individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty should not
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.
Maximo Calalang in his own behalf.
Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams, Fragante and
Bayan
City Fiscal Mabanag for the other respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF
LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC
WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The provisions of
section 1 of Commonwealth Act No. 648 do not confer legislative power upon the Director of Public
Works and the Secretary of Public Works and Communications. The authority therein conferred upon
them and under which they promulgated the rules and regulations now complained of is not to
determine what public policy demands but merely to carry out the legislative policy laid down by the
National Assembly in said Act, to wit, "to promote safe transit upon, and avoid obstructions on, roads
and streets designated as national roads by acts of the National Assembly or by executive orders of
the President of the Philippines" and to close them temporarily to any or all classes of traffic
"whenever the condition of the road or the traffic thereon makes such action necessary or advisable
in the public convenience and interest." The delegated power, if at all, therefore, is not the
determination of what the law shall be, but merely the ascertainment of the facts and circumstances
upon which the application of said law is to be predicated. To promulgate rules and regulations on the
use of national roads and to determine when and how long a national road should be closed to traffic,
in view of the condition of the road or the traffic thereon and the requirements of public convenience
and interest, is an administrative function which cannot be directly discharged by the National
Assembly. It must depend on the discretion of some other government official to whom is confided
the duty of determining whether the proper occasion exists for executing the law. But it cannot be
said that the exercise of such discretion is the making of the law.
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — Commonwealth Act
No. 548 was passed by the National Assembly in the exercise of the paramount police power of the
state. Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to
promote safe transit upon and avoid obstructions on national roads, in the interest and convenience
of the public. In enacting said law, therefore, the National Assembly was prompted by considerations
of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is,
to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment
of said law, and the state in order to promote the general welfare may interfere with personal liberty,
with property, and with business and occupations. Persons and property may be subjected to all kinds
of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state
(U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the
be made to prevail over authority because then society will fall into anarchy. Neither should authority
be made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and, personal
discipline, so that there may be established the resultant equilibrium, which means peace and order
and happiness for all. The moment greater authority is conferred upon the government, logically so
much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the
fact that the apparent curtailment of liberty is precisely the very means of insuring its preservation.
3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be approximated.
Social justice means the promotion of the welfare of all the people, the adoption by the Government
of measures calculated to insure economic stability of all the competent elements of society, through
the maintenance of a proper economic and social equilibrium in the interrelations of the members of
the community, constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the existence of all governments on the
time-honored principle of salus populi est suprema lex. Social justice, therefore, must be founded on
the recognition of the necessity of interdependence among divers and diverse units of a society and of
the protection that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to
the greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this
court this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the
National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting
Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila;
and Juan Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940,
resolved to recommend to the Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street
extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and
from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo
Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on
July 18, 1940 recommended to the Director of Public Works the adoption of the measure proposed in
the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which
authorizes said Director of Public Works, with the approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations to regulate and control the use of and traffic on
national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the
Secretary of Public Works and Communications, recommended to the latter the approval of the
recommendation made by the Chairman of the National Traffic Commission as aforesaid, with the
modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the
portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on
August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement
addressed to the Director of Public Works, approved the recommendation of the latter that Rosario
Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during
the hours as above indicated, for a period of one year from the date of the opening of the Colgante
Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and
caused to be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places
above-mentioned to the detriment not only of their owners but of the riding public as well.
It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public
Works, with the approval of the Secretary of Public Works and Communications, is authorized to
promulgate rules and regulations for the regulation and control of the use of and traffic on national
roads and streets is unconstitutional because it constitutes an undue delegation of legislative power.
This contention is untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39
Phil, 660, 700), "The rule has nowhere been better stated than in the early Ohio case decided by
Judge Ranney, and since followed in a multitude of cases, namely: ’The true distinction therefore is
between the delegation of power to make the law, which necessarily involves a discretion as to what
it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to the latter no valid objection can be made.’
(Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief
Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the Legislature to an
executive department or official. The Legislature may make decisions of executive departments or
subordinate officials thereof, to whom it has committed the execution of certain acts, final on
questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give
prominence to the ’necessity’ of the case." virtua1aw library
Section 1 of Commonwealth Act No. 548 reads as follows:
"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as
national roads by acts of the National Assembly or by executive orders of the President of the
Philippines, the Director of Public Works, with the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and regulations to regulate and control the use
of and traffic on such roads and streets. Such rules and regulations, with the approval of the
President, may contain provisions controlling or regulating the construction of buildings or other
structures within a reasonable distance from along the national roads. Such roads may be temporarily
closed to any or all classes of traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the traffic thereon makes such action
necessary or advisable in the public convenience and interest, or for a specified period, with the
approval of the Secretary of Public Works and Communications."cralaw virtua1aw library
The above provisions of law do not confer legislative power upon the Director of Public Works and the
Secretary of Public Works and Communications. The authority therein conferred upon them and
under which they promulgated the rules and regulations now complained of is not to determine what
public policy demands but merely to carry out the legislative policy laid down by the National
Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and
streets designated as national roads by acts of the National Assembly or by executive orders of the
President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever
the condition of the road or the traffic makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all, therefore, is not the determination of what
the law shall be, but merely the ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and regulations on the use of national
roads and to determine when and how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of public convenience and interest,
is an administrative function which cannot be directly discharged by the National Assembly. It must
depend on the discretion of some other government official to whom is confided the duty of
determining whether the proper occasion exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law. As was said in Locke’s Appeal (72 Pa. 491): "To
assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the
Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a
state of affairs not yet developed, or to things future and impossible to fully know." The proper
distinction the court said was this: "The Legislature cannot delegate its power to make the law; but it
can make a law to delegate a power to determine some fact or state of things upon which the law
makes, or intends to make, its own action depend. To deny this would be to stop the wheels of
government. There are many things upon which wise and useful legislation must depend which
cannot be known to the law-making power, and, must, therefore, be a subject of inquiry and
determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)
In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12,
1939, and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065,
promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of
powers has been made to adapt itself to the complexities of modern governments, giving rise to the
adoption, within certain limits, of the principle of "subordinate legislation," not only in the United
States and England but in practically all modern governments. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental regulations, and the
increased difficulty of administering the laws, the rigidity of the theory of separation of governmental
powers has, to a large extent, been relaxed by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in administrative and executive officials, not only
in the execution of the laws, but also in the promulgation of certain rules and regulations calculated to
promote public interest.
The petitioner further contends that the rules and regulations promulgated by the respondents
pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with the members of the community, constitutionally, through the adoption of measures legally justifiable,
legitimate business or trade and abridge the right to personal liberty and freedom of locomotion. or extra-constitutionally, through the exercise of powers underlying the existence of all governments
Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount on the time-honored principle of salus populi est suprema lex.
police power of the state.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence
Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to among divers and diverse units of a society and of the protection that should be equally and evenly
promote safe transit upon and avoid obstructions on national roads, in the interest and convenience extended to all groups as a combined force in our social and economic life, consistent with the
of the public. In enacting said law, therefore, the National Assembly was prompted by considerations fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all
of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, persons, and of bringing about "the greatest good to the greatest number." virtua1aw library
to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment
of said law, and the state in order to promote the general welfare may interfere with personal liberty, In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the
with property, and with business and occupations. Persons and property may be subjected to all kinds petitioner. So ordered.
of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state
(U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not
be made to prevail over authority because then society will fall into anarchy. Neither should authority
be made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and personal
discipline, so that there may be established the resultant equilibrium, which means peace and order
and happiness for all. The moment greater authority is conferred upon the government, logically so
much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the
fact that the apparent curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins
v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing
one, and a business lawful today may in the future, because of the changed situation, the growth of
population or other causes, become a menace to the public health and welfare, and be required to
yield to the public good." And in People v. Pomar (46 Phil., 440), it was observed that "advancing
civilization is bringing within the police power of the state today things which were not thought of as
being within such power yesterday. The development of civilization, the rapidly increasing population,
the growth of public opinion, with an increasing desire on the part of the masses and of the
government to look after and care for the interests of the individuals of the state, have brought within
the police power many questions for regulation which formerly were not so considered." virtua1aw
library

The petitioner finally avers that the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and economic
security of all the people. The promotion of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is "neither communism, nor despotism,
nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption by
the Government of measures calculated to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and social equilibrium in the interrelations of
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO,
FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE,
TEODORO B. MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO,
CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER,
petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO,
PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias, Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON. JOKER ARROYO,
EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR TALENTO, JAIME
ABOGADO, CONRADO AVANCENA and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE PHILIPPINES,
respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on
his way to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung
his adversary to the ground thinking him dead, but Antaeus rose even stronger to resume their
struggle. This happened several times to Hercules' increasing amazement. Finally, as they continued
grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never die as long as any
part of his body was touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up in
the air, beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces
of life and death, of men and women who, like Antaeus need the sustaining strength of the precious
earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this
precious resource among our people. But it is more than a slogan. Through the brooding centuries, it
has become a battle-cry dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the
well-being and economic security of all the people," 1 especially the less privileged. In 1973, the new
Constitution affirmed this goal adding specifically that "the State shall regulate the acquisition,
ownership, use, enjoyment and disposition of private property and equitably diffuse property
ownership and profits." 2 Significantly, there was also the specific injunction to "formulate and
implement an agrarian reform program aimed at emancipating the tenant from the bondage of the
soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted
one whole and separate Article XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of
small landowners. The State shall further provide incentives for voluntary land-
sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already
been enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition
of private lands for distribution among tenant-farmers and to specify maximum retention limits for
landowners.
The people power revolution of 1986 did not change and indeed even energized the thrust for
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring
full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the valuation of still
unvalued lands covered by the decree as well as the manner of their payment. This was followed on
July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive agrarian reform
program (CARP), and E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The result, after almost a year of spirited
debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while considerably
changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar as they
are not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve common legal questions,
including serious challenges to the constitutionality of the several measures mentioned above. They
will be the subject of one common discussion and resolution, The different antecedents of each case
will require separate treatment, however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A.
No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner
Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner
Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No. 228 as
qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no private
property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228.
The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure to
provide for retention limits for small landowners. Moreover, it does not conform to Article VI, Section
25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners argue that the same may
be made only by a court of justice and not by the President of the Philippines. They invoke the recent
cases of EPZA v. Dulay 5 and Manotok v. National Food Authority. 6 Moreover, the just compensation
contemplated by the Bill of Rights is payable in money or in cash and not in the form of bonds or other
things of value.
In considering the rentals as advance payment on the land, the executive order also deprives the
petitioners of their property rights as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian problems on the owners only of
agricultural lands. No similar obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of
the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due process.
Worse, the measure would not solve the agrarian problem because even the small farmers are
deprived of their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier
cases of Chavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn Producers of the
Philippines, Inc. v. The National Land Reform Council. 9 The determination of just compensation by the
executive authorities conformably to the formula prescribed under the questioned order is at best
initial or preliminary only. It does not foreclose judicial intervention whenever sought or warranted. At
any rate, the challenge to the order is premature because no valuation of their property has as yet
been made by the Department of Agrarian Reform. The petitioners are also not proper parties
because the lands owned by them do not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in behalf
of landowners with landholdings below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As for the cases invoked by
the public respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while what
was decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228 and
229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless, this
statute should itself also be declared unconstitutional because it suffers from substantially the same
infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a 1.
83- hectare land, who complained that the DAR was insisting on the implementation of P.D. No. 27
and E.O. No. 228 despite a compromise agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the basic
amended petition that the above- mentioned enactments have been impliedly repealed by R.A. No.
6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400
planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No.
229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as
decreed by the Constitution belongs to Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on just compensation, due process, and
equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of
the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on Good Government and such other sources as
government may deem appropriate. The amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The money needed to cover the cost of the contemplated
expropriation has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just compensation as it
is traditionally understood, i.e., with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the
Philippines "shall compensate the landowner in an amount to be established by the government,
which shall be based on the owner's declaration of current fair market value as provided in Section 4
hereof, but subject to certain controls to be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in money but in any of several modes that
may consist of part cash and part bond, with interest, maturing periodically, or direct payment in cash
or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made to make a
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas that can
justify the application of the CARP to them. To the extent that the sugar planters have been lumped in
the same legislation with other farmers, although they are a separate group with problems exclusively
their own, their right to equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention was filed, this time by Manuel
Barcelona, et al., representing coconut and riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that, in
any event, the appropriation is invalid because of uncertainty in the amount appropriated. Section 2
of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum authorized amount. This is not
allowed. Furthermore, the stated initial amount has not been certified to by the National Treasurer as
actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
convincing evidence the necessity for the exercise of the powers of eminent domain, and the violation
of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of
the said land for an amount equal to the government assessor's valuation of the land for tax purposes.
On the other hand, if the landowner declares his own valuation he is unjustly required to immediately
pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality
in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as
explained in the "whereas" clauses of the Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP and a general survey on the people's
opinion thereon are not indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to show that
they belong to a different class and should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and scheduling the expropriation of
private agricultural lands later. From this viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the payment of
public money without the corresponding appropriation. There is no rule that only money already in
existence can be the subject of an appropriation law. Finally, the earmarking of fifty billion pesos as
Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
appropriated. The word "initial" simply means that additional amounts may be appropriated later
when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing
the constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:
 (1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not
originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due
process and the requirement for just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on December 24, 1986, his petition
was denied without hearing. On February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion
moot and academic because they directly effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the
1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress convened
is anomalous and arbitrary, besides violating the doctrine of separation of powers. The legislative
power granted to the President under the Transitory Provisions refers only to emergency measures
that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of law
and to the retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of
the Constitution. He likewise argues that, besides denying him just compensation for his land, the
provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21,
1972 shall be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of
even small landowners in the program along with other landowners with lands consisting of seven
hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the
issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article
XVIII of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October
21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he was tilling. The
leasehold rentals paid after that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved
on December 14, 1987. An appeal to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and
corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate the
same. Their respective lands do not exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be
ejected or removed from his farmholding until such time as the respective rights of
the tenant- farmers and the landowner shall have been determined in accordance
with the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the Court for a writ of mandamus to
compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other purposes from
which they derive adequate income for their family. And even assuming that the petitioners do not
fall under its terms, the regulations implementing P.D. No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December
29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners), and
DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to Apply
for Retention and/or to Protest the Coverage of their Landholdings under Operation Land Transfer
pursuant to P.D. No. 27). For failure to file the corresponding applications for retention under these
measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise of
discretion which cannot be controlled through the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them because
they do not own more than seven hectares of agricultural land. Moreover, assuming arguendo that
the rules were intended to cover them also, the said measures are nevertheless not in force because
they have not been published as required by law and the ruling of this Court in Tanada v. Tuvera. 10 As
for LOI 474, the same is ineffective for the additional reason that a mere letter of instruction could not
have repealed the presidential decree.
I Personal motives and political considerations are irrelevancies that cannot influence its decision.
Although holding neither purse nor sword and so regarded as the weakest of the three departments
of the government, the judiciary is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the fundamental law. This is the
reason for what some quarters call the doctrine of judicial supremacy. Even so, this power is not
lightly assumed or readily exercised. The doctrine of separation of powers imposes upon the courts a
proper restraint, born of the nature of their functions and of their respect for the other departments,
in striking down the acts of the legislative and the executive as unconstitutional. The policy, indeed, is
a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was done or
the law was enacted, earnest studies were made by Congress or the President, or both, to insure that
the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the Supreme
Court who took part in the deliberations and voted on the issue during their session en banc. 11 And as
established by judge made doctrine, the Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question must have been opportunely raised
by the proper party, and the resolution of the question is unavoidably necessary to the decision of the
case itself. 12
With particular regard to the requirement of proper party as applied in the cases before us, we hold
that the same is satisfied by the petitioners and intervenors because each of them has sustained or is
in danger of sustaining an immediate injury as a result of the acts or measures complained of. 13 And
even if, strictly speaking, they are not covered by the definition, it is still within the wide discretion of
the Court to waive the requirement and so remove the impediment to its addressing and resolving the
serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking
only an indirect and general interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that "the transcendental importance to the
public of these cases demands that they be settled promptly and definitely, brushing aside, if we
must, technicalities of procedure." We have since then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution as God and its conscience give it the light to probe its meaning and discover its purpose.
Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make
the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the solemn and sacred
obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual
controversy the rights which that instrument secures and guarantees to them. This
 is in truth all that is involved in what is termed "judicial supremacy" which properly
is the power of judicial review under the Constitution. 16
The cases before us categorically raise constitutional questions that this Court must categorically
resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law
has already been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on
that issue. As for the power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and
229, the same was authorized under Section 6 of the Transitory Provisions of the 1987 Constitution,
quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the Congress of the
Philippines was formally convened and took over legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987,
and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on July 22, 1987.
Neither is it correct to say that these measures ceased to be valid when she lost her legislative power
for, like any statute, they continue to be in force unless modified or repealed by subsequent law or
declared invalid by the courts. A statute does not ipso facto become inoperative simply because of the
dissolution of the legislature that enacted it. By the same token, President Aquino's loss of legislative
power did not have the effect of invalidating all the measures enacted by her when and as long as she
possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically provided that they shall be suppletory to R.A.
No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some portions of the said
measures, like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and
21 of E.O. No. 229, have been incorporated by reference in the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the
requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No. 131
is not an appropriation measure even if it does provide for the creation of said fund, for that is not its
principal purpose. An appropriation law is one the primary and specific purpose of which is to
authorize the release of public funds from the treasury. 19 The creation of the fund is only incidental to
the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section 25(4)
of Article VI, are not applicable. With particular reference to Section 24, this obviously could not have
been complied with for the simple reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated
because they do not provide for retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in Section 6 of the
law, which in fact is one of its most controversial provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1)
that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land
or directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval
of this Act shall retain the same areas as long as they continue to cultivate said
homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short attention. It is settled that the title of the bill
does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever
name it was called, had the force and effect of law because it came from President Marcos. Such are
the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474
could not have repealed P.D. No. 27 because the former was only a letter of instruction. The
important thing is that it was issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply with
the requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless published in
the Official Gazette in accordance with Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully challenged in that case. LOI 474 was
published, though, in the Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus
cannot issue to compel the performance of a discretionary act, especially by a specific department of
the government. That is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and
unreasonable delay in the exercise of such duty occurs, if it is a clear duty imposed
by law, the courts will intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will require specific action.
If the duty is purely discretionary, the courts by mandamus will require action only.
For example, if an inferior court, public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the great detriment of all
parties concerned, or a court should refuse to take jurisdiction of a cause when the
law clearly gave it jurisdiction mandamus will issue, in the first case to require a
decision, and in the second to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy and
adequate remedy available from the administrative authorities, resort to the courts may still be
permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent domain that
logically preclude the application of both powers at the same time on the same subject. In the case of
City of Baguio v. NAWASA, 24 for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that
the power being exercised was eminent domain because the property involved was wholesome and
intended for a public use. Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be demolished for the
public safety, or obscene materials, which should be destroyed in the interest of public morals. The
confiscation of such property is not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police
power in a famous aphorism: "The general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went
"too far" was a law prohibiting mining which might cause the subsidence of structures for human
habitation constructed on the land surface. This was resisted by a coal company which had earlier
granted a deed to the land over its mine but reserved all mining rights thereunder, with the grantee
assuming all risks and waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there
was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of the police
power deprives the owner of some right theretofore enjoyed, and is, in that sense,
an abridgment by the State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals from dangers
threatened is not a taking. The restriction here in question is merely the prohibition
of a noxious use. The property so restricted remains in the possession of its owner.
The state does not appropriate it or make any use of it. The state merely prevents
the owner from making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious — as it may because of further
changes in local or social conditions — the restriction will have to be removed and
the owner will again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police power and the
power of eminent domain, with the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police purpose has long been accepted. 26
As for the power of expropriation, Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning law
under the police power) makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and
eminent domain powers on different planets. Generally speaking, they viewed
eminent domain as encompassing public acquisition of private property for
improvements that would be available for public use," literally construed. To the
police power, on the other hand, they assigned the less intrusive task of preventing
harmful externalities a point reflected in the Euclid opinion's reliance on an analogy
to nuisance law to bolster its support of zoning. So long as suppression of a privately
authored harm bore a plausible relation to some legitimate "public purpose," the
pertinent measure need have afforded no compensation whatever. With the
progressive growth of government's involvement in land use, the distance between
the two powers has contracted considerably. Today government often employs
eminent domain interchangeably with or as a useful complement to the police
power-- a trend expressly approved in the Supreme Court's 1954 decision in Berman
v. Parker, which broadened the reach of eminent domain's "public use" test to
match that of the police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted areas in the
District of Columbia as a proper exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:
 If those who govern the District of Columbia decide that the Nation's Capital should
be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands
in the way.
Once the object is within the authority of Congress, the right to realize it through
the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end. 28
29
In Penn Central Transportation Co. v. New York City, decided by a 6-3 vote in 1978, the U.S Supreme
Court sustained the respondent's Landmarks Preservation Law under which the owners of the Grand
Central Terminal had not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the owners of the Terminal would be
deprived of the right to use the airspace above it although other landowners in the area could do so
over their respective properties. While insisting that there was here no taking, the Court nonetheless
recognized certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it,
was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to
transfer to neighboring properties the authorized but unused rights accruing to the site prior to the
Terminal's designation as a landmark — the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its
losses at the Terminal site by constructing or selling to others the right to construct larger, hence
more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the maximum area allowed, there is
definitely a taking under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer-beneficiary. This is definitely an exercise not of the police
power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the several measures
before us are challenged as violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are
prescribed has already been discussed and dismissed. It is noted that although they excited many
bitter exchanges during the deliberation of the CARP Law in Congress, the retention limits finally
agreed upon are, curiously enough, not being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other claimed violations of due process in connection
with our examination of the adequacy of just compensation as required under the power of
expropriation.
The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657. Significantly,
they too have not questioned the area of such limits. There is also the complaint that they should not
be made to share the burden of agrarian reform, an objection also made by the sugar planters on the
ground that they belong to a particular class with particular interests of their own. However, no
evidence has been submitted to the Court that the requisites of a valid classification have been
violated.
Classification has been defined as the grouping of persons or things similar to each other in certain
particulars and different from each other in these same particulars. 31 To be valid, it must conform to
the following requirements: (1) it must be based on substantial distinctions; (2) it must be germane to
the purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must apply
equally to all the members of the class. 32 The Court finds that all these requisites have been met by
the measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike both
as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that they
belong to a different class and entitled to a different treatment. The argument that not only
landowners but also owners of other properties must be made to share the burden of implementing
land reform must be rejected. There is a substantial distinction between these two classes of owners
that is clearly visible except to those who will not see. There is no need to elaborate on this matter. In
any event, the Congress is allowed a wide leeway in providing for a valid classification. Its decision is
accorded recognition and respect by the courts of justice except only where its discretion is abused to
the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only if
there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class require the interference of the State
and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals. 34 As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the method employed
to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
expediency will not excuse constitutional shortcuts. There is no question that not even the strongest
moral conviction or the most urgent public need, subject only to a few notable exceptions, will excuse
the bypassing of an individual's rights. It is no exaggeration to say that a, person invoking a right
guaranteed under Article III of the Constitution is a majority of one even as against the rest of the
nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which
reaffirms the familiar rule that private property shall not be taken for public use without just
compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where the owner is willing to sell
under terms also acceptable to the purchaser, in which case an ordinary deed of
sale may be agreed upon by the parties. 35 It is only where the owner is unwilling to
sell, or cannot accept the price or other conditions offered by the vendee, that the
power of eminent domain will come into play to assert the paramount authority of
the State over the interests of the property owner. Private rights must then yield to
the irresistible demands of the public interest on the time-honored justification, as
in the case of the police power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no
power is absolute). The limitation is found in the constitutional injunction that "private property shall
not be taken for public use without just compensation" and in the abundant jurisprudence that has
evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of
the power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should
first distribute public agricultural lands in the pursuit of agrarian reform instead of immediately
disturbing property rights by forcibly acquiring private agricultural lands. Parenthetically, it is not
correct to say that only public agricultural lands may be covered by the CARP as the Constitution calls
for "the just distribution of all agricultural lands." In any event, the decision to redistribute private
agricultural lands in the manner prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when they
decide what is known as the political question. As explained by Chief Justice Concepcion in the case of
Tañada v. Cuenco: 36
The term "political question" connotes what it means in ordinary parlance, namely,
a question of policy. It refers to "those questions which, under the Constitution, are
to be decided by the people in their sovereign capacity; or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of
the government." It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure.
It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government." 37 Even so, this should not be construed as a license for us to
reverse the other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the
redistribution of private landholdings (even as the distribution of public agricultural lands is first
provided for, while also continuing apace under the Public Land Act and other cognate laws). The
Court sees no justification to interpose its authority, which we may assert only if we believe that the
political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March 3,1909 that the entire St.
Mary's river between the American bank and the international line, as well as all of
the upland north of the present ship canal, throughout its entire length, was
"necessary for the purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation proceedings
instituted by the United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by the Constitution
itself No less than the 1987 Charter calls for agrarian reform, which is the reason why private
agricultural lands are to be taken from their owners, subject to the prescribed maximum retention
limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an elaboration
of the constitutional injunction that the State adopt the necessary measures "to encourage and
undertake the just distribution of all agricultural lands to enable farmers who are landless to own
directly or collectively the lands they till." That public use, as pronounced by the fundamental law
itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful
examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's
gain but the owner's loss. 40 The word "just" is used to intensify the meaning of the word
"compensation" to convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate more than a mere
regulation of the use of private lands under the police power. We deal here with an actual taking of
private agricultural lands that has dispossessed the owners of their property and deprived them of all
its beneficial use and enjoyment, to entitle them to the just compensation mandated by the
Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following
conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more
than a momentary period; (3) the entry must be under warrant or color of legal authority; (4) the
property must be devoted to public use or otherwise informally appropriated or injuriously affected;
and (5) the utilization of the property for public use must be in such a way as to oust the owner and
deprive him of beneficial enjoyment of the property. All these requisites are envisioned in the
measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking
possession of the condemned property, as "the compensation is a public charge, the good faith of the
public is pledged for its payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of
rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is
entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the
offer of the government to buy his land-
... the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land, within fifteen
(15) days from the receipt of the notice. After the expiration of the above period,
the matter is deemed submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of justice
and may not be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved a
challenge to several decrees promulgated by President Marcos providing that the just compensation
for property under expropriation should be either the assessment of the property by the government
or the sworn valuation thereof by the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to render
this Court inutile in a matter which under this Constitution is reserved to it for final
determination.
Thus, although in an expropriation proceeding the court technically would still have
the power to determine the just compensation for the property, following the
applicable decrees, its task would be relegated to simply stating the lower value of
the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under
Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause
in the taking of private property is seemingly fulfilled since it cannot be said that a
judicial proceeding was not had before the actual taking. However, the strict
application of the decrees during the proceedings would be nothing short of a mere
formality or charade as the court has only to choose between the valuation of the
owner and that of the assessor, and its choice is always limited to the lower of the
two. The court cannot exercise its discretion or independence in determining what
is just or fair. Even a grade school pupil could substitute for the judge insofar as the
determination of constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by the decree and to
this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
 It is violative of due process to deny the owner the opportunity to prove that the in government financial instruments negotiable
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic at any time.
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat
or clerk to absolutely prevail over the judgment of a court promulgated only after (b) For lands above twenty-four (24) hectares
expert commissioners have actually viewed the property, after evidence and and up to fifty (50) hectares — Thirty percent
arguments pro and con have been presented, and after all factors and (30%) cash, the balance to be paid in
considerations essential to a fair and just determination have been judiciously government financial instruments negotiable at
evaluated. any time.

