G.R. No.

139285 December 21, 2007

ROMAN CATHOLIC ARCHBISHOP OF CACERES, Petitioner VS. SECRETARY OF
AGRARIAN REFORM and DAR REGIONAL
DIRECTOR (Region V) Respondents
DECISION
VELASCO, JR., J.:
The Comprehensive Agrarian Reform Law (CARL) has truly noble goals, and these
noble goals should not be stymied by the creation of exemptions or exceptions not contemplated
by the law.
The Case
In this Petition for Review on Certiorari under Rule 45, petitioner Roman Catholic
Archbishop of Caceres (Archbishop) questions the February 4, 1999 Decision [1] of the Court of
Appeals (CA) in CA-G.R. SP No. 48282, which upheld the December 8, 1997 and June 10,
1998 Orders of the Department of Agrarian Reform (DAR).

The Facts
Archbishop is the registered owner of several properties in Camarines Sur, with a total area of
268.5668 hectares. Of that land, 249.0236 hectares are planted with rice and corn, while the
remaining 19.5432 hectares are planted with coconut trees.
In 1985, Archbishop filed with the Municipal Agrarian Reform District Office No.
19, Naga City, Camarines Sur several petitions for exemption of certain properties located in
various towns of Camarines Sur from the coverage of Operation Land Transfer (OLT) under
Presidential Decree No. (PD) 27.[2] Two of these petitions were denied in an Order
dated November 6, 1986, issued by the Regional Director of DAR, Region V, Juanito L. Lorena.
[3]

Archbishop appealed from the order of the Regional Director, and sought exemption from OLT
coverage of all lands planted with rice and corn which were registered in the name of the
Roman Catholic Archdiocese of Caceres. In his appeal, Archbishop cited the following grounds:
a) That said properties are all covered by conditional donations subject to the
prohibitions of the donors to SELL, EXCHANGE, LEASE, TRANSFER,
ENCUMBER OR MORTGAGE the properties;

b) That they are used for charitable and religious purposes;

c) That the parishes located in depressed areas badly need them for the furtherance
of their mission work, propagation of the faith, maintenance and support of
their chapels, churches and educational religious institutions like the Holy
Rosary Major and Minor Seminaries for the promotion of the priesthood
vocation;
d) For the preservation of good relationship between church and state thru noninfringement of the right to exercise religious profession and worship;
e) For the maintenance of the Cathedral and Peafrancia Shrine, which now include
the Basilica Minore Housing our venerable image of Our Lady of Peafrancia
and the venerable portrait of Divine Rostro;
f) That the petitioner (church) is amenable to continue the leasehold system with
the present cultivators or tenants.[4]

This appeal was denied by then DAR Secretary Ernesto D. Garilao in an Order
dated December 8, 1997.[5] A subsequent motion for reconsideration was denied in an Order
dated June 10, 1998.[6]
The matter was then raised to the CA via Petition for Review on Certiorari. Archbishop
argued that even if the lands in question are registered in his name, he holds the lands in trust
for the benefit of his followers as cestui que trust. Archbishop further argued that the deeds of
donation by which the lands were transferred to him imposed numerous fiduciary obligations,
such that he cannot sell, exchange, lease, transfer, encumber, or mortgage the subject lands. By
this reasoning, Archbishop concluded that he is not the landowner contemplated by PD 27 and
Republic Act No. (RA) 6657, the CARL of 1988. He then prayed that the assailed orders of the
DAR be reversed, or in the alternative, that the alleged beneficiaries of the trust be each allowed
to exercise rights of retention over the landholdings.[7]
The petition was dismissed by the CA in its February 4, 1999 Decision.[8] Archbishop
filed a motion for reconsideration, but was denied in the June 18, 1999 CA Resolution.[9]
Archbishop now brings the matter before us through this petition.

The Issues
Archbishop raises issues he had raised previously, which, he contends, the CA failed to properly
address. He claims that the CA erred in holding that he is only entitled to assert one right of

retention as the subject properties are registered in his name. He further claims that an express
trust had been created wherein he only held naked title to the subject properties on behalf of the
beneficiaries. He argues that it is not the landowner contemplated by the law, but merely a
trustee, and as such is entitled to as many rights of retention on behalf of the beneficiaries of
each particular property. He then raises the question of the applicability of the ruling in The
Roman Catholic Apostolic Administrator of Davao, Inc. v. The Land Registration Commission
and the Register of Deeds of Davao City,[10] which, he cites, ruled that properties held by the
Church are held by it as a mere administrator for the benefit of the members of that particular
religion. As Archbishop claims to be merely an administrator of the subject properties, he
argues that these subject properties should have been exempt from the OLT.
The Courts Ruling
The petition has no merit.
Archbishops arguments, while novel, must fail in the face of the law and the dictates of the
1987 Constitution.
The laws simply speak of the landowner without qualification as to under what title the land is
held or what rights to the land the landowner may exercise. There is no distinction made
whether the landowner holds naked title only or can exercise all the rights of ownership.
Archbishop would have us read deeper into the law, to create exceptions that are not stated in
PD 27 and RA 6657, and to do so would be to frustrate the revolutionary intent of the law,
which is the redistribution of agricultural land for the benefit of landless farmers and
farmworkers.
Archbishop was found to be the registered owner of the lands in question, and does not contest
that fact. For the purposes of the law, this makes him the landowner, without the necessity of
going beyond the registered titles. He cannot demand a deeper examination of the registered
titles and demand further that the intent of the original owners be ascertained and followed. To
adopt his reasoning would create means of sidestepping the law, wherein the mere act of
donation places lands beyond the reach of agrarian reform.
There can be no claim of more than one right of retention per landowner. Neither PD 27 nor RA
6657 has a provision for a landowner to exercise more than one right of retention.The law is
simple and clear as to the retention limits per landowner. PD 27 states, In all cases, the
landowner may retain an area of not more than seven (7) hectares if such landowner is
cultivating such area or will now cultivate it; while RA 6657 states:
SEC. 6. Retention Limits.Except as otherwise provided in this Act, no person may
own or retain, directly, any public or private agricultural land, the size of which

shall vary according to factors governing a viable family-sized farm, such as

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

Nothing in either law supports Archbishops claim to more than one right of retention on
behalf of each cestui que trust. The provisions of PD 27 and RA 6657 are plain and require no
further interpretationthere is only one right of retention per landowner, and no multiple rights of
retention can be held by a single party. Furthermore, the scheme proposed by Archbishop would
create as many rights of retention as there are beneficiaries, which could in effect protect the
entire available land area from agrarian reform. Under Archbishops reasoning, there is not even
a definite landowner to claim separate rights of retention, and no specific number of rights of
retention to be claimed by the landowners. There is simply no basis in the law or jurisprudence
for his argument that it is the beneficial ownership that should be used to determine which party
would have the right of retention.
Archbishop makes much of the conditional donation, that he does not have the power to
sell, exchange, lease, transfer, encumber or mortgage the transferred properties. He claims that
these conditions do not make him the landowner as contemplated by the law. This matter has
already been answered in Hospicio de San Jose de Barili, Cebu City(Hospicio) v. Department of
Agrarian Reform.[11] In that case, wherein Act No. 3239 prohibited the sale under any
consideration of lands donated to the Hospicio, a charitable organization, the Court found that
the lands of the Hospicio were not exempt from the coverage of agrarian reform. In
characterizing the sale of land under agrarian reform, we stated:
Generally, sale arises out of contractual obligation. Thus, it must meet the
first essential requisite of every contract that is the presence of consent. Consent
implies an act of volition in entering into the agreement. The absence or vitiation
of consent renders the sale either void or voidable.
In this case, the deprivation of the Hospicios property did not arise as a
consequence of the Hospicios consent to the transfer. There was no meeting of
minds between the Hospicio, on one hand, and the DAR or the tenants, on the
other, on the properties and the cause which are to constitute the contract that is to

serve ultimately as the basis for the transfer of ownership of the subject
lands. Instead, the obligation to transfer arises by compulsion of law, particularly
P.D. No. 27.[12]
We discussed further:
The twin process of expropriation under agrarian reform and the payment of
just compensation is akin to a forced sale, which has been aptly described in
common law jurisdictions as sale made under the process of the court and in the
mode prescribed by law, and which is not the voluntary act of the owner, such as to
satisfy a debt, whether of a mortgage, judgment, tax lien, etc. The term has not
been precisely defined in this jurisdiction, but reference to the phrase itself is made
in Articles 223, 242, 237 and 243 of the Civil Code, which uniformly exempt the
family home from execution, forced sale, or attachment. Yet a forced sale is clearly
different from the sales described under Book V of the Civil Code which are
conventional sales, as it does not arise from the consensual agreement of the
vendor and vendee, but by compulsion of law. Still, since law is recognized as one
of the sources of obligation, there can be no dispute on the efficacy of a forced
sale, so long as it is authorized by law.[13]
Archbishops claim that he does not have jus disponendi over the subject properties is
unavailing. The very nature of the compulsory sale under PD 27 and RA 6657 defeats such a
claim. Other less scrupulous parties may even attempt creating trusts to prevent their lands from
coming under agrarian reform, and say that the trustee has no power to dispose of the
properties. The disposition under PD 27 and RA 6657 is of a different character than what is
contemplated by jus disponendi, wherein under these laws, voluntariness is not an issue, and the
disposition is necessary for the laws to be effective.
Under PD 27 and RA 6657, Archbishop cannot claim that the alleged conditions of the
donations would have primacy over the application of the law. This forced sale is not even a
violation of the conditions of the donation, since it is by application of law and beyond
Archbishops control. The application of the law cannot and should not be defeated by the
conditions laid down by the donors of the land. If such were allowed, it would be a simple
matter for other landowners to place their lands without limit under the protection of religious
organizations or create trusts by the mere act of donation, rendering agrarian reform but a pipe
dream.
Archbishops contention that he is merely an administrator of the donated properties will not
serve to remove these lands from the coverage of agrarian reform. Under PD 27, the coverage is
lands devoted to rice and corn. Section 4 of RA 6657 states, The Comprehensive Agrarian
Reform Law of 1988 shall cover, regardless of tenurial arrangement and commodity produced,
all public and private agricultural lands as provided in Proclamation No. 131 and Executive
Order No. 229, including other lands of the public domain suitable for agriculture. The lands in

Archbishops name are agricultural lands that fall within the scope of the law, and do not fall
under the exemptions.
The exemptions under RA 6657 form an exclusive list, as follows:
SEC. 10. Exemptions and Exclusions.
(a) Lands actually, directly and exclusively used for parks, wildlife, forest reserves,
reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves
shall be exempt from the coverage of this Act.
(b) Private lands actually, directly and exclusively used for prawn farms and
fishponds shall be exempt from the coverage of this Act: Provided, That said
prawn farms and fishponds have not been distributed and Certificate of Land
Ownership Award (CLOA) issued under the Agrarian Reform Program.
In cases where the fishponds or prawn farms have been subjected to the
Comprehensive Agrarian Reform Law, by voluntary offer to sell, or commercial
farms deferment or notices of compulsory acquisition, a simple and absolute
majority of the actual regular workers or tenants must consent to the exemption
within one (1) year from the effectivity of this Act. When the workers or tenants
do not agree to this exemption, the fishponds or prawn farms shall be distributed
collectively to the worker-beneficiaries or tenants who shall form cooperative or
association to manage the same.
In cases where the fishponds or prawn farms have not been subjected to the
Comprehensive Agrarian Reform Law, the consent of the farmworkers shall no
longer be necessary; however, the provision of Section 32-A hereof on incentives
shall apply.
(c) Lands actually, directly and exclusively used and found to be necessary for
national defense, school sites and campuses, including experimental farm stations
operated by public or private schools for educational purposes, seeds and seedlings
research and pilot production center, church sites and convents appurtenant thereto,
mosque sites and Islamic centers appurtenant thereto, communal burial grounds
and cemeteries, penal colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers and all lands with eighteen
percent (18%) slope and over, except those already developed, shall be exempt
from the coverage of this Act. (As amended by R. A. 7881)
Archbishop would claim exemption from the coverage of agrarian reform by stating that he is a
mere administrator, but his position does not appear under the list of exemptions under RA
6657. His claimed status as administrator does not create another class of lands exempt from the
coverage of PD 27 or RA 6657, and The Roman Catholic Apostolic Administrator of Davao,
Inc.[14] does not create another definition for the term landowner.
We explained in Hospicio:

It is axiomatic that where a general rule is established by a statute with

exceptions, the Court will not curtail nor add to the latter by implication, and it is a
rule that an express exception excludes all others. We cannot simply impute into a
statute an exception which the Congress did not incorporate. Moreover general
welfare legislation such as land reform laws is to be construed in favor of the
promotion of social justice to ensure the well-being and economic security of the
people. Since a broad construction of the provision listing the properties exempted
under the CARL would tend to denigrate the aims of agrarian reform, a strict
application of these exceptions is in order.[15]
Archbishop cannot claim exemption in behalf of the millions of Filipino faithful, as the
lands are clearly not exempt under the law. He should not fear that his followers are simply
being deprived of land, as under both PD 27 and RA 6657, he is entitled to just compensation,
which he may then use for the benefit of his followers. His situation is no different from other
landowners affected by agrarian reformthey are somewhat deprived of their land, but it is all for
a greater good.
As Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform[16] recognized the revolutionary character of the expropriation under the agrarian reform
law, we follow such lofty ideal for the resolution of this case. This grand purpose under the
CARL must not be hindered by the simple expedient of appending conditions to a donation of
land, or by donating land to a church. This is not to cast aspersions on religious organizations,
but it is not fitting for them to be used as vehicles for keeping land out of the hands of the
landless. The law is indubitably in line with the charitable ideals of religious organizations to
ensure that the land they own falls into the hands of able caretakers and owners. As a religious
leader, Archbishop can take solace in the fact that his lands are going to be awarded to those
who need and can utilize them to the fullest.
WHEREFORE, we DENY the petition, and AFFIRM the February 4, 1999 Decision in
CA-G.R. SP No. 48282.
SO ORDERED.

G.R. No. 103302 August 12, 1993

NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS

CORP., petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR.
WILFREDO LEANO, DAR REGION IV, respondents.
Lino M. Patajo for petitioners.
The Solicitor General for respondents.

