posted by respondents, the assailed SAC Order
of December 21, 2000 and the Decision of the Court of Appeals dated July 29,
2002 are justified.

WHEREFORE, the Decision of the Court of Appeals dated July 29,

2002 is AFFIRMED.

SO ORDERED.

LBP VS CA
LBP VS BARRIDO
For review is the Court of Appeals (CA) Decision[1] dated February 20, 2008
and its Resolution[2] dated July 8, 2008 in CA-G.R. CEB-SP No. 01641. The
assailed decision affirmed the Decision[3] of the Regional Trial Court (RTC),
Branch 34, Iloilo City in Civil Case No. 04-28093; while the assailed resolution
denied petitioner LandBank of the Philippines motion for reconsideration.

The undisputed facts are as follows:

Respondents Rizalina Gustilo Barrido and the Heirs of Romeo Barrido are the
registered owners of a parcel of land with an area of 89,204 square meters covered
by Original Certificate of Title No. 0-6318, situated in Barangay Apologista,
Sara, Iloilo. On April 30, 2003, the government expropriated a portion of the
property consisting of 43,461[4]sq m for distribution to the farmer-beneficiaries
under the Land Reform Program. Petitioner offered respondents a total amount
of P60,385.49 as just compensation, but respondents rejected the offer.
Respondents instituted an original action before the RTC for the judicial
determination of just compensation. The case was docketed as Civil Case No. 04-
28093.[5]

In their separate Answers, petitioner and the Department of Agrarian Reform

(DAR) insisted that the valuation made is correct, it being based on the formula
laid down in Presidential Decree (P.D.) No. 27 as supplemented by Executive
Order (E.O.) No. 228.[6] Under these issuances, the prescribed formula is as
follows:

Land Value = Average Gross Production (AGP) x 2.5 x

Government Support Price (GSP)

On December 8, 2005, the RTC rendered a Decision[7] fixing the just compensation
at P94, 797.09 per hectare, the dispositive portion of which reads:

WHEREFORE, based on the foregoing premises, judgment is hereby

rendered fixing the just compensation of land at P94,797.09 per hectare
 and ordering the LBP to pay plaintiffs Rizalina Gustilo Barrido and
Heirs of Romeo Barrido the total sum of P411,997.63 as just
compensation for the 4.3461 hectares taken by the government pursuant
to P.D. No. 27 and E.O. No. 228 plus 12% interest per annum from
March 21, 2003 until full payment.

SO ORDERED.[8]

The RTC arrived at the valuation by taking the average between the amount found
by the DAR using the formula prescribed by E.O. No. 228 and the market value of
the property which is P175,700.00 per hectare. In addition, the court also awarded
12% interest in the form of damages in view of the delay in the payment of just
compensation.[9]Petitioners motion for reconsideration was denied on March 1,
2006.[10]

On appeal, the CA affirmed the RTC decision in its entirety. Hence, the instant
petition for review which assigns the following errors:

I.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS
ERRORS OF LAW WHEN IT AFFIRMED THE DECISION DATED
DECEMBER 8, 2005 AND ORDER DATED MARCH 1, 2006 OF THE
REGIONAL TRIAL COURT OF ILOILO CITY, BRANCH 34 IN
CIVIL CASE NO. 04-28093, FINDING THAT THE APPLICABLE
LAW IN THE INSTANT CASE IS R.A. NO. 6657 AND NOT P.D. NO.
27 AND E.O. NO. 228.

II.
ASSUMING ARGUENDO THAT R.A. NO. 6657 IS THE
APPLICABLE LAW, STILL THE HONORABLE COURT OF
APPEALS COMMITTED SERIOUS ERRORS OF LAW WHEN IT
AFFIRMED THE SAID DECISION AND ORDER OF THE TRIAL
COURT THAT FIXED THE JUST COMPENSATION WHICH IS
NOT IN ACCORDANCE WITH THE PROVISIONS OF R.A. NO.
6657 AS TRANSLATED INTO A BASIC FORMULA UNDER DAR
ADMINISTRATIVE ORDER NO. 5, SERIES OF 1998.

III.
 THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS
ERRORS OF LAW WHEN IT AFFIRMED THE SUBJECT DECISION
AND ORDER OF THE TRIAL COURT THAT AWARDED IN
FAVOR OF THE RESPONDENT TWELVE PERCENT (12%)
INTEREST PER ANNUM FOR ALLEGED DELAY IN PAYMENT.[11]

The issues raised in the instant case are not novel. We have ruled in a
number of cases that if just compensation is not settled prior to the passage of
Republic Act (R.A.) No. 6657, it should be computed in accordance with said law
even if the property was acquired under P.D. No. 27.[12] The fixing of just
compensation should, therefore, be based on the parameters prescribed in R.A. No.
6657, with P.D. No. 27 and E.O. No. 228 having only suppletory
effect.[13] Specifically, Section 17[14] of R.A. 6657 is the principal basis of the
computation for just compensation.[15] The factors set forth in this section have
been translated into a basic formula outlined in DAR Administrative Order No. 5,
series of 1998,[16] thus: [17]

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

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

Where: LV = Land Value

CNI = Capitalized Net Income
CS = Comparable Sales
MV= Market Value per Tax Declaration

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

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

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

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

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

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

LV = MV x 2

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

While the determination of just compensation is essentially a judicial function

vested in the RTC acting as a Special Agrarian Court, the judge cannot abuse his
discretion by not taking into full consideration the factors specifically identified by
law and implementing rules.[18] Special Agrarian Courts are not at liberty to
disregard the formula laid down in DAR A.O. No. 5, series of 1998, because unless
an administrative order is declared invalid, courts have no option but to apply
it.[19] The courts cannot ignore, without violating the agrarian law, the formula
provided by the DAR for the determination of just compensation.[20]

In this case, the RTC adopted a different formula in determining land valuation by
considering the average between the findings of the DAR using the formula laid
down in E.O. 228 and the market value of the property as stated in the tax
declaration. This is obviously a departure from the mandate of the law and the
DAR administrative order.

As the RTC based its valuation on a different formula and without taking into
consideration the factors set forth in Section 17 of R.A. 6657, we are constrained to
remand the case to the RTC for the determination of just compensation in
accordance with this formula and applicable DAR regulations.

WHEREFORE, the February 20, 2008 Decision and July 8, 2008 Resolution of
the Court of Appeals in CA-G.R. CEB-SP No. 01641 are REVERSED and SET
ASIDE.
Civil Case No. 04-28093 is REMANDED to the court of origin, Branch 34 of the
Regional Trial Court of Iloilo City, which is directed to determine with dispatch
the just compensation due respondents Rizalina Gustilo Barrido and the Heirs of
Romeo Barrido strictly in accordance with the formula laid down in DAR
Administrative Order No. 5, series of 1998.

SO ORDERED.

LANDBANK vs. HEIRS OF TRINIDAD S. VDA. DE ARIETA,

GR 161834
FACTS: Private respondent is the registered owner of a
parcel of agricultural land situated in Sampao, Kapalong,
Davao del Norte with an approximate area of 37.1010
hectares,14.999 hectares of which was covered by RA
No. 6657 through the Voluntary Offer to Sell (VOS)
scheme of the CARP.Private respondent offered to the
DARthe price ofP2,000,000.00 per hectare for said
portion of the land covered by CARP.Petitioner bank
valued and offered as just compensation for said
14.999 hectares the amount ofP1,145,806.06
orP76,387.57 per hectare. The offer was rejected by
private respondent.In accordance with Section 16 of
RA No. 6657, petitioner LBP deposited for the
account of private respondent P1,145,806.06 in cash
and in bonds as provisional compensation for the
acquisition of the property.Thereafter, DARAB
conducted summary administrative proceedings and
rendered a decision fixing the compensation of the
property at P10,294,721.00 or P686,319.36 per
hectare.Petitioner LBP filed a petition against private
respondent for judicial determination of just
compensation before the Special Agrarian Court. Private
respondent, on the other hand, filed a similar petition
against DAR before the same Special Agrarian Court.

ISSUE: What is the correct amount of provisional

compensation which the LBP is required to deposit in the
name of the landowner if the latter rejects the DAR/LBP‘s
offer:Landbank‘s initial valuation of the land subject
of Voluntary Offer to Sell (VOS) or the sum
awarded by the PARAD/RARAD/DARAB in a summary
administrative proceedingpending final determination by
the courts?

HELD: In both voluntary and compulsory acquisitions,

wherein the landowner rejects the offer, the DAR opens
an account in the name of the landowner and
conducts a summary administrative proceeding.If the
landowner disagrees with the valuation, the matter
may be brought to the RTC, acting as a special
agrarian court.But as with the DAR-awarded
compensation, LBP‘s valuation of lands covered by CARL
is considered only as an initial determination, which is
not conclusive, as it is the RTC, sitting as a Special
Agrarian Court, that should make the final
determination of just compensation, taking into
consideration the factors enumerated in Section 17 of
R.A. No. 6657 and the applicable DAR regulations.It is
now settled that the valuation of property in eminent
domain is essentially a judicial function,which is vested
with the RTC acting as Special Agrarian Court.The same
cannot be lodged with administrative agencies and may
not be usurped by any other branch or official of the
government.Although under the CARL of 1988, the
landowners are entitled to withdraw the amount
deposited in their behalf pending the final resolution of
the case involving the final valuation of his property,the
SAC may not, as in this case, order the petitioner to
deposit or deliver the much higher amount adjudged
by the RARAD considering that it already complied
with the deposit of provisional compensation by
depositing the amount of its initial valuation which
was rejected by therespondent.And while the DARAB
Rules of Procedureprovides for execution pending
appeal upon ―meritorious grounds,‖respondent has
not established such meritorious reasons for allowing
execution of the RARAD decision pending final
determination of just compensation by the court.As the
Court had previously declared, the LBP is primarily
responsible for the valuation and determination of
compensation for all private lands.It has the discretion to
approve or reject the land valuation and just
compensation for a private agricultural land placed under
the CARP.In case the LBP disagrees with the valuation of
land and determination of just compensation by a party,
the DAR, or even the courts, the LBP not only has the
right, but the duty, to challenge the same, by appeal to
the CA or to this Court, if appropriate.Both LBP and
respondent filed petitions before the SAC disputing the
RARAD judgment awarding compensation in the amount
of P10,294,721.00.In view of the substantial difference in
the valuations --the initial valuation by the LBP being only
P1,145,806.06 --the more prudent course is to await the
final resolution of the issue of just compensation already
filed with said court.