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the (c) For lands twenty-four (24) hectares and
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the below — Thirty-five percent (35%) cash, the
proceedings are described as summary, the landowner and other interested parties are nevertheless balance to be paid in government financial
allowed an opportunity to submit evidence on the real value of the property. But more importantly, instruments negotiable at any time.
the determination of the just compensation by the DAR is not by any means final and conclusive upon
the landowner or any other interested party, for Section 16(f) clearly provides: (2) Shares of stock in government-owned or controlled corporations, LBP preferred
shares, physical assets or other qualified investments in accordance with guidelines
Any party who disagrees with the decision may bring the matter to the court of set by the PARC;
proper jurisdiction for final determination of just compensation.
(3) Tax credits which can be used against any tax liability;
The determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said determination in (4) LBP bonds, which shall have the following features:
the exercise of what is admittedly a judicial function.
(a) Market interest rates aligned with 91-day
The second and more serious objection to the provisions on just compensation is not as easily treasury bill rates. Ten percent (10%) of the face
resolved. value of the bonds shall mature every year from
the date of issuance until the tenth (10th) year:
This refers to Section 18 of the CARP Law providing in full as follows: Provided, That should the landowner choose to
forego the cash portion, whether in full or in
SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate the part, he shall be paid correspondingly in LBP
landowner in such amount as may be agreed upon by the landowner and the DAR bonds;
and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the court, as (b) Transferability and negotiability. Such LBP
the just compensation for the land. bonds may be used by the landowner, his
successors-in- interest or his assigns, up to the
The compensation shall be paid in one of the following modes, at the option of the amount of their face value, for any of the
landowner: following:

(1) Cash payment, under the following terms and conditions: (i) Acquisition of land or other real properties of
the government, including assets under the
(a) For lands above fifty (50) hectares, insofar as Asset Privatization Program and other assets
the excess hectarage is concerned — Twenty- foreclosed by government financial institutions
five percent (25%) cash, the balance to be paid in the same province or region where the lands
for which the bonds were paid are situated;
 (ii) Acquisition of shares of stock of government-
owned or controlled corporations or shares of
stock owned by the government in private
corporations;
(iii) Substitution for surety or bail bonds for the
provisional release of accused persons, or for
performance bonds;
(iv) Security for loans with any government
financial institution, provided the proceeds of
the loans shall be invested in an economic
enterprise, preferably in a small and medium-
scale industry, in the same province or region as
the land for which the bonds are paid;
(v) Payment for various taxes and fees to
government: Provided, That the use of these
bonds for these purposes will be limited to a
certain percentage of the outstanding balance
of the financial instruments; Provided, further,
That the PARC shall determine the percentages
mentioned above;
(vi) Payment for tuition fees of the immediate
family of the original bondholder in government
universities, colleges, trade schools, and other
institutions;
(vii) Payment for fees of the immediate family of
the original bondholder in government
hospitals; and
(viii) Such other uses as the PARC may from time
to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
insofar as it requires the owners of the expropriated properties to accept just compensation therefor
in less than money, which is the only medium of payment allowed. In support of this contention, they
cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property
expropriated is entitled to a just compensation, which should be neither more nor
less, whenever it is possible to make the assessment, than the money equivalent of
said property. Just compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing expropriated has to
suffer by reason of the expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent for the value of the
property at the time of its taking. Anything beyond that is more, and anything short
of that is less, than just compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever gain would accrue
to the expropriating entity. The market value of the land taken is the just
compensation to which the owner of condemned property is entitled, the market
value being that sum of money which a person desirous, but not compelled to buy,
and an owner, willing, but not compelled to sell, would agree on as a price to be
given and received for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the weight of
authority is also to the effect that just compensation for property expropriated is payable only in
money and not otherwise. Thus —
The medium of payment of compensation is ready money or cash. The condemnor
cannot compel the owner to accept anything but money, nor can the owner compel
or require the condemnor to pay him on any other basis than the value of the
property in money at the time and in the manner prescribed by the Constitution and
the statutes. When the power of eminent domain is resorted to, there must be a
standard medium of payment, binding upon both parties, and the law has fixed that
standard as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be
regarded as a reliable and constant standard of compensation. 48
"Just compensation" for property taken by condemnation means a fair equivalent in
money, which must be paid at least within a reasonable time after the taking, and it
is not within the power of the Legislature to substitute for such payment future
obligations, bonds, or other valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in the
past solely in that medium. However, we do not deal here with the traditional excercise of the power
of eminent domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of whatever kind
as long as they are in excess of the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular community or of a small segment of
the population but of the entire Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country
but goes beyond in time to the foreseeable future, which it hopes to secure and edify with the vision
and the sacrifice of the present generation of Filipinos. Generations yet to come are as involved in this
program as we are today, although hopefully only as beneficiaries of a richer and more fulfilling life we
will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be
forgotten that it is no less than the Constitution itself that has ordained this revolution in the farms,
calling for "a just distribution" among the farmers of lands that have heretofore been the prison of
their dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the
vast areas of land subject to expropriation under the laws before us, we estimate that hundreds of
billions of pesos will be needed, far more indeed than the amount of P50 billion initially appropriated,
which is already staggering as it is by our present standards. Such amount is in fact not even fully
available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more practical
method. There can be no doubt that they were aware of the financial limitations of the government
and had no illusions that there would be enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. We may therefore assume that their intention was to
allow such manner of payment as is now provided for by the CARP Law, particularly the payment of
the balance (if the owner cannot be paid fully with money), or indeed of the entire amount of the just
compensation, with other things of value. We may also suppose that what they had in mind was a
similar scheme of payment as that prescribed in P.D. No. 27, which was the law in force at the time
they deliberated on the new Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any categorical agreement
among the members regarding the meaning to be given the concept of just compensation as applied
to the comprehensive agrarian reform program being contemplated. There was the suggestion to
"fine tune" the requirement to suit the demands of the project even as it was also felt that they
should "leave it to Congress" to determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such innovations as "progressive
compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be expropriated was reached by the
Commission. 50
On the other hand, there is nothing in the records either that militates against the assumptions we are
making of the general sentiments and intention of the members on the content and manner of the
payment to be made to the landowner in the light of the magnitude of the expenditure and the
limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our
decision on this issue, but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The Court is as acutely anxious
as the rest of our people to see the goal of agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these disappointing decades. We are aware that
invalidation of the said section will result in the nullification of the entire program, killing the farmer's
hopes even as they approach realization and resurrecting the spectre of discontent and dissent in the
restless countryside. That is not in our view the intention of the Constitution, and that is not what we
shall decree today.
Accepting the theory that payment of the just compensation is not always required to be made fully in
money, we find further that the proportion of cash payment to the other things of value constituting
the total payment, as determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in
money, primarily because the small landowner will be needing it more than the big landowners, who
can afford a bigger balance in bonds and other things of value. No less importantly, the government
financial instruments making up the balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his option, are also not unreasonable because
payment is made in shares of stock, LBP bonds, other properties or assets, tax credits, and other
things of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a
little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly hoped
that these countrymen of ours, conscious as we know they are of the need for their forebearance and
even sacrifice, will not begrudge us their indispensable share in the attainment of the ideal of agrarian
reform. Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to
be viable any more as it appears that Section 4 of the said Order has been superseded by Section 14
of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure but
does not provide, as the latter did, that in case of failure or refusal to register the land, the valuation
thereof shall be that given by the provincial or city assessor for tax purposes. On the contrary, the
CARP Law says that the just compensation shall be ascertained on the basis of the factors mentioned
in its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property even before actual
payment to him in full of just compensation, in contravention of a well- accepted principle of eminent
domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle
is consistent both here and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor until
the judgment fixing just compensation is entered and paid, but the condemnor's title relates back to
the date on which the petition under the Eminent Domain Act, or the commissioner's report under
the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made. 52 (Emphasis
supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the
decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was held
that "actual payment to the owner of the condemned property was a condition precedent to the
investment of the title to the property in the State" albeit "not to the appropriation of it to public
use." In Rexford v. Knight, 55 the Court of Appeals of New York said that the construction upon the
statutes was that the fee did not vest in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete prior to the payment. Kennedy
further said that "both on principle and authority the rule is ... that the right to enter on and use the
property is complete, as soon as the property is actually appropriated under the authority of law for a
public use, but that the title does not pass from the owner without his consent, until just compensation
has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted
in this jurisdiction is such as to afford absolute reassurance that no piece of land can
be finally and irrevocably taken from an unwilling owner until compensation is paid
... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972
and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually issued to him unless and until
he had become a full-fledged member of a duly recognized farmers' cooperative." It was understood,
however, that full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21,
1972 of the land they acquired by virtue of Presidential Decree No. 27. (Emphasis
supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers' cooperatives and full payment of just compensation. Hence, it
was also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to
the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer of ownership after
full payment of just compensation), shall be considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as
recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should
counter-balance the express provision in Section 6 of the said law that "the landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained
by them thereunder, further, That original homestead grantees or direct compulsory heirs who still
own the original homestead at the time of the approval of this Act shall retain the same areas as long
as they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by
the petitioners with the Office of the President has already been resolved. Although we have said that
the doctrine of exhaustion of administrative remedies need not preclude immediate resort to judicial
action, there are factual issues that have yet to be examined on the administrative level, especially the
claim that the petitioners are not covered by LOI 474 because they do not own other agricultural
lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have not
yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are entitled to
the new retention rights provided for by R.A. No. 6657, which in fact are on the whole more liberal
than those granted by the decree.
V SO ORDERED.