BELLOSILLO, J.:
Are lands already classified for residential, commercial or industrial use, as approved by the
Housing and Land Use Regulatory Board and its precursor agencies 1 prior to 15 June
1988, 2 covered by R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988? This is the pivotal issue in this petition forcertiorari assailing the Notice of Coverage 3 of
the Department of Agrarian Reform over parcels of land already reserved as townsite areas
before the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous
parcels of land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205
hectares and 2.7080 hectares, or a total of 125.0078 hectares, and embraced in Transfer
Certificate of Title No. 31527 of the Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located
in the Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the
population overspill in the metropolis which were designated as the Lungsod Silangan
Townsite. The NATALIA properties are situated within the areas proclaimed as townsite
reservation.
Since private landowners were allowed to develop their properties into low-cost housing
subdivisions within the reservation, petitioner Estate Developers and Investors Corporation
(EDIC, for brevity), as developer of NATALIA properties, applied for and was granted
preliminary approval and locational clearances by the Human Settlements Regulatory
Commission. The necessary permit for Phase I of the subdivision project, which consisted of
13.2371 hectares, was issued sometime in 1982; 4 for Phase II, with an area of 80,000 hectares,
on 13 October 1983; 5and for Phase III, which consisted of the remaining 31.7707 hectares, on
25 April 1986. 6 Petitioner were likewise issued development permits 7 after complying with the
requirements. Thus the NATALIA properties later became the Antipolo Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of
1988" (CARL, for brevity), went into effect. Conformably therewith, respondent Department of
Agrarian Reform (DAR, for brevity), through its Municipal Agrarian Reform Officer, issued on

22 November 1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills
Subdivision which consisted of roughly 90.3307 hectares. NATALIA immediately registered its
objection to the notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and
twice wrote him requesting the cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc.
(SAMBA, for the brevity), filed a complaint against NATALIA and EDIC before the DAR
Regional Adjudicator to restrain petitioners from developing areas under cultivation by
SAMBA members. 8 The Regional Adjudicator temporarily restrained petitioners from
proceeding with the development of the subdivision. Petitioners then moved to dismiss the
complaint; it was denied. Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of
Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board
(DARAB); however, on 16 December 1991 the DARAB merely remanded the case to the
Regional Adjudicator for further proceedings. 9
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request
to set aside the Notice of Coverage. Neither respondent Secretary nor respondent Director took
action on the protest-letters, thus compelling petitioners to institute this proceeding more than a
year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including
undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL.
They argue that NATALIA properties already ceased to be agricultural lands when they were
included in the areas reserved by presidential fiat for the townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They
maintain that the permits granted petitioners were not valid and binding because they did not
comply with the implementing Standards, Rules and Regulations of P.D. 957, otherwise known
as "The Subdivision and Condominium Buyers Protective Decree," in that no application for
conversion of the NATALIA lands from agricultural residential was ever filed with the DAR. In
other words, there was no valid conversion. Moreover, public respondents allege that the instant
petition was prematurely filed because the case instituted by SAMBA against petitioners before
the DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a
consequence, that petitioners failed to fully exhaust administrative remedies available to them
before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and
Locational Clearances as well as the Development Permits granted petitioners for Phases I, II
and III of the Antipolo Hills Subdivision reveals that contrary to the claim of public
respondents, petitioners NATALIA and EDIC did in fact comply with all the requirements of
law.

Petitioners first secured favorable recommendations from the Lungsod Silangan Development
Corporation, the agency tasked to oversee the implementation of the development of the
townsite reservation, before applying for the necessary permits from the Human Settlements
Regulatory
Commission. 10 And, in all permits granted to petitioners, the Commission
stated invariably therein that the applications were in "conformance" 11 or "conformity" 12 or
"conforming" 13with the implementing Standards, Rules and Regulations of P.D. 957. Hence,
the argument of public respondents that not all of the requirements were complied with cannot
be sustained.
As a matter of fact, there was even no need for petitioners to secure a clearance or prior
approval from DAR. The NATALIA properties were within the areas set aside for the Lungsod
Silangan Reservation. Since Presidential Proclamation No. 1637 created the townsite
reservation for the purpose of providing additional housing to the burgeoning population of
Metro Manila, it in effect converted for residential use what were erstwhile agricultural lands
provided all requisites were met. And, in the case at bar, there was compliance with all relevant
rules and requirements. Even in their applications for the development of the Antipolo Hills
Subdivision, the predecessor agency of HLURB noted that petitioners NATALIA and EDIC
complied with all the requirements prescribed by P.D. 957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only
to the Lungsod Silangan Reservation, which makes it a special law. It is a basic tenet in
statutory construction that between a general law and a special law, the latter prevails. 14
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of
the Antipolo Hills Subdivision which have already been developed. 15 Of course, this is contrary
to its earlier position that there was no valid conversion. The applications for the developed and
undeveloped portions of subject subdivision were similarly situated. Consequently, both did not
need prior DAR approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall "cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands." As to what constitutes "agricultural land," it
is referred to as "land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land." 16 The deliberations of the
Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands
which are "arable and suitable agricultural lands" and "do not include commercial, industrial
and residential lands." 17
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as "agricultural lands." These lots were
intended for residential use. They ceased to be agricultural lands upon approval of their
inclusion in the Lungsod Silangan Reservation. Even today, the areas in question continued to
be developed as a low-cost housing subdivision, albeit at a snail's pace. This can readily be

gleaned from the fact that SAMBA members even instituted an action to restrain petitioners
from continuing with such development. The enormity of the resources needed for developing a
subdivision may have delayed its completion but this does not detract from the fact that these
lands are still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, 18 DAR itself
defined "agricultural land" thus
. . . Agricultural lands refers to those devoted to agricultural activity as defined in
R.A. 6657 and not classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its predecessor agencies, and not
classified in town plans and zoning ordinances as approved by the Housing and
Land Use Regulatory Board (HLURB) and its preceding competent authorities
prior to 15 June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by
such conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills
Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian
Reform, noted in an Opinion 19 that lands covered by Presidential Proclamation No. 1637, inter
alia, of which the NATALIA lands are part, having been reserved for townsite purposes "to be
developed as human settlements by the proper land and housing agency," are "not deemed
'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No. 6657. " Not being
deemed "agricultural lands," they are outside the coverage of CARL.
Anent the argument that there was failure to exhaust administrative remedies in the instant
petition, suffice it to say that the issues raised in the case filed by SAMBA members differ from
those of petitioners. The former involve possession; the latter, the propriety of including under
the operation of CARL lands already converted for residential use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents acted on their letterprotests, this after sitting it out for almost a year. Given the official indifference, which under
the circumstances could have continued forever, petitioners had to act to assert and protect their
interests. 20
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion
in issuing the assailed Notice of Coverage of 22 November 1990 by of lands over which they no
longer have jurisdiction.

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

November 1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision
were placed under CARL coverage is hereby SET ASIDE.
SO ORDERED.

G.R. No. 162070 October 19, 2005

DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY
JOSE MARI B. PONCE (OIC), Petitioner - versus - DELIA T. SUTTON, ELLA T.
SUTTON-SOLIMAN and HARRY T. SUTTON, Respondents
DECISION
PUNO, J.:
This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision
and Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004,
respectively, which declared DAR Administrative Order (A.O.) No. 9, series of 1993, null and
void for being violative of the Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been
devoted exclusively to cow and calf breeding. On October 26, 1987, pursuant to the then
existing agrarian reform program of the government, respondents made a voluntary offer to sell
(VOS)[1] their landholdings to petitioner DAR to avail of certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the
Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage
farms used for raising livestock, poultry and swine.

On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of

DAR,[2] this Court ruled that lands devoted to livestock and poultry-raising are not included in
the definition of agricultural land. Hence, we declared as unconstitutional certain provisions of
the CARL insofar as they included livestock farms in the coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request
to withdraw their VOS as their landholding was devoted exclusively to cattle-raising and thus
exempted from the coverage of the CARL.[3]
On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate,
inspected respondents land and found that it was devoted solely to cattle-raising and breeding.
He recommended to the DAR Secretary that it be exempted from the coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS
and requested the return of the supporting papers they submitted in connection therewith.
[4]

Petitioner ignored their request.

On December 27, 1993, DAR issued A.O. No. 9, series of 1993,[5] which provided that

only portions of private agricultural lands used for the raising of livestock, poultry and swine as
of June 15, 1988 shall be excluded from the coverage of the CARL. In determining the area of
land to be excluded, the A.O. fixed the following retention limits, viz: 1:1 animal-land ratio
(i.e., 1 hectare of land per 1 head of animal shall be retained by the landowner), and a ratio of
1.7815 hectares for livestock infrastructure for every 21 heads of cattle shall likewise be
excluded from the operations of the CARL.
On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as
final and irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine,their
entire landholding is exempted from the CARL.[6]
On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order [7] partially
granting the application of respondents for exemption from the coverage of CARL. Applying
the retention limits outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of

respondents land for grazing purposes, and a maximum of 102.5635 hectares for infrastructure.
Petitioner ordered the rest of respondents landholding to be segregated and placed under
Compulsory Acquisition.
Respondents moved for reconsideration. They contend that their entire landholding
should be exempted as it is devoted exclusively to cattle-raising. Their motion was denied.
[8]

They filed a notice of appeal[9] with the Office of the President assailing: (1) the

reasonableness and validity of DAR A.O. No. 9, s. 1993, which provided for a ratio between
land and livestock in determining the land area qualified for exclusion from the CARL, and (2)
the constitutionality of DAR A.O. No. 9, s. 1993, in view of the Luz Farms case which
declared cattle-raising lands excluded from the coverage of agrarian reform.
On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner
DAR.[10] It ruled that DAR A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as
the A.O. provided the guidelines to determine whether a certain parcel of land is being used for
cattle-raising. However, the issue on the constitutionality of the assailed A.O. was left for
the determination of the courts as the sole arbiters of such issue.
On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9,
s. 1993, void for being contrary to the intent of the 1987 Constitutional Commission to exclude
livestock farms from the land reform program of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series
of 1993 is hereby DECLARED null and void. The assailed order of the Office of
the President dated 09 October 2001 in so far as it affirmed the Department of
Agrarian Reforms ruling that petitioners landholding is covered by the agrarian
reform program of the government is REVERSED and SET ASIDE.
SO ORDERED.[11]
Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993,
which prescribes a maximum retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued
DAR A.O. No. 9 to limit the area of livestock farm that may be retained by a landowner

pursuant to its mandate to place all public and private agricultural lands under the coverage of
agrarian reform. Petitioner also contends that the A.O. seeks to remedy reports that some
unscrupulous landowners have converted their agricultural farms to livestock farms in order to
evade their coverage in the agrarian reform program.
Petitioners arguments fail to impress.

Administrative agencies are endowed with powers legislative in nature, i.e., the power to
make rules and regulations. They have been granted by Congress with the authority to issue
rules to regulate the implementation of a law entrusted to them. Delegated rule-making has
become a practical necessity in modern governance due to the increasing complexity and
variety of public functions. However, while administrative rules and regulations have the force
and effect of law, they are not immune from judicial review.[12]They may be properly challenged
before the courts to ensure that they do not violate the Constitution and no grave abuse of
administrative discretion is committed by the administrative body concerned.
The fundamental rule in administrative law is that, to be valid, administrative rules and
regulations must be issued by authority of a law and must not contravene the provisions of
the Constitution.[13] The rule-making power of an administrative agency may not be used to
abridge the authority given to it by Congress or by the Constitution.Nor can it be used to
enlarge the power of the administrative agency beyond the scope intended. Constitutional
and statutory provisions control with respect to what rules and regulations may be
promulgated by administrative agencies and the scope of their regulations. [14]
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the
Constitution. The A.O. sought to regulate livestock farms by including them in the coverage of
agrarian reform and prescribing a maximum retention limit for their ownership. However, the
deliberations of the 1987 Constitutional Commission show a clear intent to exclude, inter
alia, all lands exclusively devoted to livestock, swine and poultry- raising. The Court
clarified in the Luz Farms case that livestock, swine and poultry-raising are industrial activities
and do not fall within the definition of agriculture or agricultural activity. The raising of

livestock, swine and poultry is different from crop or tree farming. It is an industrial, not an
agricultural, activity. A great portion of the investment in this enterprise is in the form of
industrial fixed assets, such as: animal housing structures and facilities, drainage, waterers and
blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive
warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas and
digester plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.[15]
Clearly, petitioner DAR has no power to regulate livestock farms which have been
exempted by the Constitution from the coverage of agrarian reform. It has exceeded its
power in issuing the assailed A.O.
The subsequent case of Natalia Realty, Inc. v. DAR[16] reiterated our ruling in the Luz
Farms case. In Natalia Realty, the Court held that industrial, commercial and residential lands
are not covered by the CARL.[17] We stressed anew that while Section 4 of R.A. No. 6657
provides that the CARL shall cover all public and private agricultural lands, the term
agricultural land does not include lands classified as mineral, forest, residential,
commercial or industrial. Thus, in Natalia Realty, even portions of the Antipolo Hills
Subdivision, which are arable yet still undeveloped, could not be considered as agricultural
lands subject to agrarian reform as these lots were already classified as residential lands.
A similar logical deduction should be followed in the case at bar. Lands devoted to raising of
livestock, poultry and swine have been classified as industrial, not agricultural, lands and thus
exempt from agrarian reform. Petitioner DAR argues that, in issuing the impugned A.O., it was
seeking to address the reports it has received that some unscrupulous landowners have been
converting their agricultural lands to livestock farms to avoid their coverage by the agrarian
reform. Again, we find neither merit nor logic in this contention. The undesirable scenario
which petitioner seeks to prevent with the issuance of the A.O. clearly does not apply in
this case. Respondents family acquired their landholdings as early as 1948. They have long
been in the business of breeding cattle in Masbate which is popularly known as the cattle-

breeding capital of the Philippines.[18]Petitioner DAR does not dispute this fact. Indeed, there is
no evidence on record that respondents have just recently engaged in or converted to the
business of breeding cattle after the enactment of the CARL that may lead one to suspect that
respondents intended to evade its coverage. It must be stressed that what the CARL prohibits is
the conversion of agricultural lands for non-agricultural purposes after the effectivity of the
CARL. There has been no change of business interest in the case of respondents.
Moreover, it is a fundamental rule of statutory construction that the reenactment of a
statute by Congress without substantial change is an implied legislative approval and adoption
of the previous law. On the other hand, by making a new law, Congress seeks to supersede an
earlier one.[19] In the case at bar, after the passage of the 1988 CARL, Congress enacted R.A.
No. 7881[20] which amended certain provisions of the CARL. Specifically, the new law
changed the definition of the terms agricultural activity and commercial farming by
dropping from its coverage lands that are devoted to commercial livestock, poultry and
swine-raising.[21] With this significant modification, Congress clearly sought to align the
provisions of our agrarian laws with the intent of the 1987 Constitutional Commission to
exclude livestock farms from the coverage of agrarian reform.
In sum, it is doctrinal that rules of administrative bodies must be in harmony with the
provisions of the Constitution. They cannot amend or extend the Constitution. To be valid, they
must conform to and be consistent with the Constitution. In case of conflict between an
administrative order and the provisions of the Constitution, the latter prevails. [22] The assailed
A.O. of petitioner DAR was properly stricken down as unconstitutional as it enlarges the
coverage of agrarian reform beyond the scope intended by the 1987 Constitution.
IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and
Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004,
respectively, are AFFIRMED. No pronouncement as to costs.
SO ORDERED.