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

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

WHEREFORE, the Court holds as follows:

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

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

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

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

5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.
G.R. No. 200454 October 22, 2014 T-73010 Aurelio Surio 264

HOLY TRINITY REALTY & DEVELOPMENT CORPORATION, Petitioner, T-73011 Pacifico Eugenio 300
vs. T-73012 Godofredo Alcoriza 300
VICTORIO DELA CRUZ, LORENZO MANALAYSAY, RICARDO MARCELO, JR. and LEONCIO DE GUZMAN,
Respondents. T-73013 Lorenza Angeles 300
T-73014 Ramon Manalad 300
DECISION
Toribio M. Hernandez 300
BERSAMIN, J.:
Emerciana Montealegre 300
Land on which no agricultural activity is being conducted is not subject to the coverage of either Pedro Manalad 300
Presidential Decree No. 27 or Republic Act No. 6657 (Comprehensive Agrarian Reform Law).
T-73015 Celerino Ramos 300
The Case T-73016 Cecilia L. Martin 300
T-73017 Pablo dela Cruz 300
The petitioner appeals the decision promulgated on July 27, 2011,1 whereby the Court of Appeals
(CA) reversed the decision issued by the Office of the President (OP) on March 1, 2010,2 and T-73018 Aurelio dela Cruz 300
reinstated the order of the OIC-Regional Director of the Department of Agrarian Reform in Regional
Office III rendered on August 18, 2006.3 T-73019 Julita Leoncio 300
Anicia L. de Guzman
Antecedents
T-73020 Ramon Centeno 300
Subject of the controversy is a parcel of land located in Brgy. Dakila, Malolos, Bulacan (Dakila T-73021 Miguel Centeno 300
property) registered in the name of Freddie Santiago under Transfer Certificate of Title (TCT) No. T-
103698 of the Registry of Deeds of Bulacan with an area of 212,500 square meters. The Dakila TOTAL 4,500
property used to be tenantedby Susana Surio,Cipriano Surio, Alfonso Espiritu, Agustin Surio, Aurelio
Surio, Pacifico Eugenio, Godofredo Alcoriza, Lorenza Angeles, Ramon Manalad, Toribio Hernandez,
On September 17, 1992, the petitioner purchased the remaining 208,050 square meters of the Dakila
Emerciana Montealegre, Pedro Manalad, Celerino Ramos and Cecilia L. Martin,4 but in August 1991,
property from Santiago,7 and later caused the transfer of the title to its name as well as subdivided
these tenants freely and voluntarily relinquished their tenancy rights infavor of Santiago through their
the Dakila property into six lots,8 to wit:
respective sinumpaang pahayag5 in exchange for some financial assistance and individual homelots
titled and distributed in their names, as follows:6
TCT No.
Area Area
TCT No. Name of Tenant/Successor
(sq. m.) (sq. m.)
T-73006 Susana Surio 186 81618
T-73007 Cipriano Surio 150 50,000
T-73008 Alfonso Espiritu 300 81619
T-73009 Agustin Surio 300 50,000
 81620
50,000
81621
54,810
73022
2,401
73023
839
TOTAL
208,050
The petitioner then developed the property by dumping filling materials on the topsoil, and by
erecting a perimeter fence and steel gate. It established its field office on the property.9
On March 4, 1998, the Sanggunian Bayan ng Malolos passed Municipal Resolution No. 16-98
reclassifying four of the six subdivided lots belonging to the petitioner, to wit:
MUNICIPAL RESOLUTION NO. 16-98
A RESOLUTION RE-CLASSIFYING AS RESIDENTIAL LOTS THE FOUR (4) PARCELS OF LAND SEPARATELY
COVERED BY TCT NO. 81618, TCT NO. 81619, TCT NO.81620 AND TCT NO. 81621 CONTAINING AN
AREAOF 50,000 SQ MTS,50,000 SQ. MTS, 50,000 SQ M (sic) AND 54,810 SQ M (sic) RESPECTIVELY ALL
LOCATED AT DAKILA, MALOLOS, BULACAN REGISTERED IN THE NAME OF THE HOLY TRINITY REALTY
AND DEVELOPMENT CORPORATION
WHEREAS, Ms. Jennifer M. Romero, Auditor Representative of Holy Trinity Realty and Development
Corporation in [her] letter to the Sangguniang Bayan made a request for re-classification of four
parcel(s) of land registered in the name of Holy Trinity and Development Corporation under TCT NO.
81618, TCT NO. 81619, TCT NO. 81620 AND TCT NO. 81621 with an area of 50,000 sq. m., 50,000 sq.
m., 50,000 sq. m. AND 54,810 sq. m. respectively all located at Dakila, Malolos, Bulacan.
WHEREAS, after an ocular inspection of the subject lots and matured deliberation, the Sangguniang
Bayan found merit in the request for the following reasons, thus:
1. The Properties are untenanted;
2. That they are not fitted (sic) for agricultural use for lack of sufficient irrigation;
3. There are improvements already introduce[d] on the property by its owner like
construction of subdivision roads;
4. Lack of oppositor to the intend[ed] subdivision project on the properties by its owner;
5. That they are more suitable for residential use considering their location vi[s]-à-vi[s] with
(sic) the residential lots in the area.
NOW THEREFORE, on motion of Hon. Romeo L. Maclang as seconded by all Sangguniang Bayan
members present, RESOLVED, as is hereby resolved to re-classify into residential properties four (4)
parcels of land separately covered by TCT NO. 81618, TCT NO. 81619, TCT NO. 81620 AND TCT NO.
81621 of the Registry of Deeds of Bulacan, containing an area of 50,000 sq. m. respectively, registered
in ownership of Holy Trinity and Development Corporation located and adjacent to one another in
Barangay Dakila of this Municipality pursuant to the power vested to this Sangguniang [sic] by the
Local Government Code of the Philippines.
RESOLVED further that the owner and/or developer of the said property shall provide adequate
[illegible] to protect the adjacent lots and its owners from any inconvenience and prejudice caused by
the development of the above mentioned property.
APPROVED.10
Consequently, the Municipal Planning and Development Office (MPDO) of Malolos, Bulacan issueda
Certificate of Eligibility for Conversion (Certificate of Zoning Conformance),11 as well as a Preliminary
Approval and Locational Clearance infavor of the petitioner for its residential subdivision project on
the Dakila property.12
On August 23, 1999, the petitioner purchased from Santiago another parcel of land with an area of
25,611 located in Barangay Sumapang Matanda, Malolos, Bulacan (Sumapang Matanda property) and
covered by TCT No. T-103697 of the Registry of Deeds of Bulacan.13
In April 2006, a certain Silvino Manalad and the alleged heirs of Felix Surio wrote to the Provincial
Agrarian Reform Officer (PARO) of Bulacan to request an investigation of the sale of the Dakila
property.14 This was followed by the letter request of Sumapang Matanda Barangay Agrarian Reform
Council (BARC) Chairman Numeriano L. Enriquez to place the Dakila property within the coverage of
Operation Land Transfer (OLT) pursuant to Presidential Decree No. 27, which was docketed as A-0302-
0608-06, A.R. Case No. LSD-0324’06.15
Several days later, the DAR Provincial Office of Bulacan filed a petition to annul the sale of the T-2010-EP25 00783332 Leoncio de Guzman 54,810
Dakilaproperty with the Provincial Agrarian Reform Adjudicator (PARAD) of Bulacan, docketed as
DARAB Case No. R-03-02-2873’06. T-2011-EP26 00783334 Gonzalo Caspe 2,401
T-2012-EP27 00783333 839
Ruling of the DAR Regional Office

On August 18, 2006, the OIC-Regional Director in San Fernando, Pampanga issued an order granting Almost two months after the EPs were issued, the OIC-Regional Director denied the petitioner’s
the letter request of BARC Chairman Enriquez in A-0302-0608-06, A.R. Case No. LSD-0324’06,16 viz: motion for reconsideration.28

WHEREFORE, in the light of the foregoing premises and for the reason indicated therein, this Office Ruling of the DAR Secretary
resolves to give due course to this instant request. Accordingly, the MARO and PARO concerned are
hereby DIRECTED to place within the ambit of PD 27/RA 6657 the following titles TCT Nos. T-81618, T- The petitioner appealed to the DAR Secretary, submitting that: (1) the letter request for coverage
81619, T-81620, T-81621, T-81622 and T-73023, all situated at Sumapang Matanda, Malolos City, under Presidential Decree No. 27 and the subsequent filing of the petition for annulment of sale in the
Bulacan, registered in the name of Holy Trinity Realty and Development Corporation for distribution DARAB constituted forum shopping; and (2) the EPs were prematurely issued.
to qualified farmer beneficiary (sic).
On November 22, 2007, DAR Secretary Nasser C. Pangandaman issued an order denying the appeal,29
Finally, the DAR reserves the right to cancel or withdraw this Order in case of misrepresentation of and holding that forum shopping was not committed because the causes of action in the letter
facts material to its issuance and for violation of pertinent agrarian laws including applicable request and the action for cancellation of the deed of sale before the DARAB were distinct and
implementing guidelines or rules and regulations. separate; that the EPs were regularly issued; and that the resolution of the DARAB would not in any
manner affect the validity of the EPs.
SO ORDERED.17
Ruling on the petitioner’s motion for reconsideration, the DAR Secretary said that the Dakila property
The OIC-Regional Director opined that the sale of the Dakila property was a prohibited transaction was not exempt from the coverage of Presidential Decree No. 27 and Republic Act No. 6657 because
under Presidential Decree No. 27, Section 6 of Republic Act No. 665718 and DAR Administrative Order Municipal Resolution No. 16-98 did not change or reclassify but merely re-zoned the Dakila
No. 1, Series of 1989; and that the petitioner was disqualified from acquiring land under Republic Act property.30
No. 6657 because it was a corporation.19
Ruling of the Office of the President
Aggrieved, the petitioner assailed the order through its Motion to Withdraw/Quash/Set Aside,20
citing lack of jurisdiction and denial of due process. It argued that the letter request was in the nature On March 1, 2010, the Office ofthe President (OP) reversed the ruling of DAR Secretary Pangandaman
of a collateral attack on its title. upon its finding that the Dakila property had ceased to be suitable for agriculture, and had been
reclassified as residential land pursuant to Municipal Resolution No. 16-98, thus:31
Pending resolution of the Motion to Withdraw/Quash/Set Aside, the Register of Deeds issued
emancipation patents (EPs) pursuant to the order of the OIC-Regional Director. The petitioner’s titles We find merit in the appeal.
were canceled and EPs were issued to the respondents as follows:21
Under Section 3 (c) of RA 6657, agricultural lands refer to lands devoted to agriculture as conferred
inthe said law and not classified as industrial land. Agricultural lands are only those lands which are
Emancipation Area
TCT No. Beneficiary/ies arable or suitable lands that do not include commercial, industrial and residential lands.
Patent No. (sqm)
T-2007-EP22 00783329 Victorio dela Cruz 50,000 In this case, the subject land holdings are not agricultural lands but rather residential lands. The lands
are located in a residential area. Likewise, there are agricultural activities within or near the area. Even
T-2008-EP23 00783330 Lorenzo Manalaysay 50,000
today, the areas in question continued (sic) to be developed as a residential community, albeit at a
T-2009-EP24 00783331 Ricardo Marcelo, Jr. 50,000
snail’s pace. This can be readily gleaned from the fact that both the City Assessor of Malolos and the respected,35 subject to the clarification to the effect that its determination was only limited to the
Provincial Assessor of Bulacan have considered these lands as residential for taxation purposes. issue of whether the Dakila property was an agricultural land covered by Republic Act No. 6657.

Based on the foregoing, it is clear that appellant’s landholding cannot in any language be considered The petitioner sought reconsideration but its motion for that purpose was denied.36
as "agricultural lands." These lots were intended for residential use. They ceased to be agricultural
lands upon approval of Municipal Resolution No. 16-98. The authority of the municipality (now City) of Hence, this appeal by petition for review on certiorari.
Malolos to issue zoning classification is an exercise of its police power, not the power of eminent
domain. Section 20, Chapter 2, Title I of RA 7160 specifically empowers municipal and/or city councils Issues
to adopt zoning and subdivision ordinances or regulations within its territorial jurisdiction. A zoning
ordinance/resolution prescribes, defines, and apportions a given political subdivision into specific land
The petitioner presents the following issues for our consideration:
uses as present and future projection of needs. The power of the local government to convert or
reclassify agricultural lands to non-agricultural lands is not subject to the approval of the Department
I
of Agrarian Reform.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY OMITTED TO RULE UPON,
It bears stressing that in his Decision dated April 30, 2002, as affirmed by the Department of Agrarian
ALBEIT WITHOUT CITING ANY VALID REASONS, THE VARIOUS INTERRELATED ISSUES PROFFERED IN
Reform Adjudication Board (DARAB) in its Resolution dated March 17, 2006, Bulacan Provincial
Adjudicator Toribio Ilao, Jr., declared that the properties were not tenanted and/or agricultural and PETITIONER’S COMMENT RELATIVE TO DAR’S INCLUSION OF THE SUBJECT DAKILA PROPERTY UNDER
THE COVERAGE OF THE AGRARIAN REFORM LAW, TO WIT: A.) RESPONDENT-GRANTEES OF
that the alleged farmers-occupants are mere squatters thereto. These decision and resolution were
EMANCIPATION PATENTS FROM DAR ARE NOT LEGITIMATE TENANTS OF THE DAKILA PROPERTY; B.)
not appealed by the farmers-occupants and, as such, it became final and executory. By declaring, in its
THE SALE AND TRANSFER OF TITLES IN THE NAME OF PETITIONER HAVE NOT HERETOFORE BEEN
assailed Order of November 22, 2007, that the properties subject of the suit, were agricultural lands,
NULLIFIED EITHER BY THE DARAB CENTRAL OFFICE OR THE REGULAR COURTS; C.) THE BONAFIDE
the DAR Secretary thereby reversed the said DARAB rulings, issued more than a year before, and
TENANTS OF THE DAKILA PROPERTY HAVE VALIDLY SURRENDERED THEIR TENANCY RIGHTS IN FAVOR
nullified Resolution No. 16-98 of the Municipal Council of Malolos, approved nine (9) years earlier, on
OFPETITIONER’S PREDECESSORIN-INTEREST; D.) THE DAKILA PROPERTY WAS NO LONGER TENANTED
March 4, 1998. Thus, the DAR Secretary acted with grave abuse of discretion amounting to excess or
AND, FURTHER, WAS NO LONGER SUITABLE TO AGRICULTURE, AT THE TIME OF ITS COVERAGE UNDER
lack of jurisdiction.
AGRARIAN REFORM, ITS ACTUAL USE BEING ALREADY RESIDENTIAL
IN VIEW OF THE FOREGOING, the appeal is hereby GRANTED. Accordingly, the November 22, 2007
II
Order and February 22, 2008 Resolution of the Department of Agrarian Reform are hereby REVERSED
and SET ASIDE.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN FAILING TO RULE ON
THE ILLEGALITY OF THE MANNER BY WHICH THE DAR CAUSED THE SUMMARY COVERAGE OF THE
SO ORDERED.32
DAKILA PROPERTY UNDER THE CARP, ITS EXTRA-JUDICIAL CANCELLATION OF PETITIONER’S TITLES
WITHOUT DUE PROCESS OF LAW, AND ITS PREMATURE ISSUANCE OF EMANCIPATION PATENTS IN
The respondents moved to reconsider, but the OP denied their motion for reconsideration. Hence,
FAVOR OF RESPONDENTS
they appealed to the CA by petition for review.33
III
Ruling of the CA
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY APPLIED THE PROVISIONS OF
In the now assailed decision promulgated on July 27, 2011,34 the CA reversed and set aside the
RA 6657 IN RESOLVING THE SUBJECT PETITION, EVEN THOUGH THE DAR PLACED THE SUBJECT DAKILA
decision of the OP. It declared that prior to the effectivity of Republic Act No. 6657 onJune 15, 1988
PROPERTY UNDER THE COVERAGE OF PRESIDENTIAL DECREE NO. 27
and even after the passage of Municipal Resolution No. 16-98 on March 4, 1998, the Dakila property
was an agricultural land; that there was no valid reclassification because Section 20 of Republic Act
IV.
No. 7160 (The Local Government Code) and Memorandum Circular No. 54 required an ordinance, not
a resolution; and that findings of the DAR on the Dakila property being an agricultural land should be
WHETHER OR NOT HEREIN RESPONDENT’S PETITION FOR REVIEW A QUO OUGHT TO HAVE BEEN 2. Was the Dakila property agricultural land within the coverage of Republic Act No. 6657 or
DISMISSED OUTRIGHT BY THE HONORABLE COURT OFAPPEALS FOR FAILURE TO COMPLY WITH Presidential Decree No. 27?
SECTION 4, RULE 7 OF THE 1997 REVISED RULES OF CIVIL PROCEDURE.37
3. Was the issuance of the EPs pursuant to the August 16, 2006 order of the DAR Regional
The petitioner argues that the CA ignored issues vital to the complete determination of the parties’ Office proper?
respective rights over the Dakila property.
Ruling
Firstly, the CA should have ruled on the propriety of issuing the EPs. In view of the pending petition
beforethe DARAB, the DAR should have withheld the issuance of the EPs. Even granting that a final We reverse the CA, and reinstate the decision of the OP.
decision had already been rendered by the DARAB, the issuance of the EPs remained
I. Procedural Issue
premature inasmuch as the DAR had not yet commenced any court proceedings for the cancellation
of the petitioner’s title. Accordingly, the petitioner’s title remained indefeasible and could not be We first resolve the issue of the supposedly defective verification.
disturbed by the collateral orders by the OIC-Regional Director and the DAR Secretary.
The verification of a petition is intended to secure an assurance that the allegations contained in the
Secondly, the petitioner was deprived of due process because the requirements of notice and the petition have been madein good faith, are true and correct and not merely speculative.38 This
conduct of a public hearing and a field investigation were not strictly complied with by the DAR requirement affects the form of the pleading, and its non-compliance will not render the pleading
pursuant to Republic Act No. 6657 and DAR Administrative Order No. 12, Series of 1998. Thirdly, the defective. It is a formal, not a jurisdictional requisite.39 The courts may order the correction of the
CA erred in placing the Dakila property under the coverage of Republic Act No. 6657 when the order pleading if the verification is lacking, and may even act on an unverified pleading if doing sowill serve
of the OIC-Regional Director applied the provisions of Presidential Decree No. 27. The two laws should the ends of justice.40
be differentiated from each other; on one hand, Presidential Decree No. 27 required the beneficiary
to be a tenant-farmer of an agricultural land devoted to rice or corn, while on the other Republic Act
Under the foregoing, the CA rightly allowed the petition for review of the respondents despite the
No. 6657 was relatively broader and covered all public and private agricultural lands regardless of the
statement that the allegations therein were based on their "knowledge and belief." We underscore
tenurial arrangement and the commodity produced. Lastly, the CA should have dismissed the
thatthe defect was even lifted upon the voluntary submission by the respondents themselves of their
respondents’ petition for review due to its defective certification, pointing to the verification having
corrected verification in order to comply with the Rules of Court.
been executed by the respondents despite the letter request having been signed by BARC Chairman
Enriquez; and assailing the verification for containing the statement that the allegations therein were
We cannot also subscribe to the argument that the respondents were not appropriate parties to sign
based on their "knowledge and belief" instead of their "personal knowledge and authentic records" as
the verification. They were, considering that when the DAR issued the EPs, they became the real
required by the Rules of Court.
parties in interest in the proceedings, giving them the requisite personality to sign the verification.
Moreover, there is no question that the party himself need not sign the verification, for it was enough
The respondents countered that: (1) the CA correctly set aside the issue of whether or not they were
that the party’s representative, lawyer, or any person who personally knew the truth of the facts
qualified beneficiaries, because that was not the issue raised in the letter request; (2) the CA could not
alleged in the pleadings could sign the verification.41 In any event, the respondents, as the identified
have ruled on the validity of the sale of the Dakila property in light of the pending action in the
beneficiaries, had legal standing and interest to intervene to protect their rights or interests under
DARAB; (3) it was within the jurisdiction of the DAR to determine whether or not the respondents
Republic Act No. 6657. This is clear from Section 19 of Republic Act No. 9700,42 which amended
were qualified beneficiaries; (4) the waivers by the tenants were illegal; and (5) the issuance of the EPs
Republic Act No. 6657 by adding Section 50-A, to wit:
was a necessary consequence of placing the Dakila property under the coverage of Presidential
Decree No. 27.
Section 19. Section 50of Republic Act No. 6657, as amended, is hereby further amended by adding
Section 50-A to read as follows:
In view of the foregoing, the Court needs to consider and resolve the following:
Section 50-A. Exclusive Jurisdiction on Agrarian Dispute. – x x x
1. Did the CA gravely err in limiting its decision to the issue of whether or not the Dakila
property was subject to the coverage of Republic Act No. 6657?
In cases where regular courtsor quasi-judicial bodies have competent jurisdiction, agrarian reform
beneficiaries or identified beneficiaries and/or their associations shall have legal standing and interest
to intervene concerning their individual or collective rights and/or interests under the CARP.
xxxx
II. Courts can pass upon matters related to the issues raised by the parties
As a general rule, appellate courts are precluded from discussing and delving into issues that are not
raised by the parties. The pertinent rule is Section 8, Rule 51 of the Rules of Court, to wit:
Section 8. Questions that may be decided. – No error which does not affect the jurisdiction over the
subject matter or the validity of the judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely related to or dependent on an
assigned error and properly argued in the brief, save as the court may pass upon plain errors and
clerical errors.
In Philippine National Bank v. Rabat,43 the Court explained how this rule operates, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes some
substantial changes in the rules on assignment of errors. The basic procedural rule is that
only errors claimed and assigned by a party will be considered by the court, except errors
affecting its jurisdiction over the subject matter. To this exception has now been added
errors affecting the validity ofthe judgment appealed from or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his assignment of
errors butthe same is closely related to or dependent on an assigned error and properly
argued in his brief, such error may now be considered by the court. These changes are of
jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as that in the Court of
Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has been held that the
latter is clothed with ample authority to review matters, even if they are not assigned as
errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of
the case. Also, an unassigned error closely related to an error properly assigned (PCIB vs. CA,
et al., L-34931, Mar. 18, 1988), or upon which the determination of the question raised by
error properly assigned is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error (Ortigas, Jr. vs. Lufthansa German Airlines, L-
28773, June 30, 1975; Soco vs. Militante,et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is authorized to
consider a plain error, although it was not specifically assigned by the appellant (Dilag vs.
Heirs of Resurreccion, 76 Phil. 649), otherwise it would be sacrificing substance for
technicalities.44 (Emphasis supplied)
Conformably with the foregoing, the CA is vested with sufficient authority and discretion to review
matters, not assigned as errors on appeal, if it finds that consideration thereof isnecessary in arriving
at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing
piecemeal justice.45 In fact, the CA is possessed with inherent authority to review unassigned errors
that are closely related to an error properly raised, or upon which the determination of the error
properly assigned is dependent, or where it finds that consideration thereof is necessary in arriving at
a just decision of the case.46
It cannot be gainsaid that the validity of the EPs was closely intertwined with the issue of whether the
Dakila property was covered by the agrarian reform laws. When the CA declared that the Dakila
property came within the coverage of Republic Act No. 6657, the CA barely scraped the surface and
left more questions unresolved rather than writing finison the matter. To recall, this case originated
from the letter of BARC Chairman Enriquez requesting that the Dakila property be placed under the
OLT pursuant to Presidential Decree No. 27. But, as the petitioner correctly argues, the two laws,
although similarly seeking to alleviate the plight of landless farmers or farmworkers from the bondage
of tilling the soil, are distinct from each other. Republic Act No. 6657 is broader in scope than
Presidential Decree No. 27, for the former applies to all agricultural lands in which agricultural
activities are conducted, while the latter requires that the covered agricultural land betenanted and
primarily devoted to rice or corn cultivation.
In Sigre v. Court of Appeals,47 the Court also stated:
[T]he Court need not belabor the fact that R.A. 6657 or the CARP Law operates distinctly from P.D. 27.
R.A. 6657 covers all public and private agricultural land including other lands of the public domain
suitable for agriculture as provided for in Proclamation No. 131 and Executive Order No. 229; while,
P.D. 27 covers rice and corn lands. On this score, E.O. 229, which provides for the mechanism of the
Comprehensive Agrarian Reform Program, specifically states: "(P)residential Decree No. 27, as
amended, shall continue to operate with respect to rice and corn lands, covered thereunder. x x x" It
cannot be gainsaid, therefore, that R.A. 6657 did notrepeal or supersede, in any way, P.D. 27. And
whatever provisions of P.D. 27 that are not inconsistent with R.A. 6657 shall be suppletory to the
latter, and all rights acquired by the tenant-farmer under P.D. 27 are retainedeven with the passage of
R.A. 6657.48
In addition, the tenurial instruments issued to agrarian reform beneficiaries differ under these laws.
Ownership of the beneficiary under Presidential Decree No. 27 is evidenced by an EP while a
certificate of land ownership award (CLOA) is issued under Republic Act No. 6657. For this reason, the
CA could not have simply set aside the issue of whether the EPs issued to the respondents were
validly made by the DAR considering its declaration that the Dakila property was subject to Republic
Act No. 6657.
III. The Dakila property was not an agricultural land within the coverage of R.A.No. 6657 or P.D. No. 27
The CA declared that the Dakila property as an agricultural land; and that there was no valid
reclassification under Municipal Resolution No. 16-98 because the law required an ordinance, not a
resolution.
We agree in part with the CA.
Under Republic Act No. 7160, local government units, such as the Municipality of Malolos, Bulacan,
are vested with the power to reclassify lands. However, Section 20, Chapter II, Title I of Republic Act
No. 7160 ordains:
Section 20. Reclassification of Lands. – (a) A city or municipality may, through an ordinance passed by
the sanggunian after conducting public hearings for the purpose, authorize the reclassification of
agricultural lands and provide for the manner of their utilization or disposition in the following cases:
(1) when the land ceases to be economically feasible and sound for agricultural purposes as
determined by the Department of Agriculture or(2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by the sanggunian
concerned: x x x. (Emphasis supplied)
Clearly, an ordinance is required in order to reclassify agricultural lands, and such may only be passed
after the conduct of public hearings.
The petitioner claims the reclassification on the basis of Municipal Resolution No. 16-98. Given the
foregoing clarifications, however, the resolution was ineffectual for that purpose. A resolution was a
mere declaration of the sentiment or opinionof the lawmaking body on a specific matter that was
temporary in nature, and differed from an ordinance in that the latter was a law by itself and
possessed a general and permanent character.49 We also note that the petitioner did not show if the
requisite public hearings were conducted at all.In the absence of any valid and complete
reclassification,therefore, the Dakila property remained under the category of an agricultural land.
Nonetheless, the Dakila property was not an agricultural land subject to the coverage of Republic Act
No. 6657 or Presidential Decree No. 27.
Verily, the basic condition for land tobe placed under the coverage of Republic Act No. 6657 is that it
must either be primarily devoted to or be suitable for agriculture.50 Perforce, land that is not devoted
to agricultural activity is outside the coverage of Republic Act No. 6657.51 An agricultural land,
according to Republic Act No. 6657, is one that is devoted to agricultural activity and not classified as
mineral, forest, residential, commercial or industrial land.52 Agricultural activity includes the
"cultivation of the soil, planting of crops, growing of fruit trees, raising livestock, poultry or fish,
including the harvesting of such farm products; and other farm activities and practices performed by a
farmer in conjunction with such farming operations doneby persons whether natural or juridical."53
Consequently, before land may be placed under the coverage of Republic Act No. 6657, two requisites
must be met, namely: (1) that the land must be devoted to agricultural activity; and (2) that the land
must not be classified as mineral, forest, residential, commercial orindustrial land. Considering that
the Dakila property has not been classified as mineral, forest, residential, commercial or industrial, the
second requisite is satisfied. For the first requisite tobe met, however, there must be a showing that
agricultural activity is undertaken on the property.
It is not difficult to see why Republic Act No. 6657 requires agricultural activity in order to classify land
as agricultural. The spirit of agrarian reform laws is not to distribute lands per se, but to enable the
landless to own land for cultivation. Thisis why the basic qualification laid down for the intended
beneficiary is to show the willingness, aptitude and ability to cultivate and make the land as
productive as possible.54 This requirement conforms with the policy direction set in the 1987
Constitution to the effect that agrarian reform laws shall be founded on the right of the landless
farmers and farmworkers to own, directly or collectively, the lands they till.55 In Luz Farms v.
Secretary of the Department of Agrarian Reform,56 we even said that the framers of the Constitution
limited agricultural lands to the "arable and suitable agricultural lands."
Here, no evidence was submitted to show that any agricultural activity – like cultivation of the land,
planting of crops, growing of fruit trees, raising of livestock, or poultry or fish, including the harvesting
of such farm products, and other farm activities and practices – were being performed on the Dakila
property in order to subject it to the coverage of Republic Act No. 6657. We take particular note that
the previous tenants had themselves declared that they were voluntarily surrendering their tenancy
rights because the land was not conducive to farming by reason of its elevation, among others.57 Also
notable is the second Whereas Clause of Municipal Resolution No. 16-98, which mentioned that the
Dakila property was not fit for agricultural use due to lack of sufficient irrigation and that it was more
suitable for residential use, thus:
WHEREAS, after an ocular inspection of the subject lots and matured deliberation, the Sangguniang
Bayan found merit in the request for the following reasons, thus:
1. The properties are untenanted;
2. That they are not fitted [sic] for agricultural use for lack of sufficient irrigation;
3. There are improvements already introduce[d] on the property by its owner like
construction of subdivision roads;
4. Lack of oppositor to the intend[ed] subdivision project on the properties by its owner;
 5. That they are more suitable for residential use considering their location viz-a-viz (sic) with
(sic) the residential lots in the area.58 (Emphasis supplied)
The terse statement by the OIC-Regional Director that the Dakila property would still be subject to
Republic Act No. 6657 should Presidential Decree No. 27 be inapplicable59 did not meet the
requirements under Republic Act No. 6657. Section 7 of Republic Act No. 6657 identified rice and corn
lands subject to Presidential Decree No. 27 for priority distribution in the first phase and
implementation ofthe CARP. Insofar as the interplay of these two laws was concerned, the Court has
said that during the effectivity of the Republic Act No. 6657and in the event of incomplete acquisition
under Presidential Decree No. 27, the former should apply, with the provisions of the latter and
Executive Order No. 22860 having only suppletory effect.61
Even if we supplemented the provisions of Presidential Decree No. 27, the outcome is still the same,
because the Dakila property was still not within the scope of the law. For land to be covered under
Presidential Decree No. 27, it must be devoted to rice or corn crops, and there must be a system of
share-crop or lease-tenancy obtaining therein. If either requisite is absent, the land must be excluded.
Hence, exemption from coverage followed when the land was not devoted to rice or corn even if it
was tenanted; or the land was untenanted even though it was devoted to rice or corn.62 Based on
these conditions, the DAR Regional Office erred in subjecting the Dakila property under the OLT.
The first requirement, that the land be devoted to rice or corn cultivation, was not sufficiently
established. In this regard, the OIC-Regional Director inaccurately based his holding on the report
submitted by the Legal Services Division that—
[P]ortion of the property embraced under TCT No. 103697 with an area of 2.5611 hectares more or
less, was placed under PD [No.] 27 and subsequently an approved survey plan (Psd-03-020270) has
been prepared which was then the basis of the issuance of titles in favor of Felix Surio and Silvino
Manalad under EP Nos. 345262 and 342561. On the other hand, the land subject of this controversy
was, likewise, subdivided and now covered by an approved plan ASP No. Psd-031410-066532.63
What can be gathered from the report of the Legal Services Division was that the land owned by the
petitioner and covered by Presidential Decree No. 27 was the Sumapang Matanda property under TCT
No. 103697. As to the Dakila property, we can only infer from the report that it was merely
subdivided. The report did not mention whatsoever the agricultural activities performed in the Dakila
property. Nor was there a finding that the Dakila property was devoted to either rice or corn
cultivation as to justify its coverage under Presidential Decree No. 27. Such a finding was necessary,
for the Court has observed in Solmayor v. Arroyo:64
Although this Court will not disregard the evidence presented by petitioners that the land is devotedto
rice and corn crops in 1993, when the ocular inspection by the DAR personnel was conducted, it must
be noted that around the time of the passage of Presidential Decree No. 27 up to 1978, when the
subject property was placed under the coverage of Operation Land Transfer, the available evidence
issued and certified by the different government agencies, closer in time to the mentioned time frame
will show that respondent’s property has, indeed, been classified as within the residential and
commercial zones of Davao City. It cannot escape the notice of this Court that more than a decade
before the issuance of the said ocular investigation reportstating that the land is devoted to
agricultural production, government agencies equipped with the technical expertise to determine the
proper classification of the subject land have already determined that the land is part of the
residential and commercial zones of Davao City making it suitable for other urban use. Therefore, it is
only reasonable to conclude, based on the certification of various executive agencies issued when this
controversy arose, that at the time of the passage of Presidential Decree No. 27, respondent’s
property was not agricultural.65
For land to come within the coverage of the OLT, indeed, there must be a showing that it is devoted to
the cultivation of rice or corn, and there must be a system of share-crop or lease tenancy obtaining on
October 21, 1972, the time when Presidential Decree No. 27 took effect.66 Unfortunately, no such
evidence was presented, nor was there any field investigation conducted to verify whether or not the
landholding was primarily devoted to the cultivation of rice or corn. Accordingly, the Dakila property
should be excluded from the OLT.
The DAR Secretary affirmed the validity of the EPs in favor of the respondents only "pursuant to the
Order of the Regional Director."67 We note, however, that the evidence to establish in the
proceedings below that they or their predecessors had been tenants of the petitioner’s
predecessorin-interest to make them the rightful beneficiaries of the Dakila property was severely
wanting. For tenancy to exist, there must be proof that: (1) the parties are the landholder and the
tenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose isagricultural
production; (5) there is consideration;68 and (6) there is a sharing of the harvests. All these requisites
are necessary to create a tenancy relationship, and the absence of one or more of them will not make
the alleged tenant a de facto tenant.69 Unless a person has established his status as a de juretenant,
he is not entitled to security of tenure; nor is he covered by the land reform program of the
Government under the existing tenancy laws.70 Here, the consent to establish a tenant-landlord
relationship was manifestly absent. In view of the petitioner’s repeated denial of the tenancy, the
respondents ought then to establish the tenancy relationship, but did not do so. Tenancy could not be
presumed, but must be established by evidence; its mere allegation is neither evidence nor equivalent
to proof of its existence.71
There was also no showing that the respondents were engaged in any agricultural activities, or agreed
with Santiago or the petitioner on the sharing of harvests. The OIC-Regional Director obviously
disregarded the affidavit of Barangay Captain Felino M. Teodoro of Dakila, Malolos, Bulacan stating
that the respondents were never the actual farmers on the Dakila property.72
IV. The petitioner was deprived of due process
The petitioner posits that it was denied due process by the failure of the OIC-Regional Director to see
to the compliance withthe procedures outlined by Republic Act No. 6657 and Presidential Decree No.
27. It claims that the OIC-Regional Director resorted to "procedural shortcuts" and irregularities73 in
issuing the EPs to the respondents.
We agree with the petitioner’s position.
In Reyes v. Barrios,74 we identified the procedural requirements that must be followed prior to the
issuance of an EP, viz:
The Primer on Agrarian Reform enumerates the steps in transferring the land to the tenant-tiller, thus:
a. First step: the identification of tenants, landowners, and the land covered by OLT.
b. Second step: land survey and sketching of the actual cultivation of the tenantto determine
parcel size, boundaries, and possible land use;
c. Third step: the issuance of the Certificate of Land Transfer (CLT). To ensure accuracy and
safeguard against falsification, these certificatesare processed at the National Computer
Center (NCC) at Camp Aguinaldo;
d. Fourth step: valuation of the land covered for amortization computation;
e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year period; and
f. Sixth step: the issuance of the Emancipation Patent.
Thus, there are several steps to be undertaken before an Emancipation Patent can be issued. x x x.
xxxx
Furthermore, there are several supporting documents which a tenant-farmer must submit before he
can receive the Emancipation Patent, such as:
a. Application for issuance of Emancipation Patent;
b. Applicant's (owner's) copy of Certificate of Land Transfer.
c. Certification of the landowner and the Land Bank of the Philippines that the applicant has
tendered full payment of the parcel of land as described in the application and as actually
tilled by him;
d. Certification by the President of the Samahang Nayon or by the head of farmers'
cooperative duly confirmed by the municipal district officer (MDO) of the Ministry of Local
Government and Community Development (MLGCD) that the applicant is a full-fledged
member of a duly registered farmers' cooperative or a certification to these effect;
e. Copy of the technical (graphical) description of the land parcel applied for prepared by the
Bureau of Land Sketching Team (BLST) and approved by the regional director of the Bureau
of Lands;
f. Clearance from the MAR field team (MARFT) or the MAR District Office (MARDO) legal
officer or trial attorney; or in their absence, a clearance by the MARFT leader to the effect
that the land parcel applied for is not subject of adverse claim, duly confirmed by the legal
officer or trial attorney of the MAR Regional Office or, in their absence, by the regional
director;
g. Xerox copy of Official Receipts or certification by the municipal treasurer showing that the
applicant has fully paid or has effected up-to-date payment of the realty taxes due on the
land parcel applied for; and
h. Certification by the MARFT leader whether applicant has acquired farm machineries from
the MAR and/or from other government agencies.
Majority of these supporting documents are lacking in this case. Hence, it was improper for the
DARAB to order the issuance of the Emancipation Patent in favor of respondent without the required
supporting documents and without following the requisite procedure before an Emancipation Patent
may be validly issued.75
Furthermore, Section 16 of Republic Act No. 6657 outlines the procedure in acquiring private lands
subject to its coverage, viz:
Section 16. Procedure for Acquisition of Private Lands. - For purposes of acquisition of private lands,
the following procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send
its notice to acquire the land to the owners thereof, by personal delivery orregistered mail,
and post the same in a conspicuous place in the municipal building and barangay hall of the
place where the property is located. Said notice shall contain the offer of the DAR to pay a
corresponding value inaccordance with the valuation set forth in Sections 17, 18 and other
pertinent provisions hereof.
 (b) Within thirty (30) days from the date of receipt of written notice by personal delivery or
registered mail, the landowners, his administrator or representative shall inform the DAR of
his acceptance or rejection of the former.
(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines shall pay
the landowner the purchase price of the land within thirty (30) days after he executes and
delivers a deed of transfer in favor of the Government and surrenders the Certificate of Title
and other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land by requiring the landowner, the LBP
and other interested parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from the receipt of notice. After the expiration of the above period,
the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30)
daysafter it is submitted for decision.
(e) Upon receipt by the landowner of the corresponding payment or in case of rejection or
no response from the landowner, upon the deposit with an accessible bank designated by
the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR
shall take immediate possession of the land and shall request the proper Register of Deeds to
issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The
DAR shall thereafter proceed with the redistribution of the land tothe qualified beneficiaries.
(f) Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
Under Republic Act No. No. 6657 and DAR A.O. No. 12, Series of 1989, two notices should be sent to
the landowner — the first, the notice of coverage; and the other, the notice of acquisition. The Court
cannot consider and declare the proceedings conducted by the OIC-Regional Director as a substantial
compliance with the notice requirements. Compliance with such requirements, being necessary to
render the implementation of the CARP valid, was mandatory. As the Court observed in Roxas & Co.,
Inc. v. Court of Appeals:76
For a valid implementation of the CAR Program, two notices are required: (1) the Notice of Coverage
and letter of invitation to a preliminary conference sent to the landowner, the representatives of the
BARC, LBP, farmer beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series of
1989; and (2) the Notice of Acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the
conference, and its actual conduct cannot be understated. They are steps designed to comply with
the requirements of administrative due process. The implementation of the CARL is an exercise of the
State’s police power and the power of eminent domain. To the extent that the CARL prescribes
retention limits to the landowners, there is an exercise of police power for the regulation of private
property in accordance with the Constitution. But where, to carry out such regulation, the owners are
deprived of lands they own in excess of the maximum area allowed, there is also a taking under the
power of eminent domain. The taking contemplated is not a mere limitation of the use of the land.
What is required is the surrender of the title to and physical possession of the said excess and all
beneficial rights accruing to the owner in favor of the farmer beneficiary. The Bill of Rights provides
that "[n]o person shall be deprived of life, libertyor property without due process of law." The CARL
was not intended to take away property without due process of law. The exercise of the power of
eminent domain requires that due process be observed in the taking of private property.
xxxx
Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set
forth in Section 16 of the law. They also include the Notice of Coverage first laid down in DAR A. O. No.
12, Series of 1989 and subsequently amended in DAR A. O. No. 9, Series of 1990 and DAR A. O. No. 1,
Series of 1993. This Notice of Coverage does not merely notify the landowner that his property shall
be placed under CARP and that he is entitled to exercise his retention right; it also notifies him,
pursuant to DAR A. O. No. 9, Series of 1990, that a public hearing shall be conducted where he and
representatives of the concerned sectors of society may attend to discuss the results of the field
investigation, the land valuation and other pertinent matters. Under DAR A. O. No. 1, Series of 1993,
the Notice of Coverage also informs the landowner that a field investigation of his landholding shall be
conducted where he and the other representatives may be present.77 (Emphasis supplied)
The procedures provided by Section 16 of Republic Act No. 6657 and its relevant DAR administrative
issuances are to ensure the compliance with the due process requirements of the law. The result of
their non-compliance is to deprive the landowner of its constitutional right to due process.
The Court has carefully explained in Roxas & Co., Inc. v. Court of Appeals that the taking under the
CARL isan exercise of police power as well as of eminent domain. The taking of the landholding by the
State effectively results in the surrender by the landowner of its title and physical possession to the
beneficiaries. Hence, compensation should be given to the landowner prior to the taking. This is the
clear-cut directive of Section 16(e) of Republic Act No. 6657 which mandates the DAR to take
immediate possession of the land only after full payment and to thereafter request the Register of
Deeds to transfer title inthe name of the Republic of the Philippines, and later on to the intended
beneficiaries.
However, there was no evidence of payment prior to the cancellation of the petitioner’s TCTs
submitted here.1âwphi1 The requirement of prior payment was found in Republic Act No. 6657 and
Presidential Decree No. 27, under which full payment by the intended beneficiary was a condition
prior to the award of an EP. We haveexplicitly pronounced in Coruña v. Cinamin78 that the
emancipation of tenants does not come free. The transfer of lands under Presidential Decree No. 27
remained subject to the terms and conditions provided in said law. In Paris v. Alfeche,79 we said:
x x x. Section 2 of PD 266 states:
"After the tenant-farmer shall have fully complied with the requirements for a grant of title under SO ORDERED.
Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be issued by the Department
of Agrarian Reform on the basis of a duly approved survey plan."