G.R. No. 182332 February 23, 2011

MILESTONE FARMS, INC., Petitioner, - versus - OFFICE OF THE PRESIDENT,
Respondent
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Civil Procedure, seeking the reversal of the Court of Appeals (CA) Amended Decision [2] dated
October 4, 2006 and its Resolution[3] dated March 27, 2008.
The Facts
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and
Exchange Commission on January 8, 1960.[4] Among its pertinent secondary purposes
are: (1) to engage in the raising of cattle, pigs, and other livestock; to acquire lands by purchase
or lease, which may be needed for this purpose; and to sell and otherwise dispose of said cattle,
pigs, and other livestock and their produce when advisable and beneficial to the
corporation; (2) to breed, raise, and sell poultry; to purchase or acquire and sell, or otherwise
dispose of the supplies, stocks, equipment, accessories, appurtenances, products, and byproducts of said business; and (3) to import cattle, pigs, and other livestock, and animal food
necessary for the raising of said cattle, pigs, and other livestock as may be authorized by law.[5]
On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL), took effect, which included the
raising of livestock, poultry, and swine in its coverage. However, on December 4, 1990, this
Court, sitting en banc, ruled in Luz Farms v. Secretary of the Department of Agrarian
Reform[6] that agricultural lands devoted to livestock, poultry, and/or swine raising are excluded
from the Comprehensive Agrarian Reform Program (CARP).
Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422-hectare
property, covered by Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M7307, (T-486102) M-7308, (T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T332694) M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791, (T-486107) M-7313, (T486108) M-7314, M-8796, (T-486109) M-7315, (T-486110) M-9508, and M-6013, and located
in Pinugay, Baras, Rizal, from the coverage of the CARL, pursuant to the aforementioned ruling
of this Court in Luz Farms.

Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued
Administrative Order No. 9, Series of 1993 (DAR A.O. No. 9), setting forth rules and
regulations to govern the exclusion of agricultural lands used for livestock, poultry, and swine
raising from CARP coverage. Thus, on January 10, 1994, petitioner re-documented its
application pursuant to DAR A.O. No. 9.[7]
Acting on the said application, the DARs Land Use Conversion and Exemption Committee
(LUCEC) of Region IV conducted an ocular inspection on petitioners property and arrived at
the following findings:
[T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares;
the area which served as infrastructure is 42.0000 hectares; ten (10) hectares are
planted to corn and the remaining five (5) hectares are devoted to fish culture; that
the livestock population are 371 heads of cow, 20 heads of horses, 5,678 heads of
swine and 788 heads of cocks; that the area being applied for exclusion is far
below the required or ideal area which is 563 hectares for the total livestock
population; that the approximate area not directly used for livestock purposes with
an area of 15 hectares, more or less, is likewise far below the allowable 10%
variance; and, though not directly used for livestock purposes, the ten (10) hectares
planted to sweet corn and the five (5) hectares devoted to fishpond could be
considered supportive to livestock production.

The LUCEC, thus, recommended the exemption of petitioners 316.0422-hectare property

from the coverage of CARP. Adopting the LUCECs findings and recommendation, DAR
Regional Director Percival Dalugdug (Director Dalugdug) issued an Order dated June 27, 1994,
exempting petitioners 316.0422-hectare property from CARP.
The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers),
represented by Timiano Balajadia, Sr. (Balajadia), moved for the reconsideration of the said
Order, but the same was denied by Director Dalugdug in his Order dated November 24, 1994.
[9]
Subsequently, the Pinugay Farmers filed a letter-appeal with the DAR Secretary.
Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against
Balajadia and company before the Municipal Circuit Trial Court (MCTC) of Teresa-Baras,
Rizal, docketed as Civil Case No. 781-T.[10] The MCTC ruled in favor of petitioner, but the
decision was later reversed by the Regional Trial Court, Branch 80, of Tanay, Rizal. Ultimately,
the case reached the CA, which, in its Decision [11] dated October 8, 1999, reinstated the MCTCs

ruling, ordering Balajadia and all defendants therein to vacate portions of the property covered
by TCT Nos. M-6013, M-8796, and M-8791. In its Resolution [12] dated July 31, 2000, the CA
held that the defendants therein failed to timely file a motion for reconsideration, given the fact
that their counsel of record received its October 8, 1999 Decision; hence, the same became final
and executory.
In the meantime, R.A. No. 6657 was amended by R.A. No. 7881, [13] which was approved
on February 20, 1995. Private agricultural lands devoted to livestock, poultry, and swine raising
were excluded from the coverage of the CARL. On October 22, 1996, the fact-finding team
formed by the DAR Undersecretary for Field Operations and Support Services conducted an
actual headcount of the livestock population on the property. The headcount showed that there
were 448 heads of cattle and more than 5,000 heads of swine.
The DAR Secretarys Ruling

On January 21, 1997, then DAR Secretary Ernesto D. Garilao (Secretary Garilao) issued
an Order exempting from CARP only 240.9776 hectares of the 316.0422 hectares previously
exempted by Director Dalugdug, and declaring 75.0646 hectares of the property to be covered
by CARP.[14]
Secretary Garilao opined that, for private agricultural lands to be excluded from CARP,
they must already be devoted to livestock, poultry, and swine raising as of June 15, 1988, when
the CARL took effect. He found that the Certificates of Ownership of Large Cattle submitted by
petitioner showed that only 86 heads of cattle were registered in the name of petitioners
president, Misael Vera, Jr., prior to June 15, 1988; 133 were subsequently bought in 1990, while
204 were registered from 1992 to 1995. Secretary Garilao gave more weight to the certificates
rather than to the headcount because the same explicitly provide for the number of cattle owned
by petitioner as of June 15, 1988.
Applying the animal-land ratio (1 hectare for grazing for every head of
cattle/carabao/horse) and the infrastructure-animal ratio (1.7815 hectares for 21 heads of
cattle/carabao/horse, and 0.5126 hectare for 21 heads of hogs) under DAR A.O. No. 9,
Secretary Garilao exempted 240.9776 hectares of the property, as follows:
1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;
2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for
every 21 heads of cattle;

3.

8 hectares for the 8 horses;

4.

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

5.

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

Petitioner filed a Motion for Reconsideration,[16] submitting therewith copies of

Certificates of Transfer of Large Cattle and additional Certificates of Ownership of Large Cattle
issued to petitioner prior to June 15, 1988, as additional proof that it had met the required
animal-land ratio. Petitioner also submitted a copy of a Disbursement Voucher dated December
17, 1986, showing the purchase of 100 heads of cattle by the Bureau of Animal Industry from
petitioner, as further proof that it had been actively operating a livestock farm even before June
15, 1988. However, in his Order dated April 15, 1997, Secretary Garilao denied petitioners
Motion for Reconsideration.[17]
Aggrieved, petitioner filed its Memorandum on Appeal [18] before the Office of the
President (OP).
The OPs Ruling
On February 4, 2000, the OP rendered a decision [19] reinstating Director Dalugdugs Order
dated June 27, 1994 and declared the entire 316.0422-hectare property exempt from the
coverage of CARP.
However, on separate motions for reconsideration of the aforesaid decision filed by
farmer-groups Samahang Anak-Pawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the
Bureau of Agrarian Legal Assistance of DAR, the OP issued a resolution[20] dated September 16,
2002, setting aside its previous decision. The dispositive portion of the OP resolution reads:
WHEREFORE, the Decision subject of the instant separate motions for
reconsideration is hereby SET ASIDE and a new one entered REINSTATING the
Order dated 21 January 1997 of then DAR Secretary Ernesto D. Garilao, as
reiterated in another Order of 15 April 1997, without prejudice to the outcome of
the continuing review and verification proceedings that DAR, thru the appropriate
Municipal Agrarian Reform Officer, may undertake pursuant to Rule III (D) of
DAR Administrative Order No. 09, series of 1993.
SO ORDERED.[21]

The OP held that, when it comes to proof of ownership, the reference is the Certificate of
Ownership of Large Cattle. Certificates of cattle ownership, which are readily available being
issued by the appropriate government office ought to match the number of heads of cattle
counted as existing during the actual headcount. The presence of large cattle on the land,
without sufficient proof of ownership thereof, only proves such presence.
Taking note of Secretary Garilaos observations, the OP also held that, before an ocular
investigation is conducted on the property, the landowners are notified in advance; hence, mere
reliance on the physical headcount is dangerous because there is a possibility that the
landowners would increase the number of their cattle for headcount purposes only. The OP
observed that there was a big variance between the actual headcount of 448 heads of cattle and
only 86 certificates of ownership of large cattle.
Consequently, petitioner sought recourse from the CA.[22]
The Proceedings Before the CA and Its Rulings
On April 29, 2005, the CA found that, based on the documentary evidence presented, the
property subject of the application for exclusion had more than satisfied the animal-land and
infrastructure-animal ratios under DAR A.O. No. 9. The CA also found that petitioner applied
for exclusion long before the effectivity of DAR A.O. No. 9, thus, negating the claim that
petitioner merely converted the property for livestock, poultry, and swine raising in order to
exclude it from CARP coverage. Petitioner was held to have actually engaged in the said
business on the property even before June 15, 1988. The CA disposed of the case in this wise:
WHEREFORE, the instant petition is hereby GRANTED. The
assailed Resolution of the Office of the President dated September 16, 2002 is
hereby SET ASIDE, and its Decisiondated February 4, 2000 declaring the entire
316.0422 hectares exempt from the coverage of the Comprehensive Agrarian
Reform Program is hereby REINSTATED without prejudice to the outcome of the
continuing review and verification proceedings which the Department of Agrarian
Reform, through the proper Municipal Agrarian Reform Officer, may undertake
pursuant to Policy Statement (D) of DAR Administrative Order No. 9, Series of
1993.
SO ORDERED.[23]

Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the
CA as the parties did not inform the appellate court then DAR Secretary Rene C. Villa
(Secretary Villa) issued DAR Conversion Order No. CON-0410-0016 [24] (Conversion Order),
granting petitioners application to convert portions of the 316.0422-hectare property from
agricultural to residential and golf courses use. The portions converted with a total area of
153.3049 hectares were covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and
M-15750 (T-410434). With this Conversion Order, the area of the property subject of the
controversy was effectively reduced to 162.7373 hectares.
On the CAs decision of April 29, 2005, Motions for Reconsideration were filed by
farmer-groups, namely: the farmers represented by Miguel Espinas[25] (Espinas group), the
Pinugay Farmers,[26] and the SAPLAG.[27] The farmer-groups all claimed that the CA should
have accorded respect to the factual findings of the OP. Moreover, the farmer-groups
unanimously intimated that petitioner already converted and developed a portion of the property
into a leisure-residential-commercial estate known as the Palo Alto Leisure and Sports Complex
(Palo Alto).
Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured
Evidence pursuant to DAR Administrative Order No. 9, Series of 1993 [28](Supplement) dated
June 15, 2005, the Espinas group submitted the following as evidence:
1) Conversion Order[29] dated November 4, 2004, issued by Secretary Villa, converting
portions of the property from agricultural to residential and golf courses use, with a total area of
153.3049 hectares; thus, the Espinas group prayed that the remaining 162.7373 hectares
(subject property) be covered by the CARP;
2) Letter[30] dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer
(MARO) Bismark M. Elma (MARO Elma) and outgoing MARO Cesar C. Celi (MARO Celi)
of Baras, Rizal, addressed to Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto
Q. Kagahastian, (MARO Report), informing the latter, among others, that Palo Alto was already
under development and the lots therein were being offered for sale; that there were actual tillers
on the subject property; that there were agricultural improvements thereon, including an
irrigation system and road projects funded by the Government; that there was no existing
livestock farm on the subject property; and that the same was not in the possession and/or
control of petitioner; and
3) Certification[31] dated June 8, 2005, issued by both MARO Elma and MARO Celi,
manifesting that the subject property was in the possession and cultivation of actual occupants
and tillers, and that, upon inspection, petitioner maintained no livestock farm thereon.

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

With the CA now made aware of these developments, particularly Secretary Villas
Conversion Order of November 4, 2004, the appellate court had to acknowledge that the
property subject of the controversy would now be limited to the remaining 162.7373
hectares. In the same token, the Espinas group prayed that this remaining area be covered by the
CARP.[35]
On October 4, 2006, the CA amended its earlier Decision. It held that its April 29, 2005
Decision was theoretically not final because DAR A.O. No. 9 required the MARO to make a
continuing review and verification of the subject property. While the CA was cognizant of our
ruling in Department of Agrarian Reform v. Sutton,[36] wherein we declared DAR A.O. No. 9 as
unconstitutional, it still resolved to lift the exemption of the subject property from the CARP,
not on the basis of DAR A.O. No. 9, but on the strength of evidence such as the MARO Report
and Certification, and the Katunayan[37] issued by the Punong Barangay, Alfredo Ruba
(Chairman Ruba), of Pinugay, Baras, Rizal, showing that the subject property was no longer
operated as a livestock farm. Moreover, the CA held that the lease agreements, [38] which
petitioner submitted to prove that it was compelled to lease a ranch as temporary shelter for its
cattle, only reinforced the DARs finding that there was indeed no existing livestock farm on the
subject property. While petitioner claimed that it was merely forced to do so to prevent further
slaughtering of its cattle allegedly committed by the occupants, the CA found the claim
unsubstantiated. Furthermore, the CA opined that petitioner should have asserted its rights when
the irrigation and road projects were introduced by the Government within its property. Finally,
the CA accorded the findings of MARO Elma and MARO Celi the presumption of regularity in
the performance of official functions in the absence of evidence proving misconduct and/or
dishonesty when they inspected the subject property and rendered their report. Thus, the CA
disposed:
WHEREFORE, this Courts Decision dated April 29, 2005 is hereby
amended in that the exemption of the subject landholding from the coverage of the
Comprehensive Agrarian Reform Program is hereby lifted, and the 162.7373
hectare-agricultural portion thereof is hereby declared covered by the
Comprehensive Agrarian Reform Program.
SO ORDERED.[39]

Unperturbed, petitioner filed a Motion for Reconsideration.[40] On January 8, 2007,

MARO Elma, in compliance with the Memorandum of DAR Regional Director Dominador B.
Andres, tendered another Report[41] reiterating that, upon inspection of the subject property,
together with petitioners counsel-turned witness, Atty. Grace Eloisa J. Que (Atty. Que), PARO
Danilo M. Obarse, Chairman Ruba, and several occupants thereof, he, among others, found no
livestock farm within the subject property. About 43 heads of cattle were shown, but MARO
Elma observed that the same were inside an area adjacent to Palo Alto. Subsequently, upon Atty.
Ques request for reinvestigation, designated personnel of the DAR Provincial and Regional
Offices (Investigating Team) conducted another ocular inspection on the subject property on
February 20, 2007. The Investigating Team, in its Report [42] dated February 21, 2007, found
that, per testimony of petitioners caretaker, Rogelio Ludivices (Roger), [43] petitioner has 43
heads of cattle taken care of by the following individuals: i) Josefino Custodio (Josefino) 18
heads; ii) Andy Amahit 15 heads; and iii) Bert Pangan 2 heads; that these individuals pastured
the herd of cattle outside the subject property, while Roger took care of 8 heads of cattle inside
the Palo Alto area; that 21 heads of cattle owned by petitioner were seen in the area adjacent to
Palo Alto; that Josefino confirmed to the Investigating Team that he takes care of 18 heads of
cattle owned by petitioner; that the said Investigating Team saw 9 heads of cattle in the Palo
Alto area, 2 of which bore MFI marks; and that the 9 heads of cattle appear to have matched the
Certificates of Ownership of Large Cattle submitted by petitioner.
Because of the contentious factual issues and the conflicting averments of the parties, the
CA set the case for hearing and reception of evidence on April 24, 2007. [44]Thereafter, as
narrated by the CA, the following events transpired:
On May 17, 2007, [petitioner] presented the Judicial Affidavits of its
witnesses, namely, [petitioners] counsel, [Atty. Que], and the alleged caretaker of
[petitioners] farm, [Roger], who were both cross-examined by counsel for farmersmovants and SAPLAG. [Petitioner] and SAPLAG then marked their documentary
exhibits.
On May 24, 2007, [petitioners] security guard and third witness, Rodolfo G.
Febrada, submitted his Judicial Affidavit and was cross-examined by counsel for
fa[r]mers-movants and SAPLAG.Farmers-movants also marked their documentary
exhibits.
Thereafter, the parties submitted their respective Formal Offers of
Evidence. Farmers-movants
and
SAPLAG
filed
their objections to
[petitioners] Formal Offer of Evidence. Later, [petitioner] and farmers-movants
filed their respective Memoranda.

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

Finally, petitioners motion for reconsideration was denied by the CA in its

Resolution[46] dated March 27, 2008. The CA discarded petitioners reliance on Sutton. It
ratiocinated that the MARO Reports and the DARs Manifestation could not be disregarded
simply because DAR A.O. No. 9 was declared unconstitutional. The Sutton ruling was premised
on the fact that the Sutton property continued to operate as a livestock farm. The CA also
reasoned that, in Sutton, this Court did not remove from the DAR the power to implement the
CARP, pursuant to the latters authority to oversee the implementation of agrarian reform laws
under Section 50[47] of the CARL. Moreover, the CA found:
Petitioner-appellant claimed that they had 43 heads of cattle which are being
cared for and pastured by 4 individuals. To prove its ownership of the said cattle,
petitioner-appellant offered in evidence 43 Certificates of Ownership of Large
Cattle. Significantly, however, the said Certificates were all dated and issued on
November 24, 2006, nearly 2 months after this Court rendered its Amended
Decision lifting the exemption of the 162-hectare portion of the subject
landholding. The acquisition of such cattle after the lifting of the exemption clearly
reveals that petitioner-appellant was no longer operating a livestock farm, and
suggests an effort to create a semblance of livestock-raising for the purpose of
its Motion for Reconsideration.[48]
On petitioners assertion that between MARO Elmas Report dated January 8, 2007 and the
Investigating Teams Report, the latter should be given credence, the CA held that there were no
material inconsistencies between the two reports because both showed that the 43 heads of
cattle were found outside the subject property.
Hence, this Petition assigning the following errors:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
HELD THAT LANDS DEVOTED TO LIVESTOCK FARMING WITHIN THE
MEANING OF LUZ FARMSAND SUTTON, AND WHICH ARE THEREBY
EXEMPT FROM CARL COVERAGE, ARE NEVERTHELESS SUBJECT TO
DARS CONTINUING VERIFICATION AS TO USE, AND, ON THE BASIS OF
SUCH VERIFICATION,
MAY BE ORDERED REVERTED TO
AGRICULTURAL CLASSIFICATION AND COMPULSORY ACQUISITION[;]

II.
GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO
REVERTED TO AGRICULTURAL CLASSIFICATION, STILL THE
PROCEEDINGS FOR SUCH PURPOSE BELONGS TO THE EXCLUSIVE
ORIGINAL JURISDICTION OF THE DAR, BEFORE WHICH THE
CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES, AND AVAIL
THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT TO THE
COURT OF APPEALS EXERCISING APPELLATE JURISDICTION OVER
ISSUES COMPLETELY UNRELATED TO REVERSION [; AND]
III.
IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE
PROPERTY IN DISPUTE IS NO LONGER BEING USED FOR LIVESTOCK
FARMING.[49]
Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are
classified as industrial lands, hence, outside the ambit of the CARP; that Luz Farms,Sutton, and
R.A. No. 7881 clearly excluded such lands on constitutional grounds; that petitioners lands
were actually devoted to livestock even before the enactment of the CARL; that livestock farms
are exempt from the CARL, not by reason of any act of the DAR, but because of their nature as
industrial lands; that petitioners property was admittedly devoted to livestock farming as of
June 1988 and the only issue before was whether or not petitioners pieces of evidence comply
with the ratios provided under DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared
as unconstitutional, DAR had no more legal basis to conduct a continuing review and
verification proceedings over livestock farms. Petitioner argues that, in cases where reversion of
properties to agricultural use is proper, only the DAR has the exclusive original jurisdiction to
hear and decide the same; hence, the CA, in this case, committed serious errors when it ordered
the reversion of the property and when it considered pieces of evidence not existing as of June
15, 1988, despite its lack of jurisdiction; that the CA should have remanded the case to the DAR
due to conflicting factual claims; that the CA cannot ventilate allegations of fact that were
introduced for the first time on appeal as a supplement to a motion for reconsideration of its
first decision, use the same to deviate from the issues pending review, and, on the basis thereof,
declare exempt lands reverted to agricultural use and compulsorily covered by the CARP; that
the newly discovered [pieces of] evidence were not introduced in the proceedings before the
DAR, hence, it was erroneous for the CA to consider them; and that piecemeal presentation of
evidence is not in accord with orderly justice. Finally, petitioner submits that, in any case, the
CA gravely erred and committed grave abuse of discretion when it held that the subject property
was no longer used for livestock farming as shown by the Report of the Investigating Team.

Petitioner relies on the 1997 LUCEC and DAR findings that the subject property was devoted
to livestock farming, and on the 1999 CA Decision which held that the occupants of the
property were squatters, bereft of any authority to stay and possess the property.[50]
On one hand, the farmer-groups, represented by the Espinas group, contend that they
have been planting rice and fruit-bearing trees on the subject property, and helped the National
Irrigation Administration in setting up an irrigation system therein in 1997, with a produce of
1,500 to 1,600 sacks of palay each year; that petitioner came to court with unclean hands
because, while it sought the exemption and exclusion of the entire property, unknown to the
CA, petitioner surreptitiously filed for conversion of the property now known as Palo Alto,
which was actually granted by the DAR Secretary; that petitioners bad faith is more apparent
since, despite the conversion of the 153.3049-hectare portion of the property, it still seeks to
exempt the entire property in this case; and that the fact that petitioner applied for conversion is
an admission that indeed the property is agricultural. The farmer-groups also contend that
petitioners reliance on Luz Farms and Sutton is unavailing because in these cases there was
actually no cessation of the business of raising cattle; that what is being exempted is the activity
of raising cattle and not the property itself; that exemptions due to cattle raising are not
permanent; that the declaration of DAR A.O. No. 9 as unconstitutional does not at all diminish
the mandated duty of the DAR, as the lead agency of the Government, to implement the CARL;
that the DAR, vested with the power to identify lands subject to CARP, logically also has the
power to identify lands which are excluded and/or exempted therefrom; that to disregard DARs
authority on the matter would open the floodgates to abuse and fraud by unscrupulous
landowners; that the factual finding of the CA that the subject property is no longer a livestock
farm may not be disturbed on appeal, as enunciated by this Court; that DAR conducted a review
and monitoring of the subject property by virtue of its powers under the CARL; and that the CA
has sufficient discretion to admit evidence in order that it could arrive at a fair, just, and
equitable ruling in this case.[51]
On the other hand, respondent OP, through the Office of the Solicitor General (OSG),
claims that the CA correctly held that the subject property is not exempt from the coverage of
the CARP, as substantial pieces of evidence show that the said property is not exclusively
devoted to livestock, swine, and/or poultry raising; that the issues presented by petitioner are
factual in nature and not proper in this case; that under Rule 43 of the 1997 Rules of Civil
Procedure, questions of fact may be raised by the parties and resolved by the CA; that due to the
divergence in the factual findings of the DAR and the OP, the CA was duty bound to review and
ascertain which of the said findings are duly supported by substantial evidence; that the subject
property was subject to continuing review and verification proceedings due to the then
prevailing DAR A.O. No. 9; that there is no question that the power to determine if a property is
subject to CARP coverage lies with the DAR Secretary; that pursuant to such power, the
MARO rendered the assailed reports and certification, and the DAR itself manifested before the

CA that the subject property is no longer devoted to livestock farming; and that, while it is true
that this Courts ruling in Luz Farms declared that agricultural lands devoted to livestock,
poultry, and/or swine raising are excluded from the CARP, the said ruling is not without any
qualification.[52]
In its Reply[53] to the farmer-groups and to the OSGs comment, petitioner counters that
the farmer-groups have no legal basis to their claims as they admitted that they entered the
subject property without the consent of petitioner; that the rice plots actually found in the
subject property, which were subsequently taken over by squatters, were, in fact, planted by
petitioner in compliance with the directive of then President Ferdinand Marcos for the employer
to provide rice to its employees; that when a land is declared exempt from the CARP on the
ground that it is not agricultural as of the time the CARL took effect, the use and disposition of
that land is entirely and forever beyond DARs jurisdiction; and that, inasmuch as the subject
property was not agricultural from the very beginning, DAR has no power to regulate the same.
Petitioner also asserts that the CA cannot uncharacteristically assume the role of trier of facts
and resolve factual questions not previously adjudicated by the lower tribunals; that MARO
Elma rendered the assailed MARO reports with bias against petitioner, and the same were
contradicted by the Investigating Teams Report, which confirmed that the subject property is
still devoted to livestock farming; and that there has been no change in petitioners business
interest as an entity engaged in livestock farming since its inception in 1960, though there was
admittedly a decline in the scale of its operations due to the illegal acts of the squatteroccupants.
Our Ruling
The Petition is bereft of merit.
Let it be stressed that when the CA provided in its first Decision that continuing review
and verification may be conducted by the DAR pursuant to DAR A.O. No. 9, the latter was not
yet declared unconstitutional by this Court. The first CA Decision was promulgated on April 29,
2005, while this Court struck down as unconstitutional DAR A.O. No. 9, by way of Sutton, on
October 19, 2005. Likewise, let it be emphasized that the Espinas group filed the Supplement
and submitted the assailed MARO reports and certification on June 15, 2005, which proved to
be adverse to petitioners case. Thus, it could not be said that the CA erred or gravely abused its
discretion in respecting the mandate of DAR A.O. No. 9, which was then subsisting and in full
force and effect.

While it is true that an issue which was neither alleged in the complaint nor raised during
the trial cannot be raised for the first time on appeal as it would be offensive to the basic rules
of fair play, justice, and due process,[54] the same is not without exception,[55] such as this case.
The CA, under Section 3,[56] Rule 43 of the Rules of Civil Procedure, can, in the interest of
justice, entertain and resolve factual issues. After all, technical and procedural rules are intended
to help secure, and not suppress, substantial justice. A deviation from a rigid enforcement of the
rules may thus be allowed to attain the prime objective of dispensing justice, for dispensation of
justice is the core reason for the existence of courts. [57] Moreover, petitioner cannot validly
claim that it was deprived of due process because the CA afforded it all the opportunity to be
heard.[58] The CA even directed petitioner to file its comment on the Supplement, and to prove
and establish its claim that the subject property was excluded from the coverage of the
CARP.Petitioner actively participated in the proceedings before the CA by submitting pleadings
and pieces of documentary evidence, such as the Investigating Teams Report and judicial
affidavits. The CA also went further by setting the case for hearing. In all these proceedings, all
the parties rights to due process were amply protected and recognized.
With the procedural issue disposed of, we find that petitioners arguments fail to persuade. Its
invocation of Sutton is unavailing. In Sutton, we held:
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the
Constitution. The A.O. sought to regulate livestock farms by including them in the
coverage of agrarian reform and prescribing a maximum retention limit for their
ownership. However, the deliberations of the 1987 Constitutional Commission
show a clear intent to exclude, inter alia, all lands exclusively devoted to
livestock, swine and poultry-raising. The Court clarified in the Luz Farms case
that livestock, swine and poultry-raising are industrial activities and do not fall
within the definition of agriculture or agricultural activity. The raising of livestock,
swine and poultry is different from crop or tree farming. It is an industrial, not an
agricultural, activity. A great portion of the investment in this enterprise is in the
form of industrial fixed assets, such as: animal housing structures and facilities,
drainage, waterers and blowers, feedmill with grinders, mixers, conveyors,
exhausts and generators, extensive warehousing facilities for feeds and other
supplies, anti-pollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks, pumphouses,
sprayers, and other technological appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms which have
been exempted by the Constitution from the coverage of agrarian reform. It has
exceeded its power in issuing the assailed A.O.[59]

Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those
of Sutton because, in Sutton, the subject property remained a livestock farm. We even
highlighted therein the fact that there has been no change of business interest in the case of
respondents.[60] Similarly, in Department of Agrarian Reform v. Uy,[61] we excluded a parcel of
land from CARP coverage due to the factual findings of the MARO, which were confirmed by
the DAR, that the property was entirely devoted to livestock farming. However, in A.Z. Arnaiz
Realty, Inc., represented by Carmen Z. Arnaiz v. Office of the President; Department of
Agrarian Reform; Regional Director, DAR Region V, Legaspi City; Provincial Agrarian Reform
Officer, DAR Provincial Office, Masbate, Masbate; and Municipal Agrarian Reform Officer,
DAR Municipal Office, Masbate, Masbate,[62] we denied a similar petition for exemption and/or
exclusion, by according respect to the CAs factual findings and its reliance on the findings of
the DAR and the OP that the subject parcels of land were not directly, actually, and exclusively
used for pasture.[63]
Petitioners admission that, since 2001, it leased another ranch for its own livestock is
fatal to its cause.[64] While petitioner advances a defense that it leased this ranch because the
occupants of the subject property harmed its cattle, like the CA, we find it surprising that not
even a single police and/or barangay report was filed by petitioner to amplify its indignation
over these alleged illegal acts. Moreover, we accord respect to the CAs keen observation that
the assailed MARO reports and the Investigating Teams Report do not actually contradict one
another, finding that the 43 cows, while owned by petitioner, were actually pastured outside the
subject property.
`
Finally, it is established that issues of Exclusion and/or Exemption are characterized as
Agrarian Law Implementation (ALI) cases which are well within the DAR Secretarys
competence and jurisdiction.[65] Section 3, Rule II of the 2003 Department of Agrarian Reform
Adjudication Board Rules of Procedure provides:
Section 3. Agrarian Law Implementation Cases.
The Adjudicator or the Board shall have no jurisdiction over matters
involving the administrative implementation of RA No. 6657, otherwise known as
the Comprehensive Agrarian Reform Law (CARL) of 1988 and other agrarian laws
as enunciated by pertinent rules and administrative orders, which shall be under the
exclusive prerogative of and cognizable by the Office of the Secretary of the DAR
in accordance with his issuances, to wit:
xxxx
3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine,
and poultry raising.

Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of his legal
mandate to exercise jurisdiction and authority over all ALI cases. To succumb to petitioners
contention that when a land is declared exempt from the CARP on the ground that it is not
agricultural as of the time the CARL took effect, the use and disposition of that land is entirely
and forever beyond DARs jurisdiction is dangerous, suggestive of self-regulation. Precisely, it is
the DAR Secretary who is vested with such jurisdiction and authority to exempt and/or exclude
a property from CARP coverage based on the factual circumstances of each case and in
accordance with law and applicable jurisprudence. In addition, albeit parenthetically, Secretary
Villa had already granted the conversion into residential and golf courses use of nearly one-half
of the entire area originally claimed as exempt from CARP coverage because it was allegedly
devoted to livestock production.
In sum, we find no reversible error in the assailed Amended Decision and Resolution of the CA
which would warrant the modification, much less the reversal, thereof.
WHEREFORE, the Petition is DENIED and the Court of Appeals Amended Decision
dated October 4, 2006 and Resolution dated March 27, 2008 are AFFIRMED. No costs.
SO ORDERED.

G.R. No. 100091 October 22, 1992

CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR.
LEONARDO A. CHUA, petitioner,

vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, THE
COURT OF APPEALS and ALVIN OBRIQUE, REPRESENTING BUKIDNON FREE
FARMERS AGRICULTURAL LABORERS ORGANIZATION (BUFFALO),respondents.

CAMPOS, JR., J.:

This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to nullify the
proceedings and decision of the Department of Agrarian Reform Adjudication Board (DARAB
for brevity) dated September 4, 1989 and to set aside the decision the decision * of the Court of
Appeals dated August 20, 1990, affirming the decision of the DARAB which ordered the
segregation of 400 hectares of suitable, compact and contiguous portions of the Central
Mindanao University (CMU for brevity) land and their inclusion in the Comprehensive
Agrarian Reform Program (CARP for brevity) for distribution to qualified beneficiaries, on the
ground of lack of jurisdiction.
This case originated in a complaint filed by complainants calling themselves as the Bukidnon
Free Farmers and Agricultural Laborers Organization (BUFFALO for brevity) under the
leadership of Alvin Obrique and Luis Hermoso against the CMU, before the Department of
Agrarian Reform for Declaration of Status as Tenants, under the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an agricultural
educational institution owned and run by the state located in the town of Musuan,
Bukidnon province. It started as a farm school at Marilang, Bukidnon in early 1910, in
response to the public demand for an agricultural school in Mindanao. It expanded into the
Bukidnon National Agricultural High School and was transferred to its new site in Managok
near Malaybalay, the provincial capital of Bukidnon.
In the early 1960's, it was converted into a college with campus at Musuan, until it became
what is now known as the CMU, but still primarily an agricultural university. From its
beginning, the school was the answer to the crying need for training people in order to develop
the agricultural potential of the island of Mindanao. Those who planned and established the
school had a vision as to the future development of that part of the Philippines. On January 16,
1958 the President of the Republic of the Philippines, the late Carlos P. Garcia, "upon the
recommendation of the Secretary of Agriculture and Natural Resources, and pursuant to the
provisions of Section 53, of Commonwealth Act No. 141, as amended", issued Proclamation
No. 476, withdrawing from sale or settlement and reserving for the Mindanao Agricultural
College, a site which would be the future campus of what is now the CMU. A total land area
comprising 3,080 hectares was surveyed and registered and titled in the name of the petitioner
under OCT Nos. 160, 161 and 162. 1
In the course of the cadastral hearing of the school's petition for registration of the
aforementioned grant of agricultural land, several tribes belonging to cultural communities,

opposed the petition claiming ownership of certain ancestral lands forming part of the tribal
reservations. Some of the claims were granted so that what was titled to the present petitioner
school was reduced from 3,401 hectares to 3,080 hectares.
In the early 1960's, the student population of the school was less than 3,000. By 1988, the
student population had expanded to some 13,000 students, so that the school community has an
academic population (student, faculty and non-academic staff) of almost 15,000. To cope with
the increase in its enrollment, it has expanded and improved its educational facilities partly
from government appropriation and partly by self-help measures.
True to the concept of a land grant college, the school embarked on self-help measures to
carry out its educational objectives, train its students, and maintain various activities
which the government appropriation could not adequately support or sustain. In 1984, the
CMU approved Resolution No. 160, adopting a livelihood program called "Kilusang
Sariling Sikap Program" under which the land resources of the University were leased to
its faculty and employees. This arrangement was covered by a written contract. Under this
program the faculty and staff combine themselves to groups of five members each, and the
CMU provided technical know-how, practical training and all kinds of assistance, to
enable each group to cultivate 4 to 5 hectares of land for the lowland rice project. Each
group pays the CMU a service fee and also a land use participant's fee. The contract prohibits
participants and their hired workers to establish houses or live in the project area and to
use the cultivated land as a collateral for any kind of loan. It was expressly stipulated that
no landlord-tenant relationship existed between the CMU and the faculty and/or
employees. This particular program was conceived as a multi-disciplinary applied research
extension and productivity program to utilize available land, train people in modern agricultural
technology and at the same time give the faculty and staff opportunities within the confines of
the CMU reservation to earn additional income to augment their salaries. The location of the
CMU at Musuan, Bukidnon, which is quite a distance from the nearest town, was the proper
setting for the adoption of such a program. Among the participants in this program were Alvin
Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao, Danilo Vasquez, Aronio Pelayo and
other complainants. Obrique was a Physics Instructor at the CMU while the others were
employees in the lowland rice project. The other complainants who were not members of the
faculty or non-academic staff CMU, were hired workers or laborers of the participants in this
program. When petitioner Dr. Leonardo Chua became President of the CMU in July 1986,
he discontinued the agri-business project for the production of rice, corn and sugar cane
known as Agri-Business Management and Training Project, due to losses incurred while
carrying on the said project. Some CMU personnel, among whom were the complainants,
were laid-off when this project was discontinued. As Assistant Director of this agri-business
project, Obrique was found guilty of mishandling the CMU funds and was separated from
service by virtue of Executive Order No. 17, the re-organization law of the CMU.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project called
CMU-Income Enhancement Program (CMU-IEP) to develop unutilized land resources,
mobilize and promote the spirit of self-reliance, provide socio-economic and technical training
in actual field project implementation and augment the income of the faculty and the staff.

Under the terms of a 3-party Memorandum of Agreement 2 among the CMU, the CMUIntegrated Development Foundation (CMU-IDF) and groups or "seldas" of 5 CMU employees,
the CMU would provide the use of 4 to 5 hectares of land to a selda for one (1) calendar
year. The CMU-IDF would provide researchers and specialists to assist in the preparation
of project proposals and to monitor and analyze project implementation. The selda in turn
would pay to the CMU P100 as service fee and P1,000 per hectare as participant's land rental
fee. In addition, 400 kilograms of the produce per year would be turned over or donated to the
CMU-IDF. The participants agreed not to allow their hired laborers or member of their family to
establish any house or live within vicinity of the project area and not to use the allocated lot as
collateral for a loan. It was expressly provided that no tenant-landlord relationship would exist
as a result of the Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff members who
were still employed with the CMU and was not made available to former workers or employees.
In the middle of 1987, to cushion the impact of the discontinuance of the rice, corn and sugar
cane project on the lives of its former workers, the CMU allowed them to participate in the
CMU-IEP as special participants.
Under the terms of a contract called Addendum To Existing Memorandum of Agreement
Concerning Participation To the CMU-Income Enhancement Program, 3 a former employee
would be grouped with an existing selda of his choice and provided one (1) hectare for a
lowland rice project for one (1) calendar year. He would pay the land rental participant's fee of
P1,000.00 per hectare but on a charge-to-crop basis. He would also be subject to the same
prohibitions as those imposed on the CMU employees. It was also expressly provided that no
tenant-landlord relationship would exist as a result of the Agreement.
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those whose
contracts were not renewed were served with notices to vacate.
The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane
project, the loss of jobs due to termination or separation from the service and the alleged
harassment by school authorities, all contributed to, and precipitated the filing of the
complaint.
On the basis of the above facts, the DARAB found that the private respondents were not
tenants and cannot therefore be beneficiaries under the CARP. At the same time, the
DARAB ordered the segregation of 400 hectares of suitable, compact and contiguous portions
of the CMU land and their inclusion in the CARP for distribution to qualified beneficiaries.
The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the
Court of Appeals, raised the following issues:
1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for Declaration
of Status of Tenants and coverage of land under the CARP.

2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse of
discretion amounting to lack of jurisdiction in dismissing the Petition for Review
on Certiorari and affirming the decision of DARAB.
In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants
Obrique, et al. claimed that they are tenants of the CMU and/or landless peasants
claiming/occupying a part or portion of the CMU situated at Sinalayan, Valencia, Bukidnon and
Musuan, Bukidnon, consisting of about 1,200 hectares. We agree with the DARAB's finding
that Obrique, et. al. are not tenants. Under the terms of the written agreement signed by
Obrique, et. al., pursuant to the livelihood program called "Kilusang Sariling Sikap Program", it
was expressly stipulated that no landlord-tenant relationship existed between the CMU
and the faculty and staff (participants in the project). The CMU did not receive any share
from the harvest/fruits of the land tilled by the participants. What the CMU collected was a
nominal service fee and land use participant's fee in consideration of all the kinds of
assistance given to the participants by the CMU. Again, the agreement signed by the
participants under the CMU-IEP clearly stipulated that no landlord-tenant relationship existed,
and that the participants are not share croppers nor lessees, and the CMU did not share in the
produce of the participants' labor.
In the same paragraph of their complaint, complainants claim that they are landless peasants.
This allegation requires proof and should not be accepted as factually true. Obrique is not a
landless peasant. The facts showed he was Physics Instructor at CMU holding a very
responsible position was separated from the service on account of certain irregularities he
committed while Assistant Director of the Agri-Business Project of cultivating lowland
rice. Others may, at the moment, own no land in Bukidnon but they may not necessarily be so
destitute in their places of origin. No proof whatsoever appears in the record to show that they
are landless peasants.
The evidence on record establish without doubt that the complainants were originally
authorized or given permission to occupy certain areas of the CMU property for a definite
purpose to carry out certain university projects as part of the CMU's program of activities
pursuant to its avowed purpose of giving training and instruction in agricultural and other
related technologies, using the land and other resources of the institution as a laboratory for
these projects. Their entry into the land of the CMU was with the permission and written
consent of the owner, the CMU, for a limited period and for a specific purpose. After the
expiration of their privilege to occupy and cultivate the land of the CMU, their continued
stay was unauthorized and their settlement on the CMU's land was without legal
authority. A person entering upon lands of another, not claiming in good faith the right to do so
by virtue of any title of his own, or by virtue of some agreement with the owner or with one
whom he believes holds title to the land, is a squatter. 4 Squatters cannot enter the land of
another surreptitiously or by stealth, and under the umbrella of the CARP, claim rights to said
property as landless peasants. Under Section 73 of R.A. 6657, persons guilty of committing
prohibited acts of forcible entry or illegal detainer do not qualify as beneficiaries and may not
avail themselves of the rights and benefits of agrarian reform. Any such person who knowingly

and wilfully violates the above provision of the Act shall be punished with imprisonment or fine
at the discretion of the Court.
In view of the above, the private respondents, not being tenants nor proven to be landless
peasants, cannot qualify as beneficiaries under the CARP.
The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals,
segregating 400 hectares from the CMU land is primarily based on the alleged fact that the land
subject hereof is "not directly, actually and exclusively used for school sites, because the same
was leased to Philippine Packing Corporation (now Del Monte Philippines)".
In support of this view, the Board held that the "respondent University failed to show that it
is using actually, really, truly and in fact, the questioned area to the exclusion of others,
nor did it show that the same is directly used without any intervening agency or
person", 5 and "there is no definite and concrete showing that the use of said lands are
essentially indispensable for educational purposes". 6 The reliance by the respondents Board
and Appellate Tribunal on the technical or literal definition from Moreno's Philippine Law
Dictionary and Black's Law Dictionary, may give the ordinary reader a classroom meaning of
the phrase "is actually directly and exclusively", but in so doing they missed the true meaning of
Section 10, R.A. 6657, as to what lands are exempted or excluded from the coverage of the
CARP.
The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, are as follows:
Sec. 4. SCOPE. The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No.
229 including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian
Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable
for agriculture. No reclassification of forest of mineral lands to agricultural lands
shall be undertaken after the approval of this Act until Congress, taking into
account ecological, developmental and equity considerations, shall have
determined by law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits ad determined by
Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture;
and