On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:

"For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant
to this Decree, the value of the land shall be equivalent to two and one-half (2 ½) times the average
harvest of three normal crop years immediately preceding the promulgation of this Decree;

"The total cost of the land, including interest at the rate of six (6) per centum per annum, shall be paid
by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations[.]"

Although, under the law, tenant farmers are already deemed owners of the land they till, they are still
required to pay the cost of the land, including interest, within fifteen years before the title is
transferred to them.80 (Emphasis supplied)

The unquestioned non-compliance with the procedures set by Republic Act No. 6657 and its relevant
rules and regulations further denied to the petitioner the exercise of its right of retention.81 In doing
so, the OICRegional Director disregarded this constitutionally guaranteed right. We cannot understate
the value of the right of retention as the means 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 is not meant to perpetrate an injustice against the landowner.82

We also consider the manner by which the Dakila property was apportioned to the respondents highly
suspect. It appears from the face of the EPs that the individual lots were allocated based on how the
landholding was subdivided by the petitioner. Moreover, all the respondents were awarded lots
exceeding three hectares in violation of Section 23 of Republic Act No. 6657, which provides that "[n]o
qualified beneficiary may own more than three (3) hectares of agricultural land."

In fine, the order of the OIC-Regional Director was patently null and void. The denial of due process to
the petitioner sufficed to cast the impress of nullity on the official act thereby taken. A decision
rendered without due process is void ah initio and may be attacked directly or collaterally.83 All the
resulting acts were also null and void. Consequently, the EPs awarded to the respondents should be
nullified.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the
decision promulgated on July 27, 2011 by the Court of Appeals; REINSTATES the assailed decision of
the Office of the President issued on March 1, 2010; DIRECTS the cancellaticm of Emancipation
Patents No. 00783329, No. 00783330, No. 0078331, No. 0078332, No. 0078333, and No. 0078334
issued to the respondents for being NULL and VOID; and ORDERS the respondents to pay the costs of
suit.
G.R. No. 162070 October 19, 2005
DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B. PONCE (OIC),
Petitioner
vs.
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 Order7 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
appeal9 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 Reform’s 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.
Petitioner’s 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. DAR16 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. 788120 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,
vs.
OFFICE OF THE PRESIDENT, Respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure,
seeking the reversal of the Court of Appeals (CA) Amended Decision2 dated October 4, 2006 and its
Resolution3 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 by-products 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) M-7307, (T-486102) M-
7308, (T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T-332694) M-15755, (T-
486105) M-7311, (T-486106) M-7312, M-8791, (T-486107) M-7313, (T-486108) 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 DAR’s Land Use Conversion and Exemption Committee (LUCEC) of
Region IV conducted an ocular inspection on petitioner’s 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 petitioner’s 316.0422-hectare property from the
coverage of CARP. Adopting the LUCEC’s findings and recommendation, DAR Regional Director
Percival Dalugdug (Director Dalugdug) issued an Order dated June 27, 1994, exempting petitioner’s
316.0422-hectare property from CARP.8
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 MCTC’s 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 Resolution12
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 Secretary’s 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 petitioner’s 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 petitioner’s Motion for Reconsideration. 17
Aggrieved, petitioner filed its Memorandum on Appeal18 before the Office of the President (OP).
The OP’s Ruling
On February 4, 2000, the OP rendered a decision19 reinstating Director Dalugdug’s 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 resolution20 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 Garilao’s 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 Decision dated 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-0410-001624 (Conversion Order), granting petitioner’s 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 CA’s decision of April 29, 2005, Motions for Reconsideration were filed by farmer-groups,
namely: the farmers represented by Miguel Espinas25 (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 199328 (Supplement) dated June 15, 2005, the
Espinas group submitted the following as evidence:
1) Conversion Order29 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) Letter30 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) Certification31 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.32 In its
Manifestation dated November 29, 2005, the DAR confirmed that the subject property was no longer
devoted to cattle raising. Hence, in its Resolution33 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.
With the CA now made aware of these developments, particularly Secretary Villa’s 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 Katunayan37 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 DAR’s 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 Court’s 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
Report41 reiterating that, upon inspection of the subject property, together with petitioner’s 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. Que’s 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 Report42 dated
February 21, 2007, found that, per testimony of petitioner’s 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, [petitioner’s]
counsel, [Atty. Que], and the alleged caretaker of [petitioner’s] farm, [Roger], who were both cross-
examined by counsel for farmers-movants and SAPLAG. [Petitioner] and SAPLAG then marked their
documentary exhibits.
On May 24, 2007, [petitioner’s] 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 [petitioner’s] 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
[petitioner’s] Motion for Reconsideration submitted for resolution.45
Finally, petitioner’s motion for reconsideration was denied by the CA in its Resolution46 dated March
27, 2008. The CA discarded petitioner’s reliance on Sutton. It ratiocinated that the MARO Reports and
the DAR’s 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 latter’s authority to oversee the
implementation of agrarian reform laws under Section 5047 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 petitioner’s assertion that between MARO Elma’s Report dated January 8, 2007 and the
Investigating Team’s 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 FARMS AND SUTTON, AND WHICH
ARE THEREBY EXEMPT FROM CARL COVERAGE, ARE NEVERTHELESS SUBJECT TO DAR’S
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 petitioner’s 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 petitioner’s
property was admittedly devoted to livestock farming as of June 1988 and the only issue before was
whether or not petitioner’s 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 petitioner’s 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 petitioner’s 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 DAR’s
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 Court’s 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 Reply53 to the farmer-groups’ and to the OSG’s 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 DAR’s
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 Team’s Report, which confirmed that the subject
property is still devoted to livestock farming; and that there has been no change in petitioner’s
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 squatter-occupants.
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 petitioner’s 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 Team’s 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 petitioner’s 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 CA’s 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
Petitioner’s 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 CA’s keen observation that the assailed MARO reports and the
Investigating Team’s 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 Secretary’s 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 petitioner’s
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 DAR’s 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.lawphil1

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. 159089 May 3, 2006
ISLANDERS CARP-FARMERS BENEFICIARIES MULTI-PURPOSE COOPERATIVE, INC., Petitioner,
vs.
LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION, Respondent.
DECISION
PANGANIBAN, CJ:
The Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction to determine and
adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform
Law (CARL). Included in the definition of agrarian disputes are those arising from other tenurial
arrangements beyond the traditional landowner-tenant or lessor-lessee relationship. Expressly, these
arrangements are recognized by Republic Act 6657 as essential parts of agrarian reform. Thus, the
DARAB has jurisdiction over disputes arising from the instant Joint Production Agreement entered into
by the present parties.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the June 30,
2003 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 65498. The assailed Decision disposed as
follows:
"WHEREFORE, premises considered, the appealed decision dated October 18, 1999 dismissing the
complaint filed by [petitioner] issued by the Regional Trial Court of Tagum City, Branch 1, is hereby
AFFIRMED."3
The Facts
The facts of the case are narrated by the CA in this wise:
"On March 8, 1993, a certain Ramon Cajegas entered into a Joint Production Agreement for Islanders
Carp-Farmer Beneficiaries Multi-Purpose Cooperative, Inc. [petitioner] with Lapanday Agricultural and
Development Corporation [respondent].
"Almost three years after, on April 2, 1996, [petitioner], represented by its alleged chairman, Manuel
K. Asta, filed a complaint [with the RTC] for Declaration of Nullity, Mandamus, Damages, with prayer
for Preliminary Injunction against [respondent], the alleged x x x officers [of petitioner] who entered
into the agreement, and the Provincial Agrarian Reform Office of Davao (hereinafter PARO),
represented by Saturnino D. Sibbaluca. [Petitioner] subsequently filed an amended complaint with
leave of court alleging that the persons, who executed the contract were not authorized by it.
"[Respondent] then filed a Motion to Dismiss on April 18, 1996 x x x, stating that the Department of
Agrarian Reform Adjudication Board (hereinafter DARAB) has primary, exclusive, and original
jurisdiction; that [petitioner] failed to comply with the compulsory mediation and conciliation
proceedings at the barangay level; and for the unauthorized institution of the complaint in behalf of
[petitioner]. [Respondent] also averred that [petitioner] was engaged in forum shopping because [it]
also filed a petition before the Department of Agrarian Reform praying for the disapproval of the Joint
Production Agreement. x x x PARO also filed a motion to dismiss on May 16, 1996.
"On August 21, 1996, [respondent] then filed a case at the DARAB for Breach of Contract, Specific
Performance, Injunction with Restraining Order, Damages and Attorney’s Fees. On February 25, 1997,
the DARAB decided the case in favor of [respondent] declaring the Joint Production Agreement as
valid and binding and ordering [petitioner] to account for the proceeds of the produce and to comply
with the terms of the contract.
"The [RTC] then issued [its] decision on October 18, 1999.
"[Petitioner], before [the CA], rais[ed] the following errors on appeal:
‘I
‘THE [RTC] GRAVELY ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF LACK OF
JURISDICTION.
‘II
‘THE [RTC] GRAVELY ERRED IN NOT DECLARING THE JOINT PRODUCTION AGREEMENT AS NULL AND
VOID AB INITIO’"4
Ruling of the Court of Appeals
Finding the relationship between the parties to be an agricultural leasehold, the CA held that the issue
fell squarely within the jurisdiction of the DARAB. Hence, the appellate court ruled that the RTC had
correctly dismissed the Complaint filed by petitioner.
Moreover, being in the nature of an agricultural leasehold and not a shared tenancy, the Joint
Production Agreement entered into by the parties was deemed valid by the CA. The agreement could
not be considered contrary to public policy, simply because one of the parties was a corporation.
Hence, this Petition.5
Issues
Petitioner raises the following issues for the Court’s consideration:
"I
"Whether or not x x x the x x x Court of Appeals gravely erred in affirming the dismissal of the
case at bench by RTC of Tagum City on the ground that it has no jurisdiction over the subject
matter and nature of the suit.
"II
"Whether or not x x x the x x x Court of Appeals gravely erred in finding that the ‘Joint
Production Agreement’ is valid instead of declaring it as null and void ab initio, its provisions,
terms and condition, cause and purposes being violative of [t]he express mandatory
provision of R.A. 6657.
"III
"Whether or not x x x the x x x Court of Appeals gravely erred in holding that the ‘Joint
Production Agreement’ is a leasehold contract and therefore valid.
"IV
"Whether or not x x x the x x x Court of Appeals gravely erred in interpreting and applying the
prevailing doctrines and jurisprudence delineating the jurisdiction between the regular court
and DARAB on the matter of agricultural land and tenancy relationship."6
Simply put, the question to be resolved by the Court is this: which of the various government agencies
has jurisdiction over the controversy?
The Court’s Ruling
The Petition has no merit.1avvphil.net
Sole Issue:
Jurisdiction
Section 50 of Republic Act 66577 and Section 17 of Executive Order 2298 vests in the Department of
Agrarian Reform (DAR) the primary and exclusive jurisdiction, both original and appellate, to
determine and adjudicate all matters involving the implementation of agrarian reform.9 Through
Executive Order 129-A,10 the President of the Philippines created the DARAB and authorized it to
assume the powers and functions of the DAR pertaining to the adjudication of agrarian reform cases. 11
Moreover, Rule II of the Revised Rules of the DARAB provides as follows:
"Section 1. Primary and Exclusive Original and Appellate Jurisdiction. -- The Board shall have primary
and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian
disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under
Republic Act No. 6657, Executive Order Nos. 228 and 129-A, Republic Act No. 3844 as amended by
Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing
rules and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving
the following:
a) The rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation and use of all agricultural lands covered by the CARP and other agrarian laws[.]" 12
The subject matter of the present controversy falls squarely within the jurisdiction of the DARAB. In
question are the rights and obligations of two juridical persons engaged in the management,
cultivation and use of agricultural land acquired through the Comprehensive Agrarian Reform Program
(CARP) of the government.
Petitioner contends that, there being no tenancy or leasehold relationship between the parties, this
case does not constitute an agrarian dispute that falls within the DARAB’s jurisdiction. 13
We clarify. To prove tenancy or an agricultural leasehold agreement, it is normally necessary to
establish the following elements: 1) the parties are the landowner and the tenant or agricultural
lessee; 2) the subject matter of the relationship is a piece of agricultural land; 3) there is consent
between the parties to the relationship; 4) the purpose of the relationship is to bring about
agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural lessee;
and 6) the harvest is shared between the landowner and the tenant or agricultural lessee. 14
In the present case, the fifth element of personal cultivation is clearly absent. Petitioner is thus correct
in claiming that the relationship between the parties is not one of tenancy or agricultural leasehold.
Nevertheless, we believe that the present controversy still falls within the sphere of agrarian disputes.
An agrarian dispute "refers to any controversy relating to tenurial arrangements -- whether leasehold,
tenancy, stewardship or otherwise -- over lands devoted to agriculture. Such disputes include those
concerning farm workers’ associations or representations of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements. Also
included is any controversy relating to the terms and conditions of transfer of ownership from
landowners to farm workers, tenants and other agrarian reform beneficiaries -- whether the
disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or
lessor and lessee."15
It is clear that the above definition is broad enough to include disputes arising from any tenurial
arrangement beyond that in the traditional landowner-tenant or lessor-lessee relationship.
Tenurial Arrangements Recognized by Law
The assailed Joint Production Agreement16 is a type of joint economic enterprise. Joint economic
enterprises are partnerships or arrangements entered into by Comprehensive Agrarian Reform
Program (CARP) land beneficiaries and investors to implement agribusiness enterprises in agrarian
reform areas.17
Recognizing that agrarian reform extends beyond the mere acquisition and redistribution of land, the
law acknowledges other modes of tenurial arrangements to effect the implementation of CARP.18
that are also legal or constitutional in nature. All doubts should be resolved in favor of the DAR, since
the law has granted it special and original authority to hear and adjudicate agrarian matters."21
Validity of the Joint Production Agreement
As already discussed above, jurisdiction over the present controversy lies with the DARAB. As the RTC
had correctly dismissed the case on the ground of lack of jurisdiction, it was superfluous for the trial
court -- and the CA for that matter -- to have ruled further on the issue of the validity of the
agreement.

In line with its power to issue rules and regulations to carry out the objectives of Republic Act 6657,19
the DAR issued Administrative Order No. 2, Series of 1999, which issued "Rules and Regulations
Governing Joint Economic Enterprises in Agrarian Reform Areas." These rules and regulations were to
provide CARP beneficiaries with alternatives to sustain operations of distributed farms and to increase
their productivity.20
Section 10 of this administrative order states as follows:
"SEC. 10. Resolution of Disputes– As a rule, voluntary methods, such as mediation or conciliation and
arbitration, shall be preferred in resolving disputes involving joint economic enterprises. The specific
modes of resolving disputes shall be stipulated in the contract, and should the parties fail to do so, the
procedure herein shall apply.
The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which
jurisdiction has initially been lodged with an administrative body of special competence.22
Since the DARAB had already ruled in a separate case on the validity of the Joint Venture Agreement, 23
the proper remedy for petitioner was to question the Board’s judgment through a timely appeal with
the CA.24 Because of the manifest lack of jurisdiction on the part of the RTC, we must defer any
opinion on the other issues raised by petitioner until an appropriate review of a similar case reaches
this Court.25
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.

"The aggrieved party shall first request the other party to submit the matter to mediation or
conciliation by trained mediators or conciliators from DAR, non-governmental organizations (NGOs),
or the private sector chosen by them.

xxxxxxxxx

"Should the dispute remain unresolved, it may be brought to either of the following for resolution
depending on the principal cause of action:

‘(a) DAR Adjudication Board (DARAB) if it involves interpretation and enforcement of an agribusiness
agreement or an agrarian dispute as defined in Sec. 3(d) of RA 6657[.]’"

The present controversy involves the interpretation and enforcement of the terms of the Joint
Production Agreement. Thus, the case clearly falls within the jurisdiction of the DARAB. This Court in
fact recognized the authority of the DAR and the DARAB when it ruled thus:

"All controversies on the implementation of the Comprehensive Agrarian Reform Program (CARP) fall
under the jurisdiction of the Department of Agrarian Reform (DAR), even though they raise questions
G.R. No. 180013 January 31, 2011
DEL MONTE PHILIPPINES INC. EMPLOYEES AGRARIAN REFORM BENEFICIARIES COOPERATIVE (DEARBC),
Petitioner,
vs.
JESUS SANGUNAY and SONNY LABUNOS, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari1 assailing the Resolutions2 of the Court of Appeals (CA) in CA-
G.R. SP No. 01715, which dismissed the petition filed by Del Monte Philippines Inc. Employees
Agrarian Reform Beneficiaries Cooperative (DEARBC), challenging the May 12, 2006 Decision3 of the
Central Office of the Department of Agrarian Reform Adjudication Board (DARAB). For lack of
jurisdiction, the DARAB reversed and set aside the ruling of the DARAB Regional Adjudicator
(Adjudicator) who ordered the respondents to peacefully vacate certain portions of the subject
landholding.4
The Court is now urged to rule on the issue of jurisdiction of regular courts over petitions for recovery
of possession vis-à-vis the original, primary and exclusive jurisdiction of the Department of Agrarian
Reform (DAR) and the DARAB over agrarian disputes and/or agrarian reform implementation as
provided for under Section 50 of Republic Act No. 6657 (R.A. 6657).
The Facts
The property subject of this case is a portion of an entire landholding located in Sankanan, Manolo
Fortich, Bukidnon, with an area of 1,861,922 square meters, more or less, covered by Original
Certificate of Title No. AO-3 [Certificate of Land Ownership Award (CLOA)].5 The said landholding was
awarded to DEARBC, an agrarian cooperative and beneficiary under the Comprehensive Agrarian
Reform Program (CARP). Subsequently, DEARBC leased a substantial portion of the land to Del Monte
Philippines, Inc. (DMPI) under Section 8 of R.A. No. 6657 through a Grower’s Contract dated February
21, 1989.
On July 7, 1998, DEARBC filed a complaint for Recovery of Possession and Specific Performance with
Damages6 with the DARAB Region 10 Office against several respondents, among whom were Jesus
Sangunay (Sangunay) and Sonny Labunos (Labunos).
Essentially, DEARBC claimed that both Sangunay and Labunos illegally entered portions of its property
called "Field 34." Sangunay utilized approximately one and a half (1 ½) hectare portion7 where he
planted corn, built a house and resided from 1986 to the present. Labunos, on the other hand, tilled
an area of approximately eight (8) hectares where he planted fruit trees, gmelina, mahogany and
other crops as a source of his livelihood.8 Both respondents refused to return the parcels of land
notwithstanding a demand to vacate them. This illegal occupation resulted in the deprivation of the
proper and reasonable use of the land and damages.
On December 11, 1990, the Adjudicator ruled in favor of DEARBC on the ground that the respondents
failed to present proof of ownership over the subject portions of the landholding. According to the
Adjudicator, their bare allegation of possession, even prior to the award of the land to DEARBC, did
not suffice as proof of ownership. Thus:
In the series of hearing conducted by this Adjudicator and in the position papers submitted by some of
the defendants, none of them was able to present proof, either documentary or otherwise, that they
owned the areas they respectively occupied and cultivate[d], or that their occupation and cultivation
was with the consent and authority of the complainant.
X x x against all reasons, the fact remains that their occupation and cultivation thereof, granting it is
true, have not been validated by the DAR and they were not among the identified FB’s over the said
subject landholding.9
Aggrieved, respondents elevated the case to the DARAB Central Office before which Sangunay filed his
position paper. He claimed that the subject property was located along the Maninit River and was an
accrual deposit. He inherited the land from his father in 1948 and had since been in open, public,
adverse, peaceful, actual, physical, and continuous possession thereof in the concept of an owner. He
cultivated and lived on the land with the knowledge of DEARBC. Sangunay presented Tax Declaration
No. 15-018 and Real Property Historical Ownership issued by the Municipal Assessor of Manolo
Fortrich, showing that he had declared the property for taxation purposes long before DEARBC
acquired it. In sum, Sangunay asserted that, as a qualified farmer-beneficiary, he was entitled to
security of tenure under the agrarian reform law and, at any rate, he had already acquired the land by
prescription.
For his part, Labunos reiterated the above arguments and added that the subject portion of the
landholding was previously owned by one Genis Valdenueza who sold it to his father, Filoteo, as early
as 1950. Like Sangunay, he asserted rights of retention and ownership by prescription because he had
been in open, public, adverse, peaceful, actual, physical, and continuous possession of the landholding
in the concept of an owner.10
In its May 12, 2006 Decision,11 the DARAB dismissed the case for lack of jurisdiction. It ruled that the
issue of ownership of the subject land classifies the controversy as a regular case falling within the
jurisdiction of regular courts and not as an agrarian dispute.12 Thus:
X x x the plaintiff-appellee’s cause of action is for the recovery of possession and specific performance
with damages with respect to the subject landholding. Such cause of action flows from the plaintiff-
appellee’s contention that it owns the subject landholding. On the other hand, defendant-appellants
refuted and assailed such ownership as to their respective landholdings. Thus, the only question in
this case is who owns the said landholdings. Without doubt, the said question classified the instant
controversy to a regular case. At this premise, We hold that the only issue to be resolved by this Board
is whether or not the instant case presents an agrarian dispute and is therefore well within Our
jurisdiction.
xxx
In the case at bar, petitioner-appellants wanted to recover x x the subject landholding on the premise
of ownership xxx. Defendants-appellants assail such allegations saying that the landholdings are
accrual deposits and maintaining their open, peaceful and adverse possession over the same.
Indubitably, there assertions and issues classify the present controversy as a regular case. As such,
clearly, this Board has no jurisdiction to rule upon the instant case. Obviously, the dispute between
the parties does not relate to any tenurial arrangement. Thus, this Board has no jurisdiction over the
same.
DEARBC challenged the DARAB Decision in the CA through a petition for review filed under Rule 43 of
the Rules of Civil Procedure. In its Resolution dated June 27, 2007,13 the CA dismissed the petition for
procedural infirmities in its verification, certification and attachments, viz:
1) The Verification and Certification is defective due to the following reasons:
a) There is no assurance that the allegations in the petition are based on personal
knowledge and in authentic records, in violation of Section 4 par. (2), Rule 7 of the
Revised Rules of Civil Procedure;
b) The Community Tax Certificate Nos. of the affiant therein are not indicated;
c) The affiant is not authorized to sign the same for and in behalf of the petitioner
cooperative;
2) The attached copies of the Motion for Reconsideration filed before the DARAB Quezon
City and the Complaint filed before the DAR, Region XD, and the Decision and Resolution
rendered therein are mere plain photocopies, in violation of Sec. 6 par. (c), Rule 43, supra.
In a motion for reconsideration, DEARBC invoked substantial compliance with the pertinent
procedural rules, pointing to the attached Secretary’s Certificate as sufficient proof of authority given
to the President and Chairman of the Board, Dennis Hojas (Hojas), to represent DEARBC. On August
24, 2007,14 the CA denied the motion because DEARBC failed to attach a copy of the board resolution
showing Hojas’ authority to file the petition. This was a fatal error that warranted dismissal of the
petition, according to the appellate court.
Hence, this petition for review.
With regard to the dismissal of the case by the CA on technical grounds, the Court is of the view that it
was correct. DEARBC clearly failed to comply with the rules which mistake was a fatal error warranting
the dismissal of the petition for review. However, it has been the constant ruling of this Court that
every party-litigant should be afforded the amplest opportunity for the proper and just disposition of
his cause, free from constraints of technicalities.15 Rules of procedure are mere tools designed to
expedite the resolution of cases and other matters pending in court. A strict and rigid application of
the rules that would result in technicalities that tend to frustrate rather than promote justice must be
avoided.16 Thus, the Court opts to brush aside the procedural flaw and resolve the core issue of
jurisdiction as it has been discussed by the parties anyway.
Position of the Parties
DEARBC claims that the action it filed for recovery of possession falls within the jurisdiction of the
DARAB because it partakes of either a boundary dispute, a correction of a CLOA or an ouster of an
interloper or intruder found under Section 1 of Rule 11 of the 2003 DARAB Rules of Procedure 17 and
Administrative Order 03 Series of 2003.18 Under those rules, any conflict involving agricultural lands
and the rights of beneficiaries is within the jurisdiction of the DARAB.
In his Comment,19 Labunos argues that only questions of law may be resolved in appeals under Rule
45 and that it is the decision of the CA which must be challenged and not the DARAB decision. On the
merits, he cites cases where this Court ruled that the jurisdiction of the DARAB is limited only to
agrarian disputes and other matters relating to the implementation of the CARP. The subject land has
not been transferred, distributed and/or sold to tenants, and it is obvious that the complaint is not for
the correction of a title but for the recovery of possession and specific performance. Issues of
possession may be dealt with by the DARAB only when they relate to agrarian disputes. Otherwise,
jurisdiction lies with the regular courts.
Sangunay prays that he be declared as the owner of the land, particularly his area in Field 34, based
on the following grounds: 1] that the tax receipts and Tax Declaration No. 15-018 were issued in his
name; 2] that R.A. No. 6657 provides that farmers already in place and those not accommodated in
the distribution of privately-owned lands must be given preferential rights in the distribution of lands
from the public domain (to which the subject land as an accretion belongs); and 3] that acquisitive
prescription had set in his favor.
The Court’s Ruling
The Court finds no merit in the petition.
Where a question of jurisdiction between the DARAB and the Regional Trial Court is at the core of a
dispute, basic jurisprudential tenets come into play. It is the rule that the jurisdiction of a tribunal,
including a quasi-judicial office or government agency, over the nature and subject matter of a
petition or complaint is determined by the material allegations therein and the character of the relief
prayed for20 irrespective of whether the petitioner or complainant is entitled to any or all such
reliefs.21 In the same vein, jurisdiction of the court over the subject matter of the action is not affected 9. The defendant has caused actual damages in the amount of xxx in the form of back rentals
by the pleas or the theories set up by the defendant in an answer or a motion to dismiss. Otherwise, and an estimated amount of xxx brought about by the defendant for all his unlawful acts
jurisdiction will become dependent almost entirely upon the whims of the defendant. 22 towards the land and the owner of the land.

Under Section 50 of R.A. No. 665723 and as held in a string of cases, "the DAR is vested with the 10. To recover the possession of the land and to protect and vindicate its rights, the
primary jurisdiction to determine and adjudicate agrarian reform matters and shall have the exclusive complainant was compelled to engage the servces of a legal counsel x x x
jurisdiction over all matters involving the implementation of the agrarian reform program." 24 The
DARAB was created, thru Executive Order No. 109-A, to assume the powers and functions with PRAYER
respect to the adjudication of agrarian reform cases. Hence, all matters involving the implementation
of agrarian reform are within the DAR’s primary, exclusive and original jurisdiction. At the first WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Board, that a
instance, only the DARAB, as the DAR’s quasi-judicial body, can determine and adjudicate all agrarian decision be rendered:
disputes, cases, controversies, and matters or incidents involving the implementation of the CARP.25
An agrarian dispute refers to any controversy relating to tenurial arrangements, whether leasehold,
Ejecting the defendant from the subject landholding and/or causing him to cede possession of the land
tenancy, stewardship, or otherwise, over lands devoted to agriculture, including disputes concerning
to complainant. [Emphasis ours]
farmworkers’ associations or representation of persons in negotiating, fixing, maintaining, changing,
or seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy
xxxx
relating to compensation of lands acquired under this Act and other terms and conditions of transfer
of ownership from landowner to farmworkers, tenants, and other agrarian reform beneficiaries,
whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner Verily, all that DEARBC prayed for was the ejectment of the respondents from the respective portions
and tenant, or lessor and lessee.26 of the subject lands they allegedly entered and occupied illegally. DEARBC avers that, as the owner of
the subject landholding, it was in prior physical possession of the property but was deprived of it by
respondents’ intrusion.
The following allegations were essentially contained in the complaints filed separately against the
respondents before the DARAB with some variance in the amount of damages and fees prayed for:
Clearly, no "agrarian dispute" exists between the parties. The absence of tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, cannot be overlooked. In this case, no juridical
1. The complainant is an agrarian cooperative duly registered and organized under the laws
tie of landownership and tenancy was alleged between DEARBC and Sangunay or Labunos, which
of the Republic of the Philippines xxx.
would so categorize the controversy as an agrarian dispute. In fact, the respondents were contending
for the ownership of the same parcels of land.27
2. Complainant is an awardee of Comprehensive Agrarian Reform Program (CARP), situated
at Limbona, Bukidnon under Original Certificate of Title A-3 as evidenced by Certificate of
This set of facts clearly comprises an action for recovery of possession. The claim of being farmer-
Land Ownership Award (CLOA) xxx.
beneficiaries with right of retention will not divest the regular courts of jurisdiction, since the pleas of
the defendant in a case are immaterial.
xxxx
The ruling in DAR v. Hon. Hakim S. Abdulwahid and Yupangco Cotton Mills, Inc.28 is inapplicable to the
5. The defendant illegally entered and tilled the land owned by the complainant, inside the
present case. The complaint in Abdulwahid "impugn(ed) the CARP coverage of the landholding
portion of Field 34, with an area of one and a half (1 ½) hectares, more or less, located at
involved and its redistribution to farmer beneficiaries, and (sought) to effect a reversion thereof to the
Sankanan, Manolo Fortrich, Bukidnon xxx.
original owner, Yupangco" and essentially prayed for the annulment of the coverage of the disputed
property within the CARP. The dispute was on the "terms and conditions of transfer of ownership
xxxx from landlord to agrarian reform beneficiaries over which DARAB has primary and exclusive original
jurisdiction, pursuant to Section 1(f), Rule II, DARAB New Rules of Procedure."29
8. Demands were made by the complainant for the defendant to vacate the premises but the
latter adamantly refused and did not vacate the area xxx.
Although the complaint filed by DEARBC was similarly denominated as one for recovery of possession,
it utterly lacks allegations to persuade the Court into ruling that the issue encompasses an agrarian
dispute.1âwphi1

DEARBC’s argument that this case partakes of either a boundary dispute, correction of a CLOA, and
ouster of an interloper or intruder, as found under Section 1, Rule 11 of the 2003 DARAB Rules of
Procedure,30 is unavailing. Nowhere in the complaint was the correction or cancellation of the CLOA
prayed for, much less mentioned. DEARBC merely asserted its sole ownership of the awarded land
and no boundary dispute was even hinted at.