(d) All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon.
Sec. 10 EXEMPTIONS AND EXCLUSIONS. Lands actually, directly and
exclusively used and found to be necessary for parks, wildlife, forest reserves,
reforestration, fish sanctuaries and breeding grounds, watersheds and mangroves,
national defense, school sites and campuses including experimental farm stations
operated by public or private schools for educational purposes, seeds and
seedlings research and pilot production centers, church sites and convents
appurtenant thereto, mosque sites and Islamic centers appurtenant thereto,
communal burial grounds and cemeteries, penal colonies and penal farms actually
worked by the inmates, government and private research and quarantine centers
and all lands with eighteen percent (18%) slope and over, except those already
developed shall be exempt from the coverage of this Act. (Emphasis supplied).
The construction given by the DARAB to Section 10 restricts the land area of the CMU to its
present needs or to a land area presently, actively exploited and utilized by the university in
carrying out its present educational program with its present student population and academic
facility overlooking the very significant factor of growth of the university in the years to
come. By the nature of the CMU, which is a school established to promote agriculture and
industry, the need for a vast tract of agricultural land and for future programs of
expansion is obvious. At the outset, the CMU was conceived in the same manner as land grant
colleges in America, a type of educational institution which blazed the trail for the development
of vast tracts of unexplored and undeveloped agricultural lands in the Mid-West. What we now
know as Michigan State University, Penn State University and Illinois State University, started
as small land grant colleges, with meager funding to support their ever increasing educational
programs. They were given extensive tracts of agricultural and forest lands to be developed to
support their numerous expanding activities in the fields of agricultural technology and
scientific research. Funds for the support of the educational programs of land grant colleges
came from government appropriation, tuition and other student fees, private endowments and
gifts, and earnings from miscellaneous sources. 7 It was in this same spirit that President Garcia
issued Proclamation No. 476, withdrawing from sale or settlement and reserving for the
Mindanao Agricultural College (forerunner of the CMU) a land reservation of 3,080 hectares as
its future campus. It was set up in Bukidnon, in the hinterlands of Mindanao, in order that it can
have enough resources and wide open spaces to grow as an agricultural educational institution,
to develop and train future farmers of Mindanao and help attract settlers to that part of the
country.
In line with its avowed purpose as an agricultural and technical school, the University adopted a
land utilization program to develop and exploit its 3080-hectare land reservation as follows: 8
No. of Hectares Percentage
a. Livestock and Pasture 1,016.40 33

b. Upland Crops 616 20

c. Campus and Residential sites 462 15
d. Irrigated rice 400.40 13
e. Watershed and forest reservation 308 10
f. Fruit and Trees Crops 154 5
g. Agricultural
Experimental stations 123.20 4
3,080.00 100%
The first land use plan of the CARP was prepared in 1975 and since then it has undergone
several revisions in line with changing economic conditions, national economic policies and
financial limitations and availability of resources. The CMU, through Resolution No. 160 S.
1984, pursuant to its development plan, adopted a multi-disciplinary applied research extension
and productivity program called the "Kilusang Sariling Sikap Project" (CMU-KSSP). The
objectives 9 of this program were:
1. Provide researches who shall assist in (a) preparation of proposal; (b) monitor
project implementation; and (c) collect and analyze all data and information
relevant to the processes and results of project implementation;
2. Provide the use of land within the University reservation for the purpose of
establishing a lowland rice project for the party of the Second Part for a period of
one calendar year subject to discretionary renewal by the Party of the First Part;
3. Provide practical training to the Party of the Second Part on the management and
operation of their lowland project upon request of Party of the Second Part; and
4. Provide technical assistance in the form of relevant livelihood project specialists
who shall extend expertise on scientific methods of crop production upon request
by Party of the Second Part.
In return for the technical assistance extended by the CMU, the participants in a project pay a
nominal amount as service fee. The self-reliance program was adjunct to the CMU's lowland
rice project.
The portion of the CMU land leased to the Philippine Packing Corporation (now Del
Monte Phils., Inc.) was leased long before the CARP was passed. The agreement with the
Philippine Packing Corporation was not a lease but a Management and Development
Agreement, a joint undertaking where use by the Philippine Packing Corporation of the land
was part of the CMU research program, with the direct participation of faculty and students.

Said contracts with the Philippine Packing Corporation and others of a similar nature (like MMAgraplex) were made prior to the enactment of R.A. 6657 and were directly connected to the
purpose and objectives of the CMU as an educational institution. As soon as the objectives of
the agreement for the joint use of the CMU land were achieved as of June 1988, the CMU
adopted a blue print for the exclusive use and utilization of said areas to carry out its own
research and agricultural experiments.
As to the determination of when and what lands are found to be necessary for use by the CMU,
the school is in the best position to resolve and answer the question and pass upon the
problem of its needs in relation to its avowed objectives for which the land was given to it
by the State. Neither the DARAB nor the Court of Appeals has the right to substitute its
judgment or discretion on this matter, unless the evidentiary facts are so manifest as to
show that the CMU has no real for the land.
It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the
Court of Appeals in its Decision dated August 20, 1990, is not covered by the CARP because:
(1) It is not alienable and disposable land of the public domain;
(2) The CMU land reservation is not in excess of specific limits as determined by
Congress;
(3) It is private land registered and titled in the name of its lawful owner, the CMU;
(4) It is exempt from coverage under Section 10 of R.A. 6657 because the lands are
actually, directly and exclusively used and found to be necessary for school site
and campus, including experimental farm stations for educational purposes, and for
establishing seed and seedling research and pilot production centers. (Emphasis
supplied).
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the
DARAB is limited only to matters involving the implementation of the CARP. More
specifically, it is restricted to agrarian cases and controversies involving lands falling within the
coverage of the aforementioned program. It does not include those which are actually,
directly and exclusively used and found to be necessary for, among such purposes, school
sites and campuses for setting up experimental farm stations, research and pilot
production centers, etc.
Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it
involving a portion of the CMU's titled school site, as the portion of the CMU land reservation
ordered segregated is actually, directly and exclusively used and found by the school to be
necessary for its purposes. The CMU has constantly raised the issue of the DARAB's lack of
jurisdiction and has questioned the respondent's authority to hear, try and adjudicate the case at
bar. Despite the law and the evidence on record tending to establish that the fact that the
DARAB had no jurisdiction, it made the adjudication now subject of review.

Whether the DARAB has the authority to order the segregation of a portion of a private
property titled in the name of its lawful owner, even if the claimant is not entitled as a
beneficiary, is an issue we feel we must resolve. The quasi-judicial powers of DARAB are
provided in Executive Order No. 129-A, quoted hereunder in so far as pertinent to the issue at
bar:
Sec. 13. AGRARIAN REFORM ADJUDICATION BOARD There is hereby
created an Agrarian Reform Adjudication Board under the office of the
Secretary. . . . The Board shall assume the powers and functions with respect to
adjudication of agrarian reform cases under Executive Order 229 and this
Executive Order . . .
Sec. 17. QUASI JUDICIAL POWERS OF THE DAR. The DAR is hereby
vested with quasi-judicial powers to determine and adjudicate agrarian reform
matters and shall have exclusive original jurisdiction over all matters including
implementation of Agrarian Reform.
Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:
The DAR is hereby vested with primary jurisdiction to determine and adjudicate
agrarian reform matters and shall have original jurisdiction over all matters
involving the implementation of agrarian reform. . . .
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A. 6657.
There is no doubt that the DARAB has jurisdiction to try and decide any agrarian dispute
in the implementation of the CARP. An agrarian dispute is defined by the same law as
any controversy relating to tenurial rights whether leasehold, tenancy stewardship or
otherwise over lands devoted to
agriculture. 10
In the case at bar, the DARAB found that the complainants are not share tenants or lease
holders of the CMU, yet it ordered the "segregation of a suitable compact and contiguous
area of Four Hundred hectares, more or less", from the CMU land reservation, and
directed the DAR Regional Director to implement its order of segregation. Having found
that the complainants in this agrarian dispute for Declaration of Tenancy Status are not entitled
to claim as beneficiaries of the CARP because they are not share tenants or leaseholders, its
order for the segregation of 400 hectares of the CMU land was without legal authority. We do
not believe that the quasi-judicial function of the DARAB carries with it greater authority than
ordinary courts to make an award beyond what was demanded by the complainants/petitioners,
even in an agrarian dispute. Where the quasi-judicial body finds that the complainants/
petitioners are not entitled to the rights they are demanding, it is an erroneous interpretation of
authority for that quasi-judicial body to order private property to be awarded to future
beneficiaries. The order segregation 400 hectares of the CMU land was issued on a finding that
the complainants are not entitled as beneficiaries, and on an erroneous assumption that the
CMU land which is excluded or exempted under the law is subject to the coverage of the CARP.

Going beyond what was asked by the complainants who were not entitled to the relief prayed
the complainants who were not entitled to the relief prayed for, constitutes a grave abuse of
discretion because it implies such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction.
The education of the youth and agrarian reform are admittedly among the highest priorities in
the government socio-economic programs. In this case, neither need give way to the other.
Certainly, there must still be vast tracts of agricultural land in Mindanao outside the CMU land
reservation which can be made available to landless peasants, assuming the claimants here, or
some of them, can qualify as CARP beneficiaries. To our mind, the taking of the CMU land
which had been segregated for educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority and jurisdiction granted by law to the
DARAB.
The decision in this case is of far-reaching significance as far as it concerns state colleges and
universities whose resources and research facilities may be gradually eroded by misconstruing
the exemptions from the CARP. These state colleges and universities are the main vehicles for
our scientific and technological advancement in the field of agriculture, so vital to the existence,
growth and development of this country.
It is the opinion of this Court, in the light of the foregoing analysis and for the reasons
indicated, that the evidence is sufficient to sustain a finding of grave abuse of discretion by
respondents Court of Appeals and DAR Adjudication Board. We hereby declare the decision of
the DARAB dated September 4, 1989 and the decision of the Court of Appeals dated August 20,
1990, affirming the decision of the quasi-judicial body, as null and void and hereby order that
they be set aside, with costs against the private respondents.
SO ORDERED

VIS A VIS

[G.R. No. 158228. March 23, 2004]

DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, ROBERTO

M. PAGDANGANAN, petitioner, vs. DEPARTMENT OF EDUCATION, CULTURE
AND SPORTS (DECS), respondent.
DECISION
YNARES-SANTIAGO, J.:

This petition for review on certiorari seeks to set aside the decision [1] of the Court of
Appeals dated October 29, 2002 in CA-G.R. SP No. 64378, which reversed the August 30,
2000decision of the Secretary of Agrarian Reform, as well as the Resolution dated May 7, 2003,
which denied petitioners motion for reconsideration.
In controversy are Lot No. 2509 and Lot No. 817-D consisting of an aggregate area of
189.2462 hectares located at Hacienda Fe, Escalante, Negros Occidental and Brgy. Gen.
Luna, Sagay, Negros Occidental, respectively. On October 21, 1921, these lands were
donated by the late Esteban Jalandoni to respondent DECS (formerly Bureau of Education).
[2]
Consequently, titles thereto were transferred in the name of respondent DECS under Transfer
Certificate of Title No. 167175.[3]
On July 15, 1985, respondent DECS leased the lands to Anglo Agricultural Corporation
for 10 agricultural crop years, commencing from crop year 1984-1985 to crop year 19931994.The contract of lease was subsequently renewed for another 10 agricultural crop
years, commencing from crop year 1995-1996 to crop year 2004-2005.[4]
On June 10, 1993, Eugenio Alpar and several others, claiming to be permanent and regular
farm workers of the subject lands, filed a petition for Compulsory Agrarian Reform Program
(CARP) coverage with the Municipal Agrarian Reform Office (MARO) of Escalante.[5]
After investigation, MARO Jacinto R. Piosa, sent a Notice of Coverage to respondent
DECS, stating that the subject lands are now covered by CARP and inviting its representatives
for a conference with the farmer beneficiaries. [6] Then, MARO Piosa submitted his report to
OIC-PARO Stephen M. Leonidas, who recommended to the DAR Regional Director the
approval of the coverage of the landholdings.
On August 7, 1998, DAR Regional Director Dominador B. Andres approved the
recommendation, the dispositive portion of which reads:
WHEREFORE, all the foregoing premises considered, the petition is granted. Order is hereby
issued:
1. Placing under CARP coverage Lot 2509 with an area of 111.4791 hectares situated at
Had. Fe, Escalante, Negros Occidental and Lot 817-D with an area of 77.7671
hectares situated at Brgy. Gen. Luna, Sagay, Negros Occidental;
2. Affirming the notice of coverage sent by the DAR Provincial Office, Negros
Occidental dated November 23, 1994;
3. Directing the Provincial Agrarian Reform Office of Negros Occidental and the
Municipal Agrarian Reform Officers of Sagay and Escalante to facilitate the
acquisition of the subject landholdings and the distribution of the same qualified
beneficiaries.
SO ORDERED.[7]
Respondent DECS appealed the case to the Secretary of Agrarian Reform which affirmed
the Order of the Regional Director. [8]

Aggrieved, respondent DECS filed a petition for certiorari with the Court of Appeals,
which set aside the decision of the Secretary of Agrarian Reform.[9]
Hence, the instant petition for review.
The pivotal issue to be resolved in this case is whether or not the subject properties are
exempt from the coverage of Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1998 (CARL).
The general policy under CARL is to cover as much lands suitable for agriculture as
possible.[10] Section 4 of R.A. No. 6657 sets out the coverage of CARP. It states that the
program shall:
cover, regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including
other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform
Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account,
ecological, developmental and equity considerations, shall have determined by law,
the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural
products raised or that can be raised thereon.
Section 3(c) thereof defines agricultural land, as land devoted to agricultural activity as
defined in this Act and not classified as mineral, forest, residential, commercial or industrial
land.The term agriculture or agricultural activity is also defined by the same law as follows:
Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil,
planting of crops, growing of fruit trees, raising of livestock, poultry or fish, including the
harvesting of such farm products, and other farm activities, and practices performed by a farmer
in conjunction with such farming operations done by persons whether natural or juridical.[11]
The records of the case show that the subject properties were formerly private agricultural
lands owned by the late Esteban Jalandoni, and were donated to respondent DECS. From that
time until they were leased to Anglo Agricultural Corporation, the lands continued to be
agricultural primarily planted to sugarcane, albeit part of the public domain being owned by an
agency of the government.[12] Moreover, there is no legislative or presidential act, before and
after the enactment of R.A. No. 6657, classifying the said lands as mineral, forest, residential,

commercial or industrial land. Indubitably, the subject lands fall under the classification of lands
of the public domain devoted to or suitable for agriculture.
Respondent DECS sought exemption from CARP coverage on the ground that all the
income derived from its contract of lease with Anglo Agricultural Corporation were actually,
directly and exclusively used for educational purposes, such as for the repairs and renovations
of schools in the nearby locality.
Petitioner DAR, on the other hand, argued that the lands subject hereof are not exempt from
the CARP coverage because the same are not actually, directly and exclusively used as school
sites or campuses, as they are in fact leased to Anglo Agricultural Corporation. Further, to be
exempt from the coverage, it is the land per se, not the income derived therefrom, that must be
actually, directly and exclusively used for educational purposes.
We agree with the petitioner.
Section 10 of R.A. No. 6657 enumerates the types of lands which are exempted from the
coverage of CARP as well as the purposes of their exemption, viz:
xxxxxxxxx
c) Lands actually, directly and exclusively used and found to be necessary for national
defense, school sites and campuses, including experimental farm stations operated by public or
private schools for educational purposes, , shall be exempt from the coverage of this Act.[13]
xxxxxxxxx
Clearly, a reading of the paragraph shows that, in order to be exempt from the coverage: 1)
the land must be actually, directly, and exclusively used and found to be necessary; and 2) the
purpose is for school sites and campuses, including experimental farm stations operated by
public or private schools for educational purposes.
The importance of the phrase actually, directly, and exclusively used and found to be
necessary cannot be understated, as what respondent DECS would want us to do by not taking
the words in their literal and technical definitions. The words of the law are clear and
unambiguous. Thus, the plain meaning rule or verba legis in statutory construction is applicable
in this case. Where the words of a statute are clear, plain and free from ambiguity, it must be
given its literal meaning and applied without attempted interpretation.[14]
We are not unaware of our ruling in the case of Central Mindanao University v. Department
of Agrarian Reform Adjudication Board,[15] wherein we declared the land subject thereof exempt
from CARP coverage. However, respondent DECS reliance thereon is misplaced because the
factual circumstances are different in the case at bar.
Firstly, in the CMU case, the land involved was not alienable and disposable land of the
public domain because it was reserved by the late President Carlos P. Garcia under
Proclamation No. 476 for the use of Mindanao Agricultural College (now CMU).[16] In this case,
however, the lands fall under the category of alienable and disposable lands of the public
domain suitable for agriculture.

Secondly, in the CMU case, the land was actually, directly and exclusively used and found
to be necessary for school sites and campuses. Although a portion of it was being used by the
Philippine Packing Corporation (now Del Monte Phils., Inc.) under a Management and
Development Agreement, the undertaking was that the land shall be used by the Philippine
Packing Corporation as part of the CMU research program, with direct participation of faculty
and students. Moreover, the land was part of the land utilization program developed by the
CMU for its Kilusang Sariling Sikap Project (CMU-KSSP), a multi-disciplinary applied
research extension and productivity program.[17] Hence, the retention of the land was found to be
necessary for the present and future educational needs of the CMU. On the other hand, the lands
in this case were not actually and exclusively utilized as school sites and campuses, as they were
leased to Anglo Agricultural Corporation, not for educational purposes but for the furtherance of
its business. Also, as conceded by respondent DECS, it was the income from the contract of
lease and not the subject lands that was directly used for the repairs and renovations of the
schools in the locality.
Anent the issue of whether the farmers are qualified beneficiaries of CARP, we disagree
with the Court of Appeals finding that they were not.
At the outset, it should be pointed out that the identification of actual and potential
beneficiaries under CARP is vested in the Secretary of Agrarian Reform pursuant to Section 15,
R.A. No. 6657, which states:
SECTION 15. Registration of Beneficiaries. The DAR in coordination with the Barangay
Agrarian Reform Committee (BARC) as organized in this Act, shall register all agricultural
lessees, tenants and farmworkers who are qualified to be beneficiaries of the CARP. These
potential beneficiaries with the assistance of the BARC and the DAR shall provide the
following data:
(a) names and members of their immediate farm household;
(b) owners or administrators of the lands they work on and the length of tenurial
relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages received.
A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted
in the barangay hall, school or other public buildings in the barangay where it shall be open to
inspection by the public at all reasonable hours.
In the case at bar, the BARC certified that herein farmers were potential CARP beneficiaries
of the subject properties.[18] Further, on November 23, 1994, the Secretary of Agrarian Reform
through the Municipal Agrarian Reform Office (MARO) issued a Notice of Coverage placing
the subject properties under CARP. Since the identification and selection of CARP beneficiaries
are matters involving strictly the administrative implementation of the CARP,[19] it behooves the
courts to exercise great caution in substituting its own determination of the issue, unless there is
grave abuse of discretion committed by the administrative agency. In this case, there was none.

The Comprehensive Agrarian Reform Program (CARP) is the bastion of social justice of
poor landless farmers, the mechanism designed to redistribute to the underprivileged the natural
right to toil the earth, and to liberate them from oppressive tenancy. To those who seek its
benefit, it is the means towards a viable livelihood and, ultimately, a decent life. The objective
of the State is no less certain: landless farmers and farmworkers will receive the highest
consideration to promote social justice and to move the nation toward sound rural development
and industrialization.[20]
WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the
Court of Appeals dated October 29, 2002, in CA-G.R. SP No. 64378 is REVERSED and SET
ASIDE. The decision dated August 30, 2000 of the Secretary of Agrarian Reform placing the
subject lands under CARP coverage, is REINSTATED.
SO ORDERED.

G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and
HON. BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines
Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and
EFREN SAN JOAQUIN,respondents.
QUIASON, J.:
In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551
entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked
to decide whether the expropriation of agricultural lands by local government units is subject, to
the prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian
reform program.
On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur
passed Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or
expropriate property contiguous to the provincial capitol site, in order to establish a pilot farm
for non-food and non-traditional agricultural crops and a housing project for provincial
government employees.

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

WHEREAS, the province of Camarines Sur has adopted a five-year
Comprehensive Development plan, some of the vital components of which
includes the establishment of model and pilot farm for non-food and nontraditional agricultural crops, soil testing and tissue culture laboratory centers, 15
small scale technology soap making, small scale products of plaster of paris,
marine biological and sea farming research center,and other progressive feasibility
concepts objective of which is to provide the necessary scientific and technology
know-how to farmers and fishermen in Camarines Sur and to establish a housing
project for provincial government employees;
WHEREAS, the province would need additional land to be acquired either by
purchase or expropriation to implement the above program component;
WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial
Capitol Site ideally suitable to establish the same pilot development center;
WHEREFORE . . . .
Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis
R.Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and
Efren N. San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the
Regional Trial Court, Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.
Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession.
The San Joaquins failed to appear at the hearing of the motion.
The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price
offered for their property. In an order dated December 6, 1989, the trial court denied the motion
to dismiss and authorized the Province of Camarines Sur to take possession of the property
upon the deposit with the Clerk of Court of the amount of P5,714.00, the amount provisionally
fixed by the trial court to answer for damages that private respondents may suffer in the event
that the expropriation cases do not prosper. The trial court issued a writ of possession in an
order dated January18, 1990.
The San Joaquins filed a motion for relief from the order, authorizing the Province of
Camarines Sur to take possession of their property and a motion to admit an amended motion to
dismiss. Both motions were denied in the order dated February 1990.
In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No.
129, Series of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the
complaints for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i)
denying the motion to dismiss and (ii) allowing the Province of Camarines Sur to take
possession of the property subject of the expropriation and the order dated February 26, 1990,

denying the motion to admit the amended motion to dismiss, be set aside. They also asked that
an order be issued to restrain the trial court from enforcing the writ of possession, and thereafter
to issue a writ of injunction.
In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to
initiate the expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P.
Blg. 337) and that the expropriations are for a public purpose.
Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated
that under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the
approval by the Office of the President of the exercise by the Sangguniang Panlalawigan of the
right of eminent domain. However, the Solicitor General expressed the view that the Province
of Camarines Sur must first secure the approval of the Department of Agrarian Reform of the
plan to expropriate the lands of petitioners for use as a housing project.
The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines
Sur to take possession of private respondents' lands and the order denying the admission of the
amended motion to dismiss. It also ordered the trial court to suspend the expropriation
proceedings until after the Province of Camarines Sur shall have submitted the requisite
approval of the Department of Agrarian Reform to convert the classification of the property of
the private respondents from agricultural to non-agricultural land.
Hence this petition.
It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for
the property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.
The Court of Appeals did not rule on the validity of the questioned resolution; neither did it
dismiss the complaints. However, when the Court of Appeals ordered the suspension of the
proceedings until the Province of Camarines Sur shall have obtained the authority of the
Department of Agrarian Reform to change the classification of the lands sought to be
expropriated from agricultural to non-agricultural use, it assumed that the resolution is valid and
that the expropriation is for a public purpose or public use.
Modernly, there has been a shift from the literal to a broader interpretation of "public purpose"
or "public use" for which the power of eminent domain may be exercised. The old concept was
that the condemned property must actually be used by the general public (e.g. roads, bridges,
public plazas, etc.) before the taking thereof could satisfy the constitutional requirement of
"public use". Under the new concept, "public use" means public advantage, convenience or
benefit, which tends to contribute to the general welfare and the prosperity of the whole
community, like a resort complex for tourists or housing project (Heirs of Juancho Ardano v.
Reyes, 125 SCRA 220 [1983]; Sumulong v. Guerrero, 154 SC.RA 461 [1987]).

The expropriation of the property authorized by the questioned resolution is for a public
purpose. The establishment of a pilot development center would inure to the direct benefit and
advantage of the people of the Province of Camarines Sur. Once operational, the center would
make available to the community invaluable information and technology on agriculture, fishery
and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen
would be enhanced. The housing project also satisfies the public purpose requirement of the
Constitution. As held in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human
need. Shortage in housing is a matter of state concern since it directly and significantly affects
public health, safety, the environment and in sum the general welfare."
It is the submission of the Province of Camarines Sur that its exercise of the power of eminent
domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law
(R.A. No. 6657), particularly Section 65 thereof, which requires the approval of the Department
of Agrarian Reform before a parcel of land can be reclassified from an agricultural to a nonagricultural land.
The Court of Appeals, following the recommendation of the Solicitor General, held that the
Province of Camarines Sur must comply with the provision of Section 65 of the Comprehensive
Agrarian Reform Law and must first secure the approval of the Department of Agrarian Reform
of the plan to expropriate the lands of the San Joaquins.
In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the
Philippine Tourism Authority can expropriate lands covered by the "Operation Land Transfer"
for use of a tourist resort complex. There was a finding that of the 282 hectares sought to be
expropriated, only an area of 8,970 square meters or less than one hectare was affected by the
land reform program and covered by emancipation patents issued by the Ministry of Agrarian
Reform. While the Court said that there was "no need under the facts of this petition to rule on
whether the public purpose is superior or inferior to another purpose or engage in a balancing of
competing public interest," it upheld the expropriation after noting that petitioners had failed to
overcome the showing that the taking of 8,970 square meters formed part of the resort complex.
A fair and reasonable reading of the decision is that this Court viewed the power of
expropriation as superior to the power to distribute lands under the land reform program.
The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by
stressing the fact that local government units exercise such power only by delegation.
(Comment, pp. 14-15; Rollo, pp. 128-129)
It is true that local government units have no inherent power of eminent domain and can
exercise it only when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l
US 439, 74 L.ed. 950, 50 SCt. 360). It is also true that in delegating the power to expropriate,
the legislature may retain certain control or impose certain restraints on the exercise thereof by
the local governments (Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct.
684). While such delegated power may be a limited authority, it is complete within its limits.
Moreover, the limitations on the exercise of the delegated power must be clearly expressed,
either in the law conferring the power or in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the
Local Government Code, which provides:
A local government unit may, through its head and acting pursuant to a resolution
of its sanggunian exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.
Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first
secure the approval of the Department of Land Reform for the conversion of lands from
agricultural to non-agricultural use, before they can institute the necessary expropriation
proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law which
expressly subjects the expropriation of agricultural lands by local government units to the
control of the Department of Agrarian Reform. The closest provision of law that the Court of
Appeals could cite to justify the intervention of the Department of Agrarian Reform in
expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law, which reads:
Sec. 65. Conversion of Lands. After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for, agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or
conversion of the land and its disposition: Provided, That the beneficiary shall have
fully paid his obligation.
The opening, adverbial phrase of the provision sends signals that it applies to lands previously
placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its
award."
The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive
Order No. 129-A, Series of 1987, cannot be the source of the authority of the Department of
Agrarian Reform to determine the suitability of a parcel of agricultural land for the purpose to
which it would be devoted by the expropriating authority. While those rules vest on the
Department of Agrarian Reform the exclusive authority to approve or disapprove conversions of
agricultural lands for residential, commercial or industrial uses, such authority is limited to the
applications for reclassification submitted by the land owners or tenant beneficiaries.
Statutes conferring the power of eminent domain to political subdivisions cannot be broadened
or constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS
2d. 241).
To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals,
etc, without first applying for conversion of the use of the lands with the Department of
Agrarian Reform, because all of these projects would naturally involve a change in the land use.

In effect, it would then be the Department of Agrarian Reform to scrutinize whether the
expropriation is for a public purpose or public use.
Ordinarily, it is the legislative branch of the local government unit that shall determine whether
the use of the property sought to be expropriated shall be public, the same being an expression
of legislative policy. The courts defer to such legislative determination and will intervene only
when a particular undertaking has no real or substantial relation to the public use (United States
Ex Rel Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex
rel Twin City Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR 585).
There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not
embrace the sovereign unless the sovereign is specially mentioned as subject thereto (Alliance
of Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]). The
Republic of the Philippines, as sovereign, or its political subdivisions, as holders of delegated
sovereign powers, cannot be bound by provisions of law couched in general term.
The fears of private respondents that they will be paid on the basis of the valuation declared in
the tax declarations of their property, are unfounded. This Court has declared as unconstitutional
the Presidential Decrees fixing the just compensation in expropriation cases to be the value
given to the condemned property either by the owners or the assessor, whichever was lower
([Export Processing Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held in Municipality
of Talisay v. Ramirez, 183 SCRA 528 [1990], the rules for determining just compensation are
those laid down in Rule 67 of the Rules of Court, which allow private respondents to submit
evidence on what they consider shall be the just compensation for their property.
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals
is set aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines
Sur to take possession of private respondents' property; (b) orders the trial court to suspend the
expropriation proceedings; and (c) requires the Province of Camarines Sur to obtain the
approval of the Department of Agrarian Reform to convert or reclassify private respondents'
property from agricultural to non-agricultural use.
The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial
court, denying the amended motion to dismiss of the private respondents.
SO ORDERED.

G.R. No. 158314. June 3, 2004

SAMAHAN NG MAGSASAKA SA SAN JOSEP, represented by DOMINADOR

MAGLALANG, petitioner, vs. MARIETTA VALISNO, ADELA, AQUILES, LEANDRO,
HONORIO, LUMEN, NICOLAS, all surnamed VALISNO; RANDY V. WAGNER,
MARIA MARTA B. VALISNO, NOELITO VALISNO, MARY ANN L. VALISNO,
PHILIP V. BRANZUELA and BRENDON V. YUJUICO; MA. CRISTINA VALISNO,
BENEDICTO V. YUJUICO, GREGORIO V. YUJUICO and LEONORA V.
YUJUICO, respondents.

DECISION
YNARES-SANTIAGO, J.:
The sole issue in this petition for review on certiorari is whether or not the grandchildren of
the late Dr. Nicolas Valisno Sr. are entitled to retention rights as landowners under Republic Act
No. 6657, or the Comprehensive Agrarian Reform Law (hereafter, CARL).
The original 57-hectare property, situated in La Fuente, Sta. Rosa, Nueva Ecija, was
formerly registered in the name of Dr. Nicolas Valisno, Sr. under Transfer Certificate of Title
No. NT-38406. Before the effectivity of Presidential Decree No. 27,[1] the land was the subject
of a judicial ejectment suit, whereby in 1971, the Valisnos tenants were ejected from the
property.[2] Among these tenants was Dominador Maglalang, who represents the SMSJ in the
instant proceedings.
Meanwhile, on October 20 and 21, 1972, Dr. Valisno mortgaged 12 hectares of his property
to Renato and Angelito Banting.[3] Thereafter, the property was subdivided into ten lots and
on November 8, 1972, individual titles were issued in the name of the eight children of Nicolas,
Angelito Banting, and Renato Banting.[4]
After the mortgage on the 12 hectare portion was foreclosed and the property sold at public
auction, four grandchildren of Dr. Nicolas Valisno, namely: Maria Cristina F. Valisno, daughter
of Romulo D. Valisno; and Leonora Valisno Yujuico, Benedicto Valisno Yujuico and Gregorio
Valisno Yujuico, children of Marietta Valisno redeemed the same from the mortgagees. [5] At the
time of the redemption, Maria Cristina, Leonora and Gregorio were all minors; only Benedicto
was of legal age, being then 26 years old. [6] The redemption was made on October 25, 1973, but
the titles to the land were not transferred to the redemptioners until November 26, 1998.[7]
Subsequently, the entire 57-hectare property became the subject of expropriation
proceedings before the Department of Agrarian Reform (DAR). In 1994, Dominador
Maglalang, in behalf of the SMSP, filed a petition for coverage of the subject landholding under
the CARL, which petition was dismissed for want of jurisdiction. [8] On June 14, 1995, Rogelio
Chaves, DAR Provincial Agrarian Reform Officer (PARO), issued a Memorandum stating that
the property had been subdivided among the heirs of Dr. Nicolas Valisno Sr. before the issuance

of PD 27 into tracts of approximately six hectares each. [9] Nevertheless, PARO Chaves added
that the excess over the five-hectare retention limit could still be covered under RA 6657.[10]
On appeal, the Office of the Regional Director issued an Order dated January 2, 1996,
declaring the Valisno property exempt from the coverage of PD 27 and RA 6657. [11] This was
reversed by then Secretary Garilao, who held that the property is covered by the Comprehensive
Agrarian Reform Program, subject to the retention rights of the heirs of Nicolas, Sr. The Valisno
heirs filed a motion for reconsideration of the said order, but the same was denied.
On September 25, 1997, the Valisno heirs filed a Consolidated Application for Retention
and Award under RA 6657. Specifically, the petition was filed by (1) Adela, Aquiles, Leandro,
Honorio, Lumen, Nicolas and Marietta Valisno, seven children of Nicolas Valisno, Sr., who
applied for retention rights as landowners; (2) Randy V. Wagner, Maria Marta B. Valisno,
Noelito Valisno, Mary Ann L. Valisno, Philip V. Branzuela and Brendon V. Yujuico,
grandchildren of Nicolas Sr. (hereafter collectively the Grandchildren-Awardees), who applied
to be considered qualified child-awardees; and (3) Ma. Cristina Valisno, Benedicto V. Yujuico,
Gregorio V. Yujuico and Leonora V. Yujuico, likewise grandchildren of Nicolas Sr. (hereafter
collectively the Redemptioner-Grandchildren), who applied for retention rights as landowners
over the 12-hectare portion of the property alleged to have been mortgaged by Nicolas Sr. in
1972 to Angelito and Renato Banting.
The SMSJ, through Dominador Maglalang, opposed the Consolidated Application for
Retention, specifically objecting to the award in favor of the Grandchildren-Awardees because
they are not actually tilling nor directly managing the land in question as required by law.
On November 4, 1998, Regional Director Renato F. Herrera issued an Order which
pertinently reads:
WHEREFORE, premises considered, an ORDER is hereby issued as follows:
1. GRANTING the application for retention of the heirs of Dr. Nicolas Valisno, Sr.,
namely: Marietta Valisno; Honorio Valisno; Leandro Valisno; Adela Valisno; Nicolas Valisno,
Jr.; Aquiles Valisno; and Lumen Valisno of not more than five (5) hectares each or a total of 35
hectares covered by Title Nos. 118446, 118443, 118442, 118440, 118445, 118441 and 118444,
respectively, all located at La Fuente, Sta. Rosa, Nueva Ecija;
2. PLACING the excess of 19.0 hectares, more or less, under RA 6657 and acquiring the same
thru Compulsory Acquisition for distribution to qualified farmer-beneficiaries taking into
consideration the basic qualifications set forth by law;
3. DENYING the request for the award to children of the applicants for utter lack of merit; and
4. DIRECTING the applicants-heirs to cause the segregation and survey of the retained area at
their own expense and to submit within thirty (30) days the final approved survey plan to this
Office.
SO ORDERED.[12]

On appeal, the DAR Secretary affirmed the Order of the Regional Director with the
following relevant ratiocination:
In the second assignment of error, appellants faulted the Regional Director for not giving due
consideration to the two (2) mortgages constituted by the original owner over a portion of his
landholding in 1972 and redeemed by the latters grandchildren in 1973, when the 12-hectare
land subject of the mortgages were ordered to be distributed to CARP beneficiaries.
xxxxxxxxx
The alleged redemption of the mortgaged property by the four (4) grandchildren of Nicolas
Valisno, Sr., namely Ma. Cristina, Leonora, Gregorio and Benedicto, is not likewise worthy of
any credence. The mortgaged property was allegedly redeemed on October 25, 1973. From the
evidence on record, three (3) of the alleged redemptioners represented to be of legal age in the
Discharge of Mortgage were still minors, hence, without any legal capacity at the time the
redemption was made.[13]
On June 23, 2000, the motion for reconsideration filed by the heirs of Dr. Valisno was
denied.[14]
Respondent heirs filed a petition for review with the Court of Appeals, arguing that the
Secretary of Agrarian Reform erred (1) in disallowing the award of one hectare to each of the
seven Grandchildren-Awardees of Dr. Nicolas Valisno, as qualified children-awardees under the
CARL; and (2) in not recognizing the redemption made by the four grandchildren of Dr.
Nicolas Valisno over the 12-hectare riceland mortgaged to Renato and Angelito Banting.[15]
On March 26, 2002, the Court of Appeals reversed the Orders of the DAR Secretary,
granted the award of one hectare each for the seven Grandchildren-Awardees, and affirmed the
retention rights of the Redemptioner-Grandchildren over three hectares each, or a total of 12
hectares.[16]
Petitioners filed a partial motion for reconsideration, assailing the right of retention of the
four Redemptioner-Grandchildren over the 12-hectare property, and praying that an amended
decision be rendered placing the 12 hectares under the coverage of the CARP.[17] This motion
was denied on March 25, 2003. [18]
Hence, this appeal, on the sole assignment of error:
THE HONORABLE COURT OF APPEALS ERRED WHEN, IN EFFECT, IT RULED THAT
THE REDEMPTIONERS (GRANDCHILDREN OF THE DECEASED NICOLAS VALISNO,
SR.) WERE ENTITLED TO RETENTION RIGHTS AS LANDOWNERS UNDER THE
AGRARIAN REFORM LAW DESPITE THE FACT THAT THE REDEMPTION WAS DONE
BY THEIR PARENTS (CHILDREN OF THE DECEASED) ONLY IN THEIR NAME AND
FOR THEIR BENEFIT.[19]
The appeal lacks merit.

The Court of Appeals found the following facts relevant: First, that the mortgages were
constituted over a 12-hectare portion of Dr. Valisnos estate in 1972. Second, that the titles to the
property were transferred to the names of the mortgagees in 1972, viz., TCT No. NT-118447,
covering a 6-hectare property in La Fuente, Sta. Rosa, Nueva Ecija, issued in the name of
Angelito Banting; and TCT No. NT-118448, likewise covering a 6-hectare property in La
Fuente, Sta. Rosa, Nueva Ecija, issued in the name of Renato Banting. Third, these properties
were redeemed by the Redemptioner-Grandchildren on October 25, 1973, at the time of which
redemption three of the four Redemptioner-Grandchildren were minors.
It is a well-settled rule that only questions of law may be reviewed by the Supreme Court in
an appeal by certiorari.[20] Findings of fact by the Court of Appeals are final and conclusive and
cannot be reviewed on appeal to the Supreme Court. [21] The only time this Court will disregard
the factual findings of the Court of Appeals (which are ordinarily accorded great respect) is
when these are based on speculation, surmises or conjectures or when these are not based on
substantial evidence.[22]
In the case at bar, no reason exists for us to disregard the findings of fact of the Court of
Appeals. The factual findings are borne out by the record and are supported by substantial
evidence.
Given these settled facts, the resolution of the sole issue in this case hinges on (1) the
validity of the redemption in 1973, made when three of the Redemptioner-Grandchildren were
minors; and (2) if the redemption was valid, the determination of the retention rights of the
Redemptioner-Grandchildren, if any, under RA 6557.
The relevant laws governing the minors redemption in 1973 are the general Civil Code
provisions on legal capacity to enter into contractual relations. Article 1327 of the Civil Code
provides that minors are incapable of giving consent to a contract. Article 1390 provides that a
contract where one of the parties is incapable of giving consent is voidable or annullable.Thus,
the redemption made by the minors in 1973 was merely voidable or annullable, and
was not void ab initio, as petitioners argue.
Any action for the annulment of the contracts thus entered into by the minors would require
that: (1) the plaintiff must have an interest in the contract; and (2) the action must be brought by
the victim and not the party responsible for the defect. [23] Thus, Article 1397 of the Civil Code
provides in part that [t]he action for the annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily. However, persons who are capable cannot allege the
incapacity of those with whom they contracted. The action to annul the minors redemption in
1973, therefore, was one that could only have been initiated by the minors themselves, as the
victims or the aggrieved parties in whom the law itself vests the right to file suit.This action was
never initiated by the minors. We thus quote with approval the ratiocination of the Court of
Appeals:
Respondents contend that the redemption made by the petitioners was simulated, calculated to
avoid the effects of agrarian reform considering that at the time of redemption the latter were
still minors and could not have resources, in their own right, to pay the price thereof.

We are not persuaded. While it is true that a transaction entered into by a party who is incapable
of consent is voidable, however such transaction is valid until annulled. The redemption made
by the four petitioners has never been annulled, thus, it is valid.[24]
The transfer of the titles to the two 6-hectare properties in 1972 removed the parcels of land
from the entire Valisno estate. The evidence clearly demonstrates that Renato Banting and
Angelito Banting became the registered owners of the property in 1972. These two separate
properties were then transferred to the Redemptioner-Grandchildren in 1973. Regardless of the
source of their funds, and regardless of their minority, they became the legal owners of the
property in 1973.
Moreover, although Maria Cristina, Leonora and Gregorio were all minors in 1973, they
were undoubtedly of legal age in 1994, when SMSP initiated the petition for coverage of the
subject landholding under the CARL, and of course were likewise of legal age in 1997, when all
the Valisno heirs filed their Consolidated Application for Retention and Award under RA 6657.
As owners in their own right of the questioned properties, Redemptioner-Grandchildren
enjoyed the right of retention granted to all landowners. This right of retention is a
constitutionally guaranteed right, which is subject to qualification by the legislature. [25] It serves
to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner
and the tenant and by implementing the doctrine that social justice was not meant to perpetrate
an injustice against the landowner.[26] A retained area, as its name denotes, is land which is not
supposed to leave the landowners dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would be a
pointless process.
In the landmark case of Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform,[27] we held that landowners who have not yet exercised their
retention rights under PD 27 are entitled to the new retention rights under RA 6657. [28] The
retention rights of landowners are provided in Sec. 6 of RA 6657, which reads in relevant part:
SECTION 6. Retention Limits. Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-size, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided, That landowners whose land
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, Provided further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact or contiguous, shall pertain
to the landowner. Provided, however, That in case the area selected for retention by the

landowner is tenanted, the tenant shall have the option to choose whether to remain therein or
be a beneficiary in the same or another agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area, he shall be considered a leaseholder and
shall lose his right to be a beneficiary under this Act. In case the tenant chooses to be a
beneficiary in another agricultural land, he loses his right as a lease-holder to the land retained
by the landowner. The tenant must exercise this option within a period of one (1) year from the
time the landowner manifests his choice of the area for retention.
This section defines the nature and incidents of a landowners right of retention. For as long
as the area to be retained is compact or contiguous and it does not exceed the retention ceiling
of five hectares, a landowners choice of the area to be retained must prevail.
Each of the four Redemptioner-Grandchildren is thus entitled to retain a parcel of land with
a ceiling of five hectares, for a total of 20 hectares. The parcels of land in question total only 12
hectares, or only three hectares each, which is well within the statutory retention limits.
WHEREFORE, premises considered, the Decision of the Court of Appeals in CA-G.R. SP
No. 59752 dated March 26, 2002, and Resolution of the Court of Appeals dated March 25,
2003, which upheld the retention rights of respondents Ma. Cristina Valisno, Benedicto V.
Yujuico, Gregorio V. Yujuico and Leonora V. Yujuico, are AFFIRMED.
SO ORDERED.