WHEREFORE, the petition is DENIED.

SO ORDERED.
G.R. No. 178266 July 21, 2008
PEOPLE OF THE PHILIPPINES, Petitioner,
vs.
SAMUEL and LORETA VANZUELA, Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure.
The petitioner People of the Philippines (petitioner) seeks the reversal of the Order 2 dated May 18,
2007, issued by the Regional Trial Court (RTC), Branch 30 of Surigao City, which dismissed for lack of
jurisdiction over the subject matter the criminal case for estafa filed by private complainant
Veneranda S. Paler (Veneranda) against respondents Samuel Vanzuela (Samuel) and his wife, Loreta
Vanzuela (Loreta) (respondents). The case ostensibly involves an agrarian dispute, hence, according to
the RTC, within the exclusive original
jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).
The antecedents are as follows:
Veneranda is the wife of the late Dionisio Paler, Sr.3 who is the registered owner of a parcel of
irrigated riceland, containing an area of more than four (4) hectares, situated in Barangay Mabini
(Roxas), Mainit, Surigao del Norte, and covered by Original Certificate of Title (OCT) No. 5747. 4 One (1)
hectare of this riceland (subject property) was cultivated by the respondents as agricultural tenants
for more than ten (10) years, with an agreed lease rental of twelve and one half (12½) cavans of palay,
at 45 kilos per cavan, per harvest. The respondents allegedly failed to pay the rentals since 1997.
Initially, Veneranda brought the matter before the Department of Agrarian Reform (DAR) Office in
Mainit, Surigao del Norte, but no amicable settlement was reached by the parties. Thus, Veneranda
filed a criminal complaint for estafa against the respondents.
Consequently, respondents were charged in an Information5 dated February 28, 2002 which reads:
That in about and during the period from 1997 to 2001 in Brgy. Roxas, Mainit, Surigao del Norte,
Philippines and within the jurisdiction of this Honorable Court, said spouses Samuel and Loreta
Vanzuela, conspiring, confederating and mutually helping one another, having leased and occupied
the farmland of Veneranda S. Paler and other heirs of the late Dionesio Paler, Sr., and having
harvested and accounted for a total of 400 sacks of palay for the past 10 harvest seasons of which
25% thereof were hold (sic) in trust by them or a total value of P80,000.00, did then and there
willfully, unlawfully and feloniously misappropriate, misapply and convert said sum of P80,000.00 to
their own use and benefit to the damage and prejudice of said Veneranda Paler and other heirs of the
late Dionesio Paler, Sr. in the aforementioned sum of P80,000.00.
Contrary to law.
Upon arraignment, respondents pleaded not guilty. During pre-trial, the parties agreed that the
respondents had been the agricultural tenants of Veneranda for more than ten (10) years; and that
the palay was harvested twice a year on the subject property. Thereafter, trial on the merits ensued.
After the prosecution rested its case, the respondents filed a Demurrer to Evidence, 6 praying that the
criminal case be dismissed for failure of the petitioner to establish the culpability of the respondents
beyond reasonable doubt. Petitioner filed a Comment/Opposition7 arguing that the respondents, as
agricultural tenants, were required by law to hold the lease rentals in trust for the landowner and
thereafter turn over the same to the latter.
In an Order8 dated May 18, 2007, the RTC dismissed the criminal case ratiocinating, thus:
From the averments of the information, the admissions of the parties and the evidence adduced by
the prosecution, it is easily discernable (sic) that the instant case pertains to the non-payment of
rentals by the accused to the private complainant, involving a lease of an agricultural land by the
former from the latter. This being so, the controversy in the case at bench involves an agrarian dispute
which falls under the primary and exclusive original jurisdiction of the Department of Agrarian Reform
Adjudication Board (DARAB), pursuant to Section 1, Rule II of the DARAB New Rules of Procedure, x x
x.
Citing our ruling in David v. Rivera9 and Philippine Veterans Bank v. Court of Appeals,10 the RTC opined
that it had no jurisdiction over the subject matter of the case because the controversy had the
character of an "agrarian dispute." The trial court did not find it necessary to rule on the respondents’
Demurrer to Evidence and, in fact, no mention of it was made
in the assailed Order of May 18, 2007. Hence, this petition raising the following issues:
1. WHETHER OR NOT THE HONORABLE REGIONAL TRIAL COURT BRANCH 30, SURIGAO CITY
HAS JURISDICTION OVER THE CHARGE FOR ESTAFA EVEN IF IT INVOLVES AGRICULTURAL
TENANTS OF THE PRIVATE COMPLAINANT; [AND]
2. WHETHER OR NOT THE SEEMING "EXEMPTION" FROM CRIMINAL PROSECUTION OF
AGRICULTURAL TENANTS FOR ESTAFA WOULD CONTRAVENE THE PROVISIONS OF SECTION 1,
ARTICLE III OF THE CONSTITUTION, SPECIFICALLY THE "EQUAL PROTECTION CLAUSE." 11
Petitioner, on one hand, contends that, under Section 57 of Republic Act (RA) 6657, otherwise known
as the "Comprehensive Agrarian Reform Law" (CARL), Special Agrarian Courts (SACs) were vested with
limited criminal jurisdiction, i.e., with respect only to the prosecution of all criminal offenses under the
said Act; that the only penal provision in RA 6657 is Section 73 thereof in relation to Section 74, which
does not cover estafa; that no agrarian reform law confers criminal jurisdiction upon the DARAB, as
only civil and administrative aspects in the implementation of the agrarian reform law have been
vested in the DAR; that necessarily, a criminal case for estafa instituted against an agricultural tenant
is within the jurisdiction and competence of regular courts of justice as the same is provided for by
law; that the cases relied upon by the RTC do not find application in this case since the same were
concerned only with the civil and administrative aspects of agrarian reform implementation; that
there is no law which provides that agricultural tenants cannot be prosecuted for estafa after they
have misappropriated the lease rentals due the landowners; and that to insulate agricultural tenants
from criminal prosecution for estafa would, in effect, make them a class by themselves, which cannot
be validly done because there is no law allowing such classification. Petitioner submits that there is no
substantial distinction between an agricultural tenant who incurs criminal liability for estafa for
misappropriating the lease rentals due his landowner, and a non-agricultural tenant who likewise
incurs criminal liability for misappropriation.12
Finally, petitioner posits that, at this point, it is premature to discuss the merits of the case because
the RTC has yet to receive in full the evidence of both parties before it can render a decision on the
merits. Petitioner also claims that it is pointless to delve into the merits of the case at this stage, since
the sole basis of the assailed RTC Order is simply lack of jurisdiction.13
Respondents, on the other hand, argue that share tenancy is now automatically converted into
leasehold tenancy wherein one of the obligations of an agricultural tenant is merely to pay rentals, not
to deliver the landowner's share; thus, petitioner's allegation that respondents misappropriated the
landowner's share of the harvest is not tenable because share tenancy has already been abolished by
law for being contrary to public policy. Accordingly, respondents contend that the agricultural tenant's
failure to pay his lease rentals does not give rise to criminal liability for estafa. Respondents stand by
the ruling of the RTC that pursuant to Section 1, Rule II of the DARAB New Rules of Procedure, the
DARAB has jurisdiction over agrarian disputes; and that respondents did not commit estafa for their
alleged failure to pay their lease rentals. Respondents submit that a simple case for ejectment and
collection of unpaid lease rentals, instead of a criminal case, should have been filed with the DARAB.
Respondents also submit that, assuming arguendo that they failed to pay their lease rentals, they
cannot be held liable for Estafa, as defined under Article 315, paragraph 4, No. 1(b) of the Revised
Penal Code, because the liability of an agricultural tenant is a mere monetary civil obligation; and that
an agricultural tenant who fails to pay the landowner becomes merely a debtor, and, thus, cannot be
held criminally liable for estafa.14
Ostensibly, the main issue we must resolve is whether the RTC has jurisdiction over the crime of
estafa, because the assailed order is premised on the RTC’s lack of jurisdiction over the subject
matter. However, should our resolution be in the affirmative, the more crucial issue is whether an
agricultural tenant, who fails to pay the rentals on the land tilled, can be successfully prosecuted for
estafa.
For the guidance of the bench and bar, we find it appropriate to reiterate the doctrines laid down by
this Court relative to the respective jurisdictions of the RTC and the DARAB.
The three important requisites in order that a court may acquire criminal jurisdiction are (1) the court
must have jurisdiction over the subject matter; (2) the court must have jurisdiction over the territory
where the offense was committed; and (3) the court must have jurisdiction over the person of the
accused.15
First. It is a well-entrenched doctrine that the jurisdiction of a tribunal over the subject matter of an
action is conferred by law. It is determined by the material allegations of the complaint or information
and the law at the time the action was commenced. Lack of jurisdiction of the
court over an action or the subject matter of an action, cannot be cured by the silence, acquiescence,
or even by express consent of the parties. Thus, the jurisdiction of the court over the nature of the
action and the subject matter thereof cannot be made to depend upon the defenses set up in the
court or upon a motion to dismiss; otherwise, the question of jurisdiction would depend almost
entirely on the defendant. Once jurisdiction is vested, the same is retained up to the end of the
litigation.16
In the instant case, the RTC has jurisdiction over the subject matter because the law confers on it the
power to hear and decide cases involving estafa. In Arnado v. Buban,17 we held that:
Under Article 315 of the Revised Penal Code, "the penalty of prision correccional in its maximum
period to prision mayor in its minimum period shall be imposed if the amount of the fraud is over
P12,000.00 but does not exceed P22,000.00; and if such amount exceeds the latter sum, the penalty
provided x x x shall be imposed in its maximum period, adding one (1) year for its additional
P10,000.00 x x x." Prision mayor in its minimum period, ranges from six (6) years and one (1) day to
eight (8) years. Under the law, the jurisdiction of municipal trial courts is confined to offenses
punishable by imprisonment not exceeding six (6) years, irrespective of the amount of the fine.
Hence, jurisdiction over the criminal cases against the [respondents] pertains to the regional trial
court. x x x
The allegations in the Information are clear -- Criminal Case No. 6087 involves alleged
misappropriation of the amount of P80,000.00.
Second. The RTC also has jurisdiction over the offense charged since the crime was committed within
its territorial jurisdiction.
Third. The RTC likewise acquired jurisdiction over the persons of the respondents because they
voluntarily submitted to the RTC's authority. Where the court has jurisdiction over the subject matter
and over the person of the accused, and the crime was committed within its territorial jurisdiction, the
court necessarily exercises jurisdiction over all issues that the law requires the court to
resolve.181avvphi1
Thus, based on the law and material allegations of the information filed, the RTC erroneously
concluded that it lacks jurisdiction over the subject matter on the premise that the case before it is
purely an agrarian dispute. The cases relied upon by the RTC, namely, David v. Rivera19 and Philippine
Veterans Bank v. Court of Appeals,20 are of different factual settings. They hinged on the subject
matter of Ejectment and Annulment of Certificate of Land Ownership Awards (CLOAs), respectively. It
is true that in Machete v. Court of Appeals21 this Court held that RTCs have no jurisdiction over cases
for collection of back rentals filed against agricultural tenants by their landowners. In that case,
however, what the landowner filed before the RTC was a collection suit against his alleged tenants.
These three cases show that trial courts were declared to have no jurisdiction over civil cases which
were initially filed with them but were later on characterized as agrarian disputes and thus, within
DARAB's jurisdiction. No such declaration has been made by this Court with respect to criminal cases.
Instead, we have Monsanto v. Zerna,22 where we upheld the RTC’s jurisdiction to try the private
respondents, who claimed to be tenants, for the crime of qualified theft. However, we stressed
therein that the trial court cannot adjudge civil matters that are beyond its competence. Accordingly,
the RTC had to confine itself to the determination of whether private respondents were guilty of the
crime. Thus, while a court may have authority to pass upon the criminal liability of the accused, it
cannot make any civil awards that relate to the agrarian relationship of the parties because this
matter is beyond its jurisdiction and, correlatively, within DARAB's exclusive domain.
In the instant case, the RTC failed to consider that what is lodged before it is a criminal case for estafa
involving an alleged misappropriated amount of P80,000.00 -- a subject matter over which the RTC
clearly has jurisdiction. Notably, while the RTC has criminal jurisdiction conferred on it by law, the
DARAB, on the other hand, has no authority to try criminal cases at all. In Bautista v. Mag-isa Vda. de
Villena,23 we outlined the jurisdiction of the DARAB, to wit:
For agrarian reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR); more
specifically, in the Department of Agrarian Reform Adjudication Board (DARAB).
Executive Order 229 vested the DAR with (1) quasi-judicial powers to determine and adjudicate
agrarian reform matters; and (2) jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive original jurisdiction of the Department of Agriculture
and the Department of Environment and Natural Resources. This law divested the regional trial courts
of their general jurisdiction to try agrarian reform matters.
Under Republic Act 6657, the DAR retains jurisdiction over all agrarian reform matters. The pertinent
provision reads:
Section 50. Quasi-Judicial Powers of the DAR. — The DAR is hereby vested with the primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters involving the implementation of agrarian reform, except those falling
under the exclusive jurisdiction of the Department of Agriculture and the Department of Environment
and Natural Resources.
It shall not be bound by technical rules of procedure and evidence but shall proceed to hear and
decide all cases, disputes or controversies in a most expeditious manner, employing all reasonable
means to ascertain the facts of every case in accordance with justice and equity and the merits of the
case. Toward this end, it shall adopt a uniform rule of procedure to achieve a just, expeditious and
inexpensive determination of every action or proceeding before it.
xxx xxx xxx
Subsequently, in the process of reorganizing and strengthening the DAR, Executive Order No. 129-A24
was issued; it created the DARAB to assume the adjudicatory powers and functions of the DAR.
Pertinent provisions of Rule II of the DARAB 2003 Rules of Procedure read:
SECTION 1. Primary and Exclusive Original Jurisdiction. — The Adjudicator shall have primary and
exclusive original jurisdiction to determine and adjudicate the following cases:
1.1. The rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation, and use of all agricultural lands covered by Republic Act (RA) No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law (CARL), and other related agrarian laws;
xxx xxx xxx
1.4. Those cases involving the ejectment and dispossession of tenants and/or leaseholders;
xxx xxx xxx
Section 3(d) of RA 6657, or the CARL, defines an "agrarian dispute" over which the DARAB has
exclusive original jurisdiction as:
(d) . . . refer[ing] to any controversy relating to tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to agriculture, including disputes concerning
farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or
seeking to arrange terms or conditions of such tenurial arrangements including any controversy
relating to compensation of lands acquired under this Act and other terms and conditions of transfer
of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries,
whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.25 Clearly, the law and the DARAB Rules are deafeningly silent on the
conferment of any criminal jurisdiction in favor of the DARAB. It is worth stressing that even the
jurisdiction over the prosecution of criminal offenses in violation of RA 6657 per se is lodged with the
SACs and not with the DARAB.26 While indeed, the parties admit that there is an agricultural tenancy
relationship in this case, and that under the circumstances, Veneranda as landowner could have
simply filed a case before the DARAB for collection of lease rentals and/or dispossession of
respondents as tenants due to their failure to pay said lease rentals, there is no law which prohibits
landowners from instituting a criminal case for estafa, as defined and penalized under Article 315 of
the Revised Penal Code, against their tenants. Succinctly put, though the matter before us apparently
presents an agrarian dispute, the RTC cannot shirk from its duty to adjudicate on the merits a criminal
case initially filed before it, based on the law and evidence presented, in order to determine whether
an accused is guilty beyond reasonable doubt of the crime charged.
However, we must reiterate our ruling in Re: Conviction of Judge Adoracion G. Angeles,27 that while
we do not begrudge a party's prerogative to initiate a case against those who, in his opinion, may have
wronged him, we now remind landowners that such prerogative of instituting a criminal case against
their tenants, on matters related to an agrarian dispute, must be exercised with prudence, when there
are clearly lawful grounds, and only in the pursuit of truth and justice.
Thus, even as we uphold the jurisdiction of the RTC over the subject matter of the instant criminal
case, we still deny the petition.
Herein respondents were charged with the crime of estafa as defined under Article 315, paragraph 4,
No. 1(b) of the Revised Penal Code, which refers to fraud committed —
By misappropriating or converting, to the prejudice of another, money, goods, or any other personal
property received by the offender in trust or on commission, or for administration, or under any other
obligation involving the duty to make delivery of or to return the same, even though such obligation
be totally or partially guaranteed by a bond; or by denying having received such money, goods, or
other property.
We viewed the cases invoked by the petitioner, namely, People v. Carulasdulasan and Becarel28 and
Embuscado v. People29 where this Court affirmed the conviction for estafa of the accused therein who
were also agricultural tenants. In People v. Carulasdulasan and Becarel,30 this Court held that -
From the facts alleged, it is clear that the accused received from the sale of the abaca harvested by
them a sum of money which did not all belong to them because one-half of it corresponds to the
landlord's share of the abaca under the tenancy agreement. This half the accused were under
obligation to deliver to the landlord. They therefore held it in trust for him. But instead of turning it
over to him, they appropriated it to their own use and refused to give it to him notwithstanding
repeated demands. In other words, the accused are charged with having committed fraud by
misappropriating or converting to the prejudice of another money received by them in trust or under
circumstances which made it their duty to deliver it to its owner. Obviously, this is a form of fraud
specially covered by the penal provision above cited.1awphi1
In Embuscado v. People,31 the accused appealed to this Court his conviction for the crime of theft by
the Court of First Instance even as the information charged him with Estafa and of which he was
convicted by the City Court. This Court ruled that the accused was denied due process when the Court
of First Instance convicted him of a crime not charged in the information, and then reinstated with
modification the ruling of the City Court convicting him of estafa.
Unfortunately for the petitioner, these cited cases are inapplicable. People v. Carulasdulasan and
Becare32 involved a relationship of agricultural share tenancy between the landowner and the
accused. In such relationship, it was incumbent upon the tenant to hold in trust and, eventually,
account for the share in the harvest appertaining to the landowner, failing which the tenant could be
held liable for misappropriation. As correctly pointed out by the respondents, share tenancy has been
outlawed for being contrary to public policy as early as 1963, with the passage of R.A. 3844.33 What
prevails today, under R.A. 6657, is agricultural leasehold tenancy relationship, and all instances of
share tenancy have been automatically converted into leasehold tenancy. In such a relationship, the
tenant’s obligation is simply to pay rentals, not to deliver the landowner’s share. Given this
dispensation, the petitioner’s allegation that the respondents misappropriated the landowner’s share
of the
harvest – as contained in the information – is untenable. Accordingly, the respondents cannot be held
liable under Article 315, paragraph 4, No. 1(b) of the Revised Penal Code.
It is also worth mentioning that in Embuscado v. People,34 this Court merely dwelt on the issue of
whether the accused charged with estafa could be convicted of the crime of theft. Issues of tenancy
vis-a-vis issues of criminal liability of tenants were not addressed. Thus, the dissenting opinion of then
Justice Teodoro R. Padilla in the said case is worth mentioning when he opined that:
It is also my opinion that the petitioner cannot be found guilty of estafa because the mangoes
allegedly misappropriated by him were not given to him in trust or on commission, or for
administration, or under any obligation involving the duty to make delivery of, or to return the same,
as provided for in Art. 315, par. 4, No. 1(b) of the Revised Penal Code. What was entrusted to him for
cultivation was a landholding planted with coconut and mango trees and the mangoes, allegedly
misappropriated by him, were the fruits of the trees planted on the land. Consequently, the action, if
any, should have been for accounting and delivery of the landlord's share in the mangoes sold by the
petitioner.35
In fine, we hold that the trial court erred when it dismissed the criminal case for lack of jurisdiction
over the subject matter. However, we find no necessity to remand the case to the trial court for
further proceedings, as it would only further delay the resolution of this case. We have opted to rule
on the merits of the parties’ contentions, and hereby declare that respondents cannot be held liable
for estafa for their failure to pay the rental on the agricultural land subject of the leasehold.
WHEREFORE, the petition is DENIED. No costs.SO ORDERED.

G.R. No. 142501 December 7, 2001
LEONARDA L. MONSANTO, petitioner,
vs.
JESUS AND TERESITA ZERNA AND COURT OF APPEALS, respondents.
PANGANIBAN, J.:
The filing of a criminal action carries with it the civil liability arising from the offense. However, the
trial court cannot adjudge civil matters that are beyond its competence and powers. Thus, while a
court may have authority to pass upon the criminal liability of the accused, it cannot make any civil
awards that relate to the agrarian relationship of the parties because this matter is beyond its
jurisdiction.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the January 12, 2000
Decision1 and the March 16, 2000 Resolution2 of the Court of Appeals3 (CA) in CA-GR CV No. 55440.
The decretal portion of the challenged Decision reads as follows:
"IN VIEW OF ALL THE FOREGOING, for lack of jurisdiction, the assailed order of September 4,
1996 is hereby RECALLED, SET ASIDE and DECLARED NULL and VOID. The parties, if they so
desire, should refer their dispute before the agrarian authorities. No pronouncement as to
costs."4
The assailed Resolution denied petitioner's Motion for Reconsideration.
The Facts
Spouses Jesus and Teresita Zerna (herein private respondents) were charged with qualified theft in
Criminal Case No. 5896, filed before the Regional Trial Court (RTC) of Lanao del Norte, Branch 6. This
case was later re-raffled and transferred to Branch 4 of the same judicial region. The Information
against private respondents was amended on June 8, 1995. It is reproduced hereunder:
"That on or about February 25, 1995, up to the following month of March, 1995, in the City
of Iligan, Philippines, and within the jurisdiction of this Honorable Court, the said accused,
conspiring and confederating together and mutually helping each other, being then the
overseers of some banana plants on the land owned by one Leonarda Monsanto and
principally devoted to coconut trees, and having access to said land as such, with grave abuse
of confidence reposed [i]n them by the said owner, with intent to gain, did then and there
willfully, unlawfully and feloniously take, steal, harvest and carry away coconuts from the
premises of the said plantation, which the said accused then processed into copra with a
total value of P6,162.50, belonging to said Leonarda Monsanto, without her consent and
against her will, to the damage and prejudice of said Leonarda Monsanto in the aforesaid
sum of P6,162.50, Philippine Currency."5
After trial on the merits, the RTC acquitted them of the charge on July 24, 1996. It held as follows:
"x x x [T]he harvest in the land by the [accused] was done, not for the purpose of stealing the
coconuts or the copra, but more to confirm their claim that they are tenants of the land. In
fact the lack of intent to gain is shown by the fact that they immediately deposited the
proceeds with the barangay captain and did not even claim a share [in] the proceeds of the
copra.
xxx xxx xxx
"In view of the foregoing, the Court finds that the [accused] are not tenants of the land and
the cash deposit [from] the proceeds of the copra with the barangay captain belongs to the
private complainant, Leonarda Monsanto. However, considering the lack of intent of the
[accused] to gain, no criminal liability for theft has been committed by them." 6
It then disposed of the case in the following manner:
"WHEREFORE, the criminal case for qualified theft against the [accused] Jesus Zerna and
Teresita Zerna is hereby ordered dismissed and their bail bond cancelled. The barangay
captain of Buru-un, Iligan City is hereby ordered to deliver the amount of P5,162.50,
representing the proceeds [from the] copra sold by the [accused] to the private complainant,
Leonarda Monsanto."7
The total proceeds of the copra sale alleged in the Information was P6,262.50. However, the awarded
amount was only P5,162.50 which was deposited by private respondents with the barangay secretary
of Buru-un8 on March 2, 1995, after deducting P340 (harvesting cost) and P760 (labor cost). Thus,
petitioner filed a timely Motion for Reconsideration praying that the remaining sum of P1,100 be
returned to her.9
In its September 4, 1996 Order, the trial court granted the Motion and ordered private respondents to
return the amount of P1,100.10 It ruled thus:
"In his motion for reconsideration, the private prosecutor prays that with respect to the civil
aspect of the case, the accused be made to return the amount of P1,100.00 which they
appropriated for themselves from the gross proceeds of the stolen property.
 "Opposing the said motion, counsel for the accused avers that the amount P1,100.00 was Issues
due to the accused as compensation for their labor and equity demands that they [be]
entitled to it. In her Memorandum, petitioner raises the following issues for the Court's consideration:

"The Court has already adjudged that the accused are not guilty of theft and therefore, they I
cannot be considered to have stolen the coconuts. But the motion has raised another issue.
"Is the Regional Trial Court automatically divested of jurisdiction over a criminal case where
"Are the accused entitled to the amount of P1,100.00 as compensation for labor in an agrarian issue is argued as a defense, no matter how flimsy?
harvesting the coconuts and processing these into copra?
II
"The accused plead equity in their favor since [there] appears to be no law applicable to the
incident in question. However, for equity to apply, good faith must exist. "Does the Court of Appeals have any competence to review an RTC Decision which ha[s]
become FINAL as not appealed from, on the basis of a Notice of Appeal which was
"From the findings of this Court, the harvesting of the coconuts and processing of the same SPECIFICALLY and simply directed against an adscititious ORDER issued subsequent to that
into copra were not with the consent of the private complainant. In fact, if the proper Decision?"13
criminal charge were made, which could be unjust vexation, the accused could have been
convicted as their acts certainly vexed the private complainant by their harvesting the This Court's Ruling
coconuts and selling the copra. Therefore, without good faith, since the Court found that
they did the acts complained of in an attempt to confirm their tenancy claim, equity was
The Petition is devoid of merit.
wanting.
First Issue:
"The accused could not be entitled to compensation for their labor done without the consent
DARAB Jurisdiction
of the private complainant since, obviously, there was no contract of labor between them for
the harvesting of the coconuts and processing of these into copra.
Petitioner claims that the RTC was divested of its criminal jurisdiction when the CA annulled and set
aside the September 4, 1996 Order. We disagree.
"Even our laws on quasi-contracts do not allow compensation [for] the accused.
A careful review of the CA Decision shows that it merely set aside the September 4, 1996 RTC Order
"Without equity or any law in their favor, the accused are therefore not entitled to
directing private respondents to pay P1,100 to petitioner. It did not annul the July 24, 1996 RTC
compensation for their vexatious acts."11
Decision acquitting private respondents of qualified theft. Being an acquittal, the judgment became
"final immediately after promulgation and cannot be recalled for correction or amendment." 14
After a review of the records and the pleadings of the parties, the CA, on appeal, ruled that the trial
court had no jurisdiction to order private respondents to pay petitioner the amount of P1,100.
The trial court considered the return of the P1,100 as part of the civil aspect of the criminal case. As
Because the dispute involved an agricultural tenancy relationship, the matter fell within the primary
petitioner did not consent to the harvesting of the coconuts and the processing of the same into
and exclusive original jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).
copra, then there was no basis to award the amount to private respondents. In the words of the trial
It added that inasmuch as the RTC had no jurisdiction to rule on the civil aspect of the case ergo, it had
court, "[w]ithout equity or any law in their favor, the accused are therefore not entitled to
no appellate authority over the matter under a writ of error.
compensation for their vexatious acts."15

The appellate court thus "recalled, set aside and declared null and void" the September 6, 1996 RTC
Order requiring the return of the P1,100 to petitioner.
Hence, this Petition.12
But what is the RTC's basis for ordering the return of P1,100 after it had already acquitted private
respondents of qualified theft? Does the amount constitute civil liability? Let us clarify. Civil liability is
the liability that may arise from (1) crime, (2) breach of contract or (3) tortious act. The first is
governed by the Revised Penal Code; the second and the third, by the Civil Code.16
In the case at bar, there is no question that the RTC had criminal jurisdiction to try private
respondents for the crime of qualified theft. In the normal course, it had authority to determine
whether they had committed the crime charged and to adjudge the corresponding penalty and civil
liability arising therefrom.
On September 4, 1996, the RTC issued an Order requiring private respondents to return the P1,100 to
petitioner on the ground that petitioner had not consented to the harvesting of the coconuts or to
their conversion into copra. Such order appears inconsistent with the trial court's finding that private
respondents had not committed the crime of qualified theft. In People v. Pantig,17 the Court held that
where there is no crime committed, there can be no civil liability that can arise from the criminal
action or as a consequence thereof, as follows:
"Where the civil liability which is included in the criminal action is that arising from and as [a]
consequence of the criminal act, and the defendant was acquitted in the criminal case, no
civil liability arising from the criminal charge could be imposed upon him. The liability of the
defendant for the return of the amount so received by him may not be enforced in the
criminal case but in a civil action for the recovery of the said amount."
The foregoing ruling has been modified by the current Rules. Thus, paragraph 2 of Section 2, Rule 120
of the present Rules of Court provides that "[i]n case the judgment is of acquittal, it shall state
whether the evidence of the prosecution absolutely failed to prove the guilt of the accused or merely
failed to prove his guilt beyond reasonable doubt. In either case, the judgment shall determine if the
act or omission from which the civil liability might arise did not exist."
In the present set of facts, however, the RTC did not have jurisdiction to make a finding on the civil
liability of the accused who were acquitted.
Specifically, we believe that the resolution of the issue of who is entitled to the P1,100 falls squarely
within the jurisdiction of the DARAB. EO 22918 vested the Department of Agrarian Reform (DAR) with
quasi-judicial powers to determine and adjudicate agrarian reform matters, as well as to exercise
exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive original jurisdiction of the Department of Environment and Natural
Resources (DENR) and the Department of Agriculture (DA).
Section 13 of EO 129-A,19 on the other hand, created the Department of Agrarian Reform Adjudication
Board (DARAB), which was specifically tasked with the power and the function to decide agrarian
reform cases. The DARAB, under Section 1, paragraph (a), Rule II of the Revised Rules of Procedure,
exercises primary jurisdiction -- both original and appellate -- to determine and adjudicate all agrarian
disputes, cases, controversies, and matters or incidents involving the implementation of agrarian laws
and their implementing rules and regulations. The provision reads as follows:
"SECTION 1. Primary, Original and Appellate Jurisdiction. The Agrarian Reform Adjudication
Board shall have primary jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the
implementation of the Comprehensive Agrarian Reform Program under Republic Act No.
6657, Executive Order Nos. 229, 228 and 129-A, Republic Act No 3844 as amended by
Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such jurisdiction shall extend over but not
[be] limited to the following:
'a) Cases involving the rights and obligations of persons engaged in the cultivation
and use of agricultural land covered by the Comprehensive Agrarian Reform
Program (CARP) and other agrarian laws.'"
An agrarian dispute refers to any controversy relating to tenurial arrangements -- whether leasehold,
tenancy, stewardship or otherwise -- over lands devoted to agriculture, including (1) disputes
concerning farm workers' associations; or (2) representation of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangement.20
In Estates Development Corporation v. CA,21 the essential elements of a tenancy relationship were
listed in this wise:
"For DARAB to have jurisdiction over a case, there must exist a tenancy relationship between
the parties. In order for a tenancy agreement to take hold over a dispute, it would be
essential to establish all its indispensable elements to wit: 1) the parties are the landowner
and the tenant or agricultural lessee 2) subject matter of the relationship is an agricultural
land 3) there is consent between the parties to the relationship 4) that the purpose of the
relationship is to bring about agricultural production 5) there is personal cultivation on the
part of the tenant or agricultural lessee and 6) the harvest is shared between the landowner
and the tenant or agricultural lessee."
Petitioner claims that private respondents were not her tenants, and that they raised the defense of
tenancy in the criminal case merely to escape prosecution for qualified theft. On the other hand,
private respondents assert that they were petitioner's tenants, as shown by the evidence adduced by
the parties before the RTC.
After a careful review of the records of this case, we hold that an agrarian dispute existed between
the parties. First, the subject of the dispute between them was the taking of coconuts from the
property owned by petitioner. Second, private respondents were the overseers of the property at the
time of the taking of the coconuts, as can be gleaned from the Kasabutan (or Agreement) executed
between them on November 25, 1991, which reads thus:
"I, MRS. LEONARDA L. MONSANTO, am the owner of that land located at Tonggo, Mimbalot,
Buru-un, Iligan City. This JESUS [Z]ERNA, whose wife is TERESITA ZERNA, had requested that
he be allowed to oversee Mrs. Monsanto's Banana plants under the agreement that he (Jesus
Zerna) would be paid for his labor for each banana plant cut in Tonggo."
 "When I (Jesus Zerna) no longer want to oversee or wish to stop overseeing, Mrs. Leonarda "Indeed there are exceptions to the aforecited rule that no question may be raised for the
Monsanto cannot force me to continue in the same way that I cannot force Mrs. Monsanto first time on appeal. Though not raised below, the issue of lack of jurisdiction over the
to hire me if my services are no longer needed."22 subject matter may be considered by the reviewing court, as it may be raised at any stage."

Third, petitioner allowed private respondents to plant coconut, coffee, jackfruit and cacao as shown
by the said Agreement, pertinent portions of which are reproduced hereunder:
"And if I (Jesus Zerna) can plant coconut trees [o]n that land, I will be paid for them according
to their ages. I (Jesus Zerna) am also allowed to plant coffee, jackfruit and cacao, under the
same agreement."23
Finally, a tenurial arrangement exists among herein parties as regards the harvesting of the
agricultural products, as shown by the several remittances made by private respondents to petitioner.
These are substantiated by receipts.24
A tenancy relationship may be established either verbally or in writing, expressly or impliedly.25 In the
present case, undisputed by petitioner is the existence of the Kasabutan, which contradicts her
contention that private respondents were mere overseers. In any event, their "being overseers does
not foreclose their being also tenants," as held in Rupa v. Court of Appeals.26 Evidently, the resolution
of the agrarian dispute between the parties is a matter beyond the legal competence of regular
courts.
To repeat, petitioner is claiming the questioned amount of P1,100 as the balance of the proceeds
from the copra sale, which the RTC awarded her. Private respondents contend that this P1,100 is their
compensation, pursuant to their tenurial arrangement with her. Since this amount is inextricably
intertwined with the resolution of the agrarian dispute between them, we believe that the Court of
Appeals did not commit any reversible error in holding that it was DARAB that had jurisdiction to pass
upon this civil matter.
The reason is that jurisdiction over a subject matter is conferred by law, not by the courts or the
parties themselves. "Where the court itself clearly has no jurisdiction over the subject matter or the
nature of the action, the invocation of this defense may be done at any time. It is neither for the
courts nor the parties to violate or disregard that rule, let alone to confer that jurisdiction, this matter
being legislative in character. x x x."30
In the present case, the RTC had jurisdiction to decide the criminal case against private respondents;
however, it acted beyond its jurisdiction when it effectively ruled on the agricultural tenancy
relationship between the parties. Private respondents had raised before it the issue of tenancy by way
of defense, and apparently interwoven with the agrarian dispute, were the acts complained of by
petitioner: the harvesting of the coconuts, their conversion into copra and, later, the sale thereof.
Thus, the RTC should have confined itself to the determination of whether private respondents were
guilty of qualified theft, instead of automatically awarding the proceeds of the copra sale to
petitioner. Such matter, being an offshoot of the agrarian dispute between the parties, is cognizable
exclusively by the DARAB.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution are AFFIRMED.
Costs against petitioner.
SO ORDERED.

Second Issue:
Lack of Jurisdiction Not Waived

Petitioner argues that jurisdiction was not raised as an issue in the appeal ergo, the CA should not
have ruled on it.

We disagree. As a general rule, an appeal is limited to a review of the specific legal issues raised in the
petition by the parties. However, even if not raised, an error in jurisdiction may be taken up.27 Lack of
jurisdiction over the subject matter may be raised at any stage of the proceedings -- even on appeal.28
In Del Rosario v. Mendoza,29 we have ruled as follows: