G.R. No. 103302 August 12, 1993 petitioners from proceeding with the development of the subdivision.
ceeding with the development of the subdivision. Petitioners then moved to dismiss the
NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS
CORP., Petitioners, vs. DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T.
LEONG and DIR. WILFREDO LEANO, DAR REGION IV, Respondents.
Lino M. Patajo for petitioners.
The Solicitor General for respondents.
BELLOSILLO, J.:
Are lands already classified for residential, commercial or industrial use, as approved by the Housing and Land
Use Regulatory Board and its precursor agencies prior to 15 June 1988, covered by R.A. 6657, otherwise known as
the Comprehensive Agrarian Reform Law of 1988. This is the pivotal issue in this petition for certiorari assailing
the Notice of Coverage of the Department of Agrarian Reform over parcels of land already reserved as townsite
areas before the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels of land located
in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and 2.7080 hectares, or a total of
125.0078 hectares, and embraced in Transfer Certificate of Title No. 31527 of the Register of Deeds of the
Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located in the
Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the population overspill in the
metropolis which were designated as the Lungsod Silangan Townsite. The NATALIA properties are situated
within the areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing subdivisions within the
reservation, petitioner Estate Developers and Investors Corporation (EDIC, for brevity), as developer of
NATALIA properties, applied for and was granted preliminary approval and locational clearances by the Human
Settlements Regulatory Commission. The necessary permit for Phase I of the subdivision project, which consisted
of 13.2371 hectares, was issued sometime in 1982; for Phase II, with an area of 80,000 hectares, on 13 October
1983; and for Phase III, which consisted of the remaining 31.7707 hectares, on 25 April 1986.  Petitioner were
likewise issued development permits after complying with the requirements. Thus the NATALIA properties later
became the Antipolo Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of 1988" (CARL,
for brevity), went into effect. Conformably therewith, respondent Department of Agrarian Reform (DAR, for
brevity), through its Municipal Agrarian Reform Officer, issued on 22 November 1990 a Notice of Coverage on
the undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly 90.3307 hectares.
NATALIA immediately registered its objection to the notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice wrote him
requesting the cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for the brevity),
filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to restrain petitioners from
developing areas under cultivation by SAMBA members.  The Regional Adjudicator temporarily restrained
complaint; it was denied. Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary
Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB); however, on 16
December 1991 the DARAB merely remanded the case to the Regional Adjudicator for further proceedings.
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set aside the
Notice of Coverage. Neither respondent Secretary nor respondent Director took action on the protest-letters, thus
compelling petitioners to institute this proceeding more than a year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including underdeveloped
portions of the Antipolo Hills Subdivision within the coverage of the CARL. They argue that NATALIA
properties already ceased to be agricultural lands when they were included in the areas reserved by presidential fiat
for the townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They maintain that the
permits granted petitioners were not valid and binding because they did not comply with the implementing
Standards, Rules and Regulations of P.D. 957, otherwise known as "The Subdivision and Condominium Buyers
Protective Decree," in that no application for conversion of the NATALIA lands from agricultural residential was
ever filed with the DAR. In other words, there was no valid conversion. Moreover, public respondents allege that
the instant petition was prematurely filed because the case instituted by SAMBA against petitioners before the
DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a consequence, that petitioners failed
to fully exhaust administrative remedies available to them before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational Clearances as
well as the Development Permits granted petitioners for Phases I, II and III of the Antipolo Hills Subdivision
reveals that contrary to the claim of public respondents, petitioners NATALIA and EDIC did in fact comply with
all the requirements of law.
Petitioners first secured favorable recommendations from the Lungsod Silangan Development Corporation, the
agency tasked to oversee the implementation of the development of the townsite reservation, before applying for
the necessary permits from the Human Settlements Regulatory Commission. And, in all permits granted to
petitioners, the Commission stated invariably therein that the applications were in "conformance" or
"conformity" or "conforming" with the implementing Standards, Rules and Regulations of P.D. 957. Hence, the
argument of public respondents that not all of the requirements were complied with cannot be sustained.
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval from DAR. The
NATALIA properties were within the areas set aside for the Lungsod Silangan Reservation. Since Presidential
Proclamation No. 1637 created the townsite reservation for the purpose of providing additional housing to the
burgeoning population of Metro Manila, it in effect converted for residential use what were erstwhile agricultural
lands provided all requisites were met. And, in the case at bar, there was compliance with all relevant rules and
requirements. Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the requirements prescribed by
P.D. 957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and condominiums in
general. On the other hand, Presidential Proclamation No. 1637 referred only to the Lungsod Silangan
Reservation, which makes it a special law. It is a basic tenet in statutory construction that between a general law
and a special law, the latter prevails.  residential use prior to its effectivity.
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the Antipolo Hills
Subdivision which have already been developed. Of course, this is contrary to its earlier position that there was no
valid conversion. The applications for the developed and undeveloped portions of subject subdivision were
similarly situated. Consequently, both did not need prior DAR approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the CARL
shall "cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural
lands." As to what constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as
defined in this Act and not classified as mineral, forest, residential, commercial or industrial land." The
deliberations of the Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands
which are "arable and suitable agricultural lands" and "do not include commercial, industrial and residential
lands."
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
language be considered as "agricultural lands." These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost housing subdivision, albeit at a snail's pace. This can readily be
gleaned from the fact that SAMBA members even instituted an action to restrain petitioners from continuing with
such development. The enormity of the resources needed for developing a subdivision may have delayed its
completion but this does not detract from the fact that these lands are still residential lands and outside the ambit
of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than
respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to
Non-Agricultural Uses, DAR itself defined "agricultural land" thus -
. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as
mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies,
and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory
Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or
industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. It
was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of
CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted in an
Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
part, having been reserved for townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No.
6657. " Not being deemed "agricultural lands," they are outside the coverage of CARL.
Anent the argument that there was failure to exhaust administrative remedies in the instant petition, suffice it to
say that the issues raised in the case filed by SAMBA members differ from those of petitioners. The former
involve possession; the latter, the propriety of including under the operation of CARL lands already converted for
Besides, petitioners were not supposed to wait until public respondents acted on their letter-protests, this after
sitting it out for almost a year. Given the official indifference, which under the circumstances could have
continued forever, petitioners had to act to assert and protect their interests.
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in issuing the
assailed Notice of Coverage of 22 November 1990 by of lands over which they no longer have jurisdiction.
WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November 1990 by virtue
of which undeveloped portions of the Antipolo Hills Subdivision were placed under CARL coverage is hereby
SET ASIDE.
SO ORDERED.
G.R. No. 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," 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." 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."
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.
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
and Manotok v. National Food Authority. 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, Gonzales v. Estrella, and Association of Rice and Corn Producers of the Philippines, Inc. v.
The National Land Reform Council.  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. 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 Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and
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. 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.
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. 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, 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. 
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with constitutional issues
like the ones now before it, it will not hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution as God and its conscience give it the
light to probe its meaning and discover its purpose. Personal motives and political considerations are irrelevancies
that cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make the hammer
fall, and heavily," to use Justice Laurel's pithy language, where the acts of these departments, or of any public
official, betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that -
... when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the
other departments; it does not in reality nullify or invalidate an act of the Legislature, but only asserts the solemn
and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the
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.
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. 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.
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. 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.
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. 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.
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.
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, 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, 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. 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."
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.
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.
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. 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. 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. 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. 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. 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:
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." 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, 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. It has been repeatedly stressed by this Court that the measure is not the taker's gain but the owner's
loss. 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.
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, 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." 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 resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for property under expropriation should be
either the assessment of the property by the government or the sworn valuation thereof by the owner, whichever
was lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under this
Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power to determine the
just compensation for the property, following the applicable decrees, its task would be relegated to simply stating
the lower value of the property as declared either by the owner or the assessor. As a necessary consequence, it
would be useless for the court to appoint commissioners under Rule 67 of the Rules of Court. Moreover, the need
to satisfy the due process clause in the taking of private property is seemingly fulfilled since it cannot be said that
a judicial proceeding was not had before the actual taking. However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or charade as the court has only to choose between the
valuation of the owner and that of the assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or fair. Even a grade school pupil could
substitute for the judge insofar as the determination of constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of whether the courts under P.D. No.
1533, which contains the same provision on just compensation as its predecessor decrees, still have the power and
authority to determine just compensation, independent of what is stated by the decree and to this effect, to appoint
commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the valuation in the tax documents is
unfair or wrong. And it is repulsive to the basic concepts of justice and fairness to allow the haphazard work of a
minor bureaucrat or clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro and con have been presented,
and after all factors and considerations essential to a fair and just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that
rendered the challenged decrees constitutionally objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit evidence
on the real value of the property. But more importantly, the determination of the just compensation by the DAR is
not by any means final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly
provides:
Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final
determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the
courts of justice will still have the right to review with finality the said determination in the exercise of what is
admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. - The LBP shall compensate the landowner in such amount as
may be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in
Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just
compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned - Twenty-five percent (25%)
cash, the balance to be paid in government financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares - Thirty percent (30%) cash, the balance
to be paid in government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below - Thirty-five percent (35%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets or other
qualified investments in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of the bonds
shall mature every year from the date of issuance until the tenth (10th) year: Provided, That should the landowner
choose to forego the cash portion, whether in full or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his successors-in- interest or
his assigns, up to the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the government, including assets under the Asset Privatization
Program and other assets foreclosed by government financial institutions in the same province or region where the
lands for which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or controlled corporations or shares of stock owned by
the government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution, provided the proceeds of the loans shall be
invested in an economic enterprise, preferably in a small and medium- scale industry, in the same province or
region as the land for which the bonds are paid;
(v) Payment for various taxes and fees to government: Provided, That the use of these bonds for these purposes
will be limited to a certain percentage of the outstanding balance of the financial instruments; Provided, further,
That the PARC shall determine the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder in government universities,
colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional insofar as it
requires the owners of the expropriated properties to accept just compensation therefor in less than money, which
is the only medium of payment allowed. In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property expropriated is entitled to a just
compensation, which should be neither more nor less, whenever it is possible to make the assessment, than the
money equivalent of said property. Just compensation has always been understood to be the just and complete
equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the
expropriation. (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 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.(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.
"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. (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. library
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.
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.
... 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. (Emphasis supplied.)
In Kennedy v. Indianapolis, 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, 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, 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, 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. 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 vs.
The CARP Law and the other enactments also involved in these cases have been the subject of bitter attack from
those who point to the shortcomings of these measures and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be continuously re-examined and rehoned, that they may be
sharper instruments for the better protection of the farmer's rights. But we have to start somewhere. In the pursuit
of agrarian reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected
difficulties. This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as we venture forward, and, if
necessary, by our own mistakes. We cannot expect perfection although we should strive for it by all means.
Meantime, we struggle as best we can in freeing the farmer from the iron shackles that have unconscionably, and
for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform program are
removed, to clear the way for the true freedom of the farmer. We may now glimpse the day he will be released not
only from want but also from the exploitation and disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the farm on which he toils will be his farm. It will
be his portion of the Mother Earth that will give him not only the staff of life but also the joy of living. And where
once it bred for him only deep despair, now can he see in it the fruition of his hopes for a more fulfilling future.
Now at last can he banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the
music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED against all the
constitutional objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full payment of compensation to
their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall enjoy the retention
rights granted by R.A. No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without pronouncement as to costs.
SO ORDERED.
Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin,
Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., .
G.R. No. 171101               July 5, 2011
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING
CORPORATION, Petitioners-in-Intervention,
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER
PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA
MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI,
and JULIO SUNIGA and his SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC.
and WINDSOR ANDAYA, Respondents.
 DECISION
VELASCO, JR., J.:
"Land for the landless," a shibboleth the landed gentry doubtless has received with much misgiving, if not
resistance, even if only the number of agrarian suits filed serves to be the norm. Through the years, this battle cry
and root of discord continues to reflect the seemingly ceaseless discourse on, and great disparity in, the
distribution of land among the people, "dramatizing the increasingly urgent demand of the dispossessed x x x for a
plot of earth as their place in the sun." As administrations and political alignments change, policies advanced, and
agrarian reform laws enacted, the latest being what is considered a comprehensive piece, the face of land reform
varies and is masked in myriads of ways. The stated goal, however, remains the same: clear the way for the true
freedom of the farmer.
Land reform, or the broader term "agrarian reform," has been a government policy even before the Commonwealth
era. In fact, at the onset of the American regime, initial steps toward land reform were already taken to address
social unrest. Then, under the 1935 Constitution, specific provisions on social justice and expropriation of landed
estates for distribution to tenants as a solution to land ownership and tenancy issues were incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed, setting in motion the expropriation of
all tenanted estates.
On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was enacted, abolishing share tenancy and
converting all instances of share tenancy into leasehold tenancy. RA 3844 created the Land Bank of the
Philippines (LBP) to provide support in all phases of agrarian reform.
As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship in rice and corn, supposedly to be
accomplished by expropriating lands in excess of 75 hectares for their eventual resale to tenants. The law,
however, had this restricting feature: its operations were confined mainly to areas in Central Luzon, and its
implementation at any level of intensity limited to the pilot project in Nueva Ecija.
Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring the entire country a land reform
area, and providing for the automatic conversion of tenancy to leasehold tenancy in all areas. From 75 hectares,
the retention limit was cut down to seven hectares.
Barely a month after declaring martial law in September 1972, then President Ferdinand Marcos issued
Presidential Decree No. 27 (PD 27) for the "emancipation of the tiller from the bondage of the soil." Based on this
issuance, tenant-farmers, depending on the size of the landholding worked on, can either purchase the land they
tilled or shift from share to fixed-rent leasehold tenancy. While touted as "revolutionary," the scope of the agrarian
reform program PD 27 enunciated covered only tenanted, privately-owned rice and corn lands.
Then came the revolutionary government of then President Corazon C. Aquino and the drafting and eventual
ratification of the 1987 Constitution. Its provisions foreshadowed the establishment of a legal framework for the
formulation of an expansive approach to land reform, affecting all agricultural lands and covering both tenant-
farmers and regular farmworkers.
So it was that Proclamation No. 131, Series of 1987, was issued instituting a comprehensive agrarian reform
program (CARP) to cover all agricultural lands, regardless of tenurial arrangement and commodity produced, as
provided in the Constitution.
On July 22, 1987, Executive Order No. 229 (EO 229) was issued providing, as its title indicates, the mechanisms
for CARP implementation. It created the Presidential Agrarian Reform Council (PARC) as the highest policy-
making body that formulates all policies, rules, and regulations necessary for the implementation of CARP.
On June 15, 1988, RA 6657 or the Comprehensive Agrarian Reform Law of 1988, also known as CARL or the
CARP Law, took effect, ushering in a new process of land classification, acquisition, and distribution. As to be
expected, RA 6657 met stiff opposition, its validity or some of its provisions challenged at every possible
turn. Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform stated the
observation that the assault was inevitable, the CARP being an untried and untested project, "an experiment
[even], as all life is an experiment," the Court said, borrowing from Justice Holmes.
The Case
In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary injunctive relief,
petitioner Hacienda Luisita, Inc. (HLI) assails and seeks to set aside PARC Resolution No. 2005-32-01 and
Resolution No. 2006-34-01 issued on December 22, 2005 and May 3, 2006, respectively, as well as the
implementing Notice of Coverage dated January 2, 2006 (Notice of Coverage).
The Facts
At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once a 6,443-hectare mixed agricultural-
industrial-residential expanse straddling several municipalities of Tarlac and owned by Compañia General de
Tabacos de Filipinas (Tabacalera). In 1957, the Spanish owners of Tabacalera offered to sell Hacienda Luisita as
well as their controlling interest in the sugar mill within the hacienda, the Central Azucarera de Tarlac (CAT), as
an indivisible transaction. The Tarlac Development Corporation (Tadeco), then owned and/or controlled by the
Jose Cojuangco, Sr. Group, was willing to buy. As agreed upon, Tadeco undertook to pay the purchase price for
Hacienda Luisita in pesos, while that for the controlling interest in CAT, in US dollars.
To facilitate the adverted sale-and-purchase package, the Philippine government, through the then Central Bank of
the Philippines, assisted the buyer to obtain a dollar loan from a US bank. Also, the Government Service Insurance
System (GSIS) Board of Trustees extended on November 27, 1957 a PhP 5.911 million loan in favor of Tadeco to
pay the peso price component of the sale. One of the conditions contained in the approving GSIS Resolution No.
3203, as later amended by Resolution No. 356, Series of 1958, reads as follows:
That the lots comprising the Hacienda Luisita shall be subdivided by the applicant-corporation and sold at cost to
the tenants, should there be any, and whenever conditions should exist warranting such action under the provisions
of the Land Tenure Act;
As of March 31, 1958, Tadeco had fully paid the purchase price for the acquisition of Hacienda Luisita and
Tabacalera’s interest in CAT.
The details of the events that happened next involving the hacienda and the political color some of the parties
embossed are of minimal significance to this narration and need no belaboring. Suffice it to state that on May 7,
1980, the martial law administration filed a suit before the Manila Regional Trial Court (RTC) against Tadeco, et
al., for them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR, now the Department of
Agrarian Reform [DAR]) so that the land can be distributed to farmers at cost. Responding, Tadeco or its owners
alleged that Hacienda Luisita does not have tenants, besides which sugar lands––of which the hacienda
consisted––are not covered by existing agrarian reform legislations. As perceived then, the government
commenced the case against Tadeco as a political message to the family of the late Benigno Aquino, Jr.
Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR.
Therefrom, Tadeco appealed to the Court of Appeals (CA).
On March 17, 1988, the Office of the Solicitor General (OSG) moved to withdraw the government’s case against
Tadeco, et al. By Resolution of May 18, 1988, the CA dismissed the case the Marcos government initially
instituted and won against Tadeco, et al. The dismissal action was, however, made subject to the obtention by
Tadeco of the PARC’s approval of a stock distribution plan (SDP) that must initially be implemented after such
approval shall have been secured. The appellate court wrote:
The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x x governmental agencies
concerned in moving for the dismissal of the case subject, however, to the following conditions embodied in the
letter dated April 8, 1988 (Annex 2) of the Secretary of the [DAR] quoted, as follows:
1. Should TADECO fail to obtain approval of the stock distribution plan for failure to comply with all the
requirements for corporate landowners set forth in the guidelines issued by the [PARC]: or
2. If such stock distribution plan is approved by PARC, but TADECO fails to initially implement it.
xxxx
WHEREFORE, the present case on appeal is hereby dismissed without prejudice, and should be revived if any of
the conditions as above set forth is not duly complied with by the TADECO.
Markedly, Section 10 of EO 229 allows corporate landowners, as an alternative to the actual land transfer scheme
of CARP, to give qualified beneficiaries the right to purchase shares of stocks of the corporation under a stock
ownership arrangement and/or land-to-share ratio.
Like EO 229, RA 6657, under the latter’s Sec. 31, also provides two (2) alternative modalities, i.e., land or stock
transfer, pursuant to either of which the corporate landowner can comply with CARP, but subject to well-defined
conditions and timeline requirements. Sec. 31 of RA 6657 provides:
SEC. 31. Corporate Landowners. Corporate landowners may voluntarily transfer ownership over their agricultural
landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to qualified beneficiaries x x x.
Upon certification by the DAR, corporations owning agricultural lands may give their qualified beneficiaries the
right to purchase such proportion of the capital stock of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the company’s total assets, under such terms and
conditions as may be agreed upon by them. In no case shall the compensation received by the workers at the time
the shares of stocks are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries under this section shall be deemed to have complied with the
provisions of this Act: Provided, That the following conditions are complied with:
(a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and other financial
benefits, the books of the corporation or association shall be subject to periodic audit by certified public
accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured
of at least one (1) representative in the board of directors, or in a management or executive committee, if one
exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other
shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless said transaction
is in favor of a qualified and registered beneficiary within the same corporation.
If within two (2) years from the approval of this Act, the [voluntary] land or stock transfer envisioned above is not
made or realized or the plan for such stock distribution approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation shall be subject to the compulsory coverage of this Act.
(Emphasis added.)
Vis-à-vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued Administrative Order No. 10, Series
of 1988 (DAO 10), entitled Guidelines and Procedures for Corporate Landowners Desiring to Avail Themselves
of the Stock Distribution Plan under Section 31 of RA 6657.
From the start, the stock distribution scheme appeared to be Tadeco’s preferred option, for, on August 23, 1988, it
organized a spin-off corporation, HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this
purpose, Tadeco assigned and conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-
related properties of Hacienda Luisita in exchange for HLI shares of stock.
Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr., and Paz C. Teopaco were the
incorporators of HLI.
To accommodate the assets transfer from Tadeco to HLI, the latter, with the Securities and Exchange
Commission’s (SEC’s) approval, increased its capital stock on May 10, 1989 from PhP 1,500,000 divided into
1,500,000 shares with a par value of PhP 1/share to PhP 400,000,000 divided into 400,000,000 shares also with
par value of PhP 1/share, 150,000,000 of which were to be issued only to qualified and registered beneficiaries of
the CARP, and the remaining 250,000,000 to any stockholder of the corporation.
As appearing in its proposed SDP, the properties and assets of Tadeco contributed to the capital stock of HLI, as
appraised and approved by the SEC, have an aggregate value of PhP 590,554,220, or after deducting the total
liabilities of the farm amounting to PhP 235,422,758, a net value of PhP 355,531,462. This translated to
355,531,462 shares with a par value of PhP 1/share.
On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda Luisita
signified in a referendum their acceptance of the proposed HLI’s Stock Distribution Option Plan. On May 11,
1989, the Stock Distribution Option Agreement (SDOA), styled as a Memorandum of Agreement (MOA), was
entered into by Tadeco, HLI, and the 5,848 qualified FWBs and attested to by then DAR Secretary Philip Juico.
The SDOA embodied the basis and mechanics of the SDP, which would eventually be submitted to the PARC for
approval. In the SDOA, the parties agreed to the following:
1. The percentage of the value of the agricultural land of Hacienda Luisita (P196,630,000.00) in relation to the
total assets (P590,554,220.00) transferred and conveyed to the SECOND PARTY [HLI] is 33.296% that,
under the law, is the proportion of the outstanding capital stock of the SECOND PARTY, which is
 P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per share, that has to be distributed to the
THIRD PARTY [FWBs] under the stock distribution plan, the said 33.296% thereof being P118,391,976.85
or 118,391,976.85 shares.
2. The qualified beneficiaries of the stock distribution plan shall be the farmworkers who appear in the annual
payroll, inclusive of the permanent and seasonal employees, who are regularly or periodically employed by the
SECOND PARTY.
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY shall arrange with the FIRST
PARTY [Tadeco] the acquisition and distribution to the THIRD PARTY on the basis of number of days
worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire
block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY.
4.The SECOND PARTY shall guarantee to the qualified beneficiaries of the [SDP] that every year they will
receive on top of their regular compensation, an amount that approximates the equivalent of three (3%) of the
total gross sales from the production of the agricultural land, whether it be in the form of cash dividends or
incentive bonuses or both.
5. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from the
FIRST PARTY and distributed to the THIRD PARTY, FIRST PARTY shall execute at the beginning of each
fiscal year an irrevocable proxy, valid and effective for one (1) year, in favor of the farmworkers appearing as
shareholders of the SECOND PARTY at the start of said year which will empower the THIRD PARTY or
their representative to vote in stockholders’ and board of directors’ meetings of the SECOND PARTY
convened during the year the entire 33.296% of the outstanding capital stock of the SECOND PARTY
earmarked for distribution and thus be able to gain such number of seats in the board of directors of the
SECOND PARTY that the whole 33.296% of the shares subject to distribution will be entitled to.
the outstanding capital stock of the HLI equivalent to 118,391,976.85 shares of stock with a par value of PhP
1/share.
Subsequently, HLI submitted to DAR its SDP, designated as "Proposal for Stock Distribution under
C.A.R.P.," which was substantially based on the SDOA.
Notably, in a follow-up referendum the DAR conducted on October 14, 1989, 5,117 FWBs, out of 5,315 who
participated, opted to receive shares in HLI. One hundred thirty-two (132) chose actual land distribution.
After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec. Defensor-Santiago) addressed a
letter dated November 6, 1989 to Pedro S. Cojuangco (Cojuangco), then Tadeco president, proposing that the SDP
be revised, along the following lines:
1. That over the implementation period of the [SDP], [Tadeco]/HLI shall ensure that there will be no dilution
in the shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of the percentage shareholdings of
the [FWBs], i.e., that the 33% shareholdings of the [FWBs] will be maintained at any given time;
3. That the mechanics for distributing the stocks be explicitly stated in the [MOA] signed between the
[Tadeco], HLI and its [FWBs] prior to the implementation of the stock plan;
4. That the stock distribution plan provide for clear and definite terms for determining the actual number of
seats to be allocated for the [FWBs] in the HLI Board;
5. That HLI provide guidelines and a timetable for the distribution of homelots to qualified [FWBs]; and

6. In addition, the SECOND PARTY shall within a reasonable time subdivide and allocate for free and 6. That the 3% cash dividends mentioned in the [SDP] be expressly provided for [in] the MOA.
without charge among the qualified family-beneficiaries residing in the place where the agricultural land is
situated, residential or homelots of not more than 240 sq.m. each, with each family-beneficiary being assured
of receiving and owning a homelot in the barangay where it actually resides on the date of the execution of this In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI explained that the proposed
Agreement. revisions of the SDP are already embodied in both the SDP and MOA. Following that exchange, the PARC, under
then Sec. Defensor-Santiago, by Resolution No. 89-12-2 dated November 21, 1989, approved the SDP of
Tadeco/HLI.
7. This Agreement is entered into by the parties in the spirit of the (C.A.R.P.) of the government and with the
supervision of the [DAR], with the end in view of improving the lot of the qualified beneficiaries of the [SDP]
and obtaining for them greater benefits. (Emphasis added.) At the time of the SDP approval, HLI had a pool of farmworkers, numbering 6,296, more or less, composed of
permanent, seasonal and casual master list/payroll and non-master list members.
As may be gleaned from the SDOA, included as part of the distribution plan are: (a) production-sharing equivalent
to three percent (3%) of gross sales from the production of the agricultural land payable to the FWBs in cash From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs:
dividends or incentive bonus; and (b) distribution of free homelots of not more than 240 square meters each to
family-beneficiaries. The production-sharing, as the SDP indicated, is payable "irrespective of whether [HLI] (a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe benefits
makes money or not," implying that the benefits do not partake the nature of dividends, as the term is ordinarily
understood under corporation law.
(b) 59 million shares of stock distributed for free to the FWBs;

While a little bit hard to follow, given that, during the period material, the assigned value of the agricultural land
(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;
in the hacienda was PhP 196.63 million, while the total assets of HLI was PhP 590.55 million with net assets of
PhP 355.53 million, Tadeco/HLI would admit that the ratio of the land-to-shares of stock corresponds to 33.3% of
 (d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 hectares of converted agricultural
land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares at 80 million pesos
(P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free hospitalization/medical/maternity services, old
age/death benefits and no interest bearing salary/educational loans and rice sugar accounts.
Two separate groups subsequently contested this claim of HLI.
On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to
industrial use, pursuant to Sec. 65 of RA 6657, providing:
SEC. 65. Conversion of Lands. After the lapse of five (5) years from its award, when the land ceases to be
economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial purposes, the DAR, upon application of the
beneficiary or the landowner, with due notice to the affected parties, and subject to existing laws, may authorize
the reclassification, or conversion of the land and its disposition: Provided, That the beneficiary shall have fully
paid its obligation.
The application, according to HLI, had the backing of 5,000 or so FWBs, including respondent Rene Galang, and
Jose Julio Suniga, as evidenced by the Manifesto of Support they signed and which was submitted to the
DAR. After the usual processing, the DAR, thru then Sec. Ernesto Garilao, approved the application on August 14,
1996, per DAR Conversion Order No. 030601074-764-(95), Series of 1996, subject to payment of three percent
(3%) of the gross selling price to the FWBs and to HLI’s continued compliance with its undertakings under the
SDP, among other conditions.
On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary Holdings,
Inc. (Centennary), ceded 300 hectares of the converted area to the latter. Consequently, HLI’s Transfer Certificate
of Title (TCT) No. 287910 was canceled and TCT No. 292091 was issued in the name of Centennary. HLI
transferred the remaining 200 hectares covered by TCT No. 287909 to Luisita Realty Corporation (LRC) in two
separate transactions in 1997 and 1998, both uniformly involving 100 hectares for PhP 250 million each.
Centennary, a corporation with an authorized capital stock of PhP 12,100,000 divided into 12,100,000 shares and
wholly-owned by HLI, had the following incorporators: Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa,
Ernesto G. Teopaco, and Bernardo R. Lahoz.
Subsequently, Centennary sold the entire 300 hectares to Luisita Industrial Park Corporation (LIPCO) for PhP 750
million. The latter acquired it for the purpose of developing an industrial complex. As a result, Centennary’s TCT
No. 292091 was canceled to be replaced by TCT No. 310986 in the name of LIPCO.
From the area covered by TCT No. 310986 was carved out two (2) parcels, for which two (2) separate titles were
issued in the name of LIPCO, specifically: (a) TCT No. 365800 and (b) TCT No. 365801, covering 180 and four
hectares, respectively. TCT No. 310986 was, accordingly, partially canceled.
Later on, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO transferred the parcels covered by
its TCT Nos. 365800 and 365801 to the Rizal Commercial Banking Corporation (RCBC) by way of dacion en
pago in payment of LIPCO’s PhP 431,695,732.10 loan obligations. LIPCO’s titles were canceled and new ones,
TCT Nos. 391051 and 391052, were issued to RCBC.
Apart from the 500 hectares alluded to, another 80.51 hectares were later detached from the area coverage of
Hacienda Luisita which had been acquired by the government as part of the Subic-Clark-Tarlac Expressway
(SCTEX) complex. In absolute terms, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded to
HLI.
Such, in short, was the state of things when two separate petitions, both undated, reached the DAR in the latter
part of 2003. In the first, denominated as Petition/Protest, respondents Jose Julio Suniga and Windsor Andaya,
identifying themselves as head of the Supervisory Group of HLI (Supervisory Group), and 60 other supervisors
sought to revoke the SDOA, alleging that HLI had failed to give them their dividends and the one percent (1%)
share in gross sales, as well as the thirty-three percent (33%) share in the proceeds of the sale of the converted 500
hectares of land. They further claimed that their lives have not improved contrary to the promise and rationale for
the adoption of the SDOA. They also cited violations by HLI of the SDOA’s terms. They prayed for a
renegotiation of the SDOA, or, in the alternative, its revocation.
Revocation and nullification of the SDOA and the distribution of the lands in the hacienda were the call in the
second petition, styled as Petisyon (Petition). The Petisyon was ostensibly filed on December 4, 2003 by Alyansa
ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA), where the handwritten name of respondents
Rene Galang as "Pangulo AMBALA" and Noel Mallari as "Sec-Gen. AMBALA" appeared. As alleged, the
petition was filed on behalf of AMBALA’s members purportedly composing about 80% of the 5,339 FWBs of
Hacienda Luisita.
HLI would eventually answer the petition/protest of the Supervisory Group. On the other hand, HLI’s answer to
the AMBALA petition was contained in its letter dated January 21, 2005 also filed with DAR.
Meanwhile, the DAR constituted a Special Task Force to attend to issues relating to the SDP of HLI. Among other
duties, the Special Task Force was mandated to review the terms and conditions of the SDOA and PARC
Resolution No. 89-12-2 relative to HLI’s SDP; evaluate HLI’s compliance reports; evaluate the merits of the
petitions for the revocation of the SDP; conduct ocular inspections or field investigations; and recommend
appropriate remedial measures for approval of the Secretary.
After investigation and evaluation, the Special Task Force submitted its "Terminal Report: Hacienda Luisita,
Incorporated (HLI) Stock Distribution Plan (SDP) Conflict" dated September 22, 2005 (Terminal Report), finding
that HLI has not complied with its obligations under RA 6657 despite the implementation of the SDP. The
Terminal Report and the Special Task Force’s recommendations were adopted by then DAR Sec. Nasser
Pangandaman (Sec. Pangandaman).
Subsequently, Sec. Pangandaman recommended to the PARC Executive Committee (Excom) (a) the
recall/revocation of PARC Resolution No. 89-12-2 dated November 21, 1989 approving HLI’s SDP; and (b) the
acquisition of Hacienda Luisita through the compulsory acquisition scheme. Following review, the PARC
Validation Committee favorably endorsed the DAR Secretary’s recommendation afore-stated.
On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01, disposing as follows:
NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY RESOLVED, to approve and
confirm the recommendation of the PARC Executive Committee adopting in toto the report of the PARC ExCom
Validation Committee affirming the recommendation of the DAR to recall/revoke the SDO plan of Tarlac
Development Corporation/Hacienda Luisita Incorporated.
RESOLVED, further, that the lands subject of the recalled/revoked TDC/HLI SDO plan be forthwith placed under
the compulsory coverage or mandated land acquisition scheme of the [CARP].
APPROVED.
A copy of Resolution No. 2005-32-01 was served on HLI the following day, December 23, without any copy of
the documents adverted to in the resolution attached. A letter-request dated December 28, 2005 for certified copies
of said documents was sent to, but was not acted upon by, the PARC secretariat.
Therefrom, HLI, on January 2, 2006, sought reconsideration. On the same day, the DAR Tarlac provincial office
issued the Notice of Coverage which HLI received on January 4, 2006.
Its motion notwithstanding, HLI has filed the instant recourse in light of what it considers as the DAR’s hasty
placing of Hacienda Luisita under CARP even before PARC could rule or even read the motion for
reconsideration. As HLI later rued, it "can not know from the above-quoted resolution the facts and the law upon
which it is based."
PARC would eventually deny HLI’s motion for reconsideration via Resolution No. 2006-34-01 dated May 3,
2006.
By Resolution of June 14, 2006, the Court, acting on HLI’s motion, issued a temporary restraining
order, enjoining the implementation of Resolution No. 2005-32-01 and the notice of coverage.
On July 13, 2006, the OSG, for public respondents PARC and the DAR, filed its Comment on the petition.
On December 2, 2006, Noel Mallari, impleaded by HLI as respondent in his capacity as "Sec-Gen. AMBALA,"
filed his Manifestation and Motion with Comment Attached dated December 4, 2006 (Manifestation and
Motion). In it, Mallari stated that he has broken away from AMBALA with other AMBALA ex-members and
formed Farmworkers Agrarian Reform Movement, Inc. (FARM). Should this shift in alliance deny him standing,
Mallari also prayed that FARM be allowed to intervene.
As events would later develop, Mallari had a parting of ways with other FARM members, particularly would-be
intervenors Renato Lalic, et al. As things stand, Mallari returned to the AMBALA fold, creating the AMBALA-
Noel Mallari faction and leaving Renato Lalic, et al. as the remaining members of FARM who sought to intervene.
On January 10, 2007, the Supervisory Group and the AMBALA-Rene Galang faction submitted their
Comment/Opposition dated December 17, 2006.
On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File and Admit Attached Petition-In-
Intervention dated October 18, 2007. LIPCO later followed with a similar motion. In both motions, RCBC and
LIPCO contended that the assailed resolution effectively nullified the TCTs under their respective names as the
properties covered in the TCTs were veritably included in the January 2, 2006 notice of coverage. In the main,
they claimed that the revocation of the SDP cannot legally affect their rights as innocent purchasers for value.
Both motions for leave to intervene were granted and the corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and intervening petitioners on oral arguments. On the other hand,
the Court, on August 24, 2010, heard public respondents as well as the respective counsels of the AMBALA-
Mallari-Supervisory Group, the AMBALA-Galang faction, and the FARM and its 27 members argue their case.
Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the Supervisory Group, represented
by Suniga and Andaya; and the United Luisita Workers Union, represented by Eldifonso Pingol, filed with the
Court a joint submission and motion for approval of a Compromise Agreement (English and Tagalog
versions) dated August 6, 2010.
On August 31, 2010, the Court, in a bid to resolve the dispute through an amicable settlement, issued a
Resolution creating a Mediation Panel composed of then Associate Justice Ma. Alicia Austria-Martinez, as
chairperson, and former CA Justices Hector Hofileña and Teresita Dy-Liacco Flores, as members. Meetings on
five (5) separate dates, i.e., September 8, 9, 14, 20, and 27, 2010, were conducted. Despite persevering and
painstaking efforts on the part of the panel, mediation had to be discontinued when no acceptable agreement could
be reached.
The Issues
HLI raises the following issues for our consideration:
I.
WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY PANGANDAMAN HAVE
JURISDICTION, POWER AND/OR AUTHORITY TO NULLIFY, RECALL, REVOKE OR RESCIND THE
SDOA.
II.
[IF SO], x x x CAN THEY STILL EXERCISE SUCH JURISDICTION, POWER AND/OR AUTHORITY
AT THIS TIME, I.E., AFTER SIXTEEN (16) YEARS FROM THE EXECUTION OF THE SDOA AND ITS
IMPLEMENTATION WITHOUT VIOLATING SECTIONS 1 AND 10 OF ARTICLE III (BILL OF
RIGHTS) OF THE CONSTITUTION AGAINST DEPRIVATION OF PROPERTY WITHOUT DUE
PROCESS OF LAW AND THE IMPAIRMENT OF CONTRACTUAL RIGHTS AND OBLIGATIONS?
MOREOVER, ARE THERE LEGAL GROUNDS UNDER THE CIVIL CODE, viz, ARTICLE 1191 x x x,
ARTICLES 1380, 1381 AND 1382 x x x ARTICLE 1390 x x x AND ARTICLE 1409 x x x THAT CAN BE
INVOKED TO NULLIFY, RECALL, REVOKE, OR RESCIND THE SDOA?
III.
WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA HAVE ANY
LEGAL BASIS OR GROUNDS AND WHETHER THE PETITIONERS THEREIN ARE THE REAL
PARTIES-IN-INTEREST TO FILE SAID PETITIONS.
IV.
 WHETHER THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES TO THE SDOA
ARE NOW GOVERNED BY THE CORPORATION CODE (BATAS PAMBANSA BLG. 68) AND
NOT BY THE x x x [CARL] x x x.
On the other hand, RCBC submits the following issues:
I.
RESPONDENT PARC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT DID NOT EXCLUDE THE SUBJECT PROPERTY FROM THE
COVERAGE OF THE CARP DESPITE THE FACT THAT PETITIONER-INTERVENOR RCBC HAS
ACQUIRED VESTED RIGHTS AND INDEFEASIBLE TITLE OVER THE SUBJECT PROPERTY AS AN
INNOCENT PURCHASER FOR VALUE.
A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF COVERAGE DATED 02
JANUARY 2006 HAVE THE EFFECT OF NULLIFYING TCT NOS. 391051 AND 391052 IN THE
NAME OF PETITIONER-INTERVENOR RCBC.
B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONER-INTERVENOR RCBC CANNOT
BE PREJUDICED BY A SUBSEQUENT REVOCATION OR RESCISSION OF THE SDOA.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF COVERAGE DATED 02
JANUARY 2006 WERE ISSUED WITHOUT AFFORDING PETITIONER-INTERVENOR RCBC ITS
RIGHT TO DUE PROCESS AS AN INNOCENT PURCHASER FOR VALUE.
LIPCO, like RCBC, asserts having acquired vested and indefeasible rights over certain portions of the converted
property, and, hence, would ascribe on PARC the commission of grave abuse of discretion when it included those
portions in the notice of coverage. And apart from raising issues identical with those of HLI, such as but not
limited to the absence of valid grounds to warrant the rescission and/or revocation of the SDP, LIPCO would
allege that the assailed resolution and the notice of coverage were issued without affording it the right to due
process as an innocent purchaser for value. The government, LIPCO also argues, is estopped from recovering
properties which have since passed to innocent parties.
Simply formulated, the principal determinative issues tendered in the main petition and to which all other related
questions must yield boil down to the following: (1) matters of standing; (2) the constitutionality of Sec. 31 of RA
6657; (3) the jurisdiction of PARC to recall or revoke HLI’s SDP; (4) the validity or propriety of such recall or
revocatory action; and (5) corollary to (4), the validity of the terms and conditions of the SDP, as embodied in the
SDOA.
Our Ruling
I.
We first proceed to the examination of the preliminary issues before delving on the more serious challenges
bearing on the validity of PARC’s assailed issuance and the grounds for it.
Supervisory Group, AMBALA and their respective leaders are real parties-in-interest
HLI would deny real party-in-interest status to the purported leaders of the Supervisory Group and AMBALA, i.e.,
Julio Suniga, Windsor Andaya, and Rene Galang, who filed the revocatory petitions before the DAR. As HLI
would have it, Galang, the self-styled head of AMBALA, gained HLI employment in June 1990 and, thus, could
not have been a party to the SDOA executed a year earlier. As regards the Supervisory Group, HLI alleges that
supervisors are not regular farmworkers, but the company nonetheless considered them FWBs under the SDOA as
a mere concession to enable them to enjoy the same benefits given qualified regular farmworkers. However, if the
SDOA would be canceled and land distribution effected, so HLI claims, citing Fortich v. Corona, the supervisors
would be excluded from receiving lands as farmworkers other than the regular farmworkers who are merely
entitled to the "fruits of the land."
The SDOA no less identifies "the SDP qualified beneficiaries" as "the farmworkers who appear in the annual
payroll, inclusive of the permanent and seasonal employees, who are regularly or periodically employed by
[HLI]." Galang, per HLI’s own admission, is employed by HLI, and is, thus, a qualified beneficiary of the SDP; he
comes within the definition of a real party-in-interest under Sec. 2, Rule 3 of the Rules of Court, meaning, one
who stands to be benefited or injured by the judgment in the suit or is the party entitled to the avails of the suit.
The same holds true with respect to the Supervisory Group whose members were admittedly employed by HLI
and whose names and signatures even appeared in the annex of the SDOA. Being qualified beneficiaries of the
SDP, Suniga and the other 61 supervisors are certainly parties who would benefit or be prejudiced by the judgment
recalling the SDP or replacing it with some other modality to comply with RA 6657.
Even assuming that members of the Supervisory Group are not regular farmworkers, but are in the category of
"other farmworkers" mentioned in Sec. 4, Article XIII of the Constitution, thus only entitled to a share of the fruits
of the land, as indeed Fortich teaches, this does not detract from the fact that they are still identified as being
among the "SDP qualified beneficiaries." As such, they are, thus, entitled to bring an action upon the SDP. At any
rate, the following admission made by Atty. Gener Asuncion, counsel of HLI, during the oral arguments should
put to rest any lingering doubt as to the status of protesters Galang, Suniga, and Andaya:
Justice Bersamin: x x x I heard you a while ago that you were conceding the qualified farmer beneficiaries of
Hacienda Luisita were real parties in interest?
Atty. Asuncion: Yes, Your Honor please, real party in interest which that question refers to the complaints of
protest initiated before the DAR and the real party in interest there be considered as possessed by the farmer
beneficiaries who initiated the protest.
Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly allowed to represent themselves,
their fellow farmers or their organizations in any proceedings before the DAR. Specifically:
SEC. 50. Quasi-Judicial Powers of the DAR. x x x
xxxx
Responsible farmer leaders shall be allowed to represent themselves, their fellow farmers or their
organizations in any proceedings before the DAR: Provided, however, that when there are two or more
representatives for any individual or group, the representatives should choose only one among themselves to
represent such party or group before any DAR proceedings. (Emphasis supplied.)
Clearly, the respective leaders of the Supervisory Group and AMBALA are contextually real parties-in-interest
allowed by law to file a petition before the DAR or PARC.
This is not necessarily to say, however, that Galang represents AMBALA, for as records show and as HLI aptly
noted, his "petisyon" filed with DAR did not carry the usual authorization of the individuals in whose behalf it was
supposed to have been instituted. To date, such authorization document, which would logically include a list of the
names of the authorizing FWBs, has yet to be submitted to be part of the records.
PARC’s Authority to Revoke a Stock Distribution Plan
On the postulate that the subject jurisdiction is conferred by law, HLI maintains that PARC is without authority to
revoke an SDP, for neither RA 6657 nor EO 229 expressly vests PARC with such authority. While, as HLI argued,
EO 229 empowers PARC to approve the plan for stock distribution in appropriate cases, the empowerment only
includes the power to disapprove, but not to recall its previous approval of the SDP after it has been implemented
by the parties. To HLI, it is the court which has jurisdiction and authority to order the revocation or rescission of
the PARC-approved SDP.
We disagree.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan for stock distribution of
the corporate landowner belongs to PARC. However, contrary to petitioner HLI’s posture, PARC also has the
power to revoke the SDP which it previously approved. It may be, as urged, that RA 6657 or other executive
issuances on agrarian reform do not explicitly vest the PARC with the power to revoke/recall an approved SDP.
Such power or authority, however, is deemed possessed by PARC under the principle of necessary implication, a
basic postulate that what is implied in a statute is as much a part of it as that which is expressed.
We have explained that "every statute is understood, by implication, to contain all such provisions as may be
necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which
it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its
terms." Further, "every statutory grant of power, right or privilege is deemed to include all incidental power, right
or privilege.
Gordon v. Veridiano II is instructive:
The power to approve a license includes by implication, even if not expressly granted, the power to revoke it. By
extension, the power to revoke is limited by the authority to grant the license, from which it is derived in the first
place. Thus, if the FDA grants a license upon its finding that the applicant drug store has complied with the
requirements of the general laws and the implementing administrative rules and regulations, it is only for their
violation that the FDA may revoke the said license. By the same token, having granted the permit upon his
ascertainment that the conditions thereof as applied x x x have been complied with, it is only for the violation of
such conditions that the mayor may revoke the said permit. (Emphasis supplied.)
Following the doctrine of necessary implication, it may be stated that the conferment of express power to approve
a plan for stock distribution of the agricultural land of corporate owners necessarily includes the power to revoke
or recall the approval of the plan.
As public respondents aptly observe, to deny PARC such revocatory power would reduce it into a toothless
agency of CARP, because the very same agency tasked to ensure compliance by the corporate landowner with the
approved SDP would be without authority to impose sanctions for non-compliance with it. With the view We take
of the case, only PARC can effect such revocation. The DAR Secretary, by his own authority as such, cannot
plausibly do so, as the acceptance and/or approval of the SDP sought to be taken back or undone is the act of
PARC whose official composition includes, no less, the President as chair, the DAR Secretary as vice-chair, and at
least eleven (11) other department heads.
On another but related issue, the HLI foists on the Court the argument that subjecting its landholdings to
compulsory distribution after its approved SDP has been implemented would impair the contractual obligations
created under the SDOA.
The broad sweep of HLI’s argument ignores certain established legal precepts and must, therefore, be rejected.
A law authorizing interference, when appropriate, in the contractual relations between or among parties is deemed
read into the contract and its implementation cannot successfully be resisted by force of the non-impairment
guarantee. There is, in that instance, no impingement of the impairment clause, the non-impairment protection
being applicable only to laws that derogate prior acts or contracts by enlarging, abridging or in any manner
changing the intention of the parties. Impairment, in fine, obtains if a subsequent law changes the terms of a
contract between the parties, imposes new conditions, dispenses with those agreed upon or withdraws existing
remedies for the enforcement of the rights of the parties. Necessarily, the constitutional proscription would not
apply to laws already in effect at the time of contract execution, as in the case of RA 6657, in relation to DAO 10,
vis-à-vis HLI’s SDOA. As held in Serrano v. Gallant Maritime Services, Inc.:
The prohibition [against impairment of the obligation of contracts] is aligned with the general principle that laws
newly enacted have only a prospective operation, and cannot affect acts or contracts already perfected; however,
as to laws already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the non-
impairment clause under Section 10, Article II [of the Constitution] is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner
changing the intention of the parties thereto. (Emphasis supplied.)
Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of issuance within the ambit of Sec. 10,
Art. III of the Constitution providing that "[n]o law impairing the obligation of contracts shall be passed."
Parenthetically, HLI tags the SDOA as an ordinary civil law contract and, as such, a breach of its terms and
conditions is not a PARC administrative matter, but one that gives rise to a cause of action cognizable by regular
courts. This contention has little to commend itself. The SDOA is a special contract imbued with public interest,
entered into and crafted pursuant to the provisions of RA 6657. It embodies the SDP, which requires for its
validity, or at least its enforceability, PARC’s approval. And the fact that the certificate of compliance––to be
issued by agrarian authorities upon completion of the distribution of stocks––is revocable by the same issuing
authority supports the idea that everything about the implementation of the SDP is, at the first instance, subject to
administrative adjudication.
HLI also parlays the notion that the parties to the SDOA should now look to the Corporation Code, instead of to
RA 6657, in determining their rights, obligations and remedies. The Code, it adds, should be the applicable law on
the disposition of the agricultural land of HLI.
Contrary to the view of HLI, the rights, obligations and remedies of the parties to the SDOA embodying the SDP
are primarily governed by RA 6657. It should abundantly be made clear that HLI was precisely created in order to
comply with RA 6657, which the OSG aptly described as the "mother law" of the SDOA and the SDP. It is, thus,
paradoxical for HLI to shield itself from the coverage of CARP by invoking exclusive applicability of the
Corporation Code under the guise of being a corporate entity.
Without in any way minimizing the relevance of the Corporation Code since the FWBs of HLI are also
stockholders, its applicability is limited as the rights of the parties arising from the SDP should not be made to
supplant or circumvent the agrarian reform program.
Without doubt, the Corporation Code is the general law providing for the formation, organization and regulation
of private corporations. On the other hand, RA 6657 is the special law on agrarian reform. As between a general
and special law, the latter shall prevail—generalia specialibus non derogant. Besides, the present impasse between
HLI and the private respondents is not an intra-corporate dispute which necessitates the application of the
Corporation Code. What private respondents questioned before the DAR is the proper implementation of the SDP
and HLI’s compliance with RA 6657. Evidently, RA 6657 should be the applicable law to the instant case.
HLI further contends that the inclusion of the agricultural land of Hacienda Luisita under the coverage of CARP
and the eventual distribution of the land to the FWBs would amount to a disposition of all or practically all of the
corporate assets of HLI. HLI would add that this contingency, if ever it comes to pass, requires the applicability of
the Corporation Code provisions on corporate dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on corporate dissolution would apply insofar as the winding up of
HLI’s affairs or liquidation of the assets is concerned. However, the mere inclusion of the agricultural land of
Hacienda Luisita under the coverage of CARP and the land’s eventual distribution to the FWBs will not, without
more, automatically trigger the dissolution of HLI. As stated in the SDOA itself, the percentage of the value of the
agricultural land of Hacienda Luisita in relation to the total assets transferred and conveyed by Tadeco to HLI
comprises only 33.296%, following this equation: value of the agricultural lands divided by total corporate assets.
By no stretch of imagination would said percentage amount to a disposition of all or practically all of HLI’s
corporate assets should compulsory land acquisition and distribution ensue.
This brings us to the validity of the revocation of the approval of the SDP sixteen (16) years after its execution
pursuant to Sec. 31 of RA 6657 for the reasons set forth in the Terminal Report of the Special Task Force, as
endorsed by PARC Excom. But first, the matter of the constitutionality of said section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the corporation, as a mode of CARP
compliance, to resort to stock distribution, an arrangement which, to FARM, impairs the fundamental right of
farmers and farmworkers under Sec. 4, Art. XIII of the Constitution.
To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657 permits stock transfer in lieu of
outright agricultural land transfer; in fine, there is stock certificate ownership of the farmers or farmworkers
instead of them owning the land, as envisaged in the Constitution. For FARM, this modality of distribution is an
anomaly to be annulled for being inconsistent with the basic concept of agrarian reform ingrained in Sec. 4, Art.
XIII of the Constitution.
Reacting, HLI insists that agrarian reform is not only about transfer of land ownership to farmers and other
qualified beneficiaries. It draws attention in this regard to Sec. 3(a) of RA 6657 on the concept and scope of the
term "agrarian reform." The constitutionality of a law, HLI added, cannot, as here, be attacked collaterally.
The instant challenge on the constitutionality of Sec. 31 of RA 6657 and necessarily its counterpart provision in
EO 229 must fail as explained below.
When the Court is called upon to exercise its power of judicial review over, and pass upon the constitutionality of,
acts of the executive or legislative departments, it does so only when the following essential requirements are first
met, to wit:
(1) there is an actual case or controversy;
(2) that the constitutional question is raised at the earliest possible opportunity by a proper party or one with
locus standi; and
(3) the issue of constitutionality must be the very lis mota of the case.
Not all the foregoing requirements are satisfied in the case at bar.
While there is indeed an actual case or controversy, intervenor FARM, composed of a small minority of 27
farmers, has yet to explain its failure to challenge the constitutionality of Sec. 3l of RA 6657, since as early as
November 21, l989 when PARC approved the SDP of Hacienda Luisita or at least within a reasonable time
thereafter and why its members received benefits from the SDP without so much of a protest. It was only on
December 4, 2003 or 14 years after approval of the SDP via PARC Resolution No. 89-12-2 dated November 21,
1989 that said plan and approving resolution were sought to be revoked, but not, to stress, by FARM or any of its
members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT question the
constitutionality of Sec. 31 of RA 6657, but concentrated on the purported flaws and gaps in the subsequent
implementation of the SDP. Even the public respondents, as represented by the Solicitor General, did not question
the constitutionality of the provision. On the other hand, FARM, whose 27 members formerly belonged to
AMBALA, raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its Supplemental Comment
with the Court. Thus, it took FARM some eighteen (18) years from November 21, 1989 before it challenged the
constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept on their
rights and even accepted benefits from the SDP with nary a complaint on the alleged unconstitutionality of Sec. 31
upon which the benefits were derived. The Court cannot now be goaded into resolving a constitutional issue that
FARM failed to assail after the lapse of a long period of time and the occurrence of numerous events and activities
which resulted from the application of an alleged unconstitutional legal provision.
It has been emphasized in a number of cases that the question of constitutionality will not be passed upon by the
Court unless it is properly raised and presented in an appropriate case at the first opportunity. FARM is, therefore,
remiss in belatedly questioning the constitutionality of Sec. 31 of RA 6657. The second requirement that the
constitutional question should be raised at the earliest possible opportunity is clearly wanting.
The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not
likewise obtain. The lis mota aspect is not present, the constitutional issue tendered not being critical to the
resolution of the case. The unyielding rule has been to avoid, whenever plausible, an issue assailing the
constitutionality of a statute or governmental act. If some other grounds exist by which judgment can be made
without touching the constitutionality of a law, such recourse is favored. Garcia v. Executive Secretary explains
why:
Lis Mota — the fourth requirement to satisfy before this Court will undertake judicial review — means that the
Court will not pass upon a question of unconstitutionality, although properly presented, if the case can be disposed
of on some other ground, such as the application of the statute or the general law. The petitioner must be able to
show that the case cannot be legally resolved unless the constitutional question raised is determined. This
requirement is based on the rule that every law has in its favor the presumption of constitutionality; to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, and not one that is doubtful,
speculative, or argumentative. (Italics in the original.)
The lis mota in this case, proceeding from the basic positions originally taken by AMBALA (to which the FARM
members previously belonged) and the Supervisory Group, is the alleged non-compliance by HLI with the
conditions of the SDP to support a plea for its revocation. And before the Court, the lis mota is whether or not
PARC acted in grave abuse of discretion when it ordered the recall of the SDP for such non-compliance and the
fact that the SDP, as couched and implemented, offends certain constitutional and statutory provisions. To be sure,
any of these key issues may be resolved without plunging into the constitutionality of Sec. 31 of RA 6657.
Moreover, looking deeply into the underlying petitions of AMBALA, et al., it is not the said section per se that is
invalid, but rather it is the alleged application of the said provision in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7 of RA 6657, has all but superseded
Sec. 31 of RA 6657 vis-à-vis the stock distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA
9700 provides: "[T]hat after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell
and compulsory acquisition." Thus, for all intents and purposes, the stock distribution scheme under Sec. 31 of RA
6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional
should be a moot issue.
It is true that the Court, in some cases, has proceeded to resolve constitutional issues otherwise already moot and
academic provided the following requisites are present:
x x x first, there is a grave violation of the Constitution; second, the exceptional character of the situation and the
paramount public interest is involved; third, when the constitutional issue raised requires formulation of
controlling principles to guide the bench, the bar, and the public; fourth, the case is capable of repetition yet
evading review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the fundamental law. Sec. 4, Article XIII of the Constitution reads:
The State shall, by law, undertake an agrarian reform program founded on the right of the 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. (Emphasis supplied.)
The wording of the provision is unequivocal––the farmers and regular farmworkers have a right TO OWN
DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The basic law allows two (2) modes of land
distribution—direct and indirect ownership. Direct transfer to individual farmers is the most commonly used
method by DAR and widely accepted. Indirect transfer through collective ownership of the agricultural land is the
alternative to direct ownership of agricultural land by individual farmers. The aforequoted Sec. 4 EXPRESSLY
authorizes collective ownership by farmers. No language can be found in the 1987 Constitution that disqualifies or
prohibits corporations or cooperatives of farmers from being the legal entity through which collective ownership
can be exercised. The word "collective" is defined as "indicating a number of persons or things considered as
constituting one group or aggregate," while "collectively" is defined as "in a collective sense or manner; in a mass
or body." By using the word "collectively," the Constitution allows for indirect ownership of land and not just
outright agricultural land transfer. This is in recognition of the fact that land reform may become successful even if
it is done through the medium of juridical entities composed of farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows workers’ cooperatives or
associations to collectively own the land, while the second paragraph of Sec. 31 allows corporations or
associations to own agricultural land with the farmers becoming stockholders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other business associations.—In the case of farms owned or
operated by corporations or other business associations, the following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the
worker beneficiaries who shall form a workers’ cooperative or association which will deal with the corporation or
business association. x x x (Emphasis supplied.)
SEC. 31. Corporate Landowners.— x x x
xxxx
Upon certification by the DAR, corporations owning agricultural lands may give their qualified beneficiaries the
right to purchase such proportion of the capital stock of the corporation that the agricultural land, actually devoted
to agricultural activities, bears in relation to the company’s total assets, under such terms and conditions as may be
agreed upon by them. In no case shall the compensation received by the workers at the time the shares of stocks
are distributed be reduced. The same principle shall be applied to associations, with respect to their equity or
participation. x x x (Emphasis supplied.)
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and corporations or associations under
the succeeding Sec. 31, as differentiated from individual farmers, are authorized vehicles for the collective
ownership of agricultural land. Cooperatives can be registered with the Cooperative Development Authority and
acquire legal personality of their own, while corporations are juridical persons under the Corporation Code. Thus,
Sec. 31 is constitutional as it simply implements Sec. 4 of Art. XIII of the Constitution that land can be owned
COLLECTIVELY by farmers. Even the framers of the l987 Constitution are in unison with respect to the two (2)
modes of ownership of agricultural lands tilled by farmers––DIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own directly," we mean the principle of direct ownership by
the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we mean communal ownership, stewardship or State
ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’ cooperatives owning the land, not the
State.
MR. NOLLEDO. And when we talk of "collectively," referring to farmers’ cooperatives, do the farmers own
specific areas of land where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved: the "moshave" type of
agriculture and the "kibbutz." So are both contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa lupa ay ang pagmamay-
ari ng lupa na hahatiin sa individual na pagmamay-ari – directly – at ang tinatawag na sama-samang gagawin ng
mga magbubukid. Tulad sa Negros, ang gusto ng mga magbubukid ay gawin nila itong "cooperative or collective
farm." Ang ibig sabihin ay sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of "to own directly or collectively the lands they till," is this land for
the tillers rather than land for the landless? Before, we used to hear "land for the landless," but now the slogan is
"land for the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig sabihin ng "directly" ay tulad sa
implementasyon sa rice and corn lands kung saan inaari na ng mga magsasaka ang lupang binubungkal nila. Ang
ibig sabihin naman ng "collectively" ay sama-samang paggawa sa isang lupain o isang bukid, katulad ng
sitwasyon sa Negros. (Emphasis supplied.)
As Commissioner Tadeo explained, the farmers will work on the agricultural land "sama-sama" or collectively.
Thus, the main requisite for collective ownership of land is collective or group work by farmers of the agricultural
land. Irrespective of whether the landowner is a cooperative, association or corporation composed of farmers, as
long as concerted group work by the farmers on the land is present, then it falls within the ambit of collective
ownership scheme.
Likewise, Sec. 4, Art. XIII of the Constitution makes mention of a commitment on the part of the State to
pursue, by law, an agrarian reform program founded on the policy of land for the landless, but subject to such
priorities as Congress may prescribe, taking into account such abstract variable as "equity considerations." The
textual reference to a law and Congress necessarily implies that the above constitutional provision is not self-
executory and that legislation is needed to implement the urgently needed program of agrarian reform. And RA
6657 has been enacted precisely pursuant to and as a mechanism to carry out the constitutional directives. This
piece of legislation, in fact, restates the agrarian reform policy established in the aforementioned provision of the
Constitution of promoting the welfare of landless farmers and farmworkers. RA 6657 thus defines "agrarian
reform" as "the redistribution of lands … to farmers and regular farmworkers who are landless … to lift the
economic status of the beneficiaries and all other arrangements alternative to the physical redistribution of
lands, such as production or profit sharing, labor administration and the distribution of shares of stock which
will allow beneficiaries to receive a just share of the fruits of the lands they work."
With the view We take of this case, the stock distribution option devised under Sec. 31 of RA 6657 hews with the
agrarian reform policy, as instrument of social justice under Sec. 4 of Article XIII of the Constitution. Albeit land
ownership for the landless appears to be the dominant theme of that policy, We emphasize that Sec. 4, Article XIII
of the Constitution, as couched, does not constrict Congress to passing an agrarian reform law planted on direct
land transfer to and ownership by farmers and no other, or else the enactment suffers from the vice of
unconstitutionality. If the intention were otherwise, the framers of the Constitution would have worded said
section in a manner mandatory in character.
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features, is not inconsistent with the State’s
commitment to farmers and farmworkers to advance their interests under the policy of social justice. The
legislature, thru Sec. 31 of RA 6657, has chosen a modality for collective ownership by which the imperatives of
social justice may, in its estimation, be approximated, if not achieved. The Court should be bound by such policy
choice.
FARM contends that the farmers in the stock distribution scheme under Sec. 31 do not own the agricultural land
but are merely given stock certificates. Thus, the farmers lose control over the land to the board of directors and
executive officials of the corporation who actually manage the land. They conclude that such arrangement runs
counter to the mandate of the Constitution that any agrarian reform must preserve the control over the land in the
hands of the tiller.
This contention has no merit.
While it is true that the farmer is issued stock certificates and does not directly own the land, still, the Corporation
Code is clear that the FWB becomes a stockholder who acquires an equitable interest in the assets of the
corporation, which include the agricultural lands. It was explained that the "equitable interest of the shareholder in
the property of the corporation is represented by the term stock, and the extent of his interest is described by the
term shares. The expression shares of stock when qualified by words indicating number and ownership expresses
the extent of the owner’s interest in the corporate property." A share of stock typifies an aliquot part of the
corporation’s property, or the right to share in its proceeds to that extent when distributed according to law and
equity and that its holder is not the owner of any part of the capital of the corporation. However, the FWBs will
ultimately own the agricultural lands owned by the corporation when the corporation is eventually dissolved and
liquidated.
Anent the alleged loss of control of the farmers over the agricultural land operated and managed by the
corporation, a reading of the second paragraph of Sec. 31 shows otherwise. Said provision provides that qualified
beneficiaries have "the right to purchase such proportion of the capital stock of the corporation that the agricultural
land, actually devoted to agricultural activities, bears in relation to the company’s total assets." The wording of the
formula in the computation of the number of shares that can be bought by the farmers does not mean loss of
control on the part of the farmers. It must be remembered that the determination of the percentage of the capital
stock that can be bought by the farmers depends on the value of the agricultural land and the value of the total
assets of the corporation.
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on agrarian reform is
that control over the agricultural land must always be in the hands of the farmers. Then it falls on the shoulders of
DAR and PARC to see to it the farmers should always own majority of the common shares entitled to elect the
members of the board of directors to ensure that the farmers will have a clear majority in the board. Before the
SDP is approved, strict scrutiny of the proposed SDP must always be undertaken by the DAR and PARC, such
that the value of the agricultural land contributed to the corporation must always be more than 50% of the total
assets of the corporation to ensure that the majority of the members of the board of directors are composed of the
farmers. The PARC composed of the President of the Philippines and cabinet secretaries must see to it that control
over the board of directors rests with the farmers by rejecting the inclusion of non-agricultural assets which will
yield the majority in the board of directors to non-farmers. Any deviation, however, by PARC or DAR from the
correct application of the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not make said
provision constitutionally infirm. Rather, it is the application of said provision that can be challenged. Ergo, Sec.
31 of RA 6657 does not trench on the constitutional policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian reform unless there is land distribution and that actual land
distribution is the essential characteristic of a constitutional agrarian reform program. On the contrary, there have
been so many instances where, despite actual land distribution, the implementation of agrarian reform was still
unsuccessful. As a matter of fact, this Court may take judicial notice of cases where FWBs sold the awarded land
even to non-qualified persons and in violation of the prohibition period provided under the law. This only proves
to show that the mere fact that there is land distribution does not guarantee a successful implementation of agrarian
reform.
As it were, the principle of "land to the tiller" and the old pastoral model of land ownership where non-human
juridical persons, such as corporations, were prohibited from owning agricultural lands are no longer realistic
under existing conditions. Practically, an individual farmer will often face greater disadvantages and difficulties
than those who exercise ownership in a collective manner through a cooperative or corporation. The former is too
often left to his own devices when faced with failing crops and bad weather, or compelled to obtain usurious loans
in order to purchase costly fertilizers or farming equipment. The experiences learned from failed land reform
activities in various parts of the country are lack of financing, lack of farm equipment, lack of fertilizers, lack of
guaranteed buyers of produce, lack of farm-to-market roads, among others. Thus, at the end of the day, there is
still no successful implementation of agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a corporation stands in a better position to secure funding and
competently maintain the agri-business than the individual farmer. While direct singular ownership over farmland
does offer advantages, such as the ability to make quick decisions unhampered by interference from others, yet at
best, these advantages only but offset the disadvantages that are often associated with such ownership
arrangement. Thus, government must be flexible and creative in its mode of implementation to better its chances
of success. One such option is collective ownership through juridical persons composed of farmers.
Aside from the fact that there appears to be no violation of the Constitution, the requirement that the instant case
be capable of repetition yet evading review is also wanting. It would be speculative for this Court to assume that
the legislature will enact another law providing for a similar stock option.
As a matter of sound practice, the Court will not interfere inordinately with the exercise by Congress of its official
functions, the heavy presumption being that a law is the product of earnest studies by Congress to ensure that no
constitutional prescription or concept is infringed. Corollarily, courts will not pass upon questions of wisdom,
expediency and justice of legislation or its provisions. Towards this end, all reasonable doubts should be resolved
in favor of the constitutionality of a law and the validity of the acts and processes taken pursuant thereof.
Consequently, before a statute or its provisions duly challenged are voided, an unequivocal breach of, or a clear
conflict with the Constitution, not merely a doubtful or argumentative one, must be demonstrated in such a manner
as to leave no doubt in the mind of the Court. In other words, the grounds for nullity must be beyond reasonable
doubt. FARM has not presented compelling arguments to overcome the presumption of constitutionality of Sec. 31
of RA 6657.
The wisdom of Congress in allowing an SDP through a corporation as an alternative mode of implementing
agrarian reform is not for judicial determination. Established jurisprudence tells us that it is not within the
province of the Court to inquire into the wisdom of the law, for, indeed, We are bound by words of the statute.
II.
The stage is now set for the determination of the propriety under the premises of the revocation or recall of HLI’s
SDP. Or to be more precise, the inquiry should be: whether or not PARC gravely abused its discretion in revoking
or recalling the subject SDP and placing the hacienda under CARP’s compulsory acquisition and distribution
scheme.
The findings, analysis and recommendation of the DAR’s Special Task Force contained and summarized in its
Terminal Report provided the bases for the assailed PARC revocatory/recalling Resolution. The findings may be
grouped into two: (1) the SDP is contrary to either the policy on agrarian reform, Sec. 31 of RA 6657, or DAO 10;
and (2) the alleged violation by HLI of the conditions/terms of the SDP. In more particular terms, the following
are essentially the reasons underpinning PARC’s revocatory or recall action:
(1) Despite the lapse of 16 years from the approval of HLI’s SDP, the lives of the FWBs have hardly improved
and the promised increased income has not materialized;
(2) HLI has failed to keep Hacienda Luisita intact and unfragmented;
(3) The issuance of HLI shares of stock on the basis of number of hours worked––or the so-called "man
days"––is grossly onerous to the FWBs, as HLI, in the guise of rotation, can unilaterally deny work to anyone.
In elaboration of this ground, PARC’s Resolution No. 2006-34-01, denying HLI’s motion for reconsideration
of Resolution No. 2005-32-01, stated that the man days criterion worked to dilute the entitlement of the
original share beneficiaries;
(4) The distribution/transfer of shares was not in accordance with the timelines fixed by law;
(5) HLI has failed to comply with its obligations to grant 3% of the gross sales every year as production-
sharing benefit on top of the workers’ salary; and
(6) Several homelot awardees have yet to receive their individual titles.
Petitioner HLI claims having complied with, at least substantially, all its obligations under the SDP, as approved
by PARC itself, and tags the reasons given for the revocation of the SDP as unfounded.
Public respondents, on the other hand, aver that the assailed resolution rests on solid grounds set forth in the
Terminal Report, a position shared by AMBALA, which, in some pleadings, is represented by the same counsel as
that appearing for the Supervisory Group.
FARM, for its part, posits the view that legal bases obtain for the revocation of the SDP, because it does not
conform to Sec. 31 of RA 6657 and DAO 10. And training its sight on the resulting dilution of the equity of the
FWBs appearing in HLI’s masterlist, FARM would state that the SDP, as couched and implemented, spawned
disparity when there should be none; parity when there should have been differentiation.
The petition is not impressed with merit.
In the Terminal Report adopted by PARC, it is stated that the SDP violates the agrarian reform policy under Sec. 2
of RA 6657, as the said plan failed to enhance the dignity and improve the quality of lives of the FWBs through
greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and Policies.¾It is the policy of the State to pursue a Comprehensive
Agrarian Reform Program (CARP). The welfare of the landless farmers and farm workers will receive the highest
consideration to promote social justice and to move the nation towards sound rural development and
industrialization, and the establishment of owner cultivatorship of economic-sized farms as the basis of Philippine
agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to the rights of landowners to
just compensation and to the ecological needs of the nation, shall be undertaken to provide farmers and farm
workers with the opportunity to enhance their dignity and improve the quality of their lives through greater
productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farm workers, who are landless, to
own directly or collectively the lands they till or, in the case of other farm workers, to receive a share of the fruits
thereof. To this end, the State shall encourage the just distribution of all agricultural lands, subject to the priorities
and retention limits set forth in this Act, having taken into account ecological, developmental, and equity
considerations, and subject to the payment of just compensation. The State shall respect the right of small
landowners and shall provide incentives for voluntary land-sharing. (Emphasis supplied.)
Paragraph 2 of the above-quoted provision specifically mentions that "a more equitable distribution and ownership
of land x x x shall be undertaken to provide farmers and farm workers with the opportunity to enhance their
dignity and improve the quality of their lives through greater productivity of agricultural lands." Of note is the
term "opportunity" which is defined as a favorable chance or opening offered by circumstances. 127 Considering
this, by no stretch of imagination can said provision be construed as a guarantee in improving the lives of the
FWBs. At best, it merely provides for a possibility or favorable chance of uplifting the economic status of the
FWBs, which may or may not be attained.
Pertinently, improving the economic status of the FWBs is neither among the legal obligations of HLI under the
SDP nor an imperative imposition by RA 6657 and DAO 10, a violation of which would justify discarding the
stock distribution option. Nothing in that option agreement, law or department order indicates otherwise.
Significantly, HLI draws particular attention to its having paid its FWBs, during the regime of the SDP (1989-
2005), some PhP 3 billion by way of salaries/wages and higher benefits exclusive of free hospital and medical
benefits to their immediate family. And attached as Annex "G" to HLI’s Memorandum is the certified true report
of the finance manager of Jose Cojuangco & Sons Organizations-Tarlac Operations, captioned as "HACIENDA
LUISITA, INC. Salaries, Benefits and Credit Privileges (in Thousand Pesos) Since the Stock Option was
Approved by PARC/CARP," detailing what HLI gave their workers from 1989 to 2005. The sum total, as added
up by the Court, yields the following numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) = PhP
2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits) = PhP 303,040. The cash out figures, as stated
in the report, include the cost of homelots; the PhP 150 million or so representing 3% of the gross produce of the
hacienda; and the PhP 37.5 million representing 3% from the proceeds of the sale of the 500-hectare converted
lands. While not included in the report, HLI manifests having given the FWBs 3% of the PhP 80 million paid for
the 80 hectares of land traversed by the SCTEX. On top of these, it is worth remembering that the shares of stocks
were given by HLI to the FWBs for free. Verily, the FWBs have benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from the SDP as HLI has not anyway earned profits
through the years, it cannot be over-emphasized that, as a matter of common business sense, no corporation could
guarantee a profitable run all the time. As has been suggested, one of the key features of an SDP of a corporate
landowner is the likelihood of the corporate vehicle not earning, or, worse still, losing money.
The Court is fully aware that one of the criteria under DAO 10 for the PARC to consider the advisability of
approving a stock distribution plan is the likelihood that the plan "would result in increased income and greater
benefits to [qualified beneficiaries] than if the lands were divided and distributed to them individually." But as
aptly noted during the oral arguments, DAO 10 ought to have not, as it cannot, actually exact assurance of success
on something that is subject to the will of man, the forces of nature or the inherent risky nature of business. Just
like in actual land distribution, an SDP cannot guarantee, as indeed the SDOA does not guarantee, a comfortable
life for the FWBs. The Court can take judicial notice of the fact that there were many instances wherein after a
farmworker beneficiary has been awarded with an agricultural land, he just subsequently sells it and is eventually
left with nothing in the end.
In all then, the onerous condition of the FWBs’ economic status, their life of hardship, if that really be the case,
can hardly be attributed to HLI and its SDP and provide a valid ground for the plan’s revocation.
Neither does HLI’s SDP, whence the DAR-attested SDOA/MOA is based, infringe Sec. 31 of RA 6657, albeit
public respondents erroneously submit otherwise.
The provisions of the first paragraph of the adverted Sec. 31 are without relevance to the issue on the propriety of
the assailed order revoking HLI’s SDP, for the paragraph deals with the transfer of agricultural lands to the
government, as a mode of CARP compliance, thus:
SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily transfer ownership over their
agricultural landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to qualified
beneficiaries under such terms and conditions, consistent with this Act, as they may agree, subject to confirmation
by the DAR.
The second and third paragraphs, with their sub-paragraphs, of Sec. 31 provide as follows:
Upon certification by the DAR, corporations owning agricultural lands may give their qualified beneficiaries the
right to purchase such proportion of the capital stock of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the company’s total assets, under such terms and
conditions as may be agreed upon by them. In no case shall the compensation received by the workers at the time
the shares of stocks are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their capital stock, equity or participation in
favor of their workers or other qualified beneficiaries under this section shall be deemed to have complied with the
provisions of this Act: Provided, That the following conditions are complied with:
(a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and other financial
benefits, the books of the corporation or association shall be subject to periodic audit by certified public
accountants chosen by the beneficiaries;
 (b) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured
of at least one (1) representative in the board of directors, or in a management or executive committee, if one
exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other
shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless said transaction
is in favor of a qualified and registered beneficiary within the same corporation.
The mandatory minimum ratio of land-to-shares of stock supposed to be distributed or allocated to qualified
beneficiaries, adverting to what Sec. 31 of RA 6657 refers to as that "proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the company’s
total assets" had been observed.
Paragraph one (1) of the SDOA, which was based on the SDP, conforms to Sec. 31 of RA 6657. The stipulation
reads:
1. The percentage of the value of the agricultural land of Hacienda Luisita (P196,630,000.00) in relation to the
total assets (P590,554,220.00) transferred and conveyed to the SECOND PARTY is 33.296% that, under the law,
is the proportion of the outstanding capital stock of the SECOND PARTY, which is P355,531,462.00 or
355,531,462 shares with a par value of P1.00 per share, that has to be distributed to the THIRD PARTY under the
stock distribution plan, the said 33.296% thereof being P118,391,976.85 or 118,391,976.85 shares.
The appraised value of the agricultural land is PhP 196,630,000 and of HLI’s other assets is PhP 393,924,220. The
total value of HLI’s assets is, therefore, PhP 590,554,220. The percentage of the value of the agricultural lands
(PhP 196,630,000) in relation to the total assets (PhP 590,554,220) is 33.296%, which represents the stockholdings
of the 6,296 original qualified farmworker-beneficiaries (FWBs) in HLI. The total number of shares to be
distributed to said qualified FWBs is 118,391,976.85 HLI shares. This was arrived at by getting 33.296% of the
355,531,462 shares which is the outstanding capital stock of HLI with a value of PhP 355,531,462. Thus, if we
divide the 118,391,976.85 HLI shares by 6,296 FWBs, then each FWB is entitled to 18,804.32 HLI shares. These
shares under the SDP are to be given to FWBs for free.
The Court finds that the determination of the shares to be distributed to the 6,296 FWBs strictly adheres to the
formula prescribed by Sec. 31(b) of RA 6657.
Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs shall be assured of at least one (1)
representative in the board of directors or in a management or executive committee irrespective of the value of the
equity of the FWBs in HLI, the Court finds that the SDOA contained provisions making certain the FWBs’
representation in HLI’s governing board, thus:
5. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from the FIRST
PARTY and distributed to the THIRD PARTY, FIRST PARTY shall execute at the beginning of each fiscal year
an irrevocable proxy, valid and effective for one (1) year, in favor of the farmworkers appearing as shareholders of
the SECOND PARTY at the start of said year which will empower the THIRD PARTY or their representative to
vote in stockholders’ and board of directors’ meetings of the SECOND PARTY convened during the year the
entire 33.296% of the outstanding capital stock of the SECOND PARTY earmarked for distribution and thus be
able to gain such number of seats in the board of directors of the SECOND PARTY that the whole 33.296% of the
shares subject to distribution will be entitled to.
Also, no allegations have been made against HLI restricting the inspection of its books by accountants chosen by
the FWBs; hence, the assumption may be made that there has been no violation of the statutory prescription under
sub-paragraph (a) on the auditing of HLI’s accounts.
Public respondents, however, submit that the distribution of the mandatory minimum ratio of land-to-shares of
stock, referring to the 118,391,976.85 shares with par value of PhP 1 each, should have been made in full within
two (2) years from the approval of RA 6657, in line with the last paragraph of Sec. 31 of said law.
Public respondents’ submission is palpably erroneous. We have closely examined the last paragraph alluded to,
with particular focus on the two-year period mentioned, and nothing in it remotely supports the public
respondents’ posture. In its pertinent part, said Sec. 31 provides:
SEC. 31. Corporate Landowners x x x
If within two (2) years from the approval of this Act, the [voluntary] land or stock transfer envisioned above is not
made or realized or the plan for such stock distribution approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation shall be subject to the compulsory coverage of this Act.
(Word in bracket and emphasis added.)
Properly viewed, the words "two (2) years" clearly refer to the period within which the corporate landowner, to
avoid land transfer as a mode of CARP coverage under RA 6657, is to avail of the stock distribution option or to
have the SDP approved. The HLI secured approval of its SDP in November 1989, well within the two-year period
reckoned from June 1988 when RA 6657 took effect.
Having hurdled the alleged breach of the agrarian reform policy under Sec. 2 of RA 6657 as well as the statutory
issues, We shall now delve into what PARC and respondents deem to be other instances of violation of DAO 10
and the SDP.
On the Conversion of Lands
Contrary to the almost parallel stance of the respondents, keeping Hacienda Luisita unfragmented is also not
among the imperative impositions by the SDP, RA 6657, and DAO 10.
The Terminal Report states that the proposed distribution plan submitted in 1989 to the PARC effectively assured
the intended stock beneficiaries that the physical integrity of the farm shall remain inviolate. Accordingly, the
Terminal Report and the PARC-assailed resolution would take HLI to task for securing approval of the conversion
to non-agricultural uses of 500 hectares of the hacienda. In not too many words, the Report and the resolution view
the conversion as an infringement of Sec. 5(a) of DAO 10 which reads: "a. that the continued operation of the
corporation with its agricultural land intact and unfragmented is viable with potential for growth and increased
profitability."
The PARC is wrong.
In the first place, Sec. 5(a)––just like the succeeding Sec. 5(b) of DAO 10 on increased income and greater
benefits to qualified beneficiaries––is but one of the stated criteria to guide PARC in deciding on whether or not to
accept an SDP. Said Sec. 5(a) does not exact from the corporate landowner-applicant the undertaking to keep the
farm intact and unfragmented ad infinitum. And there is logic to HLI’s stated observation that the key phrase in
the provision of Sec. 5(a) is "viability of corporate operations": "[w]hat is thus required is not the agricultural land
remaining intact x x x but the viability of the corporate operations with its agricultural land being intact and
unfragmented. Corporate operation may be viable even if the corporate agricultural land does not remain intact or
[un]fragmented."
It is, of course, anti-climactic to mention that DAR viewed the conversion as not violative of any issuance, let
alone undermining the viability of Hacienda Luisita’s operation, as the DAR Secretary approved the land
conversion applied for and its disposition via his Conversion Order dated August 14, 1996 pursuant to Sec. 65 of
RA 6657 which reads:
Sec. 65. Conversion of Lands.¾After the lapse of five years from its award when the land ceases to be
economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial purposes, the DAR upon application of the
beneficiary or landowner with due notice to the affected parties, and subject to existing laws, may authorize the x
x x conversion of the land and its dispositions. x x x
On the 3% Production Share
On the matter of the alleged failure of HLI to comply with sharing the 3% of the gross production sales of the
hacienda and pay dividends from profit, the entries in its financial books tend to indicate compliance by HLI of the
profit-sharing equivalent to 3% of the gross sales from the production of the agricultural land on top of (a) the
salaries and wages due FWBs as employees of the company and (b) the 3% of the gross selling price of the
converted land and that portion used for the SCTEX. A plausible evidence of compliance or non-compliance, as
the case may be, could be the books of account of HLI. Evidently, the cry of some groups of not having received
their share from the gross production sales has not adequately been validated on the ground by the Special Task
Force.
Indeed, factual findings of administrative agencies are conclusive when supported by substantial evidence and are
accorded due respect and weight, especially when they are affirmed by the CA. However, such rule is not absolute.
One such exception is when the findings of an administrative agency are conclusions without citation of specific
evidence on which they are based, such as in this particular instance. As culled from its Terminal Report, it would
appear that the Special Task Force rejected HLI’s claim of compliance on the basis of this ratiocination:
 The Task Force position: Though, allegedly, the Supervisory Group receives the 3% gross production
share and that others alleged that they received 30 million pesos still others maintain that they have not
received anything yet. Item No. 4 of the MOA is clear and must be followed. There is a distinction between
the total gross sales from the production of the land and the proceeds from the sale of the land. The former
refers to the fruits/yield of the agricultural land while the latter is the land itself. The phrase "the
beneficiaries are entitled every year to an amount approximately equivalent to 3% would only be feasible if
the subject is the produce since there is at least one harvest per year, while such is not the case in the sale of
the agricultural land. This negates then the claim of HLI that, all that the FWBs can be entitled to, if any, is
only 3% of the purchase price of the converted land.
 Besides, the Conversion Order dated 14 August 1996 provides that "the benefits, wages and the like,
presently received by the FWBs shall not in any way be reduced or adversely affected. Three percent of the
gross selling price of the sale of the converted land shall be awarded to the beneficiaries of the SDO." The
3% gross production share then is different from the 3% proceeds of the sale of the converted land and, with
more reason, the 33% share being claimed by the FWBs as part owners of the Hacienda, should have been
given the FWBs, as stockholders, and to which they could have been entitled if only the land were acquired
and redistributed to them under the CARP.
xxxx
 The FWBs do not receive any other benefits under the MOA except the aforementioned [(viz: shares of
stocks (partial), 3% gross production sale (not all) and homelots (not all)].
Judging from the above statements, the Special Task Force is at best silent on whether HLI has failed to comply
with the 3% production-sharing obligation or the 3% of the gross selling price of the converted land and the
SCTEX lot. In fact, it admits that the FWBs, though not all, have received their share of the gross production sales
and in the sale of the lot to SCTEX. At most, then, HLI had complied substantially with this SDP undertaking and
the conversion order. To be sure, this slight breach would not justify the setting to naught by PARC of the
approval action of the earlier PARC. Even in contract law, rescission, predicated on violation of reciprocity, will
not be permitted for a slight or casual breach of contract; rescission may be had only for such breaches that are
substantial and fundamental as to defeat the object of the parties in making the agreement.
Despite the foregoing findings, the revocation of the approval of the SDP is not without basis as shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for corporations or business associations owning or
operating farms which opted for land distribution. Sec. 30 of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of Cooperatives.¾The individual members of the cooperatives or
corporations mentioned in the preceding section shall be provided with homelots and small farmlots for their
family use, to be taken from the land owned by the cooperative or corporation.
The "preceding section" referred to in the above-quoted provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations. In the case of farms owned
or operated by corporations or other business associations, the following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the
worker-beneficiaries who shall form a workers’ cooperative or association which will deal with the corporation or
business association. Until a new agreement is entered into by and between the workers’ cooperative or
association and the corporation or business association, any agreement existing at the time this Act takes effect
between the former and the previous landowner shall be respected by both the workers’ cooperative or association
and the corporation or business association.
Noticeably, the foregoing provisions do not make reference to corporations which opted for stock distribution
under Sec. 31 of RA 6657. Concomitantly, said corporations are not obliged to provide for it except by stipulation,
as in this case.
Under the SDP, HLI undertook to "subdivide and allocate for free and without charge among the qualified family-
beneficiaries x x x residential or homelots of not more than 240 sq. m. each, with each family beneficiary being
assured of receiving and owning a homelot in the barrio or barangay where it actually resides," "within a
reasonable time."
More than sixteen (16) years have elapsed from the time the SDP was approved by PARC, and yet, it is still the
contention of the FWBs that not all was given the 240-square meter homelots and, of those who were already
given, some still do not have the corresponding titles.
During the oral arguments, HLI was afforded the chance to refute the foregoing allegation by submitting proof that
the FWBs were already given the said homelots:
Justice Velasco: x x x There is also an allegation that the farmer beneficiaries, the qualified family beneficiaries
were not given the 240 square meters each. So, can you also [prove] that the qualified family beneficiaries were
already provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please.
Other than the financial report, however, no other substantial proof showing that all the qualified beneficiaries
have received homelots was submitted by HLI. Hence, this Court is constrained to rule that HLI has not yet fully
complied with its undertaking to distribute homelots to the FWBs under the SDP.
On "Man Days" and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock distribution, We find
that it violates two (2) provisions of DAO 10. Par. 3 of the SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange with the
FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on the basis of number of
days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY.
Based on the above-quoted provision, the distribution of the shares of stock to the FWBs, albeit not entailing a
cash out from them, is contingent on the number of "man days," that is, the number of days that the FWBs have
worked during the year. This formula deviates from Sec. 1 of DAO 10, which decrees the distribution of equal
number of shares to the FWBs as the minimum ratio of shares of stock for purposes of compliance with Sec. 31 of
RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.¾The [SDP] submitted by the corporate landowner-applicant shall provide for
the distribution of an equal number of shares of the same class and value, with the same rights and features as all
other shares, to each of the qualified beneficiaries. This distribution plan in all cases, shall be at least the minimum
ratio for purposes of compliance with Section 31 of R.A. No. 6657.
On top of the minimum ratio provided under Section 3 of this Implementing Guideline, the corporate landowner-
applicant may adopt additional stock distribution schemes taking into account factors such as rank, seniority,
salary, position and other circumstances which may be deemed desirable as a matter of sound company policy.
(Emphasis supplied.)
The above proviso gives two (2) sets or categories of shares of stock which a qualified beneficiary can acquire
from the corporation under the SDP. The first pertains, as earlier explained, to the mandatory minimum ratio of
shares of stock to be distributed to the FWBs in compliance with Sec. 31 of RA 6657. This minimum ratio
contemplates of that "proportion of the capital stock of the corporation that the agricultural land, actually devoted
to agricultural activities, bears in relation to the company’s total assets." It is this set of shares of stock which, in
line with Sec. 4 of DAO 10, is supposed to be allocated "for the distribution of an equal number of shares of stock
of the same class and value, with the same rights and features as all other shares, to each of the qualified
beneficiaries."
On the other hand, the second set or category of shares partakes of a gratuitous extra grant, meaning that this set or
category constitutes an augmentation share/s that the corporate landowner may give under an additional stock
distribution scheme, taking into account such variables as rank, seniority, salary, position and like factors which
the management, in the exercise of its sound discretion, may deem desirable.
Before anything else, it should be stressed that, at the time PARC approved HLI’s SDP, HLI
recognized 6,296 individuals as qualified FWBs. And under the 30-year stock distribution program envisaged
under the plan, FWBs who came in after 1989, new FWBs in fine, may be accommodated, as they appear to have
in fact been accommodated as evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original 1989 FWBs shall depend on the number of "man
days," HLI violated the afore-quoted rule on stock distribution and effectively deprived the FWBs of equal shares
of stock in the corporation, for, in net effect, these 6,296 qualified FWBs, who theoretically had given up their
rights to the land that could have been distributed to them, suffered a dilution of their due share entitlement. As
has been observed during the oral arguments, HLI has chosen to use the shares earmarked for farmworkers as
reward system chips to water down the shares of the original 6,296 FWBs. Particularly:
Justice Abad: If the SDOA did not take place, the other thing that would have happened is that there would be
CARP?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: That’s the only point I want to know x x x. Now, but they chose to enter SDOA instead of placing
the land under CARP. And for that reason those who would have gotten their shares of the land actually gave up
their rights to this land in place of the shares of the stock, is that correct?
Atty. Dela Merced: It would be that way, Your Honor.
Justice Abad: Right now, also the government, in a way, gave up its right to own the land because that way the
government takes own [sic] the land and distribute it to the farmers and pay for the land, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent (33%) of the shares of HLI to the farmers at that time that
numbered x x x those who signed five thousand four hundred ninety eight (5,498) beneficiaries, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their shares, some workers came in from 1989, 1990, 1991, 1992
and the rest of the years that you gave additional shares who were not in the original list of owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any right that would have belong to them in 1989 when the land was
supposed to have been placed under CARP?
Atty. Dela Merced: If you are talking or referring… (interrupted)
Justice Abad: None! You tell me. None. They gave up no rights to land?
Atty. Dela Merced: They did not do the same thing as we did in 1989, Your Honor.
Justice Abad: No, if they were not workers in 1989 what land did they give up? None, if they become workers
later on.
Atty. Dela Merced: None, Your Honor, I was referring, Your Honor, to the original… (interrupted)
Justice Abad: So why is it that the rights of those who gave up their lands would be diluted, because the company
has chosen to use the shares as reward system for new workers who come in? It is not that the new workers, in
effect, become just workers of the corporation whose stockholders were already fixed. The TADECO who has
shares there about sixty six percent (66%) and the five thousand four hundred ninety eight (5,498) farmers at the
time of the SDOA? Explain to me. Why, why will you x x x what right or where did you get that right to use this
shares, to water down the shares of those who should have been benefited, and to use it as a reward system
decided by the company?
From the above discourse, it is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the
time of the approval of the SDP, suffered from watering down of shares. As determined earlier, each original FWB
is entitled to 18,804.32 HLI shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per
beneficiary, because the acquisition and distribution of the HLI shares were based on "man days" or "number of
days worked" by the FWB in a year’s time. As explained by HLI, a beneficiary needs to work for at least 37 days
in a fiscal year before he or she becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately,
does not get any share at year end. The number of HLI shares distributed varies depending on the number of days
the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to the original 6,296
FWBs, such that, as indicated in the Compliance dated August 2, 2010 submitted by HLI to the Court, the total
number of farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include the original
6,296 FWBs, were given shares out of the 118,931,976.85 HLI shares representing the 33.296% of the total
outstanding capital stock of HLI. Clearly, the minimum individual allocation of each original FWB of 18,804.32
shares was diluted as a result of the use of "man days" and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year timeframe for HLI-to-
FWBs stock transfer is an arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for
the implementation of the approved stock distribution plan within three (3) months from receipt by the corporate
landowner of the approval of the plan by PARC. In fact, based on the said provision, the transfer of the shares of
stock in the names of the qualified FWBs should be recorded in the stock and transfer books and must be
submitted to the SEC within sixty (60) days from implementation. As stated:
Section 11. Implementation/Monitoring of Plan.¾The approved stock distribution plan shall
be implemented within three (3) months from receipt by the corporate landowner-applicant of the approval thereof
by the PARC, and the transfer of the shares of stocks in the names of the qualified beneficiaries shall be recorded
in stock and transfer books and submitted to the Securities and Exchange Commission (SEC) within sixty (60)
days from the said implementation of the stock distribution plan. (Emphasis supplied.)
It is evident from the foregoing provision that the implementation, that is, the distribution of the shares of stock to
the FWBs, must be made within three (3) months from receipt by HLI of the approval of the stock distribution
plan by PARC. While neither of the clashing parties has made a compelling case of the thrust of this provision, the
Court is of the view and so holds that the intent is to compel the corporate landowner to complete, not merely
initiate, the transfer process of shares within that three-month timeframe. Reinforcing this conclusion is the 60-day
stock transfer recording (with the SEC) requirement reckoned from the implementation of the SDP.
To the Court, there is a purpose, which is at once discernible as it is practical, for the three-month threshold.
Remove this timeline and the corporate landowner can veritably evade compliance with agrarian reform by simply
deferring to absurd limits the implementation of the stock distribution scheme.
The argument is urged that the thirty (30)-year distribution program is justified by the fact that, under Sec. 26 of
RA 6657, payment by beneficiaries of land distribution under CARP shall be made in thirty (30) annual
amortizations. To HLI, said section provides a justifying dimension to its 30-year stock distribution program.
HLI’s reliance on Sec. 26 of RA 6657, quoted in part below, is obviously misplaced as the said provision clearly
deals with land distribution.
SEC. 26. Payment by Beneficiaries.¾Lands awarded pursuant to this Act shall be paid for by the beneficiaries to
the LBP in thirty (30) annual amortizations x x x.
Then, too, the ones obliged to pay the LBP under the said provision are the beneficiaries. On the other hand, in the
instant case, aside from the fact that what is involved is stock distribution, it is the corporate landowner who has
the obligation to distribute the shares of stock among the FWBs.
Evidently, the land transfer beneficiaries are given thirty (30) years within which to pay the cost of the land thus
awarded them to make it less cumbersome for them to pay the government. To be sure, the reason underpinning
the 30-year accommodation does not apply to corporate landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much shorter period of time.
Taking into account the above discussion, the revocation of the SDP by PARC should be upheld for violating
DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC and the DAR have the power to issue rules
and regulations, substantive or procedural. Being a product of such rule-making power, DAO 10 has the force and
effect of law and must be duly complied with. The PARC is, therefore, correct in revoking the SDP. Consequently,
the PARC Resolution No. 89-12-2 dated November 21, l989 approving the HLI’s SDP is nullified and voided.
III.
We now resolve the petitions-in-intervention which, at bottom, uniformly pray for the exclusion from the coverage
of the assailed PARC resolution those portions of the converted land within Hacienda Luisita which RCBC and
LIPCO acquired by purchase.
Both contend that they are innocent purchasers for value of portions of the converted farm land. Thus, their plea
for the exclusion of that portion from PARC Resolution 2005-32-01, as implemented by a DAR-issued Notice of
Coverage dated January 2, 2006, which called for mandatory CARP acquisition coverage of lands subject of the
SDP.
To restate the antecedents, after the conversion of the 500 hectares of land in Hacienda Luisita, HLI transferred the
300 hectares to Centennary, while ceding the remaining 200-hectare portion to LRC. Subsequently, LIPCO
purchased the entire three hundred (300) hectares of land from Centennary for the purpose of developing the land
into an industrial complex. Accordingly, the TCT in Centennary’s name was canceled and a new one issued in
LIPCO’s name. Thereafter, said land was subdivided into two (2) more parcels of land. Later on, LIPCO
transferred about 184 hectares to RCBC by way of dacion en pago, by virtue of which TCTs in the name of RCBC
were subsequently issued.
Under Sec. 44 of PD 1529 or the Property Registration Decree, "every registered owner receiving a certificate of
title in pursuance of a decree of registration and every subsequent purchaser of registered land taking a certificate
of title for value and in good faith shall hold the same free from all encumbrances except those noted on the
certificate and enumerated therein."
It is settled doctrine that one who deals with property registered under the Torrens system need not go beyond the
four corners of, but can rely on what appears on, the title. He is charged with notice only of such burdens and
claims as are annotated on the title. This principle admits of certain exceptions, such as when the party has actual
knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry, or when
the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title of the property in litigation. A higher level of care and
diligence is of course expected from banks, their business being impressed with public interest.
Millena v. Court of Appeals describes a purchaser in good faith in this wise:
x x x A purchaser in good faith is one who buys property of another, without notice that some other person has a
right to, or interest in, such property at the time of such purchase, or before he has notice of the claim or interest of
some other persons in the property. Good faith, or the lack of it, is in the final analysis a question of intention; but
in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the
evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined.
Truly, good faith is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind
which can only be judged by actual or fancied tokens or signs. Otherwise stated, good faith x x x refers to the state
of mind which is manifested by the acts of the individual concerned. (Emphasis supplied.)
In fine, there are two (2) requirements before one may be considered a purchaser in good faith, namely: (1) that the
purchaser buys the property of another without notice that some other person has a right to or interest in such
property; and (2) that the purchaser pays a full and fair price for the property at the time of such purchase or before
he or she has notice of the claim of another.
It can rightfully be said that both LIPCO and RCBC are––based on the above requirements and with respect to the
adverted transactions of the converted land in question––purchasers in good faith for value entitled to the benefits
arising from such status.
First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial land, there was no notice
of any supposed defect in the title of its transferor, Centennary, or that any other person has a right to or interest in
such property. In fact, at the time LIPCO acquired said parcels of land, only the following annotations appeared on
the TCT in the name of Centennary: the Secretary’s Certificate in favor of Teresita Lopa, the Secretary’s
Certificate in favor of Shintaro Murai, and the conversion of the property from agricultural to industrial and
residential use.
The same is true with respect to RCBC. At the time it acquired portions of Hacienda Luisita, only the following
general annotations appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its use solely as an
industrial estate; the Secretary’s Certificate in favor of Koji Komai and Kyosuke Hori; and the Real Estate
Mortgage in favor of RCBC to guarantee the payment of PhP 300 million.
It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that were previously covered
by the SDP. Good faith "consists in the possessor’s belief that the person from whom he received it was the owner
of the same and could convey his title. Good faith requires a well-founded belief that the person from whom title
was received was himself the owner of the land, with the right to convey it. There is good faith where there is an
honest intention to abstain from taking any unconscientious advantage from another." It is the opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by
means of a stock distribution plan, as the DAR conversion order was annotated at the back of the titles of the lots
they acquired. However, they are of the honest belief that the subject lots were validly converted to commercial or
industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC Resolution No.
89-12-2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows
conversion and disposition of agricultural lands previously covered by CARP land acquisition "after the lapse of
five (5) years from its award when the land ceases to be economically feasible and sound for agricultural purposes
or the locality has become urbanized and the land will have a greater economic value for residential, commercial
or industrial purposes." Moreover, DAR notified all the affected parties, more particularly the FWBs, and gave
them the opportunity to comment or oppose the proposed conversion. DAR, after going through the necessary
processes, granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction under
Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and its original exclusive jurisdiction
over all matters involving the implementation of agrarian reform. The DAR conversion order became final and
executory after none of the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO
purchased the lots in question on their honest and well-founded belief that the previous registered owners could
legally sell and convey the lots though these were previously subject of CARP coverage. Ergo, RCBC and LIPCO
acted in good faith in acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value. Undeniably, LIPCO
acquired 300 hectares of land from Centennary for the amount of PhP 750 million pursuant to a Deed of Sale
dated July 30, 1998. On the other hand, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO
conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of PhP
431,695,732.10.
As bona fide purchasers for value, both LIPCO and RCBC have acquired rights which cannot just be disregarded
by DAR, PARC or even by this Court. As held in Spouses Chua v. Soriano:
With the property in question having already passed to the hands of purchasers in good faith, it is now of no
moment that some irregularity attended the issuance of the SPA, consistent with our pronouncement in Heirs of
Spouses Benito Gavino and Juana Euste v. Court of Appeals, to wit:
x x x the general rule that the direct result of a previous void contract cannot be valid, is inapplicable in this case
as it will directly contravene the Torrens system of registration. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the property, the court cannot
disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation will
be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved;
otherwise, everyone dealing with the property registered under the system will have to inquire in every instance as
to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law.
Being purchasers in good faith, the Chuas already acquired valid title to the property. A purchaser in good
faith holds an indefeasible title to the property and he is entitled to the protection of the law. x x x (Emphasis
supplied.)
To be sure, the practicalities of the situation have to a point influenced Our disposition on the fate of RCBC and
LIPCO. After all, the Court, to borrow from Association of Small Landowners in the Philippines, Inc., is not a
"cloistered institution removed" from the realities on the ground. To note, the approval and issuances of both the
national and local governments showing that certain portions of Hacienda Luisita have effectively ceased, legally
and physically, to be agricultural and, therefore, no longer CARPable are a matter of fact which cannot just be
ignored by the Court and the DAR. Among the approving/endorsing issuances:
(a) Resolution No. 392 dated 11 December 1996 of the Sangguniang Bayan of Tarlac favorably endorsing the
300-hectare industrial estate project of LIPCO;
(b) BOI Certificate of Registration No. 96-020 dated 20 December 1996 issued in accordance with the
Omnibus Investments Code of 1987;
(c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June 1997, approving LIPCO’s application for
a mixed ecozone and proclaiming the three hundred (300) hectares of the industrial land as a Special
Economic Zone;
(d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan of Tarlac, approving the Final
Development Permit for the Luisita Industrial Park II Project;
(e) Development Permit dated 13 August 1997 for the proposed Luisita Industrial Park II Project issued by the
Office of the Sangguniang Bayan of Tarlac;
(f) DENR Environmental Compliance Certificate dated 01 October 1997 issued for the proposed project of
building an industrial complex on three hundred (300) hectares of industrial land;
(g) Certificate of Registration No. 00794 dated 26 December 1997 issued by the HLURB on the project of
Luisita Industrial Park II with an area of three million (3,000,000) square meters;
(h) License to Sell No. 0076 dated 26 December 1997 issued by the HLURB authorizing the sale of lots in the
Luisita Industrial Park II;
(i) Proclamation No. 1207 dated 22 April 1998 entitled "Declaring Certain Parcels of Private Land in
Barangay San Miguel, Municipality of Tarlac, Province of Tarlac, as a Special Economic Zone pursuant to
Republic Act No. 7916," designating the Luisita Industrial Park II consisting of three hundred hectares (300
has.) of industrial land as a Special Economic Zone; and
(j) Certificate of Registration No. EZ-98-05 dated 07 May 1998 issued by the PEZA, stating that pursuant to
Presidential Proclamation No. 1207 dated 22 April 1998 and Republic Act No. 7916, LIPCO has been
registered as an Ecozone Developer/Operator of Luisita Industrial Park II located in San Miguel, Tarlac,
Tarlac.
While a mere reclassification of a covered agricultural land or its inclusion in an economic zone does not
automatically allow the corporate or individual landowner to change its use, the reclassification process is a prima
facie indicium that the land has ceased to be economically feasible and sound for agricultural uses. And if only to
stress, DAR Conversion Order No. 030601074-764-(95) issued in 1996 by then DAR Secretary Garilao had
effectively converted 500 hectares of hacienda land from agricultural to industrial/commercial use and authorized
their disposition.
In relying upon the above-mentioned approvals, proclamation and conversion order, both RCBC and LIPCO
cannot be considered at fault for believing that certain portions of Hacienda Luisita are industrial/commercial
lands and are, thus, outside the ambit of CARP. The PARC, and consequently DAR, gravely abused its discretion
when it placed LIPCO’s and RCBC’s property which once formed part of Hacienda Luisita under the CARP
compulsory acquisition scheme via the assailed Notice of Coverage.
As regards the 80.51-hectare land transferred to the government for use as part of the SCTEX, this should also be
excluded from the compulsory agrarian reform coverage considering that the transfer was consistent with the
government’s exercise of the power of eminent domain and none of the parties actually questioned the transfer.
While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos. 2005-32-01
and 2006-34-01, the Court cannot close its eyes to certain "operative facts" that had occurred in the interim.
Pertinently, the "operative fact" doctrine realizes that, in declaring a law or executive action null and void, or, by
extension, no longer without force and effect, undue harshness and resulting unfairness must be avoided. This is as
it should realistically be, since rights might have accrued in favor of natural or juridical persons and obligations
justly incurred in the meantime. The actual existence of a statute or executive act is, prior to such a determination,
an operative fact and may have consequences which cannot justly be ignored; the past cannot always be erased by
a new judicial declaration.
The oft-cited De Agbayani v. Philippine National Bank discussed the effect to be given to a legislative or
executive act subsequently declared invalid:
x x x It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act
must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have
changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has
been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is
now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is
merely to reflect awareness that precisely because the judiciary is the government organ which has the final say on
whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise
the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality
of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a
determination of [unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects,––with respect to particular relations, individual and
corporate, and particular conduct, private and official." x x x
Given the above perspective and considering that more than two decades had passed since the PARC’s approval of
the HLI’s SDP, in conjunction with numerous activities performed in good faith by HLI, and the reliance by the
FWBs on the legality and validity of the PARC-approved SDP, perforce, certain rights of the parties, more
particularly the FWBs, have to be respected pursuant to the application in a general way of the operative fact
doctrine.
A view, however, has been advanced that the operative fact doctrine is of minimal or altogether without relevance
to the instant case as it applies only in considering the effects of a declaration of unconstitutionality of a statute,
and not of a declaration of nullity of a contract. This is incorrect, for this view failed to consider is that it is NOT
the SDOA dated May 11, 1989 which was revoked in the instant case. Rather, it is PARC’s approval of the HLI’s
Proposal for Stock Distribution under CARP which embodied the SDP that was nullified.
A recall of the antecedent events would show that on May 11, 1989, Tadeco, HLI, and the qualified FWBs
executed the SDOA. This agreement provided the basis and mechanics of the SDP that was subsequently proposed
and submitted to DAR for approval. It was only after its review that the PARC, through then Sec. Defensor-
Santiago, issued the assailed Resolution No. 89-12-2 approving the SDP. Considerably, it is not the SDOA which
gave legal force and effect to the stock distribution scheme but instead, it is the approval of the SDP under the
PARC Resolution No. 89-12-2 that gave it its validity.
The above conclusion is bolstered by the fact that in Sec. Pangandaman’s recommendation to the PARC Excom,
what he proposed is the recall/revocation of PARC Resolution No. 89-12-2 approving HLI’s SDP, and not the
revocation of the SDOA. Sec. Pangandaman’s recommendation was favorably endorsed by the PARC Validation
Committee to the PARC Excom, and these recommendations were referred to in the assailed Resolution No. 2005-
32-01. Clearly, it is not the SDOA which was made the basis for the implementation of the stock distribution
scheme.
That the operative fact doctrine squarely applies to executive acts––in this case, the approval by PARC of the HLI
proposal for stock distribution––is well-settled in our jurisprudence. In Chavez v. National Housing Authority, We
held:
Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because it is an equitable
doctrine which could not be used to countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of the various agreements
implementing the SMDRP is an operative fact that can no longer be disturbed or simply ignored, citing Rieta v.
People of the Philippines.
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a
legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid and must be
complied with, thus:
x x x           x x x          x x x
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein we
ruled that:
Moreover, we certainly cannot nullify the City Government's order of suspension, as we have no reason to do so,
much less retroactively apply such nullification to deprive private respondent of a compelling and valid reason for
not filing the leave application. For as we have held, a void act though in law a mere scrap of paper nonetheless
confers legitimacy upon past acts or omissions done in reliance thereof. Consequently, the existence of a statute or
executive order prior to its being adjudged void is an operative fact to which legal consequences are attached. It
would indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a
formal leave application. (Citations omitted; Emphasis supplied.)
The applicability of the operative fact doctrine to executive acts was further explicated by this Court in Rieta v.
People, thus:
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754 was invalid, as
the law upon which it was predicated — General Order No. 60, issued by then President Ferdinand E. Marcos —
was subsequently declared by the Court, in Tañada v. Tuvera, 33 to have no force and effect. Thus, he asserts, any
evidence obtained pursuant thereto is inadmissible in evidence.
We do not agree. In Tañada, the Court addressed the possible effects of its declaration of the invalidity of various
presidential issuances. Discussing therein how such a declaration might affect acts done on a presumption of their
validity, the Court said:
". . .. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot
County Drainage District vs. Baxter Bank to wit:
‘The courts below have proceeded on the theory that the Act of Congress, having been found to be
unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence
affording no basis for the challenged decree. . . . It is quite clear, however, that such broad statements as to the
effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute,
prior to [the determination of its invalidity], is an operative fact and may have consequences which cannot justly
be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as
to invalidity may have to be considered in various aspects — with respect to particular conduct, private and
official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have
finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous
application, demand examination. These questions are among the most difficult of those which have engaged the
attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.’
x x x           x x x          x x x
"Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official
Gazette is ‘an operative fact which may have consequences which cannot be justly ignored. The past cannot
always be erased by a new judicial declaration . . . that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.’"
The Chicot doctrine cited in Tañada advocates that, prior to the nullification of a statute, there is an imperative
necessity of taking into account its actual existence as an operative fact negating the acceptance of "a principle of
absolute retroactive invalidity." Whatever was done while the legislative or the executive act was in operation
should be duly recognized and presumed to be valid in all respects. The ASSO that was issued in 1979 under
General Order No. 60 — long before our Decision in Tañada and the arrest of petitioner — is an operative fact that
can no longer be disturbed or simply ignored. (Citations omitted; Emphasis supplied.)
To reiterate, although the assailed Resolution No. 2005-32-01 states that it revokes or recalls the SDP, what it
actually revoked or recalled was the PARC’s approval of the SDP embodied in Resolution No. 89-12-2.
Consequently, what was actually declared null and void was an executive act, PARC Resolution No. 89-12-2, and
not a contract (SDOA). It is, therefore, wrong to say that it was the SDOA which was annulled in the instant case.
Evidently, the operative fact doctrine is applicable.
IV.
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld, the revocation
must, by application of the operative fact principle, give way to the right of the original 6,296 qualified FWBs to
choose whether they want to remain as HLI stockholders or not. The Court cannot turn a blind eye to the fact that
in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP approved by
PARC per its Resolution No. 89-12-2 dated November 21, 1989. From 1989 to 2005, the FWBs were said to have
received from HLI salaries and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the
gross produce from agricultural lands, and 3% of the proceeds of the sale of the 500-hectare converted land and
the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were distributed as of April 22,
2005. On August 6, 20l0, HLI and private respondents submitted a Compromise Agreement, in which HLI gave
the FWBs the option of acquiring a piece of agricultural land or remain as HLI stockholders, and as a matter of
fact, most FWBs indicated their choice of remaining as stockholders. These facts and circumstances tend to
indicate that some, if not all, of the FWBs may actually desire to continue as HLI shareholders. A matter best left
to their own discretion.
With respect to the other FWBs who were not listed as qualified beneficiaries as of November 21, 1989 when the
SDP was approved, they are not accorded the right to acquire land but shall, however, continue as HLI
stockholders. All the benefits and homelots received by the 10,502 FWBs (6,296 original FWBs and 4,206 non-
qualified FWBs) listed as HLI stockholders as of August 2, 2010 shall be respected with no obligation to refund or
return them since the benefits (except the homelots) were received by the FWBs as farmhands in the agricultural
enterprise of HLI and other fringe benefits were granted to them pursuant to the existing collective bargaining
agreement with Tadeco. If the number of HLI shares in the names of the original FWBs who opt to remain as HLI
stockholders falls below the guaranteed allocation of 18,804.32 HLI shares per FWB, the HLI shall assign
additional shares to said FWBs to complete said minimum number of shares at no cost to said FWBs.
With regard to the homelots already awarded or earmarked, the FWBs are not obliged to return the same to HLI or
pay for its value since this is a benefit granted under the SDP. The homelots do not form part of the 4,915.75
hectares covered by the SDP but were taken from the 120.9234 hectare residential lot owned by Tadeco. Those
who did not receive the homelots as of the revocation of the SDP on December 22, 2005 when PARC Resolution
No. 2005-32-01 was issued, will no longer be entitled to homelots. Thus, in the determination of the ultimate
agricultural land that will be subjected to land distribution, the aggregate area of the homelots will no longer be
deducted.
There is a claim that, since the sale and transfer of the 500 hectares of land subject of the August 14, 1996
Conversion Order and the 80.51-hectare SCTEX lot came after compulsory coverage has taken place, the FWBs
should have their corresponding share of the land’s value. There is merit in the claim. Since the SDP approved by
PARC Resolution No. 89-12-2 has been nullified, then all the lands subject of the SDP will automatically be
subject of compulsory coverage under Sec. 31 of RA 6657. Since the Court excluded the 500-hectare lot subject of
the August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot acquired by the government from the
area covered by SDP, then HLI and its subsidiary, Centennary, shall be liable to the FWBs for the price received
for said lots. HLI shall be liable for the value received for the sale of the 200-hectare land to LRC in the amount of
PhP 500,000,000 and the equivalent value of the 12,000,000 shares of its subsidiary, Centennary, for the 300-
hectare lot sold to LIPCO for the consideration of PhP 750,000,000. Likewise, HLI shall be liable for PhP
80,511,500 as consideration for the sale of the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the proceeds of the sale of the 500-hectare land and 80.51-
hectare SCTEX lot to the FWBs. We also take into account the payment of taxes and expenses relating to the
transfer of the land and HLI’s statement that most, if not all, of the proceeds were used for legitimate corporate
purposes. In order to determine once and for all whether or not all the proceeds were properly utilized by HLI and
its subsidiary, Centennary, DAR will engage the services of a reputable accounting firm to be approved by the
parties to audit the books of HLI to determine if the proceeds of the sale of the 500-hectare land and the 80.51-
hectare SCTEX lot were actually used for legitimate corporate purposes, titling expenses and in compliance with
the August 14, 1996 Conversion Order. The cost of the audit will be shouldered by HLI. If after such audit, it is
determined that there remains a balance from the proceeds of the sale, then the balance shall be distributed to the
qualified FWBs.
A view has been advanced that HLI must pay the FWBs yearly rent for use of the land from 1989. We disagree. It
should not be forgotten that the FWBs are also stockholders of HLI, and the benefits acquired by the corporation
from its possession and use of the land ultimately redounded to the FWBs’ benefit based on its business operations
in the form of salaries, and other fringe benefits under the CBA. To still require HLI to pay rent to the FWBs will
result in double compensation.
For sure, HLI will still exist as a corporation even after the revocation of the SDP although it will no longer be
operating under the SDP, but pursuant to the Corporation Code as a private stock corporation. The non-
agricultural assets amounting to PhP 393,924,220 shall remain with HLI, while the agricultural lands valued at
PhP 196,630,000 with an original area of 4,915.75 hectares shall be turned over to DAR for distribution to the
FWBs. To be deducted from said area are the 500-hectare lot subject of the August 14, 1996 Conversion Order,
the 80.51-hectare SCTEX lot, and the total area of 6,886.5 square meters of individual lots that should have been
distributed to FWBs by DAR had they not opted to stay in HLI.
HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR for land
distribution to the FWBs. We find that the date of the "taking" is November 21, 1989, when PARC approved
HLI’s SDP per PARC Resolution No. 89-12-2. DAR shall coordinate with LBP for the determination of just
compensation. We cannot use May 11, 1989 when the SDOA was executed, since it was the SDP, not the SDOA,
that was approved by PARC.
The instant petition is treated pro hac vice in view of the peculiar facts and circumstances of the case.
WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01 dated December 22, 2005 and
Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLI’s SDP under compulsory
coverage on mandated land acquisition scheme of the CARP, are hereby AFFIRMED with the MODIFICATION
that the original 6,296 qualified FWBs shall have the option to remain as stockholders of HLI. DAR shall
immediately schedule meetings with the said 6,296 FWBs and explain to them the effects, consequences and legal
or practical implications of their choice, after which the FWBs will be asked to manifest, in secret voting, their
choices in the ballot, signing their signatures or placing their thumbmarks, as the case may be, over their printed
names.
Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is entitled to 18,804.32 HLI shares,
and, in case the HLI shares already given to him or her is less than 18,804.32 shares, the HLI is ordered to issue or
distribute additional shares to complete said prescribed number of shares at no cost to the FWB within thirty (30)
days from finality of this Decision. Other FWBs who do not belong to the original 6,296 qualified beneficiaries
are not entitled to land distribution and shall remain as HLI shareholders. All salaries, benefits, 3% production
share and 3% share in the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare SCTEX lot
and homelots already received by the 10,502 FWBs, composed of 6,296 original FWBs and 4,206 non-qualified
FWBs, shall be respected with no obligation to refund or return them.
Within thirty (30) days after determining who from among the original FWBs will stay as stockholders, DAR shall
segregate from the HLI agricultural land with an area of 4,915.75 hectares subject of PARC’s SDP-approving
Resolution No. 89-12-2 the following: (a) the 500-hectare lot subject of the August 14, l996 Conversion Order; (b)
the 80.51-hectare lot sold to, or acquired by, the government as part of the SCTEX complex; and (c) the aggregate
area of 6,886.5 square meters of individual lots that each FWB is entitled to under the CARP had he or she not
opted to stay in HLI as a stockholder. After the segregation process, as indicated, is done, the remaining area shall
be turned over to DAR for immediate land distribution to the original qualified FWBs who opted not to remain as
HLI stockholders.
The aforementioned area composed of 6,886.5-square meter lots allotted to the FWBs who stayed with the
corporation shall form part of the HLI assets.
HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000 received by it from Luisita Realty,
Inc. for the sale to the latter of 200 hectares out of the 500 hectares covered by the August 14, 1996 Conversion
Order, the consideration of PhP 750,000,000 received by its owned subsidiary, Centennary Holdings, Inc. for the
sale of the remaining 300 hectares of the aforementioned 500-hectare lot to Luisita Industrial Park Corporation,
and the price of PhP 80,511,500 paid by the government through the Bases Conversion Development Authority
for the sale of the 80.51-hectare lot used for the construction of the SCTEX road network. From the total amount
of PhP 1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP 1,330,511,500) shall be
deducted the 3% of the total gross sales from the production of the agricultural land and the 3% of the proceeds of
said transfers that were paid to the FWBs, the taxes and expenses relating to the transfer of titles to the transferees,
and the expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate corporate purposes. For this
purpose, DAR is ordered to engage the services of a reputable accounting firm approved by the parties to audit the
books of HLI and Centennary Holdings, Inc. to determine if the PhP 1,330,511,500 proceeds of the sale of the
three (3) aforementioned lots were used or spent for legitimate corporate purposes. Any unspent or unused balance
as determined by the audit shall be distributed to the 6,296 original FWBs.
HLI is entitled to just compensation for the agricultural land that will be transferred to DAR to be reckoned from
November 21, 1989 per PARC Resolution No. 89-12-2. DAR and LBP are ordered to determine the compensation
due to HLI.
DAR shall submit a compliance report after six (6) months from finality of this judgment. It shall also submit,
after submission of the compliance report, quarterly reports on the execution of this judgment to be submitted
within the first 15 days at the end of each quarter, until fully implemented.
The temporary restraining order is lifted.
SO ORDERED.
G.R. No. 209384, June 27, 2016
URBANO F. ESTRELLA, Petitioner, v. PRISCILLA P. FRANCISCO, Respondent.
DECISION
BRION, J.:
This petition for review on certiorari seeks to reverse and set aside the November 28, 2012 resolution of the
Court of Appeals (CA) in CA-G.R. SP No. 121519. The CA dismissed petitioner Urbano F. Estrella's (Estrella)
appeal from the Department of Agrarian Reform Adjudication Board's (DARAB) February 23, 2009
decision in DARAB Case No. 13185 which denied Estrella's right of redemption over an agricultural landholding.
ANTECEDENTS
Lope Cristobal (Cristobal) was the owner of a twenty-three thousand nine hundred and thirty-three square meter
(23,933 sqm.) parcel of agricultural riceland (subject landholding) in Cacarong Matanda, Pandi, Bulacan, covered
by Transfer Certificate of Title (TCT) No. T-248106 of the Register of Deeds of Bulacan. Estrella was the
registered agricultural tenant-lessee of the subject landholding.
On September 22, 1997, Cristobal sold the subject landholding to respondent Priscilla Francisco (Francisco) for
five hundred thousand pesos (P500,000.00), without notifying Estrella.
Upon discovering the sale, Estrella sent Cristobal a demand letter dated March 31, 1998, for the return of the
subject landholding. He also sent Francisco a similar demand letter dated July 31, 1998. Neither Cristobal nor
Francisco responded to Estrella's demands.
On February 12, 2001, Estrella filed a complaint against Cristobal and Francisco for legal redemption, recovery,
and maintenance of peaceful possession before the Office of the Provincial Agrarian Reform Adjudicator
(PARAD). His complaint was docketed as DCN. R-03-02-2930'01.
Estrella alleged that the sale between Cristobal and Francisco was made secretly and in bad faith, in violation of
Republic Act No. (R.A.) 3844, the Agricultural Land Reform Code (the Code). He insisted that he never waived
his rights as a registered tenant over the property and that he was willing to match the sale price. Estrella
concluded that as the registered tenant, he is entitled to legally redeem the property from Francisco. He also
manifested his ability and willingness to deposit the amount of P500,000.00 with the PARAD as the redemption
price.
Cristobal did not file an answer while Francisco denied all the allegations in the complaint except for the fact of
the sale. Francisco claimed that she was an innocent purchaser in good faith because she only bought the property
after: (1) Cristobal assured her that there would be no problems regarding the transfer of the property; and (2)
Cristobal personally undertook to compensate Estrella. Therefore, Estrella had no cause of action against her.
On June 23, 2002, the PARAD rendered its decision recognizing Estrella's right of redemption. The PARAD
found that neither Cristobal nor Francisco notified Estrella in writing of the sale. In the absence of such notice, an
agricultural lessee has a right to redeem the landholding from the buyer pursuant to Section 12 of the Code.
Francisco appealed the PARAD's decision to the DARAB where it was docketed as DARAB Case No. 13185.
On February 23, 2009, the DARAB reversed the PARAD's decision and denied Estrella the right of
redemption. Citing Section 12 of the Code as amended, the DARAB held that the right of redemption may be
exercised within 180 days from written notice of the sale. Considering that more than three years had lapsed
between Estrella's discovery of the sale and his filing of the case for redemption, the DARAB concluded that
Estrella slept on his rights and lost the right to redeem the landholding.
Estrella moved for reconsideration but the DARAB denied the motion.
On September 30, 2011, Estrella filed a motion before the CA to declare himself as a pauper litigant and
manifested his intention to file a petition for review of the DARAB's decision. He alleged that he was living below
the poverty line and did not have sufficient money or property for food, shelter, and other basic necessities.
On October 17, 2011, Estrella filed a petition for review of the DARAB's decision before the CA. The petition was
docketed as CA-G.R. SP No. 121519.
Estrella emphasized that the purpose of the State in enacting the agrarian reform laws is to protect the welfare of
landless farmers and to promote social justice towards establishing ownership over the agricultural land by the
tenant-lessees.16 He insisted that the DARAB erred in denying him the right of redemption based on a technicality
and that the redemption period in Sec. 12 of the Code does not apply in his case because neither the lessor nor the
vendee notified him in writing of the sale.
On November 28, 2012, the CA dismissed Estrella's petition for review for failure to show any reversible error in
the DARAB's decision. Estrella received a copy of the CA's resolution on April 10, 2013.chanrobleslaw
On April 11, 2013, Estrella filed a motion for a twenty-day extension of time (or until April 31, 2013) to file his
motion for reconsideration of the November 28, 2012 resolution.
On April 30, 2013, Estrella requested another ten-day extension of time (or until May 9, 2013) to file his motion
for reconsideration.
On May 9, 2013, Estrella filed his Motion for Reconsideration arguing that his right of redemption had not yet
prescribed because he was not given written notice of the sale to Francisco.
On May 30, 2013, the CA denied Estrelia's motions for extension of time, citing the rule that the reglementary
period to file a motion for reconsideration is non-extendible. The CA likewise denied Estrelia's Motion for
Reconsideration.
Hence, the present recourse to this Court.
On August 23, 2013, Estrella filed a motion for extension of time to file his petition for review and a motion to be
declared as a pauper litigant. We granted both motions on October 13, 2013.
THE PARTIES' ARGUMENTS
Estrella argues that an agricultural tenant's right of redemption over the landholding cannot prescribe when neither
the lessor-seller nor the buyer has given him written notice of the sale.
On the other hand, Francisco counters that Estrella failed to make a formal tender of or to consign with the
PARAD the redemption price as required in Quiño v. Court of Appeals. She also questioned the genuineness of
Estrelia's claim to be a pauper litigant. Francisco points out that a person who claims to be willing to pay the
redemption price of P500,000.00 is not, by any stretch of the imagination, a pauper.
OUR RULING
We find no merit in the petition.
The use and ownership of property bears a social function, and all economic agents are expected to contribute to
the common good. To this end, property ownership and economic activity are always subject to the duty of the
State to promote distributive justice and intervene when the common good requires.
As early as 1973, the Philippines has already declared our goal of emancipating agricultural tenants from the
bondage of the soil. The State adopts a policy of promoting social justice, establishing owner cultivatorship of
economic-size farms as the basis of Philippine agriculture, and providing a vigorous and systematic land
resettlement and redistribution program.
In pursuit of land reform, the State enacted the Agricultural Land Reform Code in 1963. The Code established an
agricultural leasehold system that replaced all existing agricultural share tenancy systems at that point.
The existence of an agricultural tenancy relationship between the lessor and the lessee gives the latter rights that
attach to the landholding, regardless of whoever may subsequently become its owner. This strengthens the security
of tenure of the tenants and protects them from being dispossessed of the landholding or ejected from their
leasehold by the death of either the lessor or of the tenant, the expiration of a term/period in the leasehold contract,
or the alienation of the landholding by the lessor. If either party dies, the leasehold continues to bind the lessor (or
his heirs) in favor of the tenant (or his surviving spouse/descendants). In case the lessor alienates the land, the
transferee is subrogated to the rights and substituted to the obligations of the lessor-transferor. The agricultural
leasehold subsists, notwithstanding the resulting change in ownership of the landholding, and the lessee's rights are
made enforceable against the transferee or other successor-in-interest of the original lessor.
To protect the lessee's security of tenure, the Code grants him the right of pre-emption - the preferential right to
buy the landholding under reasonable terms and conditions if ever the agricultural lessor decides to sell it. As an
added layer of protection, the Code also grants him the right to redeem the landholding from the vendee in the
event that the lessor sells it without the lessee's knowledge.
Originally, the lessee had a redemption period of two years from registration of the sale:
Sec. 12. Lessee's Right of Redemption - In case the landholding is sold to a third person without the knowledge of
the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration:
Provided, That the entire landholding sold must be redeemed: Provided, further, That where there are two or more
agricultural lessees, each shall be entitled to said right of redemption only to the extent of the area actually
cultivated by him. The right of redemption under this Section may be exercised within two years from the
registration of the sale, and shall have priority over any other right of legal redemption.
In Padasas v. Court of Appeals, we held that a lessee's actual knowledge of the sale of the landholding is
immaterial because the Code specifically and definitively provides that the redemption period must be counted
from the registration of the sale. This ruling was subsequently affirmed in Manuel v. Court of Appeals.
In 1971, R.A. 6389 amended Section 12 of the Code and shortened the redemption period:
Sec. 12. Lessee's right of Redemption. - In case the landholding is sold to a third person without the knowledge of
the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration:
Provided, That where there are two or more agricultural lessees, each shall be entitled to said right of redemption
only to the extent of the area actually cultivated by him. The right of redemption under this Section may be
exercised within one hundred eighty days from notice in writing which shall be served by the vendee on all
lessees affected and the Department of Agrarian Reform upon the registration of the sale, and shall have
priority over any other right of legal redemption. The redemption price shall be the reasonable price of the land at
the time of the sale.
Upon the filing of the corresponding petition or request with the department or corresponding case in court by the
agricultural lessee or lessees, the period of one hundred and eighty days shall cease to run.
Any petition or request for redemption shall be resolved within sixty days from the filing thereof; otherwise, the
said period shall start to run again.
The Department of Agrarian Reform shall initiate, while the Land Bank shall finance, said redemption as in the
case of pre-emption. [emphases and underscoring supplied]
In Mallari v. Court of Appeals, we held that the lessee's right of redemption will not prescribe if he is not served
written notice of the sale. We affirmed this ruling in Springsun Management Systems v. Camerino and Planters
Development Bank v. Garcia.
More recently in Po v. Dampal, we held that the failure of the vendee to serve written notice of the sale to the
lessee and the DAR prevents the running of the 180-day redemption period; the lessee's constructive knowledge of
the sale does not dispense with the vendee's duty to give written notice.
Simply put, Section 12 expressly states that the 180-day period must be reckoned from written notice of sale. If the
agricultural lessee was never notified in writing of the sale of the landholding, there is yet no prescription period to
speak of.
As the vendee, respondent Francisco had the express duty to serve written notice on Estrella, the agricultural
lessee, and on the DAR. Her failure to discharge this legal duty prevented the commencement of the 180-day
redemption period. Francisco only gave written notice of the sale in her answer before the PARAD wherein she
admitted the fact of the sale. Thus, Estrella timely exercised his right of redemption. To hold otherwise would
allow Francisco to profit from her own neglect to perform a legally mandated duty.
However, despite the timely filing of the redemption suit, Estrella did not validly exercise his right to redeem the
property. As early as 1969 in Basbas v. Entena, this Court had already held that the valid exercise of the right of
redemption requires either tender of the purchase price or valid consignation thereof in Court:
x x x the right of legal redemption must be exercised within specified time limits: and the statutory periods would
be rendered meaningless and of easy evasion unless the redemptioner is required to make an actual tender in good
faith of what he believed to be the reasonable price of the land sought to be redeemed. The existence of the right of
redemption operates to depress the market value of the land until the period expires, and to render that period
indefinite by permitting the tenant to file a suit for redemption, with either party unable to foresee when final
judgment will terminate the action, would render nugatory the period of two years [now 180 days] fixed by the
statute for making the redemption and virtually paralyze any efforts of the landowner to realize the value of his
land. No buyer can be expected to acquire it without any certainty as to the amount for which it may be redeemed,
so that he can recover at least his investment in case of redemption. In the meantime, the landowner's needs and
obligations cannot be met. It is doubtful if any such result was intended by the statute, absent clear wording to that
effect.
The situation becomes worse when, as shown by the evidence in this case, the redemptioner has no funds and must
apply for them to the Land Authority, which, in turn, must depend on the availability of funds from the Land
Bank. It then becomes practically certain that the landowner will not be able to realize the value of his property for
an indefinite time beyond the two years redemption period.
After the amendment of Section 12 of the Code, a certification from the Land Bank that it will finance the
redemption will also suffice in lieu of tender of payment or consignation.
In the present case, Estrella manifested his willingness to pay the redemption price but failed to tender payment or
consign it with the PARAD when he filed his complaint. To be sure, a tenant's failure to tender payment or
consign it in court upon filing the redemption suit is not necessarily fatal; he can still cure the defect and complete
his act of redemption by consigning his payment with the court within the remaining prescriptive period.
Ordinarily, the 180-day redemption period begins to run from the date that the vendee furnishes written notice of
the sale to the lessee. The filing of a petition or request for redemption with the DAR (through the PARAD)
suspends the running of the redemption period.
However, as the cases of Basbas and Almeda v. Court of Appeals - as well the amendment to Section 12 of the
Code - evidently show, Congress did not intend the redemption period to be indefinite. This 180-day period
resumes running if the petition is not resolved within sixty days.
Because Francisco failed to serve Estrella written notice of the sale, Estrella's 180-day redemption period was
intact when he filed the complaint before the PARAD. The filing of the complaint prevented the running of the
prescription period and gave Estrella time to cure the defect of his redemption through consignment of the
redemption price.
After the lapse of sixty days, Estrella's 180-day redemption period began running pursuant to Section 12 of the
Code. Nevertheless, Estrella could still have consigned payment within this 180-day period.
The exercise of the right of redemption must be made in accordance with the law. Tender of the redemption price
or its valid consignation must be made within the prescribed redemption period. The reason for this rule is simple:
xxx Only by such means can the buyer become certain that the offer to redeem is one made seriously and in
good faith. A buyer cannot be expected to entertain an offer of redemption without attendant evidence that
the redemptioner can, and is willing to accomplish the repurchase immediately. A different rule would leave
the buyer open to harassment by speculators or crackpots as well as to unnecessary prolongation of the
redemption period, contrary to the policy of the law. While consignation of the tendered price is not always
necessary because legal redemption is not made to discharge a pre-existing debt, a valid tender is indispensable,
for the reasons already stated. Of course, consignation of the price would remove all controversy as to the
redemptioner's ability to pay at the proper time. [Emphasis supplied]
Unfortunately, even after the lapse of the 240 days (the 60-day freeze period and the 180-day redemption period),
there was neither tender nor judicial consignation of the redemption price. Even though Estrella repeatedly
manifested his willingness to consign the redemption price, he never actually did.
While Estrella exercised his right of redemption in a timely manner, the redemption was ineffective because he
failed to exercise this right in accordance with the law. Notably, he had also repeatedly manifested his inability to
even pay judicial costs and docket fees. He has been declared (twice) as a pauper litigant who was "living below
the poverty threshold level because of limited income." This casts considerable doubt on Estrella's ability to pay
the full price of the property. In sum, we have no choice but to deny the petition.
The Agricultural Land Reform Code is a social legislation designed to promote economic and social stability. It
must be interpreted liberally to give full force and effect to its clear intent, which is "to achieve a dignified
existence for the small farmers" and to make them "more independent, self-reliant and responsible citizens, and a
source of genuine strength in our democratic society." Nevertheless, while we endeavor to protect the rights of
agricultural lessees, we must be mindful not to do so at the expense of trampling upon the landowners' rights
which are likewise protected by law.
WHEREFORE, we hereby DENY the petition for lack of merit; accordingly, we AFFIRM the November 28,
2012 resolution of the Court of Appeals in CA-G.R. SP No. 121519. No costs.
SO ORDERED.
Carpio, (Chairperson), Mendoza, and Leonen, JJ., concur.
Del Castillo, J., on leave.
 G.R. No. 170018, September 23, 2013
DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY OIC-SECRETARY
NASSER C. PANGANDAMAN, Petitioner, v. THE COURT OF APPEALS AND BASILAN
AGRICULTURAL TRADING CORPORATION (BATCO), Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari is the Decision dated September 6, 2005 of the Court of Appeals (CA) in
CA-G.R. SP No. 55377 which: (a) reversed and set aside the Order dated February 25, 1999 of the Secretary of
the Department of Agrarian Reform (DAR); (b) cancelled Transfer Certificates of Title (TCT) Nos. T-1012, T-
1013, and T-1014 in the name of Malo-ong Canal Farmers Agrarian Reform Multi-Purpose Cooperative
(MCFARMCO); and (c) directed the Registry of Deeds of the Province of Basilan (Basilan RD) to issue a new set
of titles in favor of private respondent Basilan Agricultural Trading Corporation (BATCO).
The Facts
BATCO was the owner of several parcels of agricultural land, with an aggregate area of 206.5694 hectares (has.),
situated in Malo-ong Canal, Lamitan, Province of Basilan (Basilan) and covered by TCT Nos. T-7454, T-
7455, and T-7456 (subject lands). On September 20, 1989, the aforesaid lands were voluntarily offered for sale
(VOS) to the government pursuant to Section 19 of Republic Act No. (RA) 6657, otherwise known as the
“Comprehensive Agrarian Reform Law of 1988,” for a consideration of P12,360,000.00. In 1992, BATCO was
notified that the 153.8801 hectare portion of the subject lands (subject portion), consisting of Lot Nos. 3, 4, and 5,
was being placed under the compulsory acquisition scheme by the DAR.
On January 6, 1993, BATCO reiterated its offer to sell the entire 206.5694 has. of the subject lands, but this time
to include the improvements thereon, and for a higher consideration of P32,000,000.00. On May 6, 1997, BATCO
received a Notice of Land Valuation and Acquisition dated April 15, 1997 from the DAR Provincial Agrarian
Reform Officer (PARO), offering it the amount of P7,501,228.39 for the subject portion. BATCO rejected the
valuation and opposed the same before the DAR Adjudication Board (DARAB). In view of BATCO’s rejection,
the DAR – following the procedure under Section 16(e) of RA 6657 – directed the Land Bank of the Philippines
(LBP) to deposit the compensation in cash and in agrarian reform bonds and thereafter requested the Basilan RD
to issue TCTs in the name of the Republic of the Philippines (Republic). In the meantime, the subject portion was
surveyed and the beneficiaries were accordingly identified. After which, DAR Regional Director Rogelio E.
Tamin (Director Tamin) directed the PARO to generate and issue the corresponding Certificates of Land
Ownership (CLOAs) in favor of the identified beneficiaries even over BATCO's protest.
On February 9, 1998, then DAR Secretary Ernesto Garilao directed Director Tamin and the PARO to proceed with
the registration and distribution of the CLOAs to the said identified beneficiaries.
In a letter dated March 2, 1998 to Director Tamin, BATCO requested for the exemption of the subject portion,
citing the case of Luz Farms v. DAR Secretary (Luz Farms) and DAR Administrative Order No. (AO) 09, Series
of 1993 (DAR AO 09-93). On May 6, 1998, BATCO filed before the DAR Regional Office a petition for the
exemption of the subject portion from the coverage of the government's Comprehensive Agrarian Reform Program
(CARP). It alleged that almost all of the entire subject lands have been devoted to cattle and livestock production
since their acquisition in 1987, warranting their exemption from CARP coverage in accordance with the ruling
in Luz Farms and the provisions of DAR AO 09-93. It claimed that as of March 15, 1998, there were 150 heads of
cattle, 50 heads of swine, and 50 heads of goats in the subject portion. Meanwhile, BATCO's certificates of title
over the foregoing were cancelled and new titles were issued in the name of the Republic on July 17, 1998.
The DAR Regional Director’s Ruling
On August 12, 1998, Director Tamin issued an Order (August 12, 1998 Order) dismissing BATCO's petition,
holding that based on the DAR's ocular inspection/investigation, the subject portion was “not exclusively, directly
and actually used for livestock, poultry, and swine raising as of June 15, 1988[,] the date of effectivity of RA
6657, and contrary to the spirit and intent of [DAR AO 09-93].” Hence, the subject portion is not exempt from
CARP coverage. Moreover, under DAR AO 09, Series of 1990, VOS of lands to the government, with the
exception of lands within the retention limits, may no longer be withdrawn.
BATCO appealed to the Office of the DAR Secretary, reiterating its claim that the subject portion was devoted to
cattle production prior to June 15, 1988 as evidenced by the appended certificates of ownership of large cattle
(certificates of livestock ownership) which, according to it, “should have been the major basis in the determination
of whether or not a particular landholding is devoted to such production, as claimed.”
In the interim, the Republic's certificates of title were cancelled on October 6, 1998 with the registration of the
CLOAs in the name of MCFARMCO for the benefit of its 54 members. Accordingly, new certificates of title, i.e.,
TCT Nos. T-1012, T-1013, and T-1014, were issued in favor of MCFARMCO.
The DAR Secretary’s Ruling
On February 25, 1999, then DAR Secretary Horacio R. Morales, Jr. (Secretary Morales) issued an Order (February
25, 1999 Order), denying the appeal on the ground that BATCO failed: 1) to present substantial evidence to show
that the subject portion was exclusively, directly and actually used for livestock, poultry, and swine raising prior to
June 15, 1988; and 2) to comply with the livestock and infrastructure requirements under DAR AO 09-
93. Secretary Morales observed that: (a) none of the certificates of livestock ownership appended to the records
predates the effectivity of RA 6657; (b) more than half of the cattle “was registered and presumably brought into
the property only on March 13, 1998 onwards, barely three months before [BATCO] filed [its] application for
exemption with the DAR Provincial Office on May 6, 1998”; and (c) BATCO's act of submitting the subject lands
(including the subject portion) under the VOS scheme is an admission that they were subject to CARP
coverage. Finding that the act of changing or converting the lands to livestock, poultry and swine raising after June
15, 1988 was without an approved conversion, Secretary Morales directed the Municipal Agrarian Reform Officer
concerned to conduct an investigation for possible violations of Section 73(c) and (e) of RA 6657. library
BATCO filed a motion for reconsideration and a supplemental motion, averring that prior to its acquisition of the
subject lands from the Marcelo Mendoza Development Corporation (Mendoza Plantation) on February 4, 1987,
the latter was already engaged in livestock raising and had facilities such as shade/barn, feed storage, corals and
gates, which BATCO subsequently improved and developed. BATCO further admitted that only a portion (about
100 has.) of the subject lands was devoted to livestock raising, for which the corresponding exemption was
prayed. It explained that the necessary documents were in the possession of the previous owner, hence, it was
unable to produce the same before the DAR Regional Director. In support of the foregoing motions, BATCO
submitted, among others, Certificates of Ownership of Large Cattle Nos. B-3144051 to B-3144150 dated between
July 10, 1987 to August 15, 1987, and the Joint Affidavit of barangay officials of Barangays Tumakid, Maloong
San Jose, Maloong Canal, and Buahan, all in Lamitan, Basilan declaring that BATCO is engaged in large cattle
raising. Nonetheless, BATCO affirmed that it is still offering 100 has. of the subject lands for the CARP.
On August 31, 1999, Secretary Morales issued an Order denying BATCO's motion for reconsideration. He gave
no credence to the certificates of livestock ownership belatedly submitted by BATCO, observing that the absence
of a sufficient justification for its failure to present such certificates earlier casts doubt to their veracity and
genuineness. Further, he held that laches had set in, especially considering that the petition was filed only in 1998,
or long after the orders for coverage were issued in 1992. Finally, he pointed out that BATCO failed to present
proof that it has met the infrastructure requirements under DAR AO 09-93.
The Proceedings Before the CA
BATCO's appeal was initially dismissed but subsequently reinstated by the CA.
On September 6, 2005, the CA issued a Decision reversing and setting aside Secretary Morales’ February 25, 1999
Order. It ruled that estoppel does not lie against BATCO considering that the pertinent law and regulations did not
provide for a prescriptive period for the filing of exemption from CARP coverage. Moreover, in the light of Luz
Farms, a petition for exemption is not even necessary so long as the landholdings are devoted to livestock, poultry,
and swine raising, thus, rendering DAR AO 09-93 ineffective and inconsequential.
The CA gave credence to BATCO's documentary evidence to support its claim of the existence and presence of
livestock in the lands in question starting the year 1987 consisting of: (a) the Certification dated March 26, 1998
of the Municipal Agriculturist of Lamitan, Basilan (Municipal Agriculturist Certification) as to the number of
cattle found in the area; (b) the photographs of the livestock therein allegedly taken on May 31, 2001 and July 5,
2005; and (c) the affidavits of former municipal mayors of Lamitan, Basilan – namely, Wilfrido C. Furigay and
Ramon Garcia, Jr. – attesting to the existence and presence of livestock in the subject lands starting the year 1987.
The CA likewise condemned the cancellation of BATCO's certificates of title prior to full payment of the
compensation and prior to the decision on the petition for exemption as violative of BATCO's right to procedural
and substantive due process. Corollarily, the CA cancelled TCT Nos. T-1012, T-1013 and T-1014 in the name of
MCFARMCO and directed the Basilan RD to issue a new set of titles in BATCO's favor.
The Issue Before the Court
The essential issue in this case is whether or not the CA gravely abused its discretion in excluding/exempting the
subject lands from CARP coverage despite BATCO's admission that only a portion thereof was devoted to
livestock raising and considering its previous voluntary offer of the lands to the government under the VOS
scheme.
The Court's Ruling
The petition is meritorious.
Under RA 6657, the CARP shall cover all public and private agricultural lands, including other lands of the public
domain suitable for agriculture, regardless of tenurial arrangement and commodity produced. 75 Section 3(c) thereof
defines “agricultural land” as land devoted to agricultural activity and not classified as mineral, forest, residential,
commercial or industrial land. Lands devoted to livestock, poultry, and swine raising are classified as industrial,
not agricultural lands and, thus, exempt from agrarian reform. As such, the DAR has no power to regulate
livestock farms.
Nevertheless, the determination of the land’s classification as either an agricultural or industrial land – and, in turn,
whether or not the land falls under agrarian reform exemption – must be preliminarily threshed out before the
DAR, particularly, before the DAR Secretary. Verily, issues of exclusion or exemption partake the nature of
Agrarian Law Implementation (ALI) cases which are well within the competence and jurisdiction of the DAR
Secretary. Towards this end, the latter is ordained to exercise his legal mandate of excluding or exempting a
property from CARP coverage based on the factual circumstances of each case and in accordance with the law and
applicable jurisprudence. Thus, considering too his technical expertise on the matter, courts cannot simply brush
aside his pronouncements regarding the status of the land in dispute, i.e., as to whether or not it falls under CARP
coverage. As held in DAR v. Oroville Development Corp.:
We cannot simply brush aside the DAR’s pronouncements regarding the status of the subject property as
not exempt from CARP coverage considering that the DAR has unquestionable technical expertise on these
matters. Factual findings of administrative agencies are generally accorded respect and even finality by this
Court, if such findings are supported by substantial evidence, a situation that obtains in this case. The factual
findings of the Secretary of Agrarian Reform who, by reason of his official position, has acquired expertise
in specific matters within his jurisdiction, deserve full respect and, without justifiable reason, ought not to
be altered, modified or reversed. (Emphases supplied)
It is settled that in order to be entitled to exclusion/exemption, it must be shown that the land is exclusively
devoted to livestock, swine or poultry raising. The land must be shown to have been used for such purposes as of
the effectivity of RA 6657, or on June 15, 1988, in order to prevent any fraudulent declaration of areas supposedly
used for these purposes as well as to protect the rights of agrarian beneficiaries therein. This is in consonance with
Section 73(c) of RA 6657 which prohibits the conversion by any landowner of his agricultural land into any non-
agricultural use with intent to avoid the application of RA 6657 to his landholdings and to dispossess his tenant
farmers of the land tilled by them.
A thorough review of the records reveals no substantial evidence to show that the entirety of the subject lands
were exclusively devoted to livestock production since June 15, 1988 so as to warrant their exclusion/exemption
from CARP coverage and the consequent cancellation of MCFARMCO's certificates of title. In fact, contrary to its
original submission that almost all of the entire 206.5694 has. landholding has been devoted to cattle and livestock
production since their acquisition in 1987, BATCO subsequently admitted in its Supplemental Motion for
Reconsideration of the Order dated 25 February 1999 (supplemental motion for reconsideration) that only a
portion of the subject lands was actually devoted to livestock raising, for which the exemption of not less than 100
has. was sought. On this score alone, the CA gravely abused its discretion in declaring the subject lands as exempt
from CARP coverage and ordering the cancellation of MCFARMCO's certificates of title and the issuance of new
titles in BATCO's favor.
It must be further pointed out that the subject lands were offered by BATCO to the government under the VOS
scheme on September 20, 1989, which offer was reiterated on January 6, 1993 without any claim of exemption,
notwithstanding the existence of the Luz Farms ruling (which was promulgated on December 4, 1990). In fact, the
subject portion was acquired by the government in 1992 and still BATCO never sought exemption under Luz
Farms. While it protested the valuation of the DAR during its VOS, it did not, at that time, seek any exemption
from CARP coverage. BATCO only raised the claimed exemption when it filed the petition for exemption before
the DAR Regional Director on May 6, 1998. However, the petition was filed on the basis of DAR AO 09-93, and
accordingly denied by the DAR Regional Director and the DAR Secretary for failing to meet the requirements set
forth therein. While the Court struck down DAR AO 09-93 as unconstitutional in the case of DAR v.
Sutton (Sutton) on October 19, 2005, the DAR Decisions and even the CA Decision dated September 6, 2005 in
CA-G.R. SP No. 55377 were all rendered at the time that the said AO was still subsisting and in full force and
effect. Consequently, in view of the prospectivity principle of judicial decisions and the operative fact doctrine, the
petition for exemption must be resolved under the provisions of the said AO.
Under DAR AO 09-93, in order to be entitled to exemption, the applicant must prove that: (a) the land sought to
be excluded from CARP coverage is exclusively, directly and actually used for livestock, poultry and swine
raising as of June 15, 1988; (b) there should be one head of cattle per hectare of land and seven heads of goat per
hectare of land; and (c) there should be 21 heads of cattle for every 1.7815 has. of infrastructure, 147 heads of goat
or sheep for every 0.7205 hectare of infrastructure, and 21 heads of swine for every 0.5126 hectare of
infrastructure. Consistent with the prohibition under Section 73(c) of RA 6657, DAR AO 09-93 likewise provided
that “[a]ny act of a landowner to change or convert his agricultural land to livestock, poultry and swine raising
after [June 15, 1988], with the intent to avoid the application of [RA 6657] to his landholdings, shall be considered
invalid and illegal and shall not affect the coverage of his landholding under CARP.”

It bears noting that the denial of the petition for exemption by the DAR Regional Director was based on an ocular
inspection/investigation conducted by the DAR provincial personnel in Basilan. The rationale for the denial of the
petition was also clearly outlined in the February 25, 1999 Order 95 of the DAR Secretary who observed that: (a)
none of the 156 certificates of livestock ownership submitted by BATCO predates the effectivity of RA 6657; (b)
more than half (80 out of 156) of the cattle was brought into the property only a few months before the petition
was filed; (c) the municipal agriculturist certified the presence of only 120 heads of cattle, which is short of the
minimum requirement under DAR AO 09-93; and (d) no evidence was presented to prove the presence of hogs
and goats as well as of BATCO having met the infrastructure requirements under DAR AO 09-93. There being no
cogent reason to deviate from the foregoing, the Court is impelled to sustain the DAR Secretary’s findings.
To note, in denying BATCO's motion for reconsideration, the DAR Secretary also observed that, contrary to
BATCO's claim that the additional certificates of livestock ownership it undertook to produce further were in the
name of the Mendoza Plantation from which it purchased the subject lands in 1987, the certificates eventually
submitted with its supplemental motion for reconsideration were actually under its name. Accordingly, the DAR
Secretary cannot be faulted for not giving credence to the same.
In fact, even if the Court were to apply Sutton retroactively and disregard DAR AO 09-93, the pieces of evidence
relied upon by the CA actually failed to establish the theory that the entirety of the subject lands or specific
portions thereof are exclusively devoted to the raising of cattle, swine and goat as of June 15, 1988. The Court
notes that the Municipal Agriculturist Certification dated March 26, 1998, which the CA appreciated in favor of
BATCO, merely stated that the subject lands are “suitable for cattle production since before it was acquired and
transferred to BATCO PLANTATION.” On the other hand, the Affidavits of former municipal mayors confirming
their issuance of several certificates of livestock ownership during their respective terms were only presented
before the CA and were not backed up by copies of the certificates themselves. Moreover, while the former
municipal mayors attested to the existence and presence of livestock in the subject lands starting the year 1987,
they commonly described the subject lands as a vast tract of land principally devoted to coconut production, which
was extensively inter-cropped with coffee, rubber, black pepper, and cacao trees after BATCO's acquisition. These
descriptions are insufficient to establish BATCO’s claimed exemption as what is required is exclusive devotion of
the lands to the raising of cattle, swine and goat as of June 15, 1988.
More pertinently, the Court further notes that contrary to BATCO's representations in its petition for exemption,
the primary land use of the subject lands as declared by BATCO itself in its landowner's reply to notice of land
valuation and acquisition (landowners reply) dated May 6, 1997, negates its own claim that the said lands were
exclusively devoted for the raising of cattle, swine and goat, viz.:chanrobles virtua1aw 1ibrary
Lot Land Use Area Acq'd  
3 Cocoland 8.9917
  Cocoland/Coffee 10.0000
  Sub-total 18.9917
   
4 Cocoland 44.4733
  Coco/Coffee 8.0000
  Coco/Rubber 1.5000
  Coco/Black Pepper 1.5000
Coco/Black
  1.5000
Pepper/Rubber
  Sub-total 56.9733
5 Cocoland 10.0000
  Cocoland/Coffee 67.9151
  Sub-total 77.9151
  GRAND TOTAL 153.8801107
In this accord, the Court finds that BATCO's claim of a different land use in its petition for exemption was only a
mere afterthought which, therefore, cannot be countenanced.
Finally, the Court cannot give credence to BATCO's claim of denial of due process when its certificates of title
were cancelled and new ones were issued in favor of the Republic prior to the issuance of the DAR Regional
Director's August 12, 1998 Order. While the final resolution of petitions for exemption, as a rule, should precede
the placing of the property under the CARP and the issuance of the CLOA to the beneficiaries, it bears stressing
that the subject lands had already been placed under the CARP coverage in 1992, or long before the petition for
exemption was filed by BATCO on May 6, 1998. In the meantime, the actions undertaken by BATCO such as the
VOS on January 6, 1993, the counter-offer of valuation for the subject lands according to their declared land uses
as contained in the afore-mentioned landowner’s reply dated May 6, 1997, the letter-protest dated May 23, 1997
(which challenged the survey of the lands), and the identification of the beneficiaries grounded on its alleged
failure to choose the retention area, all affirmed the coverage of the subject lands under the CARP. Considering
further that the claim of denial of due process was never raised in the proceedings before the DAR but belatedly
brought up only in its Memorandum dated July 28, 2005 filed before the CA and in the absence of showing that
the same prevented it from presenting its case before the DAR officials, it cannot be said that BATCO was denied
due process. Neither was it deprived of its properties without just compensation given that after it rejected the
DAR's valuation on May 6, 1997, the DAR immediately caused the deposit of the compensation in cash and in
agrarian reform bonds on June 11, 1997. All told, the denial of BATCO’s petition for exemption was proper. In
view of its contrary ruling, and the absence of any substantial bases therefor, the Court finds that the CA gravely
abused its discretion in reversing the DAR Secretary's February 25, 1999 Order.
WHEREFORE, the petition is GRANTED. The Decision dated September 6, 2005 of the Court of Appeals in
CA-G.R. SP No. 55377 is hereby REVERSED AND SET ASIDE and a new judgment is
rendered REINSTATING the Order dated February 25, 1999 of the Department of Agrarian Reform Secretary
dismissing private respondent Basilan Agricultural Trading Corporation's petition for exemption.
SO ORDERED.
Carpio, (Chairperson), Brion, Del Castillo, and Perez, JJ., concur.
G.R. No. 178895 : January 10, 2011
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF AGRARIAN
REFORM, through the HON. SECRETARY NASSER C.
PANGANDAMAN, Petitioner, v. SALVADOR N. LOPEZ AGRI-BUSINESS CORP.,
represented by SALVADOR N. LOPEZ, JR., President and General Manager, Respondent.
G.R. No. 179071 : January 10, 2011
SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. LOPEZ,
JR., President and General Manager, Petitioner, v. DEPARTMENT OF AGRARIAN REFORM,
through the Honorable Secretary, Respondent.
DECISION
 SERENO, J.:
Before us are two Rule 45 Petitions filed separately by the Department of Agrarian Reform (DAR), through the
Office of the Solicitor General, and by the Salvador N. Lopez Agri-Business Corp. (SNLABC). Each Petition
partially assails the Court of Appeals Decision dated 30 June 2006 with respect to the application for exemption of
four parcels of land - located in Mati, Davao Oriental and owned by SNLABC - from Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law (CARL).
There is little dispute as to the facts of the case, as succinctly discussed by the Court of Appeals and adopted
herein by the Court, to wit: chanrob1esvirtwallawlibrary
Subject of this petition are four (4) parcels of land with an aggregate area of 160.1161 hectares registered in the
name of Salvador N. Lopez Agri-Business Corporation. Said parcels of land are hereinafter described as
follows: chanrob1esvirtwallawlibrary
Title No. Area Location
TCT No. T-12635 (Lot 1454-A & 49.5706 has. Bo. Limot, Mati, Davao Oriental
1296)
TCT No. T-12637 (Lot 1298) 42.6822 has. Bo. Don Enrique Lopez, Mati, Dvo. Or.
TCT No. T-12639 (Lot 1293-B) 67.8633 has. Bo. Don Enrique Lopez, Mati, Dvo. Or.
On August 2, 1991, Municipal Agrarian Reform Officer (MARO) Socorro C. Salga issued a Notice of Coverage to
petitioner with regards (sic) to the aforementioned landholdings which were subsequently placed under
Compulsory Acquisition pursuant to R.A. 6657 (Comprehensive Agrarian Reform Law).
On December 10, 1992, petitioner filed with the Provincial Agrarian Reform Office (PARO), Davao Oriental, an
Application for Exemption of the lots covered by TCT No. T-12637 and T-12639 from CARP coverage. It alleged
that pursuant to the case of Luz Farms v. DAR Secretary said parcels of land are exempted from coverage as the
said parcels of land with a total area of 110.5455 hectares are used for grazing and habitat of petitioner's 105 heads
of cattle, 5 carabaos, 11 horses, 9 heads of goats and 18 heads of swine, prior to the effectivity of the
Comprehensive Agrarian Reform Law (CARL).
On December 13, 1992 and March 1, 1993, the MARO conducted an onsite investigation on the two parcels of
land confirming the presence of the livestock as enumerated. The Investigation Report dated March 9, 1993 stated:
That there are at least 2[5] to 30 heads of cows that farrow every year and if the trend of farrowing persist (sic),
then the cattle shall become overcrowded and will result to scarcity of grasses for the cattle to graze;
That during the week cycle, the herds are being moved to the different adjacent lots owned by the corporation. It
even reached Lot 1454-A and Lot 1296. Thereafter, the herds are returned to their respective night chute corrals
which are constructed under Lot 1293-B and Lot 1298.
xxx
That the age of coconut trees planted in the area are already 40 to 50 years and have been affected by the recent
drought that hit the locality.
That the presence of livestocks (sic) have already existed in the area prior to the Supreme Court decision on LUZ
FARMS vs. Secretary of Agrarian Reform. We were surprised however, why the management of the corporation
did not apply for Commercial Farm Deferment (CFD) before, when the two years reglamentary (sic) period which
the landowner was given the chance to file their application pursuant to R.A. 6657, implementing Administrative
Order No. 16, Series of 1989;
However, with regards to what venture comes (sic) first, coconut or livestocks (sic), majority of the farmworkers
including the overseer affirmed that the coconut trees and livestocks (sic) were (sic) simultaneously and all of
these were inherited by his (applicant) parent. In addition, the financial statement showed 80% of its annual
income is derived from the livestocks (sic) and only 20% from the coconut industry.
Cognitive thereto, we are favorably recommending for the exemption from the coverage of CARP based on LUZ
FARMS as enunciated by the Supreme Court the herein Lot No. 1293-B Psd-65835 under TCT No. T-12639
except Lot No. 1298, Cad. 286 of TCT No. T-12637 which is already covered under the Compulsory Acquisition
(CA) Scheme and had already been valued by the Land Valuation Office, Land Bank of the Philippines.
On June 24, 1993, TCT No. T-12635 covering Lots 1454-A & 1296 was cancelled and a new one issued in the
name of the Republic of the Philippines under RP T-16356. On February 7, 1994, petitioner through its President,
Salvador N. Lopez, Jr., executed a letter-affidavit addressed to the respondent-Secretary requesting for the
exclusion from CARP coverage of Lots 1454-A and 1296 on the ground that they needed the additional area for its
livestock business. On March 28, 1995, petitioner filed before the DAR Regional Director of Davao City an
application for the exemption from CARP coverage of Lots 1454-A and 1296 stating that it has been operating
grazing lands even prior to June 15, 1988 and that the said two (2) lots form an integral part of its grazing land.
The DAR Regional Director, after inspecting the properties, issued an Order dated March 5, 1997 denying the
application for exemption of Lots 1454-A and 1296 on the ground that it was not clearly shown that the same were
actually, directly and exclusively used for livestock raising since in its application, petitioner itself admitted that it
needs the lots for additional grazing area. The application for exemption, however of the other two (2) parcels of
land was approved.
On its partial motion for reconsideration, petitioner argued that Lots 1454-A & 1296 were taken beyond the
operation of the CARP pursuant to its reclassification to a Pollutive Industrial District (Heavy Industry) per
Resolution No. 39 of the Sangguniang Bayan of Mati, Davao Oriental, enacted on April 7, 1992. The DAR
Regional Director denied the Motion through an Order dated September 4, 1997, ratiocinating that the
reclassification does not affect agricultural lands already issued a Notice of Coverage as provided in Memorandum
Circular No. 54-93: Prescribing the Guidelines Governing Section 20 of R.A. 7160.
Undaunted, petitioner appealed the Regional Director's Orders to respondent DAR. On June 10, 1998, the latter
issued its assailed Order affirming the Regional Director's ruling on Lots 1454-A & 1296 and further declared Lots
1298 and 1293-B as covered by the CARP. Respondent ruled in this wise considering the documentary evidence
presented by petitioner such as the Business Permit to engage in livestock, the certification of ownership of large
cattle and the Corporate Income Tax Returns, which were issued during the effectivity of the Agrarian Reform
Law thereby debunking petitioner's claim that it has been engaged in livestock farming since the 1960s.
Respondent further ruled that the incorporation by the Lopez family on February 12, 1988 or four (4) months
before the effectivity of R.A. 6657 was an attempt to evade the noble purposes of the said law.
On October 17, 2002, petitioner's Motion for Reconsideration was denied by respondent prompting the former to
file the instant petition.
In the assailed Decision dated 30 June 2006, the Court of Appeals partially granted the SNLABC Petition and
excluded the two (2) parcels of land (Transfer Certificate of Title [TCT] Nos. T-12637 and T-12639) located in
Barrio Don Enrique Lopez (the "Lopez lands") from coverage of the CARL. However, it upheld the Decisions of
the Regional Director and the DAR Secretary denying the application for exemption with respect to Lots 1454-A
and 1296 (previously under TCT No. T-12635) in Barrio Limot (the "Limot lands"). These lots were already
covered by a new title under the name of the Republic of the Philippines (RP T-16356).
The DAR and SNLABC separately sought a partial reconsideration of the assailed Decision of the Court of
Appeals, but their motions for reconsideration were subsequently denied in the Court of Appeals Resolution dated
08 June 2007.cralawredlaw
The DAR and SNLABC elevated the matter to this Court by filing separate Rule 45 Petitions (docketed as G.R.
No. 178895 and 179071, respectively), which were subsequently ordered consolidated by the Court.
The main issue for resolution by the Court is whether the Lopez and Limot lands of SNLABC can be considered
grazing lands for its livestock business and are thus exempted from the coverage of the CARL under the Court's
ruling in Luz Farms v. DAR. The DAR questions the disposition of the Court of Appeals, insofar as the latter
allowed the exemption of the Lopez lands, while SNLABC assails the inclusion of the Limot lands within the
coverage of the CARL.
The Court finds no reversible error in the Decision of the Court of Appeals and dismisses the Petitions of DAR
and SNLABC.
Preliminarily, in a petition for review on certiorari filed under Rule 45, the issues that can be raised are, as a
general rule, limited to questions of law. However, as pointed out by both the DAR and SNLABC, there are
several recognized exceptions wherein the Court has found it appropriate to re-examine the evidence presented. In
this case, the factual findings of the DAR Regional Director, the DAR Secretary and the CA are contrary to one
another with respect to the following issue: whether the Lopez lands were actually, directly and exclusively used
for SNLABC's livestock business; and whether there was intent to evade coverage from the Comprehensive
Agrarian Reform Program (CARP) based on the documentary evidence. On the other hand, SNLABC argues that
these authorities misapprehended and overlooked certain relevant and undisputed facts as regards the inclusion of
the Limot lands under the CARL. These circumstances fall within the recognized exceptions and, thus, the Court
is persuaded to review the facts and evidence on record in the disposition of these present Petitions.
The Lopez lands of SNLABC are actually and directly being used for livestock and are thus exempted from the
coverage of the CARL.
Briefly stated, the DAR questions the object or autoptic evidence relied upon by the DAR Regional Director in
concluding that the Lopez lands were actually, directly and exclusively being used for SNLABC's livestock
business prior to the enactment of the CARL.
In Luz Farms v. Secretary of the Department of Agrarian Reform, the Court declared unconstitutional the CARL
provisions that included lands devoted to livestock under the coverage of the CARP. The transcripts of the
deliberations of the Constitutional Commission of 1986 on the meaning of the word "agricultural" showed that it
was never the intention of the framers of the Constitution to include the livestock and poultry industry in the
coverage of the constitutionally mandated agrarian reform program of the government. Thus, lands devoted to the
raising of livestock, poultry and swine have been classified as industrial, not agricultural, and thus exempt from
agrarian reform.
Under the rules then prevailing, it was the Municipal Agrarian Reform Officer (MARO) who was primarily
responsible for investigating the legal status, type and areas of the land sought to be excluded; and for ascertaining
whether the area subject of the application for exemption had been devoted to livestock-raising as of 15 June 1988.
The MARO's authority to investigate has subsequently been replicated in the current DAR guidelines regarding
lands that are actually, directly and exclusively used for livestock raising. As the primary official in charge of
investigating the land sought to be exempted as livestock land, the MARO's findings on the use and nature of the
land, if supported by substantial evidence on record, are to be accorded greater weight, if not finality.
Verily, factual findings of administrative officials and agencies that have acquired expertise in the performance of
their official duties and the exercise of their primary jurisdiction are generally accorded not only respect but, at
times, even finality if such findings are supported by substantial evidence. The Court generally accords great
respect, if not finality, to factual findings of administrative agencies because of their special knowledge and
expertise over matters falling under their jurisdiction.
In the instant case, the MARO in its ocular inspection found on the Lopez lands several heads of cattle, carabaos,
horses, goats and pigs, some of which were covered by several certificates of ownership. There were likewise
structures on the Lopez lands used for its livestock business, structures consisting of two chutes where the
livestock were kept during nighttime. The existence of the cattle prior to the enactment of the CARL was
positively affirmed by the farm workers and the overseer who were interviewed by the MARO. Considering these
factual findings and the fact that the lands were in fact being used for SNLABC's livestock business even prior to
15 June 1988, the DAR Regional Director ordered the exemption of the Lopez lands from CARP coverage. The
Court gives great probative value to the actual, on-site investigation made by the MARO as affirmed by the DAR
Regional Director. The Court finds that the Lopez lands were in fact actually, directly and exclusively being used
as industrial lands for livestock-raising.
Simply because the on-site investigation was belatedly conducted three or four years after the effectivity of the
CARL does not perforce make it unworthy of belief or unfit to be offered as substantial evidence in this case.
Contrary to DAR's claims, the lack of information as regards the initial breeders and the specific date when the
cattle were first introduced in the MARO's Report does not conclusively demonstrate that there was no livestock-
raising on the Lopez lands prior to the CARL. Although information as to these facts are significant, their non-
appearance in the reports does not leave the MARO without any other means to ascertain the duration of livestock-
raising on the Lopez lands, such as interviews with farm workers, the presence of livestock infrastructure, and
evidence of sales of cattle - all of which should have formed part of the MARO's Investigation Report.
Hence, the Court looks with favor on the expertise of the MARO in determining whether livestock-raising on the
Lopez lands has only been recently conducted or has been a going concern for several years already. Absent any
clear showing of grave abuse of discretion or bias, the findings of the MARO - as affirmed by the DAR Regional
Director - are to be accorded great probative value, owing to the presumption of regularity in the performance of
his official duties.
The DAR, however, insisted in its Petition on giving greater weight to the inconsistencies appearing in the
documentary evidence presented, and noted by the DAR Secretary, in order to defeat SNLABC's claim of
exemption over the Lopez lands. The Court is not so persuaded.
In the Petition, the DAR argued that that the tax declarations covering the Lopez lands characterized them as
agricultural lands and, thus, detracted from the claim that they were used for livestock purposes. The Court has
since held that "there is no law or jurisprudence that holds that the land classification embodied in the tax
declarations is conclusive and final nor would proscribe any further inquiry"; hence, "tax declarations are clearly
not the sole basis of the classification of a land." Applying the foregoing principles, the tax declarations of the
Lopez lands as agricultural lands are not conclusive or final, so as to prevent their exclusion from CARP coverage
as lands devoted to livestock-raising. Indeed, the MARO's on-site inspection and actual investigation showing that
the Lopez lands were being used for livestock-grazing are more convincing in the determination of the nature of
those lands.
Neither can the DAR in the instant case assail the timing of the incorporation of SNLABC and the latter's
operation shortly before the enactment of the CARL. That persons employ tactics to precipitously convert their
lands from agricultural use to industrial livestock is not unheard of; they even exploit the creation of a new
corporate vehicle to operate the livestock business to substantiate the deceitful conversion in the hopes of evading
CARP coverage. Exemption from CARP, however, is directly a function of the land's usage, and not of the
identity of the entity operating it. Otherwise stated, lands actually, directly and exclusively used for livestock are
exempt from CARP coverage, regardless of the change of owner. In the instant case, whether SNLABC was
incorporated prior to the CARL is immaterial, since the Lopez lands were already being used for livestock-grazing
purposes prior to the enactment of the CARL, as found by the MARO. Although the managing entity had been
changed, the business interest of raising livestock on the Lopez lands still remained without any indication that it
was initiated after the effectivity of the CARL.
As stated by SNLABC, the Lopez lands were the legacy of Don Salvador Lopez, Sr. The ownership of these lands
was passed from Don Salvador Lopez, Sr., to Salvador N. Lopez, Jr., and subsequently to the latter's children
before being registered under the name of SNLABC. Significantly, SNLABC was incorporated by the same
members of the Lopez family, which had previously owned the lands and managed the livestock business. In all
these past years, despite the change in ownership, the Lopez lands have been used for purposes of grazing and
pasturing cattle, horses, carabaos and goats. Simply put, SNLABC was chosen as the entity to take over the reins
of the livestock business of the Lopez family. Absent any other compelling evidence, the inopportune timing of
the incorporation of the SNLABC prior to the enactment of the CARL was not by itself a categorical manifestation
of an intent to avoid CARP coverage.
Furthermore, the presence of coconut trees, although an indicia that the lands may be agricultural, must be placed
within the context of how they figure in the actual, direct and exclusive use of the subject lands. The DAR failed
to demonstrate that the Lopez lands were actually and primarily agricultural lands planted with coconut trees. This
is in fact contradicted by the findings of its own official, the MARO. Indeed, the DAR did not adduce any proof to
show that the coconut trees on the Lopez lands were used for agricultural business, as required by the Court
in DAR v. Uy, wherein we ruled thus: chanrob1esvirtwallawlibrary
It is not uncommon for an enormous landholding to be intermittently planted with trees, and this would not
necessarily detract it from the purpose of livestock farming and be immediately considered as an agricultural land.
It would be surprising if there were no trees on the land. Also, petitioner did not adduce any proof to show that the
coconut trees were planted by respondent and used for agricultural business or were already existing when the land
was purchased in 1979. In the present case, the area planted with coconut trees bears an insignificant value to the
area used for the cattle and other livestock-raising, including the infrastructure needed for the business. There can
be no presumption, other than that the "coconut area" is indeed used for shade and to augment the supply of fodder
during the warm months; any other use would be only be incidental to livestock farming. The substantial quantity
of livestock heads could only mean that respondent is engaged in farming for this purpose. The single conclusion
gathered here is that the land is entirely devoted to livestock farming and exempted from the CARP.
On the assumption that five thousand five hundred forty-eight (5,548) coconut trees were existing on the Lopez
land (TCT No. T-12637), the DAR did not refute the findings of the MARO that these coconut trees were merely
incidental. Given the number of livestock heads of SNLABC, it is not surprising that the areas planted with
coconut trees on the Lopez lands where forage grass grew were being used as grazing areas for the livestock. It
was never sufficiently adduced that SNLABC was primarily engaged in agricultural business on the Lopez lands,
specifically, coconut-harvesting. Indeed, the substantial quantity of SNLABC's livestock amounting to a little over
one hundred forty (140) livestock heads, if measured against the combined 110.5455 hectares of land and applying
the DAR-formulated ratio, leads to no other conclusion than that the Lopez lands were exclusively devoted to
livestock farming.
In any case, the inconsistencies appearing in the documentation presented (albeit sufficiently explained) pale in
comparison to the positive assertion made by the MARO in its on-site, actual investigation - that the Lopez lands
were being used actually, directly and exclusively for its livestock-raising business. The Court affirms the findings
of the DAR Regional Director and the Court of Appeals that the Lopez lands were actually, directly and
exclusively being used for SNLABC's livestock business and, thus, are exempt from CARP coverage.
The Limot lands of SNLABC are not actually and directly being used for livestock and should thus be covered
by the CARL.
In contrast, the Limot lands were found to be agricultural lands devoted to coconut trees and rubber and are thus
not subject to exemption from CARP coverage.
In the Report dated 06 April 1994, the team that conducted the inspection found that the entire Limot lands were
devoted to coconuts (41.5706 hectares) and rubber (8.000 hectares) and recommended the denial of the application
for exemption. Verily, the Limot lands were actually, directly and exclusively used for agricultural activities, a fact
that necessarily makes them subject to the CARP. These findings of the inspection team were given credence by
the DAR Regional Director who denied the application, and were even subsequently affirmed by the DAR
Secretary and the Court of Appeals.
SNLABC argues that the Court of Appeals misapprehended the factual circumstances and overlooked certain
relevant facts, which deserve a second look. SNLABC's arguments fail to convince the Court to reverse the rulings
of the Court of Appeals.
In the 07 February 1994 Letter-Affidavit addressed to the DAR Secretary, SNLABC requested the exemption of
the Limot lands on the ground that the corporation needed the additional area for its livestock business. As pointed
out by the DAR Regional Director, this Letter-Affidavit is a clear indication that the Limot lands were not directly,
actually and exclusively used for livestock raising. SNLABC casually dismisses the clear import of their Letter-
Affidavit as a "poor choice of words." Unfortunately, the semantics of the declarations of SNLABC in its
application for exemption are corroborated by the other attendant factual circumstances and indicate its treatment
of the subject properties as non-livestock.
Verily, the MARO itself, in the Investigation Report cited by no less than SNLABC, found that the livestock were
only moved to the Limot lands sporadically and were not permanently designated there. The DAR Secretary even
described SNLABC's use of the area as a "seasonal extension of the applicant's 'grazing lands' during the summer."
Therefore, the Limot lands cannot be claimed to have been actually, directly and exclusively used for SNLABC's
livestock business, especially since these were only intermittently and secondarily used as grazing areas. The said
lands are more suitable -- and are in fact actually, directly and exclusively being used -- for agricultural purposes.
SNLABC's treatment of the land for non-livestock purposes is highlighted by its undue delay in filing the
application for exemption of the Limot lands. SNLABC filed the application only on 07 February 1994, or three
years after the Notice of Coverage was issued; two years after it filed the first application for the Lopez lands; and
a year after the titles to the Limot lands were transferred to the Republic. The SNLABC slept on its rights and
delayed asking for exemption of the Limot lands. The lands were undoubtedly being used for agricultural
purposes, not for its livestock business; thus, these lands are subject to CARP coverage. Had SNLABC indeed
utilized the Limot lands in conjunction with the livestock business it was conducting on the adjacent Lopez lands,
there was nothing that would have prevented it from simultaneously applying for a total exemption of all the lands
necessary for its livestock.
The defense of SNLABC that it wanted to "save" first the Lopez lands where the corrals and chutes were located,
before acting to save the other properties does not help its cause. The piecemeal application for exemption of
SNLABC speaks of the value or importance of the Lopez lands, compared with the Limot lands, with respect to its
livestock business. If the Lopez and the Limot lands were equally significant to its operations and were actually
being used for its livestock business, it would have been more reasonable for it to apply for exemption for the
entire lands. Indeed, the belated filing of the application for exemption was a mere afterthought on the part of
SNLABC, which wanted to increase the area of its landholdings to be exempted from CARP on the ground that
these were being used for its livestock business.
In any case, SNLABC admits that the title to the Limot lands has already been transferred to the Republic and
subsequently awarded to SNLABC's farm workers. This fact only demonstrates that the land is indeed being used
for agricultural activities and not for livestock grazing.
The confluence of these factual circumstances leads to the logical conclusion that the Limot lands were not being
used for livestock grazing and, thus, do not qualify for exemption from CARP coverage. SNLABC's belated filing
of the application for exemption of the Limot lands was a ruse to increase its retention of its landholdings and an
attempt to "save" these from compulsory acquisition.
WHEREFORE, the Petitions of the Department of Agrarian Reform and the Salvador N. Lopez Agri-Business
Corp. are DISMISSED, and the rulings of the Court of Appeals and the DAR Regional Director are
hereby AFFIRMED.
SO ORDERED.
[G.R. No. 86889. December 4, 1990.]
LUZ FARMS, Petitioner, v. THE HONORABLE SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, Respondent.
Enrique M. Belo for petitioner.
DECISION
PARAS, J.:
This is a petition for prohibition with prayer for restraining order and/or preliminary and permanent injunction
against the Honorable Secretary of the Department of Agrarian Reform for acting without jurisdiction in enforcing
the assailed provisions of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988
and in promulgating the Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No.
6657, insofar as the same apply to herein petitioner, and further from performing an act in violation of the
constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes the raising of
livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and Procedures Implementing
Production and Profit Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations implementing
Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business and together with
others in the same business allegedly stands to be adversely affected by the enforcement of Section 3(b), Section
11, Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive
Agrarian Reform Law and of the Guidelines and Procedures Implementing Production and Profit Sharing under
R.A. No. 6657 promulgated on January 2, 1989 and the Rules and Regulations Implementing Section 11 thereof as
promulgated by the DAR on January 9, 1989 (Rollo, pp. 2-36).
Hence, this petition praying that aforesaid laws, guidelines and rules be declared unconstitutional. Meanwhile, it is
also prayed that a writ of preliminary injunction or restraining order be issued enjoining public respondents from
enforcing the same, insofar as they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms’ prayer for the issuance
of a preliminary injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said Motion for
Reconsideration regarding the injunctive relief, after the filing and approval by this Court of an injunction bond in
the amount of P100,000.00. This Court also gave due course to the petition and required the parties to file their
respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his Memorandum (Rollo, pp.
186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to it: library
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of "Agricultural,
Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to commercial, livestock,
poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the authority to summarily determine
the just compensation to be paid for lands covered by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13 —
". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are distributed within sixty
(60) days of the end of the fiscal year as compensation to regular and other farmworkers in such lands over and
above the compensation they currently receive: Provided, That these individuals or entities realize gross sales in
excess of five million pesos per annum unless the DAR, upon proper application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety (90) days of the end of the fiscal year . . ." cralaw virtua1aw library
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the raising of livestock, poultry
and swine in its coverage as well as the Implementing Rules and Guidelines promulgated in accordance
therewith. chanrobles.com.ph : virtual law library
The constitutional provision under consideration reads as follows: chanrob1es virtual 1aw library
ARTICLE XIII
x       x       x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 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 rights of small landowners. The
State shall further provide incentives for voluntary land-sharing.
x       x       x"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In fact, it acknowledges the
correctness of the decision of this Court in the case of the Association of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting the said law has transcended
the mandate of the Constitution, in including land devoted to the raising of livestock, poultry and swine in its
coverage (Rollo, p. 131). Livestock or poultry raising is not similar to crop or tree farming. Land is not the
primary resource in this undertaking and represents no more than five percent (5%) of the total investment of
commercial livestock and poultry raisers. Indeed, there are many owners of residential lands all over the country
who use available space in their residence for commercial livestock and raising purposes, under "contract-growing
arrangements," whereby processing corporations and other commercial livestock and poultry raisers (Rollo, p. 10).
Lands support the buildings and other amenities attendant to the raising of animals and birds. The use of land is
incidental to but not the principal factor or consideration in productivity in this industry. Including backyard
raisers, about 80% of those in commercial livestock and poultry production occupy five hectares or less. The
remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under Section 3(b) of R.A. 6657 is proper. He cited that
Webster’s International Dictionary, Second Edition (1954), defines the following words:
"Agriculture — the art or science of cultivating the ground and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock — domestic animals used or raised on a farm, especially for profit.
Farm — a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in constitutional construction is to
ascertain and thereafter assure the realization of the purpose of the framers in the adoption of the Constitution
(J.M. Tuazon & Co. v. Land Tenure Administration, 31 SCRA 413 [1970]).
Ascertainment of the meaning of the provision of Constitution begins with the language of the document itself.
The words used in the Constitution are to be given their ordinary meaning except where technical terms are
employed in which case the significance thus attached to them prevails (J.M. Tuazon & Co. v. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of doubtful meaning, the
courts may consider the debates in the constitutional convention as throwing light on the intent of the framers of
the Constitution. It is true that the intent of the convention is not controlling by itself, but as its proceeding was
preliminary to the adoption by the people of the Constitution the understanding of the convention as to what was
meant by the terms of the constitutional provision which was the subject of the deliberation, goes a long way
toward explaining the understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183
[1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention of the framers of the Constitution to include livestock
and poultry industry in the coverage of the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A. 3844, as laud
devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandoned land
(Record, CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture." Commissioner Jamir proposed
to insert the word "ARABLE" to distinguish this kind of agricultural land from such lands as commercial and
industrial lands and residential properties because all of them fall under the general classification of the word
"agricultural." This proposal, however, was not considered because the Committee contemplated that agricultural
lands are limited to arable and suitable agricultural lands and therefore, do not include commercial, industrial and
residential lands (Record, CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed several questions, among
others, quoted as follows:
x       x       x
"Line 19 refers to genuine reform program founded on the primary right of farmers and farmworkers. I wonder if
it means that leasehold tenancy is thereby proscribed under this provision because it speaks of the primary right of
farmers and farmworkers to own directly or collectively the lands they till. As also mentioned by Commissioner
Tadeo, farmworkers include those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a piggery or a poultry project
and for that purpose hires farmworkers therein, these farmworkers will automatically have the right to own
eventually, directly or ultimately or collectively, the land on which the piggeries and poultry projects were
constructed. (Record, CONCOM, August 2, 1986, p. 618).
 x       x       x
The questions were answered and explained in the statement of then Commissioner Tadeo, quoted as follows:
x       x       x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan. Ipinaaalam ko kay Commissioner
Regalado na hindi namin inilagay ang agricultural worker sa kadahilanang kasama rito ang piggery, poultry at
livestock workers. Ang inilagay namin dito ay farm worker kaya hindi kasama ang piggery, poultry at livestock
workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private agricultural lands
devoted to commercial livestock, poultry and swine raising" in the definition of "commercial farms" is invalid, to
the extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program of
the State. There is simply no reason to include livestock and poultry lands in the coverage of agrarian reform.
(Rollo, p. 21).
Hence, there is merit in Luz Farms’ argument that the requirement in Sections 13 and 32 of R.A. 6657 directing
"corporate farms" which include livestock and poultry raisers to execute and implement "production-sharing
plans" (pending final redistribution of their landholdings) whereby they are called upon to distribute from three
percent (3%) of their gross sales and ten percent (10%) of their net profits to their workers as additional
compensation is unreasonable for being confiscatory, and therefore violative of due process (Rollo, p. 21).
It has been established that this 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 (Association of Small Landowners of the Philippines, Inc.
v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay
v. Juico, G.R. 79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with constitutional issues, 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 and God as its conscience gives it in the light to probe its meaning and
discover its purpose. Personal motives and political considerations are irrelevancies that cannot influence its
decisions. Blandishment is as ineffectual as intimidation, for all the awesome power of the Congress and
Executive, the Court will not hesitate "to make the hammer fall heavily," where the acts of these departments, or
of any official, betray the people’s will as expressed in the Constitution (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico,
G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional powers, it becomes the duty
of the judiciary to declare what the other branches of the government had assumed to do, as void. This is the
essence of judicial power conferred by the Constitution" (I)n one Supreme Court and in such lower courts as may
be established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973 Constitution
and which was adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the 1987 Constitution)
and which power this Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No.
6657 insofar as the inclusion of the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith, are hereby DECLARED null and void
for being unconstitutional and the writ of preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin, Griño-Aquino,
Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave.
[G.R. NO. 132759. October 25, 2005]
ALEJANDRO DANAN, TIRSO LINGAD, JR., AMADO BELLEZA, CARLITO SANTOS,
LADISLAO DANAN, RUBEN SAMBAT, RODRIGO DANAN, ABEDNIDO DANAN, FELIX
ESCUETA, ROMEO TALA, ADELOMO BALUYOT, PEDRO TALA, RUBEN MANGANTI,
PAQUITO CRUZ, RICARDO DIMA-RUCUT, RUFINO DEL ROSARIO, MARCOS PANGAN,
LAURA MANIAGO, LAMBERTO DANAN, FLORNARDO MANANSALA, DOMINADOR
ARTOLA, ROBERTO ZUÑIGA, JR., JOSE MENDOZA, ROMAN BERNAL, BENEDICTO
DANAN, JOEL DANAN, RODRIGO PAULE, JIMMY MANALAC, FELICIANO
MACASPAC, MARIANO MANANSALA, SILVESTRE MANUEL, FAUSTINO PANGAN,
FLORENCIO PANGAN, CONRADO CARLOS DANAN, PESCASIO DIMARUCUT, DANIEL
DANAN, LUCIANO MANLAPAZ, ARMANDO DANAN, FELICIANO MALLARI,
REYNALDO MUSNI, RODEL ZUNIGA DANAN, ALFREDO MORALES, JESUS NUNAG,
ABRAHAM MANUYAG, PEDRO MERCADO, OSCAR MANALILI, FORTUNATO
MANUEL, ROSITA BERNAL, RUBEN MIRANDA, NICOLAS MANANSALA, JOSE
MANLAPAZ, JR., DIOSDADO LINGAD, MONICA TALA, JULIE CORTES, ANDRES
PAULE, RONNIE PAULE, CARLITO AGUILUS, ROMEO BALINGIT, BENIGNO
PORTALES, ARNEL SAMBAT, ALFREDO ALFARO, ROMEO ALFARO, FELICIANO
BUCAD, SR., ONADAB ISIP, CARLITO DIMACALI, JAIME BAUTISTA, ELIAS BALINGIT,
REMY CARLOS, MARIANO SANTOS, FEDERICO MANLAPAZ, REYNALDO SANTOS,
ADELAIDA CALMA, GREGORIO CALMA, PEPITO ALFARO, FERNANDO MANANSALA,
JOE RAMMIE EMILIA, ROGELIO CORTES, DOMINADOR MALIT, ELPIDIO TALA,
RODRIGO TALA, SALVADOR TALA, ROMEO TALA, REMEO DANAN, EDUARDO
DANAN, CWZAR DANAN, BENJAMIN PANGAN, DOMINGO SUMANDAL, MOISES SUSI,
RODOLFO GERVACIO, SR., RODOLFO GERVASIO, JR., JESUS BERNAL, ALFREDO
SANTOS, FORTUNATO DANAN, FRANCISCO MACASPAC, EDWIN MACASPAC,
FELICISIMO MACASPAC, DIOSDADO MACASPAC, REYNALDO TIMBANG, EULOGIO
MACASPAC, RICARDO CHAVEZ, RUBEN MANUYAG, DELFIN TALA, TOMAS PAULE,
CLARO SUBA, DIOSDADO FLORES, FRANCISCO NORALES, VENANCIO FLORES,
DANTE FLORES, AGUSTIN ARIOLA, RICARDO ARIOLA, ARTEMIO FLORES,
FELICIANO BUCOD, JR., ROLANDO SERRANO, JUANITO LINTAG, TOMAS TALA,
LEONARDO RONQUILLO, LAMBERTO TALA, RICARDO LINGAD, ANOTNIO SANTOS,
IGNACIO TRESVALLES, ERNESTO PITUC, TEOFILO MUNOZ, BIENVENIDO BELLEZA,
MANUEL MAGUIAT, OFELIA MIGUEL, PEDRO TALA, ALEJANDRO TALA, RODRIGO
SERRANO, FRANCISCO BERNARTE, OSCAR SERRANO, CONSOLACION SERRANO,
CEZAR SERRANO, JOSE BERNARTE, JESUS BERNARTE, CALIXTO SERRANO,
ROBERTO MALLARI, ARNOLD PATRICIA, REYNALDO OSBUAL, WILFREDO
 TAPALLA, ELIZALDE FAPREQUILAN, REYNALDO CASTRO, LUISITO MALLARI,
ANTONIO CASTRO, MARCELO MANANSALA, MARFELA AQUINO, HERMOGENES
LACAP, VIRGILIO MANANSALA, NESTOR DATU, ROMEO DATU, ALEGRIA BELLEZA,
PURITA MIRANDO, MARIA PEREZ, ALBERTO DELA CRUZ, ARTURO DELA CRUZ,
GENERITO TALA, CELESTINO TAPALLA, JIMMY TAPALLA, MIKE TAPALLA,
REMIGIO OSBUAL, MYRNA MIGUEL, EDUARDO ESCUETA, CONRADO MALLARI,
AVELINO MIGUEL, VICTORINO TALA, IGNACIO DELA CRUZ, ROLANDO OSBUAL
and ROLANDO MASANQUE, Petitioners, v. THE HONORABLE COURT OF APPEALS and
ESTRELLA ARRASTIA, Respondents.
[G.R. NO. 132866]
THE COURT OF APPEALS and THE DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD, Petitioners, v. ESTRELLA ARRASTIA, Respondent.
DECISION
TINGA, J.:
This deals with two separate Rule 45 petitions, later consolidated, filed by the Department of Agrarian Reform
Adjudication Board ("DARAB") and Alfredo Danan, et al. Both petitions seek the reversal of the Court of
Appeals' Decision in CA-G.R. SP No. 33796, which reversed and set aside the DARAB Decision in DARAB Case
No. 1551 and its Resolution denying petitioners' motion for reconsideration.
Petitioners ("private petitioners") in G.R. No. 132759 are all residents of Lubao, Pampanga, claiming to be
cultivating a vast landholding owned by the heirs of Teodorica Reinares Arrastia, Leticia Arrastia Montenegro and
Juanita Arrastia ("Arrastia heirs"). Said property has an aggregate area of approximately three hundred (300)
hectares and is situated at the Barangays of Lourdes, Baruya, and San Isidro, all within the Municipality of Lubao,
Pampanga. The records of the case show that the landholding had been subdivided and distributed among the
Arrastia heirs and the corresponding certificates of titles issued accordingly.
Petitioner in G.R. No. 132866 is the DARAB, the adjudication arm of the Department of Agrarian Reform
("DAR") that is tasked to implement the government's comprehensive agrarian reform program ("CARP").
The common respondent in both petitions is Estrella Arrastia, one of the Arrastia heirs and a co-owner of the
disputed property. Respondent Arrastia own 4.4630 hectares of the disputed property.
The factual antecedents are as follows:
Sometime in 1976, a certain Rustico Coronel leased the subject property for a period of twelve (12) years or until
the crop year 1987 to 1988. On September 27, 1986, persons claiming to be farmers and residents
of Barangay Lourdes and Barangay San Rafael signed a joint resolution as members of the Aniban ng mga
Manggagawa sa Agrikultura ("AMA") to enter and lease the subject property from the Arrastia heirs. Then
Pampanga Governor Brien Guiao favorably endorsed the resolution to then Minister of Environment and Natural
Resources Heherson Alvarez. On the basis of said resolution but without the consent of the landowners, the AMA
members, who are herein petitioners, entered the disputed land, cleared portions thereof and planted various crops
thereon. This culminated in a violent confrontation on May 21, 1988 that led to the filing of criminal charges
against AMA members.
On June 2, 1988, the AMA filed a complaint with petitioner DARAB, docketed as DARAB Case No. 0001,
praying that respondent Arrastia be prevented from destroying standing crops on the disputed property and from
fencing said property and that petitioners be allowed to continue with their farming thereon. On August 15, 1988,
the DARAB ordered the DAR Regional Director to conduct an ocular inspection on the disputed property. The
inspection team submitted an Ocular/Investigation Report with the observation that there were no substantially
significant plantings on the disputed property. The Municipal Agrarian Reform Officer ("MARO") of Lubao,
Pampanga also submitted a report dated September 21, 1989, recommending the disqualification of private
petitioners from availing of the benefits under the CARP.
On October 5, 1988, the DARAB issued an order denying AMA's motion for authority to cultivate. The order
became final and executory on July 29, 1989, after the DARAB denied AMA's motion for reconsideration.
On behalf of her co-heirs and co-owners, Arrastia instituted an action against private petitioners for violation of
Section 73(b) of Republic Act (R.A.) No. 6657 on October 9, 1989. Arrastia's complaint, docketed as Agrarian
Case No. 2000, was raffled to Branch 48 of the Regional Trial Court of San Fernando, Pampanga on October 9,
1989. The trial court, sitting as a special agrarian court ("SAC"), issued a temporary restraining order, and
subsequently a preliminary injunction, both enjoining private petitioners from entering and cultivating the disputed
property.
On November 29, 1989, private petitioners filed a complaint for injunction and damages before the Provincial
Agrarian Reform Adjudication Board ("PARAD") against Arrastia, alleging that they were actual tillers of the
disputed property who were forcibly evicted by Arrastia from their tenanted lots through the use of armed men. In
their complaint, docketed as DARAB Regional Case No. 161-P' 89, they prayed that Arrastia be restrained from
preventing them from reoccupying the property in question. Upon referral of the matter to the respective Barangay
Agrarian Reform Committees ("BARC") of the Barangays of Lourdes, San Isidro, and San Rafael, BARC officials
reported that the dispute could no longer be settled amicably. In particular, the BARC of Barangay San Rafael
(Baruya), Lubao informed the hearing officer that private petitioners were tenants or actual tillers of the disputed
property. The Lubao MARO also submitted the reports of other BARC officials.
On the basis of the reports submitted by BARC officials and private petitioners' affidavits, the hearing officer
issued on December 9, 1990 an order granting a preliminary injunction to restrain Arrastia from disturbing private
petitioners in the tilling of the disputed property. The PARAD hearing officer also directed the MARO to act on
the petition for the coverage of the disputed property under the CARP.
Meanwhile, on January 30, 1991, Arrastia filed an omnibus motion in DARAB Case No. 0001, questioning the
jurisdiction of the hearing officer to issue an order of injunction. The DARAB denied said motion and
subsequently issued the writ of injunction on September 22, 1992.
Arrastia filed an answer in DARAB Regional Case No. 161-P' 89, interposing the defense that the disputed land
was not devoted to agriculture and that private petitioners were not tenants thereof.
After due hearing, the PARAD rendered a decision in DARAB Regional Case No. 161-P' 89 on May 13, 1993,
declaring that the subject property is covered by the CARP and that private petitioners are qualified beneficiaries
of the program. The adjudicator also issued an injunction prohibiting Arrastia from disturbing private petitioners'
occupation of the property. The dispositive portion of the decision reads:
WHEREFORE, PREMISES CONSIDERED, this Board hereby renders judgment:
(1) Confirming and declaring that the subject landholding with an area of 300 hectares, more or less, situated at
Barangays Lourdes, San Isidro and San Rafael (Baruya), Lubao, Pampanga, owned by the defendant and her co-
owners are agricultural land subject to the coverage of RA No. 6657, and that plaintiffs are qualified beneficiaries
who enjoy the benefits of agrarian laws including the right to an award of the lands they actually till in accordance
with the procedure therein;
(2) Making the preliminary injunction hereto forthwith issued, prohibiting the defendant and her co-owners and all
other persons claiming any right or title under them, from continuing to exclude plaintiffs and from re-entry and
re-occupation of the subject landholding as agricultural tenants and their restoration thereat, final and permanent;
and
(3) Ordering the defendant and her co-owners to pay plaintiffs the amount of P10,000.00 as attorney's fees, plus
costs.
Arrastia appealed the aforementioned decision to petitioner DARAB. The appeal was docketed as DARAB Case
No. 1551. On March 28, 1994, the DARAB rendered its decision modifying the appealed judgment, the
dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is DISMISSED. The judgment of the Provincial Adjudicator is
hereby modified as follows:
1. Declaring Dominador Flores, Rodrigo Serrano, Oscar Salazar, Alejandro Danan, Tirso Lingad, Francisco
Santos, Dante Danan, Jesus Castro, Amado Escueta, Marcos Susi, Francisco Bernate, Felix Escueta, Ladislao
Danan, Lamberto Danan, Carlito Santos, Orlando Santos, Jose Manansala, Eulalio Danan, Eddie Escueta, Conrado
Castro, Pedro Tala and Victorino Tala to be agricultural lessees on their respective tillages, and ordering their
reinstatement on the land;
2. Ordering the rest of the Plaintiffs-Appellees to be reinstated on the land and to possess and occupy their
respective areas of cultivation;
3. Ordering the Regional Director of the Department of Agrarian Reform, Region III, San Fernando, Pampanga,
the Provincial Agrarian Reform Officer for the Province of Pampanga and the Municipal Reform Officer for the
Municipality of Lubao, Province of Pampanga to immediately undertake administrative processes for the coverage
of the land under Republic Act No. 6657 and other applicable agrarian laws, DAR Administrative Order No. 1,
Series of 1993, DAR Department Memorandum Circular No. 04, Series of 1993 and other DAR rules and
regulations taking into consideration the qualifications of Appellees to be beneficiaries of the program as well as
the right of retention of the owners of the subject landholding and the last paragraph of Section 6, Republic Act
No. 6657 which provides:
Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of possession of
private lands executed by the original landowner in violation of this Act shall be null and void; Provided, however,
That those executed prior to this Act shall be valid only when registered with the Register of Deeds within the
period of three (3) months after the effectivity of this Act. Thereafter, all Register of Deeds shall inform the DAR
within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares.
4. Ordering Defendant-Appellant, or any person or persons acting for and in behalf, to refrain from committing
any act or acts which will disturb or in any way adversely interfere with the peaceful possession, occupation and
farming activities of Appellees on the land itself;
5. Ordering Defendant-Appellant to pay Plaintiff-Appellees the reasonable amount of Twenty Thousand Pesos
(P20,000.00) as attorney's fees plus costs of the suit; andcralawlibrary
6. Ordering the Regional Sheriff of the DAR Regional Adjudication Board, Region III, to implement this Order
and submit a return to this Board within seven (7) days from receipt of this Order.
This decision is immediately executory pursuant to Section 50 of Republic Act No. 6657.
Aggrieved, Arrastia elevated the controversy to the Court of Appeals, which reversed and set aside the decision of
the DARAB.
On the issue of whether private petitioners are qualified beneficiaries under the CARP, the appellate court ruled in
the negative mainly on the basis of the report of MARO Josefina Vidal which was quoted at length in its Decision.
In the said report, the MARO recommended the disqualification of private petitioners from the coverage of the
CARP in view of their continued violation of Sections 22 and 23 of Executive Order No. 229, under which
persons, associations, or entities which prematurely enter lands covered by agrarian reform shall be permanently
disqualified from CARP coverage and cited for contempt, respectively. The Court of Appeals also found private
petitioners guilty of violating the temporary restraining order and preliminary injunction issued by the SAC in
Agrarian Case No. 2000 and also the temporary restraining issued by the Court of Appeals itself on April 13,
1994. The appeals court denied the motions for reconsideration separately filed by private petitioners. Hence, the
petitions before this Court.
In its petition, DARAB raised the following issues:
1.1. THE HONORABLE COURT OF APPEALS ERRED WHEN IT SET ASIDE THE ENTIRETY OF THE
DECISION APPEALED FROM, TO INCLUDE THE ORDER TO PLACE THE DISPUTED LANDHOLDINGS
UNDER CARP COVERAGE, ON THE SOLE BASIS OF THE FINDING THAT PRIVATE RESPONDENTS
(FARMERS) THEREIN WERE DISQUALIFIED AS FARMER BENEFICIARIES;
1.2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED ON THE DISQUALIFICATION
OF ALL THE FARMERS (PRIVATE RESPONDENTS THEREIN), IRRESPECTIVE OF WHETHER THEY
(OR SOME) ARE AGRICULTURAL TENANTS OR NOT, ON THE SOLE BASIS OF A FIELD REPORT
THAT WAS PREPARED AND SUBMITTED WITHOUT THE FARMERS AT LEAST GIVEN
OPPORTUNITY TO BE HEARD, THUS, VIOLATIVE OF DUE PROCESS.
In turn, private petitioners in their petition impute the following errors to the Court of Appeals:
1. RESPONDENT COURT GRAVELY ERRED IN NOT GIVING FIRST DUE COURSE TO THE PETITION
IN CA-G.R. NO. 33796 AND REQUIRED THE DARAB TO ELEVATE TO IT THE RECORDS OF DARAB
CASE NO. 1551 INCLUDING ALL THE EVIDENCE PRESENTED SO IT COULD HAVE FULLY
APPRECIATED ALL THE FACTS INSTEAD OF MERELY RELYING ON THE PLEADINGS FILED
BEFORE IT.
2. THE RESPONDENT COURT GRAVELY ERRED IN IGNORING FUNDAMENTAL RULES OF
ADMINISTRATIVE DUE PROCESS BY ITS FAILURE AND REFUSAL TO CONSIDER SUBSTANTIVE
EVIDENCE INTRODUCED BY PETITIONERS IN THE PROCEEDINGS IN DARAB CASE NO. 161-P 89
AND DARAB CASE NO. 1551 RESULTING IN FINDINGS WHICH ARE NOT ONLY CONTRARY TO LAW
AND THE EVIDENCE ON RECORD BUT ARE FURTHER PATENTLY PARTIAL TO PRIVATE
RESPONDENTS.
3. THE RESPONDENT COURT GRAVELY ERRED IN MAKING CONCLUSIONS FROM ITS REVIEW OF
THE DARAB DECISION IN DARAB CASE NO. 1551 WITHOUT ANY BASIS ON THE DECISION ITSELF
THUS CITING ERRORS IN THE SAID DECISION WHICH WERE NOT ACTUALLY MADE BY THE
DARAB.
4. THE RESPONDENT COURT GRAVELY ERRED IN REVERSING THE FINDINGS OF FACTS OF THE
DARAB WITHOUT DUE REGARD TO EVIDENCE PRESENTED BEFORE THE LATTER.
The two petitions advance two main arguments: first, the Court of Appeals' finding that private petitioners are
ineligible to become CARP beneficiaries is without factual or evidentiary basis; second, the Court of Appeals'
reversal of the DARAB's order to undertake administrative proceedings for the acquisition of the subject property
for agrarian reform purposes is premature.
Private petitioners contend that the Court of Appeals' declaration that they are not qualified beneficiaries of the
CARP has no evidentiary basis because it failed to order the transmittal of the DARAB records, particularly the
reports of the different BARC officials establishing tenancy relationship between private petitioners and the
owners of the disputed property. For its part, DARAB denies having categorically declared in its decision in
DARAB Case No. 1551 that private petitioners are qualified beneficiaries because the administrative proceeding
to determine the beneficiaries entitled under R.A. No. 6657 was yet to be undertaken not by DARAB but by the
administrative officials of DAR. DARAB also describes as arbitrary and unilateral the MARO report quoted by
the appellate court in support of its ruling that private petitioners prematurely entered the disputed property.
The resolution of the issue on private petitioners' eligibility under the CARP calls for a review of the evidence on
record to determine whether or not the conclusion of the Court of Appeals has factual basis. At the outset, it
should be noted that the jurisdiction of this Court in a Petition for Review on Certiorari under Rule 45 of the
Rules of Court is limited to reviewing only errors of law, as it is not a trier of facts. It is a settled doctrine that
findings of fact of the Court of Appeals are binding and conclusive upon this Court, not to be disturbed unless: (1)
the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is
manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of
facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its
findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of
Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of specific
evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence on record.
The DARAB and the Court of Appeals' findings in respect to the status of private petitioners are conflicting. The
DARAB found that private petitioners are either agricultural lessees paying rentals to the landowners or actual
tillers in possession of distinct portions of the subject property. The Court of Appeals, however, found private
petitioners as not qualified to become CARP beneficiaries on account of certain violations they committed and
considered it unnecessary to ascertain their status as agricultural lessees or tillers. In view of the divergent
opinions, the Court must review the evidence relied upon by the DARAB and the Court of Appeals in arriving at
their respective conclusions.
The Court affirms factual findings and conclusions of the Court of Appeals.
The appellate court's conclusion that private petitioners committed particular violations warranting their
disqualification from the CARP is based on the MARO report which has not been disputed by all the private
petitioners. The MARO who prepared the report enjoys the presumption of regularity in the performance of her
functions. Absent any showing that the Court of Appeals committed grave abuse of discretion in giving
evidentiary weight to said report, said factual findings are generally deemed conclusive on this Court, which is not
a trier of facts.
Anent DARAB's contention that the MARO report was made unilaterally and without giving private petitioners
the opportunity to be heard, the circumstances not nullify said report for lack of due process. The essence of due
process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain
one's side or an opportunity to seek reconsideration of the action or ruling complained of. Private petitioners
cannot claim denial of due process simply because they had ample opportunity to rebut the MARO's findings and
present contrary evidence in the proceedings before the PARAD, the DARAB, or the Court of Appeals.
Private petitioners insist that they are bona fide agricultural tenants of the disputed property. It is unnecessary to
pass upon this issue in the light of the categorical finding of the appellate court that private petitioners are no
longer entitled to avail of the benefits under the CARP. In any event, however, the claim is not well-founded.
A perusal of the decision in DARAB Case No. 1551 reveals that DARAB classified two (2) sets of
farmworkers, i.e., those who cultivated the land and paid corresponding rentals, and those who occupied and
cultivated portions of the disputed property since 1986 as certified by BARC officials.
Mere occupation or cultivation of an agricultural land does not automatically convert a tiller or farmworker into an
agricultural tenant recognized under agrarian laws. The essential requisites of a tenancy relationship are: (1) the
parties are the landowner and the tenant; (2) the subject is agricultural land; (3) there is consent among the parties;
(4) the purpose is agricultural production; (5) there is personal cultivation; and (6) there is sharing of harvests. All
these requisites must concur in order to create a tenancy relationship between the parties. In the case at bar, it has
not been sufficiently established that private petitioners' occupation and cultivation of the disputed property was
with the consent of the landowners.
DARAB assails the Court of Appeals in reversing the DARAB decision in its entirety. It contends that the
determination of private petitioners' eligibility under R.A. No. 6657 has no bearing on its order to commence
administrative procedure for the acquisition of the disputed property.
As borne by the case records, respondent Arrastia owns only 4.4630 hectares of the subject property, which is
below the retention limit under Section 6 of R.A. No. 6657 granting a right of retention of up to a maximum of
five (5) hectares of agricultural land in favor of a landowner whose property may be acquired for distribution to
agrarian reform beneficiaries. Consequently, a landowner may keep his entire covered landholding if its aggregate
size does not exceed the retention limit of five (5) hectares. His land will not be covered at all by the operation
land transfer program although all requisites for coverage are present.
The right of retention is a constitutionally guaranteed right, which is subject to qualification by the legislature. It
serves to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the
tenant and by implementing the doctrine that social justice was not meant to perpetrate an injustice against the
landowner. A retained area, as its name denotes, is land which is not supposed to anymore leave the landowner's
dominion, thus sparing the government from the inconvenience of taking land only to return it to the landowner
afterwards, which would be a pointless process. For as long as the area to be retained is compact or contiguous and
does not exceed the retention ceiling of five (5) hectares, a landowner's choice of the area to be retained must
prevail. Moreover, Administrative Order No. 4, series of 1991, which supplies the details for the exercise of a
landowner's retention rights, likewise recognizes no limit to the prerogative of the landowner, although he is
persuaded to retain other lands instead to avoid dislocation of farmers. Therefore, there is no legal and practical
basis to order the commencement of the administrative proceedings for the placement of respondent Arrastia's land
under the CARP since her property's land area falls below the retention limit of five (5) hectares.
WHEREFORE, both petitions in G.R No. 132759 and G.R. No. 132866 are DENIED. The Decision of the Court
of Appeals in CA-G.R. SP No. 33796 is AFFIRMED. Costs against private petitioners.
SO ORDERED.
Puno, J., (Chairman), Austria-Martinez, and Callejo, Sr., JJ., concur.
Chico-Nazario, J., on leave.
[G.R. NO. 132759. October 25, 2005]
ALEJANDRO DANAN, TIRSO LINGAD, JR., AMADO BELLEZA, CARLITO SANTOS, LADISLAO
DANAN, RUBEN SAMBAT, RODRIGO DANAN, ABEDNIDO DANAN, FELIX ESCUETA, ROMEO
TALA, ADELOMO BALUYOT, PEDRO TALA, RUBEN MANGANTI, PAQUITO CRUZ, RICARDO
DIMA-RUCUT, RUFINO DEL ROSARIO, MARCOS PANGAN, LAURA MANIAGO, LAMBERTO
DANAN, FLORNARDO MANANSALA, DOMINADOR ARTOLA, ROBERTO ZUÑIGA, JR., JOSE
MENDOZA, ROMAN BERNAL, BENEDICTO DANAN, JOEL DANAN, RODRIGO PAULE, JIMMY
MANALAC, FELICIANO MACASPAC, MARIANO MANANSALA, SILVESTRE MANUEL,
FAUSTINO PANGAN, FLORENCIO PANGAN, CONRADO CARLOS DANAN, PESCASIO
DIMARUCUT, DANIEL DANAN, LUCIANO MANLAPAZ, ARMANDO DANAN, FELICIANO
MALLARI, REYNALDO MUSNI, RODEL ZUNIGA DANAN, ALFREDO MORALES, JESUS NUNAG,
ABRAHAM MANUYAG, PEDRO MERCADO, OSCAR MANALILI, FORTUNATO MANUEL, ROSITA
BERNAL, RUBEN MIRANDA, NICOLAS MANANSALA, JOSE MANLAPAZ, JR., DIOSDADO
LINGAD, MONICA TALA, JULIE CORTES, ANDRES PAULE, RONNIE PAULE, CARLITO
AGUILUS, ROMEO BALINGIT, BENIGNO PORTALES, ARNEL SAMBAT, ALFREDO ALFARO,
ROMEO ALFARO, FELICIANO BUCAD, SR., ONADAB ISIP, CARLITO DIMACALI, JAIME
BAUTISTA, ELIAS BALINGIT, REMY CARLOS, MARIANO SANTOS, FEDERICO MANLAPAZ,
REYNALDO SANTOS, ADELAIDA CALMA, GREGORIO CALMA, PEPITO ALFARO, FERNANDO
MANANSALA, JOE RAMMIE EMILIA, ROGELIO CORTES, DOMINADOR MALIT, ELPIDIO TALA,
RODRIGO TALA, SALVADOR TALA, ROMEO TALA, REMEO DANAN, EDUARDO DANAN,
CWZAR DANAN, BENJAMIN PANGAN, DOMINGO SUMANDAL, MOISES SUSI, RODOLFO
GERVACIO, SR., RODOLFO GERVASIO, JR., JESUS BERNAL, ALFREDO SANTOS, FORTUNATO
DANAN, FRANCISCO MACASPAC, EDWIN MACASPAC, FELICISIMO MACASPAC, DIOSDADO
MACASPAC, REYNALDO TIMBANG, EULOGIO MACASPAC, RICARDO CHAVEZ, RUBEN
MANUYAG, DELFIN TALA, TOMAS PAULE, CLARO SUBA, DIOSDADO FLORES, FRANCISCO
NORALES, VENANCIO FLORES, DANTE FLORES, AGUSTIN ARIOLA, RICARDO ARIOLA,
ARTEMIO FLORES, FELICIANO BUCOD, JR., ROLANDO SERRANO, JUANITO LINTAG, TOMAS
TALA, LEONARDO RONQUILLO, LAMBERTO TALA, RICARDO LINGAD, ANOTNIO SANTOS,
IGNACIO TRESVALLES, ERNESTO PITUC, TEOFILO MUNOZ, BIENVENIDO BELLEZA, MANUEL
MAGUIAT, OFELIA MIGUEL, PEDRO TALA, ALEJANDRO TALA, RODRIGO SERRANO,
FRANCISCO BERNARTE, OSCAR SERRANO, CONSOLACION SERRANO, CEZAR SERRANO,
JOSE BERNARTE, JESUS BERNARTE, CALIXTO SERRANO, ROBERTO MALLARI, ARNOLD
PATRICIA, REYNALDO OSBUAL, WILFREDO TAPALLA, ELIZALDE FAPREQUILAN,
REYNALDO CASTRO, LUISITO MALLARI, ANTONIO CASTRO, MARCELO MANANSALA,
MARFELA AQUINO, HERMOGENES LACAP, VIRGILIO MANANSALA, NESTOR DATU, ROMEO
DATU, ALEGRIA BELLEZA, PURITA MIRANDO, MARIA PEREZ, ALBERTO DELA CRUZ,
ARTURO DELA CRUZ, GENERITO TALA, CELESTINO TAPALLA, JIMMY TAPALLA, MIKE
TAPALLA, REMIGIO OSBUAL, MYRNA MIGUEL, EDUARDO ESCUETA, CONRADO MALLARI,
AVELINO MIGUEL, VICTORINO TALA, IGNACIO DELA CRUZ, ROLANDO OSBUAL and
ROLANDO MASANQUE, Petitioners, v. THE HONORABLE COURT OF APPEALS and ESTRELLA
ARRASTIA, Respondents.
[G.R. NO. 132866]
THE COURT OF APPEALS and THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, Petitioners, v. ESTRELLA ARRASTIA, Respondent.
DECISION
TINGA, J.:
This deals with two separate Rule 45 petitions, later consolidated, filed by the Department of Agrarian Reform
Adjudication Board ("DARAB") and Alfredo Danan, et al. Both petitions seek the reversal of the Court of
Appeals' Decision in CA-G.R. SP No. 33796, which reversed and set aside the DARAB Decision in DARAB Case
No. 1551 and its Resolution denying petitioners' motion for reconsideration.
Petitioners ("private petitioners") in G.R. No. 132759 are all residents of Lubao, Pampanga, claiming to be
cultivating a vast landholding owned by the heirs of Teodorica Reinares Arrastia, Leticia Arrastia Montenegro and
Juanita Arrastia ("Arrastia heirs"). Said property has an aggregate area of approximately three hundred (300)
hectares and is situated at the Barangays of Lourdes, Baruya, and San Isidro, all within the Municipality of Lubao,
Pampanga. The records of the case show that the landholding had been subdivided and distributed among the
Arrastia heirs and the corresponding certificates of titles issued accordingly.
Petitioner in G.R. No. 132866 is the DARAB, the adjudication arm of the Department of Agrarian Reform
("DAR") that is tasked to implement the government's comprehensive agrarian reform program ("CARP").
The common respondent in both petitions is Estrella Arrastia, one of the Arrastia heirs and a co-owner of the
disputed property. Respondent Arrastia own 4.4630 hectares of the disputed property.
The factual antecedents are as follows:
Sometime in 1976, a certain Rustico Coronel leased the subject property for a period of twelve (12) years or until
the crop year 1987 to 1988. On September 27, 1986, persons claiming to be farmers and residents
of Barangay Lourdes and Barangay San Rafael signed a joint resolution as members of the Aniban ng mga
Manggagawa sa Agrikultura ("AMA") to enter and lease the subject property from the Arrastia heirs. Then
Pampanga Governor Brien Guiao favorably endorsed the resolution to then Minister of Environment and Natural
Resources Heherson Alvarez. On the basis of said resolution but without the consent of the landowners, the AMA
members, who are herein petitioners, entered the disputed land, cleared portions thereof and planted various crops
thereon. This culminated in a violent confrontation on May 21, 1988 that led to the filing of criminal charges
against AMA members.
On June 2, 1988, the AMA filed a complaint with petitioner DARAB, docketed as DARAB Case No. 0001,
praying that respondent Arrastia be prevented from destroying standing crops on the disputed property and from
fencing said property and that petitioners be allowed to continue with their farming thereon. On August 15, 1988,
the DARAB ordered the DAR Regional Director to conduct an ocular inspection on the disputed property. The
inspection team submitted an Ocular/Investigation Report with the observation that there were no substantially
significant plantings on the disputed property. The Municipal Agrarian Reform Officer ("MARO") of Lubao,
Pampanga also submitted a report dated September 21, 1989, recommending the disqualification of private
petitioners from availing of the benefits under the CARP.
On October 5, 1988, the DARAB issued an order denying AMA's motion for authority to cultivate. The order
became final and executory on July 29, 1989, after the DARAB denied AMA's motion for reconsideration.
On behalf of her co-heirs and co-owners, Arrastia instituted an action against private petitioners for violation of
Section 73(b) of Republic Act (R.A.) No. 6657 on October 9, 1989. Arrastia's complaint, docketed as Agrarian
Case No. 2000, was raffled to Branch 48 of the Regional Trial Court of San Fernando, Pampanga on October 9,
1989. The trial court, sitting as a special agrarian court ("SAC"), issued a temporary restraining order, and
subsequently a preliminary injunction, both enjoining private petitioners from entering and cultivating the disputed
property.
On November 29, 1989, private petitioners filed a complaint for injunction and damages before the Provincial
Agrarian Reform Adjudication Board ("PARAD") against Arrastia, alleging that they were actual tillers of the
disputed property who were forcibly evicted by Arrastia from their tenanted lots through the use of armed men. In
their complaint, docketed as DARAB Regional Case No. 161-P' 89, they prayed that Arrastia be restrained from
preventing them from reoccupying the property in question. Upon referral of the matter to the respective Barangay
Agrarian Reform Committees ("BARC") of the Barangays of Lourdes, San Isidro, and San Rafael, BARC officials
reported that the dispute could no longer be settled amicably. In particular, the BARC of Barangay San Rafael
(Baruya), Lubao informed the hearing officer that private petitioners were tenants or actual tillers of the disputed
property. The Lubao MARO also submitted the reports of other BARC officials.
On the basis of the reports submitted by BARC officials and private petitioners' affidavits, the hearing officer
issued on December 9, 1990 an order granting a preliminary injunction to restrain Arrastia from disturbing private
petitioners in the tilling of the disputed property. The PARAD hearing officer also directed the MARO to act on
the petition for the coverage of the disputed property under the CARP.
Meanwhile, on January 30, 1991, Arrastia filed an omnibus motion in DARAB Case No. 0001, questioning the
jurisdiction of the hearing officer to issue an order of injunction. The DARAB denied said motion and
subsequently issued the writ of injunction on September 22, 1992.
Arrastia filed an answer in DARAB Regional Case No. 161-P' 89, interposing the defense that the disputed land
was not devoted to agriculture and that private petitioners were not tenants thereof.
After due hearing, the PARAD rendered a decision in DARAB Regional Case No. 161-P' 89 on May 13, 1993,
declaring that the subject property is covered by the CARP and that private petitioners are qualified beneficiaries
of the program. The adjudicator also issued an injunction prohibiting Arrastia from disturbing private petitioners'
occupation of the property. The dispositive portion of the decision reads:
WHEREFORE, PREMISES CONSIDERED, this Board hereby renders judgment:
(1) Confirming and declaring that the subject landholding with an area of 300 hectares, more or less, situated at
Barangays Lourdes, San Isidro and San Rafael (Baruya), Lubao, Pampanga, owned by the defendant and her co-
owners are agricultural land subject to the coverage of RA No. 6657, and that plaintiffs are qualified beneficiaries
who enjoy the benefits of agrarian laws including the right to an award of the lands they actually till in accordance
with the procedure therein;
(2) Making the preliminary injunction hereto forthwith issued, prohibiting the defendant and her co-owners and all
other persons claiming any right or title under them, from continuing to exclude plaintiffs and from re-entry and
re-occupation of the subject landholding as agricultural tenants and their restoration thereat, final and permanent;
andcralawlibrary
(3) Ordering the defendant and her co-owners to pay plaintiffs the amount of P10,000.00 as attorney's fees, plus
costs.8
Arrastia appealed the aforementioned decision to petitioner DARAB. The appeal was docketed as DARAB Case
No. 1551. On March 28, 1994, the DARAB rendered its decision modifying the appealed judgment, the
dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is DISMISSED. The judgment of the Provincial Adjudicator is
hereby modified as follows:
1. Declaring Dominador Flores, Rodrigo Serrano, Oscar Salazar, Alejandro Danan, Tirso Lingad, Francisco
Santos, Dante Danan, Jesus Castro, Amado Escueta, Marcos Susi, Francisco Bernate, Felix Escueta, Ladislao
Danan, Lamberto Danan, Carlito Santos, Orlando Santos, Jose Manansala, Eulalio Danan, Eddie Escueta, Conrado
Castro, Pedro Tala and Victorino Tala to be agricultural lessees on their respective tillages, and ordering their
reinstatement on the land;
2. Ordering the rest of the Plaintiffs-Appellees to be reinstated on the land and to possess and occupy their
respective areas of cultivation;
3. Ordering the Regional Director of the Department of Agrarian Reform, Region III, San Fernando, Pampanga,
the Provincial Agrarian Reform Officer for the Province of Pampanga and the Municipal Reform Officer for the
Municipality of Lubao, Province of Pampanga to immediately undertake administrative processes for the coverage
of the land under Republic Act No. 6657 and other applicable agrarian laws, DAR Administrative Order No. 1,
Series of 1993, DAR Department Memorandum Circular No. 04, Series of 1993 and other DAR rules and
regulations taking into consideration the qualifications of Appellees to be beneficiaries of the program as well as
the right of retention of the owners of the subject landholding and the last paragraph of Section 6, Republic Act
No. 6657 which provides:
Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of possession of
private lands executed by the original landowner in violation of this Act shall be null and void; Provided, however,
That those executed prior to this Act shall be valid only when registered with the Register of Deeds within the
period of three (3) months after the effectivity of this Act. Thereafter, all Register of Deeds shall inform the DAR
within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares.
4. Ordering Defendant-Appellant, or any person or persons acting for and in behalf, to refrain from committing
any act or acts which will disturb or in any way adversely interfere with the peaceful possession, occupation and
farming activities of Appellees on the land itself;
5. Ordering Defendant-Appellant to pay Plaintiff-Appellees the reasonable amount of Twenty Thousand Pesos
(P20,000.00) as attorney's fees plus costs of the suit;
6. Ordering the Regional Sheriff of the DAR Regional Adjudication Board, Region III, to implement this Order
and submit a return to this Board within seven (7) days from receipt of this Order.
This decision is immediately executory pursuant to Section 50 of Republic Act No. 6657.
Aggrieved, Arrastia elevated the controversy to the Court of Appeals, which reversed and set aside the decision of
the DARAB.
On the issue of whether private petitioners are qualified beneficiaries under the CARP, the appellate court ruled in
the negative mainly on the basis of the report of MARO Josefina Vidal which was quoted at length in its Decision.
In the said report, the MARO recommended the disqualification of private petitioners from the coverage of the
CARP in view of their continued violation of Sections 22 and 23 of Executive Order No. 229, under which
persons, associations, or entities which prematurely enter lands covered by agrarian reform shall be permanently
disqualified from CARP coverage and cited for contempt, respectively. The Court of Appeals also found private
petitioners guilty of violating the temporary restraining order and preliminary injunction issued by the SAC in
Agrarian Case No. 2000 and also the temporary restraining issued by the Court of Appeals itself on April 13,
1994. The appeals court denied the motions for reconsideration separately filed by private petitioners. Hence, the
petitions before this Court.
In its petition, DARAB raised the following issues:
1.1. THE HONORABLE COURT OF APPEALS ERRED WHEN IT SET ASIDE THE ENTIRETY OF THE
DECISION APPEALED FROM, TO INCLUDE THE ORDER TO PLACE THE DISPUTED LANDHOLDINGS
UNDER CARP COVERAGE, ON THE SOLE BASIS OF THE FINDING THAT PRIVATE RESPONDENTS
(FARMERS) THEREIN WERE DISQUALIFIED AS FARMER BENEFICIARIES;
1.2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED ON THE DISQUALIFICATION
OF ALL THE FARMERS (PRIVATE RESPONDENTS THEREIN), IRRESPECTIVE OF WHETHER THEY
(OR SOME) ARE AGRICULTURAL TENANTS OR NOT, ON THE SOLE BASIS OF A FIELD REPORT
THAT WAS PREPARED AND SUBMITTED WITHOUT THE FARMERS AT LEAST GIVEN
OPPORTUNITY TO BE HEARD, THUS, VIOLATIVE OF DUE PROCESS.
In turn, private petitioners in their petition impute the following errors to the Court of Appeals:
1. RESPONDENT COURT GRAVELY ERRED IN NOT GIVING FIRST DUE COURSE TO THE PETITION
IN CA-G.R. NO. 33796 AND REQUIRED THE DARAB TO ELEVATE TO IT THE RECORDS OF DARAB
CASE NO. 1551 INCLUDING ALL THE EVIDENCE PRESENTED SO IT COULD HAVE FULLY
APPRECIATED ALL THE FACTS INSTEAD OF MERELY RELYING ON THE PLEADINGS FILED
BEFORE IT.
2. THE RESPONDENT COURT GRAVELY ERRED IN IGNORING FUNDAMENTAL RULES OF
ADMINISTRATIVE DUE PROCESS BY ITS FAILURE AND REFUSAL TO CONSIDER SUBSTANTIVE
EVIDENCE INTRODUCED BY PETITIONERS IN THE PROCEEDINGS IN DARAB CASE NO. 161-P 89
AND DARAB CASE NO. 1551 RESULTING IN FINDINGS WHICH ARE NOT ONLY CONTRARY TO LAW
AND THE EVIDENCE ON RECORD BUT ARE FURTHER PATENTLY PARTIAL TO PRIVATE
RESPONDENTS.
3. THE RESPONDENT COURT GRAVELY ERRED IN MAKING CONCLUSIONS FROM ITS REVIEW OF
THE DARAB DECISION IN DARAB CASE NO. 1551 WITHOUT ANY BASIS ON THE DECISION ITSELF
THUS CITING ERRORS IN THE SAID DECISION WHICH WERE NOT ACTUALLY MADE BY THE
DARAB.
4. THE RESPONDENT COURT GRAVELY ERRED IN REVERSING THE FINDINGS OF FACTS OF THE
DARAB WITHOUT DUE REGARD TO EVIDENCE PRESENTED BEFORE THE LATTER.
The two petitions advance two main arguments: first, the Court of Appeals' finding that private petitioners are
ineligible to become CARP beneficiaries is without factual or evidentiary basis; second, the Court of Appeals'
reversal of the DARAB's order to undertake administrative proceedings for the acquisition of the subject property
for agrarian reform purposes is premature.
Private petitioners contend that the Court of Appeals' declaration that they are not qualified beneficiaries of the
CARP has no evidentiary basis because it failed to order the transmittal of the DARAB records, particularly the
reports of the different BARC officials establishing tenancy relationship between private petitioners and the
owners of the disputed property. For its part, DARAB denies having categorically declared in its decision in
DARAB Case No. 1551 that private petitioners are qualified beneficiaries because the administrative proceeding
to determine the beneficiaries entitled under R.A. No. 6657 was yet to be undertaken not by DARAB but by the
administrative officials of DAR. DARAB also describes as arbitrary and unilateral the MARO report quoted by
the appellate court in support of its ruling that private petitioners prematurely entered the disputed property.
The resolution of the issue on private petitioners' eligibility under the CARP calls for a review of the evidence on
record to determine whether or not the conclusion of the Court of Appeals has factual basis. At the outset, it
should be noted that the jurisdiction of this Court in a Petition for Review on Certiorari under Rule 45 of the
Rules of Court is limited to reviewing only errors of law, as it is not a trier of facts. It is a settled doctrine that
findings of fact of the Court of Appeals are binding and conclusive upon this Court, not to be disturbed unless: (1)
the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is
manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of
facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its
findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of
Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of specific
evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence on record.
The DARAB and the Court of Appeals' findings in respect to the status of private petitioners are conflicting. The
DARAB found that private petitioners are either agricultural lessees paying rentals to the landowners or actual
tillers in possession of distinct portions of the subject property. The Court of Appeals, however, found private
petitioners as not qualified to become CARP beneficiaries on account of certain violations they committed and
considered it unnecessary to ascertain their status as agricultural lessees or tillers. In view of the divergent
opinions, the Court must review the evidence relied upon by the DARAB and the Court of Appeals in arriving at
their respective conclusions.
The Court affirms factual findings and conclusions of the Court of Appeals.
The appellate court's conclusion that private petitioners committed particular violations warranting their
disqualification from the CARP is based on the MARO report which has not been disputed by all the private
petitioners. The MARO who prepared the report enjoys the presumption of regularity in the performance of her
functions. Absent any showing that the Court of Appeals committed grave abuse of discretion in giving
evidentiary weight to said report, said factual findings are generally deemed conclusive on this Court, which is not
a trier of facts.
Anent DARAB's contention that the MARO report was made unilaterally and without giving private petitioners
the opportunity to be heard, the circumstances not nullify said report for lack of due process. The essence of due
process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain
one's side or an opportunity to seek reconsideration of the action or ruling complained of. Private petitioners
cannot claim denial of due process simply because they had ample opportunity to rebut the MARO's findings and
present contrary evidence in the proceedings before the PARAD, the DARAB, or the Court of Appeals.
landowner's retention rights, likewise recognizes no limit to the prerogative of the landowner, although he is
persuaded to retain other lands instead to avoid dislocation of farmers. Therefore, there is no legal and practical
basis to order the commencement of the administrative proceedings for the placement of respondent Arrastia's land
under the CARP since her property's land area falls below the retention limit of five (5) hectares.
WHEREFORE, both petitions in G.R No. 132759 and G.R. No. 132866 are DENIED. The Decision of the Court
of Appeals in CA-G.R. SP No. 33796 is AFFIRMED. Costs against private petitioners.
SO ORDERED.
Puno, J., (Chairman), Austria-Martinez, and Callejo, Sr., JJ., concur.
Chico-Nazario, J., on leave.

Private petitioners insist that they are bona fide agricultural tenants of the disputed property. It is unnecessary to G. R. No. 133507 - February 17, 2000
pass upon this issue in the light of the categorical finding of the appellate court that private petitioners are no
longer entitled to avail of the benefits under the CARP. In any event, however, the claim is not well-founded. EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, Petitioners, v. THE
HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA, ROGELIO
A perusal of the decision in DARAB Case No. 1551 reveals that DARAB classified two (2) sets of MACATULAD and MANUEL UMALI, Respondents.
farmworkers, i.e., those who cultivated the land and paid corresponding rentals, and those who occupied and
cultivated portions of the disputed property since 1986 as certified by BARC officials.
DE LEON, JR., J.:

Mere occupation or cultivation of an agricultural land does not automatically convert a tiller or farmworker into an
Before us is a petition for review on certiorari of the Decision of the Court of Appeals dated January 28, 1998
agricultural tenant recognized under agrarian laws. The essential requisites of a tenancy relationship are: (1) the
which denied the application of petitioner heirs of Eudosia Daez for the retention of a 4.1685-hectare riceland
parties are the landowner and the tenant; (2) the subject is agricultural land; (3) there is consent among the parties;
pursuant to Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law, thereby
(4) the purpose is agricultural production; (5) there is personal cultivation; and (6) there is sharing of harvests. All
reversing the Decision of then Executive Secretary Ruben D. Torres and the Order of then Deputy Executive
these requisites must concur in order to create a tenancy relationship between the parties. In the case at bar, it has
Secretary Renato C. Corona, both of which had earlier set aside the Resolution and Order of then Department of
not been sufficiently established that private petitioners' occupation and cultivation of the disputed property was
Agrarian Reform (DAR) Secretary Ernesto D. Garilao denying exemption of the same riceland from coverage
with the consent of the landowners.
under Presidential Decree (P.D.) No. 27.

DARAB assails the Court of Appeals in reversing the DARAB decision in its entirety. It contends that the
The pertinent facts are:
determination of private petitioners' eligibility under R.A. No. 6657 has no bearing on its order to commence
administrative procedure for the acquisition of the disputed property.
Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay Lawa, Meycauayan,
Bulacan which was being cultivated by respondents Macario Soriente, Rogelio Macatulad, Apolonio Mediana and
As borne by the case records, respondent Arrastia owns only 4.4630 hectares of the subject property, which is
Manuel Umali under a system of share-tenancy. The said land was subjected to the Operation Land Transfer
below the retention limit under Section 6 of R.A. No. 6657 granting a right of retention of up to a maximum of
(OLT) Program under Presidential Decree (P.D.) No. 27 as amended by Letter of Instruction (LOI) No. 474. Thus,
five (5) hectares of agricultural land in favor of a landowner whose property may be acquired for distribution to
the then Ministry of Agrarian Reform acquired the subject land and issued Certificates of Land Transfer (CLT) on
agrarian reform beneficiaries. Consequently, a landowner may keep his entire covered landholding if its aggregate
December 9, 1980 to private respondents as beneficiaries.
size does not exceed the retention limit of five (5) hectares. His land will not be covered at all by the operation
land transfer program although all requisites for coverage are present.
However, on May 31, 1981, private respondents signed an affidavit, allegedly under duress, stating that they are
not share tenants but hired laborers. Armed with such document, Eudosia Daez applied for the exemption of said
The right of retention is a constitutionally guaranteed right, which is subject to qualification by the legislature. It
riceland from coverage of P.D. No. 27 due to non-tenancy as well as for the cancellation of the CLTs issued to
serves to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the
private respondents.
tenant and by implementing the doctrine that social justice was not meant to perpetrate an injustice against the
landowner. A retained area, as its name denotes, is land which is not supposed to anymore leave the landowner's
dominion, thus sparing the government from the inconvenience of taking land only to return it to the landowner In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared ownership over 41.8064
afterwards, which would be a pointless process. For as long as the area to be retained is compact or contiguous and hectares of agricultural lands located in Meycauayan, Bulacan and fourteen (14) hectares of riceland, sixteen (16)
does not exceed the retention ceiling of five (5) hectares, a landowner's choice of the area to be retained must hectares of forestland, ten (10) hectares of "batuhan" and 1.8064 hectares of residential lands in Penaranda, Nueva
prevail. Moreover, Administrative Order No. 4, series of 1991, which supplies the details for the exercise of a
Ecija. Included in their 41.8064-hectare landholding in Bulacan, was the subject 4,1685-hectare riceland in
Meycauayan.
On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying Eudosia Daez's application for
exemption upon finding that her subject land is covered under LOI No. 474, petitioner being owner of the
aforesaid agricultural lands exceeding seven (7) hectares.
On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong requesting for
reconsideration of Undersecretary Medina's order. But on January 16, 1992 Secretary Leong affirmed the assailed
order upon finding private respondents to be bonafide tenants of the subject land. Secretary Leong disregarded
private respondents' May 31, 1981 affidavit for having been executed under duress because he found that
Eudosia's son, Adriano, who was then the incumbent Vice-Mayor of Meycauayan, pressured private respondents
into signing the same.
Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of Appeals via a petition
for certiorari. The Court of Appeals, however, sustained the order of Secretary Leong in a decision dated April 29,
1992. Eudosia pursued her petition before this court but we denied it in a minute resolution dated September 18,
1992. We also denied her motion for reconsideration on November 9, 1992.
Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to private respondents.
Thereafter, the Register of Deeds of Bulacan issued the corresponding Transfer Certificates of Title (TCTs).
Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally denied her, Eudosia Daez
next filed an application for retention of the same riceland, this time under R.A. No. 6657.
In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo allowed Eudosia Daez to
retain the subject riceland but he denied the application of her eight (8) children to retain three (3) hectares each
for their failure to prove actual tillage of the land or direct management thereof as required by law 14. Aggrieved,
they appealed to the DAR.
On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of Regional Director Bernardo in
a Resolution, the decretal portion of which reads, viz.:
WHEREFORE, premises considered, this Resolution is hereby issued setting aside with FINALITY the Order
dated March 22, 1994 of the Regional Director of DAR Region III.
The records of this case is remanded to the Regional Office for immediate implementation of the Order dated
January 16, 1992 of this office as affirmed by the Court of Appeals and the Supreme Court.
SO ORDERED.
Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19, 1995.
She appealed Secretary Garilao's decision to the Office of the President which ruled in her favor. The dispositive
portion of the Decision of then Executive Secretary reads:
WHEREFORE, the resolution and order appealed from are hereby SET ASIDE and judgment is rendered
authorizing the retention by Eudosia Daez or her heirs of the 4.1685-hectare landholding subject thereof.
SO ORDERED.
Aggrieved, private respondents sought from the Court of Appeals, a review of the decision of the Office of the
President.
On January 28, 1999, the said Decision of the Office of the President was reversed. The Court of Appeals ordered,
thus:
WHEREFORE, the assailed decision of July 5, 1996 and Order dated October 23, 1996 of the public respondents
are REVERSED AND SET ASIDE, and the Resolution and Order of DAR Secretary Ernesto D. Garilao
respectively dated August 26, 1994 and January 19, 1995 are REINSTATED.
SO ORDERED.
Hence, this petition which assigns the following errors:
I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT DISTINCTION BETWEEN
EXEMPTION FROM AGRARIAN REFORM COVERAGE AND THE RIGHT OF RETENTION OF
LANDOWNERS IS ONLY A MATTER OF SEMANTICS THAT AN ADVERSE DECISION IN THE
FORMER WILL FORECLOSE FURTHER ACTION TO ENFORCE THE LATTER CONSIDERING THAT
THEY CONSTITUTE SEPARATE AND DISTINCT CAUSES OF ACTION AND, THEREFORE,
ENFORCEABLE SEPARATELY AND IN SEQUEL.
II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE PRINCIPLE OF RES
JUDICATA DESPITE THE FACT THAT THE PREVIOUS CASE CITED (EXEMPTION FROM COVERAGE
DUE TO NON-TENANCY) AND THE PRESENT CASE (RETENTION RIGHT) ARE OF DIFFERENT
CAUSES OF ACTION.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED/OPINED THAT THERE WAS A
CUT-OFF DATE (AUGUST 27, 1985) FOR LANDOWNERS TO APPLY FOR EXEMPTION OR RETENTION
UNDER PD 27 AND THOSE WHO FAILED TO FILE THEIR APPLICATIONS/PETITIONS ARE DEEMED
TO HAVE WAIVED THEIR RIGHTS.
IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT PETITIONERS
(RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.
V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE LAND SUBJECT OF
THIS CASE IS NO LONGER OWNED BY PETITIONERS SINCE PRIVATE RESPONDENTS HAVE
ALREADY BEEN ISSUED NOT ONLY THEIR RESPECTIVE CERTIFICATES OF LAND TRANSFER BUT
ALSO THEIR INDIVIDUAL CERTIFICATES OF TITLE OVER THE DISPUTED AREA.
We grant the petition.
First. Exemption and retention in agrarian reform are two (2) distinct concepts.
P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers tenanted rice or corn lands.
The requisites for coverage under the OLT program are the following: (1) the land must be devoted to rice or corn
crops; and (2) there must be a system of share-crop or lease-tenancy obtaining therein. If either requisite is absent,
a landowner may apply for exemption. If either of these requisites is absent, the land is not covered under OLT.
Hence, a landowner need not apply for retention where his ownership over the entire landholding is intact and
undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the land is irrigated, a three (3)-
hectare lot constituting a family size farm. However, said law allows a covered landowner to retain not more than
seven (7) hectares of his land if his aggregate landholding does not exceed twenty-four (24) hectares. Otherwise,
his entire landholding is covered without him being entitled to any retention right.
Consequently, a landowner may keep his entire covered landholding if its aggregate size does not exceed the
retention limit of seven (7) hectares. In effect, his land will not be covered at all by the OLT program although all
requisites for coverage are present. LOI No. 474 clarified the effective coverage of OLT to include tenanted rice or
corn lands of seven (7) hectares or less, if the landowner owns other agricultural lands of more than seven (7)
hectares. The term "other agricultural lands" refers to lands other than tenanted rice or corn lands from which the
landowner derives adequate income to support his family.
Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted to rice or corn crops even
if it is tenanted; or (2) the land is untenanted even though it is devoted to rice or corn crops.
On the other hand, the requisites for the exercise by the landowner of his right of retention are the following: (1)
the land must be devoted to rice or corn crops; (2) there must be a system of share-crop or lease-tenancy obtaining
therein; and (3) the size of the landholding must not exceed twenty-four (24) hectares, or it could be more than
twenty-four (24) hectares provided that at least seven (7) hectares thereof are covered lands and more than seven
(7) hectares of it consist of "other agricultural lands".
Clearly, then, the requisites for the grant of an application for exemption from coverage of OLT and those for the
grant of an application for the exercise of a landowner's right of retention, are different.
Hence, it is incorrect to posit that an application for exemption and an application for retention are one and the
same thing. Being distinct remedies, finality of judgment in one does not preclude the subsequent institution of the
other. There was, thus, no procedural impediment to the application filed by Eudosia Daez for the retention of the
subject 4.1865-hectare riceland, even after her appeal for exemption of the same land was denied in a decision that
became final and executory.
Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the subject 4.1685 riceland.
The right of retention is a constitutionally guaranteed right, which is subject to qualification by the legislature. It
serves to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the
tenant and by implementing the doctrine that social justice was not meant to perpetrate an injustice against the
landowner. A retained area, as its name denotes, is land which is not supposed to anymore leave the landowner's
dominion, thus sparing the government from the inconvenience of taking land only to return it to the landowner
afterwards, which would be a pointless process.
In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary of Agrarian Reform, we
held that landowners who have not yet exercised their retention rights under P.D. No. 27 are entitled to the new
retention rights under R.A. No. 6657. We disregarded the August 27, 1985 deadline imposed by DAR
Administrative Order No. 1, series of 1985 on landowners covered by OLT. However, if a landowner filed his
application for retention after August 27, 1985 but he had previously filed the sworn statements required by LOI
Nos. 41, 45 and 52, he is still entitled to the retention limit of seven (7) hectares under P.D. No. 27. Otherwise, he
is only entitled to retain five (5) hectares under R.A. No. 6657.
Sec. 6 of R.A. No. 6657, which provides, viz.:
Sec. 6. Retention Limits Except as otherwise provided in this Act, no person may own or retain, directly or
indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a
viable family-size, such as commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner
exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose land have been covered by Presidential Decree No.
27 shall be allowed to keep the area originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the
landowner. Provided, however, That in case the area selected for retention by the landowner is tenanted, the tenant
shall have the option to choose whether to remain therein or be a beneficiary in the same or another agricultural
land with similar or comparable features. In case the tenant chooses to remain in the retained area, he shall be
considered a leaseholder and shall lose his right to be a beneficiary under this Act. In case the tenant chooses to be
a beneficiary in another agricultural land, he loses his right as a lease-holder to the land retained by the landowner.
The tenant must exercise this option within a period of one (1) year from the time the landowner manifests his
choice of the area for retention.
In all cases, the security of tenure of the farmers or farmworkers on the land prior to the approval of this Act shall
be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of possession of
private lands executed by the original landowner in violation of this Act shall be null and void; Provided, however,
That those executed prior to this Act shall be valid only when registered with the Register of Deeds within a
period of three (3) months after the effectivity of this Act. Thereafter, all Register of Deeds shall inform the DAR
within thirty (3) days of any transaction involving agricultural lands in excess of five (5) hectares.
defines the nature and incidents of a landowner's right of retention. For as long as the area to be retained is
compact or contiguous and it does not exceed the retention ceiling of five (5) hectares, a landowner's choice of the
area to be retained, must prevail. Moreover, Administrative Order No. 4, series of 1991, which supplies the details
for the exercise of a landowner's retention rights, likewise recognizes no limit to the prerogative of the landowner,
although he is persuaded to retain other lands instead to avoid dislocation of farmers.
Without doubt, this right of retention may be exercised over tenanted land despite even the issuance of Certificate
of Land Transfer (CLT) to farmer-beneficiaries. What must be protected, however, is the right of the tenants to opt
to either stay on the land chosen to be retained by the landowner or be a beneficiary in another agricultural land
with similar or comparable features.
Finally. Land awards made pursuant to the government's agrarian reform program are subject to the exercise by a
landowner, who is so qualified, of his right of retention.
Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands. Thereafter, they are issued
Emancipation Patents (EPs) after compliance with all necessary conditions. Such EPs, upon their presentation to
the Register of Deeds, result in the issuance of the corresponding transfer certificates of title (TCT) in favor of the
beneficiaries mentioned therein.
Under R.A. No. 6657, the procedure has been simplified. Only Certificates of Land Ownership Award (CLOAs)
are issued, in lieu of EPs, after compliance with all prerequisites. Thereafter, upon presentation of the CLOAs to
the Register of Deeds, TCTs are issued to the designated beneficiaries. CLTs are no longer issued.
The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from retaining the area
covered thereby. Under Administrative Order No. 2, series of 1994, an EP or CLOA may be cancelled if the land
covered is later found to be part of the landowner's retained area.
A certificate of title accumulates in one document a comprehensive statement of the status of the fee held by the
owner of a parcel of land. As such, it is a mere evidence of ownership and it does not constitute the title to the land
itself. It cannot confer title where no title has been acquired by any of the means provided by law.
Thus, we had, in the past, sustained the nullification of a certificate of title issued pursuant to a homestead patent
because the land covered was not part of the public domain and as a result, the government had no authority to
issue such patent in the first place. Fraud in the issuance of the patent, is also a ground for impugning the validity
of a certificate of title. In other words, the invalidity of the patent or title is sufficient basis for nullifying the
certificate of title since the latter is merely an evidence of the former.
In the instant case, the CLTs of private respondents over the subject 4.1685-hectare riceland were issued without
Eudosia Daez having been accorded her right of choice as to what to retain among her landholdings. The transfer
certificates of title thus issued on the basis of those CLTs cannot operate to defeat the right of the heirs of deceased
Eudosia Daez to retain the said 4.1685 hectares of riceland.
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals, dated January
28, 1998, is REVERSED and SET ASIDE and the Decision of the Office of the President, dated July 5, 1996, is
hereby REINSTATED. In the implementation of said decision, however, the Department of Agrarian Reform is
hereby ORDERED to fully accord to private respondents their rights under Section 6 of R.A. No. 6657.
No costs.
SO ORDERED.
Bellosillo and Mendoza, JJ., concur.
Quisumbing, J., took no part. Prior official action.
Buena, J., is on leave.
G.R. No. 194417, November 23, 2016
HEIRS OF TEODORO CADELIÑA, REPRESENTED BY SOLEDAD CADIZ VDA. DE
CADELIÑA, Petitioners, v. FRANCISCO CADIZ, CELESTINO DELA CRUZ, ANTONIO
VICTORIA, HEIRS OF TELESFORO VILLAR REPRESENTED BY SAMUEL VILLAR,
FRANCISCO VICTORIA AND MAGNO GANTE, Respondents;
HON. JOSE C. REYES, JR., IN HIS CAPACITY AS PRESIDING JUSTICE, HON.
NORMANDIE PIZARRO, IN HIS CAPACITY AS MEMBER, AND HON. RICARDO R.
ROSARIO, IN HIS CAPACITY AS MEMBER OF THE COURT OF APPEALS SPECIAL
FORMER THIRD DIVISION, Public Respondents.
DECISION
JARDELEZA, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking to nullify the Court of
Appeals' (CA) May 25, 2009 Resolution and September 22, 2010 Resolution in CA-G.R. SP No. 108414
(collectively, Assailed Resolutions). The Assailed Resolutions dismissed the petition for review under Rule 43 of
the Revised Rules of Court filed by the Heirs of Teodoro Cadeliña represented by Soledad Cadiz Vda. De
Cadeliña (petitioners), against the July 5, 2006 Decision and the March 11, 2009 Resolution of the Department of
Agrarian Reform Adjudication Board (DARAB) in DARAB Cases Nos. 10543 and 10554. The DARAB granted
the complaint filed by Francisco Cadiz, Celestino Dela Cruz, Antonio Victoria and heirs of Telesforo Villar,
represented by Samuel Villar, (respondents) for reinstatement of possession as farmer tenants.
The Facts
Respondents filed complaints for reinstatement of possession as farmer tenants against petitioners with the
DARAB-Region 2, San Fermin, Cauayan, Isabela docketed as DARAB Cases Nos. II-2063-ISA 2000 and II-
2064-ISA 2000. Respondents alleged that they were the farmers/tillers of portions of Lot No. 7050, Cad. 211,
Santiago Cadastre (properties), "ownership then claimed by Nicanor Ibuna, Sr. [who is] their landowner," since
1962 until around the end of 1998 when they were deprived of their respective possessions, occupations and
tillage of the properties. This was allegedly brought about by the execution of the decision of the CA in a previous
case (CA-G.R. CV No. 42237) ordering the transfer of the properties to Teodoro Cadeliña (Teodoro) and his heirs,
petitioners herein.
Petitioners moved to dismiss the complaint on the ground that respondents cannot be considered as tenants under
land reform law because they were instituted by Nicanor Ibuna, Sr. (Ibuna) whose rights were declared by the
court illegal and unlawful in CA-G.R. CV No. 42237 and that the DARAB has no jurisdiction to entertain the case
for lack of tenancy relationship between the parties.
In its Decision dated October 24, 2000, the DARAB, Region 2, San Fermin, Cauayan, Isabela ruled in favor of
respondents. The DARAB declared Ibuna as legal possessor of the properties who had the right to institute
respondents as tenants of the properties. The DARAB said, "[w]hile the title of the late Nicanor Ibuna was
subsequently declared null and void by the [CA in CA-G.R. CV No. 42237], he is deemed considered as legal
possessor of the subject land" and "[a]s legal possessor, the late Ibuna has the right to grant to the herein plaintiffs
the cultivation of the land pursuant to Section 6 of [Republic Act (RA) No.] 3844, as amended, otherwise known
as the Agricultural Land Reform Code." As a result, respondents are entitled to security of tenure in working on
the properties. Thus, the DARAB: (1) declared respondents the tenants of the properties; (2) ordered petitioners,
their heirs, agent, or any person(s) acting on their behalf to vacate the land in issue and to deliver the possession
and cultivation of said lands to respondents; (3) ordered respondents to pay lease rentals to petitioners in
accordance with Section 34 of RA No. 3844; and (4) ordered petitioners to pay respondents attorney's fees and
honoraria in the amount of P20,000.00.
This was appealed before the DARAB Quezon City (DARAB Cases Nos. 10543-10544) which denied the appeal
in its Decision dated July 5, 2006. A motion for reconsideration was also denied in the March 11, 2009 Resolution.
Thereafter, petitioners filed the petition for review under Rule 43 before the CA.
On May 25, 2009, the CA dismissed the petition for not being sufficient in form and in substance. In their Motion
for Reconsideration, petitioners attached the missing special power of attorney in favor of Enor C. Cadeliña and
the certified original copies of the pertinent DARAB decisions and resolution, and cited inadvertence and
excusable negligence for the other procedural lapses. The CA, however, denied the motion in the September 22,
2010 Resolution which petitioners received on September 29, 2010.
Hence, this petition filed on November 26, 2010, where petitioners argue that the CA committed grave abuse of
discretion in dismissing the petition based on procedural grounds, and for ignoring the merits of the petition.
According to them, there is a conflict between the decision in CA G.R. CV No. 42237 annulling the titles of
respondents and declaring the homestead patents of Teodoro lawful, and the DARAB Decision dated October 24,
2000 declaring respondents as tenants.
The Issue
Whether the CA committed grave abuse of discretion in dismissing the petition for review based on procedural
grounds.chanroblesvirtuallawlibrary
Our Ruling
We grant the petition.
Technical rules of procedure may be set aside in order to achieve substantial justice.
It does not escape us that the right recourse against the dismissal of petitioners' appeal with the CA is an appeal
by certiorari under Rule 45, and not certiorari under Rule 65, of the Revised Rules of Court. The Assailed
Decisions were final and appealable judgments, which disposed of petitioners' appeal in a manner left nothing
more to be done by the CA. As a rule, the existence and availability of this right to appeal precludes the resort
to certiorari since a petition for certiorari under Rule 65 of the Revised Rules of Court may only be resorted to in
the absence of appeal or any plain, speedy and adequate remedy in the ordinary course of law. Corollarily, we
have repeatedly ruled that certiorari is not and cannot be made a substitute for a lost appeal. As such, this case
would have been dismissed outright for failure of petitioners to avail of the proper remedy.
Nevertheless, when we are convinced that substantial justice will be defeated by the strict application of
procedural rules that are, ironically, intended for the just, speedy and inexpensive disposition of cases on the
merits, we will not hesitate to overlook the procedural technicalities. While ordinarily, certiorari is unavailing
where the appeal period has lapsed, there are exceptions, as when: (a) the public welfare and the advancement of
public policy dictates; (b) the broader interest of justice so requires; (c) the writs issued are null and void; or (d)
the questioned order amounts to an oppressive exercise of judicial authority. 24 Thus, we said in Pahila-Garrido v.
Tortogo:
We also observe that the rule that a petition should have been brought under Rule 65 instead of under Rule 45 of
the Rules of Court (or vice versa) is not inflexible or rigid. The inflexibility or rigidity of application of the rules of
procedure is eschewed in order to serve the higher ends of justice. Thus, substance is given primacy over form, for
it is paramount that the rules of procedure are not applied in a very rigid technical sense, but used only to help
secure, not override, substantial justice. If a technical and rigid enforcement of the rules is made, their aim is
defeated. Verily, the strict application of procedural technicalities should not hinder the speedy disposition
of the case on the merits. To institute a guideline, therefore, the Rules of Court expressly mandates that the rules
of procedure "shall be liberally construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding." (Emphasis supplied.)
The record shows that the facts of this case are undisputed and we are only presented with questions of law which
we are readily able to decide. The issues only involve the determination of whether respondents are de jure tenants
entitled to security of tenure under our land reform laws, and consequently, of the jurisdiction of the DARAB to
order the restoration of possession of petitioners' properties to respondents. After review, we hold that since the
merits of the petition far outweigh the rigid application of the rules, there is a need to suspend the rules in this case
to achieve substantial justice.
This is all the more true when the strict application of technical rules of procedure will result in a decision that will
disturb already settled cases. We are mindful of the impact that the dismissal of this petition may have on the final
and executory decisions not only in CA-G.R. CV No. 42237 (declaring Ibuna's title as void, and upholding
petitioners' homestead over the properties), but also in a much earlier case involving the denial of the free patent
application of Ibuna over the properties (which also declared his title void) in Department of Agriculture and
Natural Resources (DANR) Case No. 2411. We take notice that we affirmed this order of the Secretary of DANR
in DANR Case No. 2411 in our Resolution in G.R. No. L-30916 dated April 25, 1988.
Respondents are not agricultural leasehold lessees entitled to security of tenure.
We first address petitioners' claim that there is inconsistency between respondents' position of claiming ownership
in CA-G.R. CV No. 42237, and their claim of tenancy relationship in this case. While we have previously held
that "[t]enancy relationship is inconsistent with the assertion of ownership," this is not applicable in the case of
respondents. Records show that respondents were previously issued title (albeit nullified in CA-G.R. CV No.
42237) under Section 3 of Presidential Decree No. 152, which gives a share tenant actually tilling the land the
preferential right to acquire the portion actually tilled by him. Respondents' assertions of ownership over the
properties in CA-G.R. CV No. 42237 were only but a consequence of their previous status as alleged tenants of
Ibuna; their claims of tenancy status and ownership were successive, and not simultaneous. Thus, particular to the
circumstances of their case, there was no conflict between their assertion of ownership in CA-G.R. CV No. 42237
and of tenancy in this case.
Nevertheless, respondents' claim of tenancy relationship fails.
Under RA No. 3844, otherwise known as the Agriculture Land Reform Code, which superseded RA No. 1199, the
determination of the existence of an agricultural leasehold relation is not only a factual issue, but is also an issue
determined by the terms of the law. RA No. 3844 provides that agricultural leasehold relation is established: (1) by
operation of law in accordance with Section 4 of the said act as a result of the abolition of the agricultural share
tenancy system under RA No. 1199, and the conversion of share tenancy relations into leasehold relations; or (2)
by oral or written agreement, either express or implied. While petitioners Cadiz and Victoria claim to be instituted
as tenants in 1962 or during the effectivity of RA No. 1199, and petitioners Villar and Dela Cruz claim to be
instituted in 1972 or during the effectivity of RA No. 3844, the principles in establishing such relationship in cases
before us have been the same for both laws.
For agricultural tenancy or agricultural leasehold to exist, the following requisites must be present: (1) the parties
are the landowner and the tenant or agricultural lessee; (2) the subject matter of the relationship is an agricultural
land; (3) there is consent between the parties to the relationship; (4) the purpose of the relationship is to bring
about agricultural production; (5) there is personal cultivation on the part of the tenant or agricultural lessee; and
(6) the harvest is shared between landowner and tenant or agricultural lessee. The absence of any of the requisites
does not make an occupant, cultivator, or a planter, a de jure tenant which entitles him to security of tenure or to
coverage by the Land Reform Program of the government under existing tenancy laws.
In Cunanan v. Aguilar, we held that a tenancy relationship can only be created with the true and lawful landowner
who is the owner, lessee, usufructuary or legal possessor of the land, to wit:
Under the foregoing factual milieu, private respondent's claims-(1) that petitioner was not agricultural tenant, and
(2) that the recognition by the Court of Agrarian Relations of his alleged tenancy status has been secured thru
misrepresentation and suppression of facts-must prevail.
(1) By petitioner's own claim filed with the CAR in 1970 he was constituted as tenant on the land by Pragmacio
Paule. Paule was, however, ordered to vacate the holding and surrender the same to private respondents herein, the
heirs of Ciriaco Rivera, as early as December 8, 1964 by the final and executory judgment in Civil Case No. 1477.
Therefore, Paule's institution of petitioner as tenant in the holding did not give rise to a tenure
relationship. Tenancy relationship can only be created with the consent of the true and lawful landowner
who is the owner, lessee, usufructuary or legal possessor of the land. It cannot be created by the act of a
supposed landowner, who has no right to the land subject of the tenancy, much less by one who has been
dispossessed of the same by final judgement. (Emphasis supplied; citations omitted.)
In this case, Ibuna's institution of respondents as tenants did not give rise to a tenure relationship because Ibuna is
not the lawful landowner, either in the concept of an owner or a legal possessor, of the properties. It is undisputed
that prior to the filing of the complaint with the DARAB, the transfers of the properties to Ibuna and his
predecessor, Andres Castillo, were declared void in separate and previous proceedings. Since the transfers were
void, it vested no rights whatsoever in favor of Ibuna, either of ownership and possession. It is also for this reason
that the DARAB erred in declaring Ibuna as a legal possessor who may furnish a landholding to respondents. That
which is inexistent cannot give life to anything at all.
Notably, upholding Ibuna as the legal possessor of the properties is inconsistent with petitioners' homestead since
a homestead applicant is required to occupy and cultivate the land for his own and his family's benefit, and not for
the benefit of someone else. Also, it must be recalled that the CA, in CA-G.R. CV No. 42237, ordered respondents
to reconvey the properties to petitioners herein. Upholding respondents' claim for tenancy, and consequently their
possession of the properties, would frustrate this final and executory decision of the CA.
There being no agricultural tenancy relationship between petitioners and respondents, the DARAB acted beyond
its jurisdiction when it ordered petitioners, among other things, to restore possession of the lands to respondents.
WHEREFORE, the petition is GRANTED. The DARAB Quezon City Decision dated July 5, 2006 and the
Resolution dated March 11, 2009 in DARAB Cases Nos. 10543 and 10544, as well as the affirmed Decision of the
DARAB-Region 2 dated October 14, 2000, are hereby SET ASIDE. The complaints in DARAB Case Nos. 11-
2063-ISA 2000 and 11-2064-ISA 2000 are DISMISSED.
No costs.
SO ORDERED.
Velasco, Jr., (Chairperson), Perez, and Reyes, JJ., concur.
Peralta, J., on official leave.
[G.R. No. 171972, June 08 : 2011]
LUCIA RODRIGUEZ AND PRUDENCIA RODRIGUEZ, PETITIONERS, VS. TERESITA V.
SALVADOR, RESPONDENT.
DECISION
DEL CASTILLO, J.:
Agricultural tenancy is not presumed but must be proven by the person alleging it. 
This Petition for Certiorari under Rule 65 of the Rules of Court assails the August 24, 2005 Decision and the
February 20, 2006 Resolution of the Court of Appeals (CA) in CA G.R. SP No. 86599.  However, per
Resolution of this Court dated August 30, 2006, the instant petition shall be treated as a Petition for Review
on Certiorari under Rule 45 of the same Rules.
Factual Antecedents
On May 22, 2003, respondent Teresita V. Salvador filed a Complaint for Unlawful Detainer, docketed as Civil
Case No. 330, against petitioners Lucia (Lucia) and Prudencia Rodriguez, mother and daughter, respectively
before the Municipal Trial Court (MTC) of Dalaguete, Cebu. Respondent alleged that she is the absolute owner of
a parcel of land covered by Original Certificate of Title (OCT) No. P-27140 issued by virtue of Free Patent No.
(VII-5) 2646 in the name of the Heirs of Cristino Salvador represented by Teresita Salvador; that petitioners
acquired possession of the subject land by mere tolerance of her predecessors-in-interest; and that despite several
verbal and written demands made by her, petitioners refused to vacate the subject land.
In their Answer, petitioners interposed the defense of agricultural tenancy.  Lucia claimed that she and her
deceased husband, Serapio, entered the subject land with the consent and permission of respondent's predecessors-
in-interest, siblings Cristino and Sana Salvador, under the agreement that Lucia and Serapio would devote the
property to agricultural production and share the produce with the Salvador siblings. Since there is a tenancy
relationship between the parties, petitioners argued that it is the Department of Agrarian Reform Adjudication
Board (DARAB) which has jurisdiction over the case and not the MTC.
On July 10, 2003, the preliminary conference was terminated and the parties were ordered to submit their
respective position papers together with the affidavits of their witnesses and other evidence to support their
respective claims.
Ruling of the Municipal Trial Court
On September 10, 2003, the MTC promulgated a Decision finding the existence of an agricultural tenancy
relationship between the parties, and thereby, dismissing the complaint for lack of jurisdiction.  Pertinent portions
of the Decision read:
Based on the facts presented, it is established that defendant Lucia Rodriguez and her husband Serapio Rodriguez
were instituted as agricultural tenants on the lot in question by the original owner who was the predecessor-in-
interest of herein plaintiff Teresita Salvador.  The consent given by [the]original owner to constitute [defendants]
as agricultural tenants of subject landholdings binds plaintiff who as successor-in-interest of the original owner
Cristino Salvador steps into the latter's shoes acquiring not only his rights but also his obligations towards the
herein defendants. In the instant case, the consent to tenurial arrangement between the parties is inferred from the
fact that the plaintiff and her successors-in-interest had received their share of the harvests of the property in
dispute from the defendants.
Moreover, dispossession of agricultural tenants can only be ordered by the Court for causes expressly provided
under Sec. 36 of R.A. 3844. However, this Court has no jurisdiction over detainer case involving agricultural
tenants as ejectment and dispossession of said tenants is within the primary and exclusive jurisdiction of the
Department of Agrarian Reform and Agricultural Board (DARAB). ([S]ee Sec. 1(1.4) DARAB 2003 Rules of
Procedure[.])
WHEREFORE, in view of the foregoing, the instant complaint is hereby ordered DISMISSED for lack of
jurisdiction.
SO ORDERED.
Aggrieved, respondent filed an appeal, docketed as Civil Case No. AV-1237, with the Regional Trial Court (RTC)
of Argao, Cebu, Branch 26.
Ruling of the Regional Trial Court
On January 12, 2004, the RTC rendered a Decision remanding the case to
the MTC for preliminary hearing to determine whether tenancy relationship exists between the parties.
Petitioners moved for reconsideration arguing that the purpose of a preliminary hearing was served by the parties'
submission of their respective position papers and other supporting evidence.
On June 23, 2004, the RTC granted the reconsideration and affirmed the MTC Decision dated September 10,
2003.  The fallo of the new Decision reads:
WHEREFORE, the motion for reconsideration is GRANTED.  The Decision dated September 10, 2003 of the
Municipal Trial Court of Dalaguete, Cebu, is hereby AFFIRMED.
IT IS SO DECIDED.
Respondent sought reconsideration but it was denied by the RTC in an Order dated August 18, 2004.
Thus, respondent filed a Petition for Review with the CA, docketed as CA G.R. SP No. 86599.
Ruling of the Court of Appeals
On August 24, 2005, the CA rendered judgment in favor of respondent.  It ruled that no tenancy relationship exists
between the parties because petitioners failed to prove that respondent or her predecessors-in-interest consented to
the tenancy relationship. The CA  likewise gave no probative  value to the affidavits
of petitioners' witnesses as it found their statements insufficient to establish petitioners' status as agricultural
tenants. If at all, the affidavits merely showed that petitioners occupied the subject land with the consent of the
original owners. And since petitioners are occupying the subject land by mere tolerance, they are bound by an
implied promise to vacate the same upon demand by the respondent. Failing to do so, petitioners are liable to pay
damages. Thus, the CA disposed of the case in this manner:
WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by us SETTING ASIDE, as
we hereby set aside, the decision rendered by the RTC of Argao, Cebu on June 23, 2004 in Civil Case No. AV-
1237 and ORDERING the remand of this case to the MTC of Dalaguete, Cebu for the purpose of determining the
amount of actual damages suffered by the [respondent] by reason of the [petitioners'] refusal and failure to turn
over to [respondent] the possession and enjoyment of the land and, then, to make such award of damages to the
[respondent].
SO ORDERED.
Issues
Hence, this petition raising the following issues:
I.
WHETHER X X X THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT PETITIONERS-
DEFENDANTS ARE NOT TENANTS OF THE SUBJECT LAND.
II.
WHETHER X X X SUCH RULING OF THE COURT OF APPEALS HAS FACTUAL AND LEGAL BASIS
AND IS SUPPORTED WITH SUBSTANTIAL EVIDENCE.
Petitioners' Arguments
Petitioners contend that under Section 5 of Republic Act No. 3844, otherwise known as the Agricultural Land
Reform Code, tenancy may be constituted by agreement of the parties either orally or in writing, expressly or
impliedly. In this case, there was an implied consent to constitute a tenancy relationship as respondent and her
predecessors-in-interest allowed petitioners to cultivate the land and share the harvest with the landowners for
more than 40 years.
Petitioners further argue that the CA erred in disregarding the affidavits executed by their witnesses as these are
sufficient to prove the existence of a tenancy relationship. Petitioners claim that their witnesses had personal
knowledge of the cultivation and the sharing of harvest.
Respondent's Arguments
Respondent, on the other hand, maintains that petitioners are not agricultural tenants because mere cultivation of
an agricultural land does not make the tiller an agricultural tenant. Respondent insists that her predecessors-in-
interest merely tolerated petitioners' occupation of the subject land.
Our Ruling
The petition lacks merit.
Agricultural tenancy relationship does not exist in the instant case.
Agricultural tenancy exists when all the following requisites are present: 1) the parties are the landowner and the
tenant or agricultural lessee; 2) the subject matter of the relationship is an agricultural land; 3) there is consent
between the parties to the relationship; 4) the purpose of the relationship is to bring about agricultural production;
5) there is personal cultivation on the part of the tenant or agricultural lessee; and 6) the harvest is shared between
landowner and tenant or agricultural lessee.
In this case, to prove that an agricultural tenancy relationship exists between the parties, petitioners submitted as
evidence the affidavits of petitioner Lucia and their neighbors. In her affidavit, petitioner Lucia declared that she
and her late husband occupied the subject land with the consent and permission of the original owners and that
their agreement was that she and her late husband would cultivate the subject land, devote it to agricultural
production, share the harvest with the landowners on a 50-50 basis, and at the same time watch over the land. 
Witness Alejandro Arias attested in his affidavit that petitioner Lucia and her husband, Serapio, have been
cultivating the subject land since 1960; that after the demise of Serapio, petitioner Lucia and her children
continued to cultivate the subject land; and that when respondent's predecessors-in-interest were still alive, he
would often see them and respondent get some of the harvest.  The affidavit of witness Conseso Muñoz stated, in
essence, that petitioner Lucia has been in peaceful possession and cultivation of the subject property since 1960
and that the harvest was divided into two parts, for the landowner and for petitioner Lucia.
The statements in the affidavits presented by the petitioners are not sufficient to prove the existence of an
agricultural tenancy.
As correctly found by the CA, the element of consent is lacking. Except for the self-serving affidavit of Lucia, no
other evidence was submitted to show that respondent's predecessors-in-interest consented to a tenancy
relationship with petitioners.  Self-serving statements, however, will not suffice to prove consent of the landowner;
independent evidence is necessary.
Aside from consent, petitioners also failed to prove sharing of harvest.  The affidavits of petitioners' neighbors
declaring that respondent and her predecessors-in-interest received their share in the harvest are not sufficient.
Petitioners should have presented receipts or any other evidence to show that there was sharing of harvest and that
there was an agreed system of sharing between them and the landowners.
As we have often said, mere occupation or cultivation of an agricultural land will not ipso facto make the tiller an
agricultural tenant. It is incumbent upon a person who claims to be an agricultural tenant to prove by substantial
evidence all the requisites of agricultural tenancy.
In the instant case, petitioners failed to prove consent and sharing of harvest between the parties.  Consequently,
their defense of agricultural tenancy must fail. The MTC has jurisdiction over the instant case. No error can
therefore be attributed to the CA in reversing and setting aside the dismissal of respondent's complaint for lack of
jurisdiction.  Accordingly, the remand of the case to the MTC for the determination of the amount of damages due
respondent is proper.
Respondent is entitled to the fair rental value or the reasonable compensation for the use and occupation of the
subject land.
We must, however, clarify that "the only damage that can be recovered [by respondent] is the fair rental value or
the reasonable compensation for the use and occupation of the leased property.  The reason for this is that [in
forcible entry or unlawful detainer cases], the only issue raised in ejectment cases is that of rightful possession;
hence, the damages which could be recovered are those which the [respondent] could have sustained as a mere
possessor, or those caused by the loss of the use and occupation of the property, and not the damages which [she]
may have suffered but which have no direct relation to [her] loss of material possession."
WHEREFORE, the petition is DENIED.  The assailed August 24, 2005 Decision and the February 20, 2006
Resolution of the Court of Appeals in CA G.R. SP No. 86599 are AFFIRMED.  This case is
ordered REMANDED to the Municipal Trial Court of Dalaguete, Cebu, to determine the amount of damages
suffered by respondent by reason of the refusal and failure of petitioners to turn over the possession of the subject
land, with utmost dispatch consistent with the above disquisition.
SO ORDERED.
Corona, C.J., (Chairperson), Velasco, Jr., Leonardo-De Castro, Del Castillo, and Perez, JJ.
G.R. No. 78517 February 27, 1989
GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO RICALDE, VICENTE
RICALDE and ROLANDO SALAMAR, Petitioners, vs. THE HONORABLE COURT OF
APPEALS, ENRIQUE M. REYES, PAZ M. REYES and FE M. REYES, Respondents.
Bureau of Agrarian Legal Assistance for petitioners.
Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for private respondents.
PARAS, J.:
Before us is a petition seeking the reversal of the decision rendered by the respondent Court of Appeals**on
March 3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the dispositive portion of the trial
court's decision reading as follows;
WHEREFORE, the decision rendered by this Court on November 5, 1982 is hereby reconsidered and a new
judgment is hereby rendered:
1. Declaring that Presidential Decree No. 27 is inapplicable to lands obtained thru the homestead law, 
2. Declaring that the four registered co-owners will cultivate and operate the farmholding themselves as owners
thereof; and 
3. Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus Julian, Sr., Jesus Julian, Jr., Pedro
Ricalde, Vicente Ricalde and Rolando Salamar, as the owners would want to cultivate the farmholding themselves.
No pronouncement as to costs.
SO ORDERED. (p. 31, Rollo)
The facts are undisputed. The subject matter of the case consists of two (2) parcels of land, acquired by private
respondents' predecessors-in-interest through homestead patent under the provisions of Commonwealth Act No.
141. Said lands are situated at Guilinan, Tungawan, Zamboanga del Sur. virtual law library
Private respondents herein are desirous of personally cultivating these lands, but petitioners refuse to vacate,
relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations issued by the then Ministry of
Agrarian Reform (DAR for short), now Department of Agrarian Reform (MAR for short).
On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon. Conrado Estrella as
then Minister of Agrarian Reform, P.D. Macarambon as Regional Director of MAR Region IX, and herein
petitioners (then defendants) for the declaration of P.D. 27 and all other Decrees, Letters of Instructions and
General Orders issued in connection therewith as inapplicable to homestead lands.
Defendants filed their answer with special and affirmative defenses of July 8,
1981.chanroblesvirtualawlibrarychanrobles virtual law library
Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from declaring the lands
in litigation under Operation Land Transfer and from being issued land transfer certificates to which the
defendants filed their opposition dated August 4, 1982.
On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV, Pagadian City
(now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its decision dismissing the said complaint
and the motion to enjoin the defendants was denied.
On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants filed their
opposition on January 10, 1983.chanroblesvirtualawlibrarychanrobles virtual law library
Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting defendants to move
for a reconsideration but the same was denied in its Order dated June 6,
1986.chanroblesvirtualawlibrarychanrobles virtual law library
On appeal to the respondent Court of Appeals, the same was sustained in its judgment rendered on March 3, 1987,
thus:
WHEREFORE, finding no reversible error thereof, the decision appealed from is hereby AFFIRMED.
SO ORDERED. (p. 34, Rollo)
Hence, the present petition for review on certiorari.
The pivotal issue is whether or not lands obtained through homestead patent are covered by the Agrarian Reform
under P.D. 27.
The question certainly calls for a negative answer.
We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from the bondage of the
soil and transferring to them ownership of the land they till is a sweeping social legislation, a remedial measure
promulgated pursuant to the social justice precepts of the Constitution. However, such contention cannot be
invoked to defeat the very purpose of the enactment of the Public Land Act or Commonwealth Act No. 141. Thus,
The Homestead Act has been enacted for the welfare and protection of the poor. The law gives a needy citizen a
piece of land where he may build a modest house for himself and family and plant what is necessary for
subsistence and for the satisfaction of life's other needs. The right of the citizens to their homes and to the things
necessary for their subsistence is as vital as the right to life itself. They have a right to live with a certain degree of
comfort as become human beings, and the State which looks after the welfare of the people's happiness is under a
duty to safeguard the satisfaction of this vital right. (Patricio v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders' rights over the
rights of the tenants guaranteed by the Agrarian Reform statute. In point is Section 6 of Article XIII of the 1987
Philippine Constitution which provides:
Section 6. The State shall apply the principles of agrarian reform or stewardship, whenever applicable in
accordance with law, in the disposition or utilization of other natural resources, including lands of public domain
under lease or concession suitable to agriculture, subject to prior rights, homestead rights of small settlers, and the
rights of indigenous communities to their ancestral lands.
Additionally, it is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of 1988 or
Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to lands covered by
homestead patents like those of the property in question, reading,
Section 6. Retention Limits. ...
... Provided further, That original homestead grantees or their direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate
said homestead.'
WHEREFORE, premises considered, the decision of the respondent Court of Appeals sustaining the decision of
the Regional Trial Court is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., .
G.R. No. 199008, November 19, 2014
DANILO ALMERO, TERESITA ALAGON, CELIA BULASO, LUDY RAMADA, REGINA
GEGREMOSA, ISIDRO LAZARTE, THELMA EMBARQUE, FELIPE LAZARTE,
GUILERMA LAZARTE, DULCESIMA BENIMELE, Petitioners, v. HEIRS OF MIGUEL
PACQUING, AS REPRESENTED BY LINDA PACQUINGFADRILAN, Respondents.
DECISION
BRION, J.:
Before this Court is a petition for review on certiorari filed under Rule 45 of the Rules of Court directly assailing
the February 16, 2011 decision and July 19, 2011 resolution of the Office of the President (OP) in OP Case No.
10-C-152. The OP recalled and cancelled the Certificate of Land Ownership Awards (CLOAs) issued to the
petitioners covering certain homestead lots that formed part of the Pacquing Estate, a 23.6272-hectare property
located in Cuambogan, Tagum City.cralawred
Factual Antecedents
Miguel Pacquing acquired agricultural lands (the property) with a total area of 23.6272 hectares in Cuambogan,
Tagum City through Homestead Patent No. V-33775. These lands were registered on January 6, 1955 with the
Register of Deeds under Original Certificate of Title No. (P-2590) P-653.
The records show that, on August 5, 1991, the Municipal Agrarian Reform Officer (MARO) sent Miguel's
representative a Notice of Coverage placing the Pacquing Estate under the Comprehensive Agrarian Reform
Program (CARP). Miguel failed to reply to the notice and, instead filed a Voluntary Offer to Sell (VOS) with the
Department of Agrarian Reform (DAR) on August 31, 1991. Miguel, however, died during the pendency of the
VOS proceedings. Miguel's wife, Salome, had died five years earlier.
In January 1992, respondent Linda Pacquing-Fadrilan, sole heir of the spouses Pacquing, executed an affidavit
adjudicating to herself ownership of the property. In August of the same year, she filed an application for retention
with the DAR Regional Director who denied Linda's application in an order dated December 14, 1993. The order
denying Linda's application for retention later became final and executory.
On June 25, 1994, certain individuals, including the present petitioners who were earlier identified as farmer-
beneficiaries of the subject land, were issued CLOAs over their respective cultivated portions of the property.
On October 20, 1999, Linda, through her attorney-in-fact, Samuel Osias, filed with the Office of the Provincial
Adjudicator in Tagum City a petition to cancel the petitioners' CLOAs. The Provincial Adjudicator later dismissed
the petition due to Linda's failure to file her position paper. She appealed the dismissal with the Department of
Agrarian Reform Adjudication Board (DARAB).
It appears that, in the meantime, Transfer Certificates of Title (TCTs) covering portions of the property were
issued to Napoleon Villa Sr., et al. who had been contracted by Linda, under an agricultural leasehold agreement,
to cultivate the lands.
In a resolution dated June 29, 2001, the DARAB nullified the TCTs issued to Napoleon Villa Sr. et. al. and
reinstated Linda's title to the property. At the same time, the DARAB ordered the generation and issuance of
titles to the petitioners and other farmer-beneficiaries of the subject land. In a subsequent resolution dated
September 28, 2001, the DARAB validated the TCTs issued to the following individuals: Danilo Almero, Celia
Bulaso, Ludy Ramada, Isidro Lazarte, Cepriano Lazarte, Thelma Emorque, Domingo Juanico, Candido Labeste
and Renato Benimate.
Root of the present petition: Petition to Recall and Cancel the petitioners' CLOAs
Linda again sought to recall and cancel the petitioners' CLOAs by filing a petition with the DAR, which the latter
endorsed to the DAR Regional Office. Linda argued that the DARAB erred in distributing portions of the land to
the petitioners because the entire property was supposed to be exempt from CARP coverage. The petitioners
opposed Linda's petition.
In an order dated December 18, 2008, the DAR Regional Director ruled that the Pacquing Estate was subject to
CARP and that the CLOAs issued to the petitioners were valid. Linda filed an appeal to the DAR Secretary.
In an order dated August 18, 2009, former DAR Secretary Nasser C. Pangandaman denied Linda's appeal under
the following terms:
"xxx, under Section 6 of R.A. No. 6657, there are two requisites to exempt homestead lands from CARP coverage.
First, the homestead grantee or his direct compulsory heir(s) still own the original homestead at the time of the
effectivity of R.A. No. 6657 on 15 June 1988; and second, the original homestead grantee or his direct compulsory
heir(s) was cultivating the homestead as of 15 June 1988 and continues to cultivate the same.
In this case, it is undisputed that the subject landholdings were still owned by the original homestead grantees at
the time of the effectivity of R.A. No. 6657. However, the said homestead grantees no longer cultivate the same.
Therefore, on this score, the subject landholdings cannot be exempted from CARP coverage." (Emphasis ours)
Linda appealed the DAR Secretary's August 18,2009 order to the OP.
In a decision dated February 16, 2011, the OP, through Executive Secretary Paquito N. Ochoa Jr., reversed the
DAR Secretary's August 18, 2009 Order and recalled and cancelled the petitioners' CLOAs. The OP held that:
"xxx, the fact that petitioners-appellants (referring to the respondent Linda), since the beginning, have always
protested the issuance of the CLOAs to the respondents-appellees (referring to the petitioners) is a clear
demonstration of their willingness to continue with the cultivation of the subject landholdings, or to start anew
with the cultivation or even to direct the management of the farm.
Given the foregoing, petitioners-appellants should be given the chance to exercise their rights as heirs of the
homestead grantee to continue to cultivate the homestead lots either personally or directly managing the farm
pursuant to the pronouncement in the Paris case. They still own the original homestead issued to their
predecessor-in-interest and have manifested their intention to continue with the cultivation of the homestead
lots." (Emphasis supplied)
The petitioners moved to reconsider the decision, but the OP denied their motion in a resolution dated July 19,
2011.
With no appeal or petition for review filed with the Court of Appeals within the fifteen (15) - day appeal
period, the DAR Bureau of Agrarian Legal Assistance issued on August 22, 2011 a Certificate of
Finality declaring as final and executory the OP's February 16, 2011 decision and July 19, 2011 resolution.
The petitioners, however, contest the finality of the OP's decision and allege that their counsel only received
a certified copy of the OP's resolution denying their motion for reconsideration on September 29, 2011.
On November 14, 2011, the petitioners directly filed with this Court a petition for review on certiorari under Rule
45 assailing the subject OP's decision and resolution.
The Petition
The petitioners raise the following issues:
I- WHO WILL ISSUE A CERTIFICATE OF FINALITY OF THE DECISION WHEN THE DECISION OF THE
ADMINISTRATIVE AGENCY IS REVERSE (sic) ON APPEAL BY THE OFFICE OF THE PRESIDENT?
II- ARE LANDS UNDER THE HOMESTEAD GRANT, EXEMPT FROM AGRARIAN REFORM
COVERAGE UNDER SECTION 6 OF R.A. 6657, EVEN IF THE HEIR OF THE PATENTEE IS NOT
CULTIVATING THE LAND, BUT AND HAD EVEN OFFERED THE SAME UNDER THE
VOLUNTARY OFFER TO SELL SCHEME?
III- IN CARP COVERAGE, IS DEPOSIT OF LANDOWNER'S COMPENSATION WITH LAND BANK OF
THE PHILIPPINES ENOUGH TO TRANSFER TITLE TO THE STATE, EVEN IF THE OWNER DOES NOT
ACCEPT THE SAME? (Emphasis supplied)
Pleadings Subsequent to the Petition
In her comment dated March 16, 2012, Linda counter-argues that the present petition should be denied outright for
being an improper mode of appeal: the appeal from the OP's assailed decision and resolution should have been
filed with the CA via a petition for review under Rule 43 and not directly with this Court via a petition for review
on certiorari under Rule 45.
The petitioners filed their counter-comment/reply asking this Court to decide the present case not on technicalities
but based on its merits, and that the Court, instead, treat their petition as a special civil action for certiorari under
Rule 65.cralawred
OUR RULING
We see MERIT in the present petition.
First, we address the procedural issue raised by the respondent.
Under Rule 43 of the Rules of Court, an appeal from the awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency such as the Office of the President, in the exercise of its quasi-judicial
functions shall be filed to the CA within a period of fifteen (15) days from notice of, publication or denial of a
motion for new trial or reconsideration. The appeal may involve questions of fact, of law, or mixed questions of
fact and law.
A direct resort to this Court, however, may be allowed in cases where only questions of law are raised. A
question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted.
In the present petition, the petitioners raised valid questions of law that warranted the direct recourse to this Court.
Basically, they question the OP's application of the law and jurisprudence on the issue of whether the Pacquing
Estate should be exempt from CARP coverage. In this case, no further examination of the truth or falsity of the
facts is required. Our review of the case is limited to the determination of whether the OP has correctly applied the
law and jurisprudence based on the facts on record.
We now proceed to the merits of the case.
R.A. No. 6657 or the Comprehensive Agrarian Reform Law (CARL) of 1988 covers all public and private
agricultural lands as provided in Proclamation No. 131 and E.O. No. 229, including other lands of the public
domain suitable for agriculture. Section 4 of R.A. 6657, as amended, specifically lists the lands covered by the
CARP, which include:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this
Act until Congress, taking into account ecological, developmental and equity considerations, shall have
determined by law, the specific limits of the public domain;
(b) All lands of the public domain in excess to the specific limits as determined by Congress in the preceding
paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that
can be raised thereon.
And Section 10 of R.A. 6657, as amended, expressly provides for the lands exempted or excluded from the CARP,
namely:
(a) Lands actually, directly and exclusively used for parks, wildlife, forest reserves, reforestation, fish sanctuaries
and breeding grounds, watersheds and mangroves shall be exempt from the coverage of this Act;
(b) Private lands actually, directly and exclusively used for prawn farms and fishponds shall be exempt from the
coverage of this Act: Provided, that said prawn farms and fishponds have not been distributed and Certificate of
Land Ownership (CLOA) issued under the Agrarian Reform Program; and
xxxx
(c) Lands actually, directly and exclusively used and found to be necessary for national defense, school sites and
campuses, including experimental farms stations operated by public or private schools for educational purposes,
seeds and seedlings research and pilot production centers, church sites and covenants appurtenant thereto, mosque
sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal
farms actually worked by the inmates, government and private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already developed, shall be exempt from the coverage of this
Act.
The subject land, being agricultural in nature, is clearly not exempt from CARP coverage. 
But Linda argues that the subject land is exempt from CARP primarily because it was acquired by her father via a
homestead patent. She claims that the rights of homestead grantees have been held superior to those of agrarian
reform tenants and, thus, her right to the subject land must be upheld. The OP, agreeing with the respondent, stated
that:
"There can be no question that, weighed against each other, the rights of a homesteader prevail over the rights of
the tenants guaranteed by agrarian reform laws.
As early as the case of Patricio v. Bayug, it has been held that the more paramount and superior policy
consideration is to uphold the right of the homesteader and his heirs to own and cultivate personally the land
acquired from the State without being encumbered by tenancy relations.
Just right after the promulgation of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law (CARL), the doctrine enunciated in Patricio was applied in Alita v. Court of Appeals where it was
held that Presidential Decree No. 27 cannot be invoked to defeat the very purpose of the enactment of the Public
Land Act or Commonwealth Act No. 141. It was further pointed out that even the Philippine Constitution respects
the superiority of the homesteaders' rights over the rights of the tenants guaranteed by the Agrarian Reform
statute." (Citations omitted.)
The right of homestead grantees to retain or keep their homestead is, however, not absolutely guaranteed by law.
Section 6 of R.A 6657 provides that:
"Section 6. Retention Limits.-Except as otherwise provided in this Act, no person may own or retain, directly or
indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a
viable family-size 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 areas originally retained by them thereunder: provided, further, that original
homestead grantees or their direct compulsory heirs who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as they continue to cultivate said
homestead. (Emphasis ours)
Thus, in order for the homestead grantees or their direct compulsory heirs to retain or keep their homestead, the
following conditions must first be satisfied: (a) they must still be the owners of the original homestead at the time
of the CARL's effectivity, and (b) they must continue to cultivate the homestead land.
In this case, Linda, as the direct compulsory heir of the original homestead grantee, is no longer cultivating the
subject homestead land. The OP misinterpreted our ruling in Paris v. Alfeche when it held that Linda's mere
expression of her desire to continue or to start anew with the cultivation of the land would suffice to exempt the
subject homestead land from the CARL. On the contrary, we specifically held in Paris v. Alfeche that:
"Indisputably, homestead grantees or their direct compulsory heirs can own and retain the original homestead,
only for "as long as they continue to cultivate" them. That parcels of land are covered by homestead patents will
not automatically exempt them from the operation of land reform. It is the fact of continued cultivation by the
original grantees or their direct compulsory heirs that shall exempt their lands from land reform
coverage." (Emphasis supplied)
WHEREFORE, in view of the foregoing, we hereby:
(a) REVERSE and SET ASIDE the February 16, 2011 Decision and July 19, 2011 Resolution of the Office of
the President in OP Case No. 10-C-152;
(b) RECALL and REVOKE the August 22, 2011 Certificate of Finality issued by the Department of Agrarian
Reform Bureau of Agrarian Legal Assistance; and
(c) AFFIRM the August 18, 2009 Order of the Department of Agrarian Reform Secretary in DARCO Order
No. MS-0908-295 Series of2009 A-999-10-CLT-028-09.
SO ORDERED.
Carpio, (Chairperson), Del Castillo, and Mendoza, JJ, concur.
Leonen, J., see dissenting opinion.
[G.R. No. 139592. October 5, 2000.]
REPUBLIC OF THE PHILIPPINES rep. by the DEPARTMENT OF AGRARIAN
REFORM, Petitioner, v. HON. COURT OF APPEALS and GREEN CITY ESTATE &
DEVELOPMENT CORPORATION, Respondents.
DECISION
GONZAGA-REYES, J.:
This is a petition for review by certiorari of the Decision of the Court of Appeals dated December 9, 1998 that
reversed the Order of petitioner, the Department of Agrarian Reform (petitioner DAR), by exempting the parcels
of land of private respondent Green City Estate and Development Corporation (private respondent) from agrarian
reform. Also assailed in this instant petition is the Resolution dated May 11, 1998 issued by the same court that
denied the Motion for Reconsideration of petitioner DAR.
The five parcels of land in issue has a combined area of approximately 112.0577 hectares situated at Barangay
Punta, Municipality of Jala-Jala, Province of Rizal, covered by Transfer Certificates of Title Nos. M-45856, M-
45857, M-45858, M-45859 and M-45860 of the Register of Deeds of Rizal. Private respondent acquired the land
by purchase on May 26, 1994 from Marcela Borja vda. De Torres. The tax declarations classified the properties as
agricultural.
On June 16, 1994, petitioner DAR issued a Notice of Coverage of the subject parcels of land under compulsory
acquisition pursuant to Section 7, Chapter II of R.A. 6657 or the Comprehensive Land Reform Law of 1998
(CARL).
On July 21, 1994, private respondent filed with the DAR Regional Office an application for exemption of the land
from agrarian reform, pursuant to DAR Administrative Order No. 6, series of 1994 and DOJ Opinion No. 44,
series of 1990. Administrative Order No. 6 provides the guidelines for exemption from the Comprehensive
Agrarian Reform Program (CARP) coverage while DOJ Opinion No. 44, Series of 1990, authorizes the DAR to
approve conversion of agricultural lands covered by RA 6651 to non-agricultural uses effective June 15, 1988.
In support of its application for exemption, private respondent submitted the following documents:
1. Certified photocopies of the titles and tax declarations.
2. Vicinity and location plans.
3. Certification of the Municipal Planning and Development Coordinator of the Office of the Mayor of Jala-Jala.
4. Resolution No. R-36, series of 1981 of the HLURB.
5. Certification from the National Irrigation Administration.
On October 12, 1994, the DAR Regional Director recommended a denial of the said petition, on the ground that
private respondent "failed to substantiate their (sic) allegation that the properties are indeed in the municipality’s
residential and forest conservation zone and that portions of the properties are not irrigated nor irrigable" .
On February 15, 1995, private respondent filed an Amended Petition for Exemption/Exclusion from CARP
coverage. This time, private respondent alleged that the property should be exempted since it is within the
residential and forest conservation zones of the town plan/zoning ordinance of Jala-Jala. The amended petition for
exemption showed that a portion of about 15 hectares of the land is irrigated riceland which private respondent
offered to sell to the farmer beneficiaries or to the DAR. In support of its amended petition, private respondent
submitted the following additional documents:
1. Certification letter from the HLURB that the specific properties are within the residential and forest
conservation zone.
2. Certification from the HLURB that the town plan/zoning ordinance of Jala-Jala was approved on December 2,
1981 by the Human Settlements Commission.
3. Undertaking that the landowner is ready and willing to pay disturbance compensation to the tenants for such
amount as may be agreed upon or directed by the DAR.
4. Vicinity plan.
5. Amended survey plan which indicates the irrigated riceland that is now excluded from the application.
6. Certification of the Jala-Jala Municipal Planning and Development Coordinator to the effect that the properties
covered are within the residential and forest conservation areas pursuant to the zoning ordinance of Jala-Jala.
On October 19, 1995, the DAR Secretary issued an Order denying the application for exemption of private
respondent, on the grounds that the land use plan of Jala-Jala, which differs from its land use map, intends to
develop 73% of Barangay Punta into an agricultural zone; that the certification issued by the Housing and Land
Use Regulatory Board (HLURB) is not definite and specific; and that the certification issued by the National
Irrigation Authority (NIA) that the area is not irrigated nor programmed for irrigation, is not conclusive on the
DAR, since big areas in the municipality are recipients of JICA-funded Integrated Jala-Jala Rural Development
Projects. The motion for reconsideration filed by private respondent was likewise denied by the DAR Secretary.
Private respondent then appealed to the Court of Appeals. During the course of the appeal, said court created a
commission composed of three (3) members tasked to conduct an ocular inspection and survey of the subject
parcels of land and to submit a report on the result of such inspection and survey. To verify the report of the
commission, the DAR constituted its own team to inspect and report on the property in question. The verification
report of the DAR, duly filed with the Court of Appeals, objected to the report of the commission mainly due to
the lack of specific boundaries delineating the surveyed areas.
On December 9, 1998, the Court of Appeals issued its Decision that reversed the assailed DAR orders, the
dispositive portion of which reads:
"WHEREFORE, the Orders of the respondent Secretary dated October 19, 1995 and November 15, 1995 are
hereby REVERSED, and judgment is hereby rendered declaring those portions of the land of the petitioner which
are mountainous and residential, as found by the Courts (sic) commissioners, to be exempt from the
Comprehensive Agrarian Reform Program, subject to their delineation. The records of this case are hereby ordered
remanded to the respondent Secretary for further proceedings in the determination of the boundaries of the said
areas."
Hence this petition for review wherein petitioner DAR seeks the reversal of the foregoing decision on the ground
that the honorable Court of Appeals erred:
1. WHEN IT RULED THAT THERE WAS NO DEFINITE CLASSIFICATION OF THE PROPERTIES
INVOLVED WHEN, PER THE CORRESPONDING TAX DECLARATIONS, THEY ARE GENERALLY
CLASSIFIED AS AGRICULTURAL.
2. WHEN IT RULED THAT THE PHYSICAL FEATURES OF THE LAND AS OF 1980 OR BEFORE AS
APPEARING IN TABLE 3-3 OF THE ZONING ORDINANCE IS THE PRESENT CLASSIFICATION OF THE
LANDHOLDINGS INVOLVED; and
3. WHEN IT MADE A RULING ON HOW SUBJECT LANDHOLDING BE CLASSIFIED (WHETHER
COVERED BY AGRARIAN REFORM FOR BEING AGRICULTURAL LAND OR NOT) AND DISPOSED
OF SOLELY ON THE BASIS OF THE PHYSICAL CONDITION OF THE LAND IRRESPECTIVE OF THE
LEGAL ISSUE RAISED ON THEIR LEGAL CLASSIFICATION, A FUNCTION THAT IS VESTED IN
CONGRESS.
The petition has no merit.
Republic Act No. 6657 otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1998 covers all
public and private agricultural lands. The same law defines agricultural as "land devoted to agricultural activity as
defined in this Act and not classified as mineral, forest, residential, commercial or industrial land."
Private respondent sought exemption from the coverage of CARL on the ground that its five parcels of land are
not wholly agricultural. The land use map of the municipality, certified by the Office of the Municipal Planning
and Development Coordinator (MPDC) of Jala-Jala and the report of the commission constituted by the Court of
Appeals established that the properties lie mostly within the residential and forest conservation zone.chanrob1es
virtua1 1aw 1ibrary
Petitioner DAR maintains that the subject properties have already been classified as agricultural based on the tax
declarations. The Office of the Solicitor General (OSG) and petitioner DAR are one in contending that the
classification of lands once determined by law may not be varied or altered by the results of a mere ocular or aerial
inspection.
We are unable to sustain petitioner’s contention. There is no law or jurisprudence that holds that the land
classification embodied in the tax declarations is conclusive and final nor would proscribe any further inquiry.
Furthermore, the tax declarations are clearly not the sole basis of the classification of a land. In fact, DAR
Administrative Order No. 6 lists other documents, aside from tax declarations, that must be submitted when
applying for exemption from CARP. In Halili v. Court of Appeals , we sustained the trial court when it ruled that
the classification made by the Land Regulatory Board of the land in question outweighed the classification stated
in the tax declaration. The classification of the Board in said case was more recent than that of the tax declaration
and was based on the present condition of the property and the community thereat.
In this case, the Court of Appeals was constrained to resort to an ocular inspection of said properties through the
commission it created considering that the opinion of petitioner DAR conflicted with the land use map submitted
in evidence by private Respondent. Respondent court also noted that even from the beginning the properties of
private respondent had no definite delineation and classification. Hence, the survey of the properties through the
court appointed commissioners was the judicious and equitable solution to finally resolve the issue of land
classification and delineation.
The OSG stresses that to be exempt from CARP under DOJ Opinion No. 44, the land must have been classified as
industrial/residential before June 15, 1988. Based on this premise, the OSG points out that no such classification
was presented except the municipality’s alleged land use map in 1980 showing that subject parcels of land fall
within the municipality’s forest conservation zone. The OSG further argues that assuming that a change in the use
of the subject properties in 1980 may justify their exemption from CARP under DOJ Opinion No. 44, such land
use of 1980 was, nevertheless, repealed/amended when the HLURB approved the municipality’s Comprehensive
Development Plan for Barangay Punta for the years 1980 to 2000 in its Resolution No. 33, series of 1981. The
plan for Barangay Punta, where the parcels of land in issue are located, allegedly envision the development of the
barangay into a progressive agricultural community with the limited allocation of only 51 hectares for residential
use and none for commercial and forest conservation zone use.
The foregoing arguments are untenable. We are in full agreement with respondent Court when it rationalized that
the land use map is the more appropriate document to consider, thus:
"The petitioner (herein private respondent) presented a development plan of the Municipality of Jala-Jala, which
was approved by the Housing and Land Use Regulatory Board (HLURB) on December 2, 1981. It also presented
certifications from the HLURB and the Municipal Planning and Development Coordinator of Jala-Jala that the
subject properties fall within the Residential and Forest Conservation zones of the municipality. Extant on the
record is a color-coded land use map of Jala-Jala, showing that the petitioner’s land falls mostly within the
Residential and Forest Conservation zones. This notwithstanding, the respondent Secretary of Agrarian Reform
denied the petitioner’s application on the ground that the town plan of the municipality, particularly Table 4-4
thereof, shows that Barangay Punta is intended to remain and to become a progressive agricultural community in
view of the abundance of fertile agricultural areas in the barangay, and that there is a discrepancy between the land
use map which identifies a huge forest conservation zone and the land use plan which has no area classified as
forest conservation.
However, a closer look at the development plan for the municipality of Jala-Jala shows that Table 4-4 does not
represent the present classification of land in that municipality, but the proposed land use to be achieved. The
existing land use as of 1980 is shown by Table 3-3, wherein Barangay Punta is shown to have a forest area of 35
hectares and open grassland (which was formerly forested area) of 56 hectares. The land use map is consistent
with this."
Moreover, the commissioner’s report on the actual condition of the properties confirms the fact that the properties
are not wholly agricultural. In essence, the report of the commission showed that the land of private respondent
consists of a mountainous area with an average 28 degree slope containing 66.5 hectares; a level, unirrigated area
of 34 hectares of which 5 to 6 hectares are planted to palay; and a residential area of 8 hectares. The finding that
66.5 hectares of the 112.0577 hectares of land of private respondent have an average slope of 28 degrees provides
another cogent reason to exempt these portions of the properties from the CARL. Section 10 of the CARL is clear
on this point when it provides that "all lands with eighteen percent (18%) slope and over, except those already
developed shall be exempt from the coverage of this Act." chanrob1es virtua1 1aw 1ibrary
Petitioner DAR and the OSG contest the finding of the Court of Appeals that the subject parcels of land have a
mountainous slope on the ground that this conclusion was allegedly arrived at in a manner not in accord with
established surveying procedures. They also bewail the consideration given by the Court of Appeals to the "slope"
issue since this matter was allegedly never raised before the DAR and the Court of Appeals. Petitioner DAR and
the OSG thus claim that laches had already set in.
As pointed out earlier, the crux of the controversy is whether the subject parcels of land in issue are exempt from
the coverage of the CARL. The determination of the classification and physical condition of the lands is therefore
material in the disposition of this case, for which purpose the Court of Appeals constituted the commission to
inspect and survey said properties. Petitioner DAR did not object to the creation of a team of commissioners 21
when it very well knew that the survey and ocular inspection would eventually involve the determination of the
slope of the subject parcels of land. It is the protestation of petitioner that comes at a belated hour. The team of
commissioners appointed by respondent court was composed persons who were mutually acceptable to the parties.
22 Thus, in the absence of any irregularity in the survey and inspection of the subject properties, and none is
alleged, the report of the commissioners deserves full faith and credit and we find no reversible error in the
reliance by the appellate court upon said report.
WHEREFORE, the petition is hereby DENIED. The challenged Decision is AFFIRMED.
SO ORDERED.
Melo, Vitug, Panganiban and Purisima, JJ., concur.
G.R. No. 197127, July 15, 2015
NOEL L. ONG, OMAR ANTHONY L. ONG, AND NORMAN L.
ONG, Petitioners, v. NICOLASA O. IMPERIAL, DARIO R. ECHALUCE, ROEL I. ROBELO,
SERAFIN R. ROBELO, EFREN R. ROBELO, RONILO S. AGNO, LORENA ROBELO,
ROMEO O. IMPERIAL, NANILON IMPERIAL CORTEZ, JOVEN IMPERIAL CORTEZ,
AND RODELIO O. IMPERIAL, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a petition for review on certiorari under Rule 45 seeking to reverse, nullify, and set aside the
November 30, 2010 Decision and the May 11, 2011 Resolution of the Court of Appeals in CA-G.R. SP No.
93941.
The facts are as follows:
Petitioners Noel L. Ong, Omar Anthony L. Ong, and Norman L. Ong (petitioners) are registered owners of a
parcel of land with an area of Four Hundred Five Thousand Six Hundred Forty-Five (405,645) square meters
described under Transfer Certificate of Title (TCT) No. T-17045 located in Barangay Dogongan, Daet, Camarines
Norte (subject property).
The Municipal Agrarian Reform Officer (MARO) of Daet issued a Notice of Coverage to petitioners on August
14, 1994.
Petitioners wrote a letter dated April 26, 1995 "vehemently protesting/objecting" to the coverage of the subject
property under compulsory acquisition under Comprehensive Agrarian Reform Law (CARL), for the following
reasons:
1) The entire area of 40.5645 [hectares] had been used as grazing area for cattle and carabao long before the
passage of R.A. 6657, and is therefore, excluded from the coverage of CARL;
2) After deducting the retention area of the individual landowners, the excess area of each is only 8.5215 has.;
3) Considering that there are several bills pending in Congress to increase the retention area of landowners, to
cover lands below 20 hectares will result only in confusion and needless paperwork should the retention area
be increased in answer to the clamor of majority of landowners.
MARO Jinny Glorioso sent a letter-reply on May 31, 1995, stating that the petitioners had confirmed that the
entire 40.5645 hectares was actually being used for coconut production, so petitioners had failed to comply with
the requirement that the property must be actually, directly and exclusively used for livestock, poultry, and swine-
raising purposes. MARO Glorioso also wrote that the subject property was covered by CARL because the
retention area for landowners is five hectares, and the excess area in this case is 8.5214 hectares; thus, it is
covered.
On September 23, 1996, MARO Glorioso issued a Notice of Acquisition over the subject property.
Petitioners then filed an application for exemption clearance with the Department of Agrarian Reform (DAR)
Regional Office V on October 16, 1996, claiming that subject property had already been reclassified as residential
built-up area pursuant to the Town Plan and Zoning Ordinance of Daet dated September 21, 1978 and Zoning
Ordinance No. 04, series of 1980. Petitioners submitted the following supporting documents:
1. Certified True Copy of TCTNo. 17045;
2. Location Map;
3. Certification dated 9 October 1996 issued by [Deputized Zoning Administrator (DZA)] Jesus L.
Hernandez, Jr. stating that the subject landholding is within the residential built-up area per Zoning
Ordinance No. 4, series of 1980;
4. Certification dated 9 December 1996 issued by Jesus A. Obligacion, Regional Director of Housing and
Land Use Regulatory Board (HLURB), Region V, stating that the Town Plan and Zoning Ordinance of
 Daet, Camarines Norte was approved by then Human Settlements Regulatory Commission now HLURB
on 21 September 1978;
5. Certification dated 14 October 1996 issued by Antonio A. Avila, Jr. of the National Irrigation
Administration (NIA) of Daet, Camarines Norte stating that the subject land is not covered by an existing
irrigation system [or] by [an] irrigation project with firm funding commitment; and
6. Certification dated 5 March 1997 issued by [MARO] Jinny P. Glorioso stating that the land covered by
TCT No. 17045 [was] tenanted and a Notice of Coverage/Acquisition [had] been issued on 17 August
1996.
DAR Region V Director Percival C. Dalugdug sent a letter 7 dated June 5, 1997 to Deputized Zoning Administrator
Fernandez, which reads in part:
Please be informed that subject property has already been covered by the CARP under the [Compulsory]
Acquisition scheme, because we believe that the land is agricultural and not otherwise. x x x.
xxxx
In order to rectify these conflicting claims may we request from your good office for a revalidation and
verification of the exact location of the above-mentioned landholding as far as its zoning location is concerned
according to the Official Land Use Plan of Daet, for the proper guidance of this office in the issuance of requested
DAR Exemption Clearance, x x x. (Emphasis ours.)
Deputized Zoning Administrator Fernandez replied to the DAR Director's request for revalidation and verification
of the exact location of the subject property in the following manner:
Please be informed that there is no conflict between the official land use map of 1978 and the certification
issued by our Office. Please note that what is reflected in the aforesaid town plan is the actual use of
properties in Daet as of 1978, while our Certification states that the property under TCT T-17045 is within
the RESIDENTIAL BUILT-UP AREA. xxx.
xxxx
The projected increase of 278.465 hectares is the Built-Up Area for residential purposes, to which the property in
question is classified. Please be informed further that in classifying Built-Up areas, we give priority to properties
in the center or poblacion of barangays connected to provincial or national roads, more so if the adjacent
properties are already being used and classified as residential as of 1978. Please note that in the land use map of
1978, the area directly in front of the property in question, as well as the property in the eastern portion are
already classified as residential areas. We took into consideration also the fact that the Barangay Hall Day Care
and Health Center of the Barangay are located in this area.
We hope that all the above explanation clears the issue on the supposed conflicting claims, and we see no
reason to rectify our Certification dated October 9, 1996 regarding the property under TCT No. T-17045-
C.N. (Emphases added.)
The DAR Regional Center for Land Use Policy, Planning and Implementation (RCLUPPI) V conducted an
investigation and in its report, wrote the following as established facts:
a. Subject landholdings are planted with coconuts and predominantly agricultural in nature;
b. Said lands are tenanted by Nicolasa Vda. De Imperial, Efren Rodelo and Julio Jamite;
c. The landowner executed a Deed of Undertaking to pay disturbance compensation to affected tenants;
d. The area has been reclassified as residential prior to 15 June 1988;
e. The area applied for conversion has not been placed under the coverage of P.D. 27 but a Notice of Coverage
under R.A. 6657 had been issued on 17 August 1994 by MARO Jinny P. Glorioso; and
f. The area is not irrigated nor scheduled for irrigation rehabilitation nor irrigable (sic) with firm funding
commitment. (Emphasis ours.)
Based on their findings, the DAR RCLUPPI V investigating team recommended the denial of petitioners'
application for exemption. DAR Region V Director Dalugdug in his 2 nd Indorsement to the DAR Secretary dated
September 30, 1997, wrote:
This Office, after a careful evaluation of the records of the application, concurs with the findings and
recommendations of the RCLUPPI V [Investigation] team for the denial of the application on the ground
that the subject property has been [placed] under compulsory coverage and a Notice of Acquisition was
already issued by the MARO of Daet, Camarines Norte. Moreover, the contention/justification of the
Deputized Zoning Administrator when he was requested to explain why the properties are in the green [color-
coded] in the land use map as stated in his July 7, 1997 letter cannot be given credence by this Office. This is due
to the fact that we believe that the built-up area for residential areas provided in the right hand portion of
the map (from 258 to 556 has.) or another 258 has. between 1978 and 1982) has long been exhausted. If one
will take note, the present residential area of Daet is well beyond the 556 has. limit set for 1982. The Ong
property, [therefore], can no longer find any room in the built-up area under the 1978 land use
plan. (Emphases ours.)
Upholding the findings of the Regional Office, then DAR Secretary Horacio R. Morales, Jr. issued an Order dated
February 2, 2000 denying petitioners' Application for Exemption under DOJ Opinion No. 44, series of 1990, and
directing the Director of DAR Region V "to proceed with the acquisition of the subject landholding in accordance
with existing agrarian laws." Secretary Morales's Order contained the following discussion, which we quote:
First, the justification made by Jesus L. Fernandez, Jr., Deputized Zoning Administrator of Daet,
Camarines Norte, in his letter dated 7 July 1997, is not sufficient to prove that the subject land is classified
as built-up area for residential purposes. It is true that the said agency is the proper forum to certify as to
the classification of a parcel of land within their jurisdiction. However, the same must be supported by
substantial evidence. The findings of the Regional Director reveal that the built-up area for residential
purposes provided in the right hand portion of the Official Land Use Plan of 1978 of the Municipality of
Daet has long been exhausted. Thus, the present residential area of Daet is well beyond the 556-hectare limit set
for 1982. Therefore, the subject landholding cannot be considered as part of the built-up area reserved for
residential purposes. The subject landholding remains agricultural based on the original land use plan in 1978.
Being an agricultural land, the subject landholding is within the ambit of RA 6657.
Second, Administrative Order No. 6, Series of 1994, requires that any application for exemption should be
accompanied by a Certification from the Housing and Land Use Regulatory Board (HLURB) that the pertinent
zoning ordinance has been approved by the Board prior to 15 June 1988. In the case at hand, the original land use
plan in 1978 shows that the subject landholding was agricultural in nature. The Deputy Zoning Administrator
claims that the subject landholdings became part of the residential built-up area by virtue of an authority indicated
in the right hand portion of the land use plan to extend the residential area from 258 hectares in 1980 to 556
hectares in 1982. However, it is not shown that the 1982 land use plan had been similarly approved by the
HLURB. No proof has ever been presented that the 1982 land use plan had been approved by the HLURB.
Since coverage is the general rule, applicant has the burden of proof that subject property is exempt.
Acting on petitioners' Motion for Reconsideration, then DAR Secretary Hernani A. Braganza issued an Order on
June 20, 2002 stating that the opinion of the Deputized Zoning Administrator had insufficient basis and could not
prevail over the clear findings of the DAR Regional Director.

Meanwhile, TCT No. T-4202-A (Certificate of Land Ownership Award No. 00538736) 14 was issued to "Nicolasa
Imperial, et al." covering 253,263 square meters in Barangay Dogongan, Municipality of Daet, Province of
Camarines Norte on October 27, 2000.
Petitioners appealed the DAR Orders dated February 2, 2000 and June 20, 2002 (the questioned DAR Orders) to
the Office of the President for review.
The records from the Office of the President contained a copy of a document entitled Memorandum for the
Executive Secretary from DESLA Manuel G. Gaite, Subject: Appeal of Noel Ong in O.P. Case No. 04-L-500
dated July 29, 2005 and we note the following portion of said memorandum:
The DZA has positively declared that the subject property is within the reclassified built-up residential areas of the
municipality. As far as the coverage of the Municipal Ordinance is concerned, the DZA should have the last say,
since it is within its mandate to determine the coverage of the zoning ordinance and therefore has exclusive
jurisdiction as far as the issue is concerned. Verification likewise of the records show (Rec. p. 12) that the
application is accompanied by a corresponding certification of HLURB Region No. 5, Regional Director, Jesse A.
Obligacion that the pertinent Municipal Ordinance No. 4 of Daet, Camarines Norte, has been approved by the
HLURB on September 21, 1978, prior to June 15, 1988, the effectivity of the CARP law.
The Office of the President rendered its Decision on September 5, 2005 signed by Executive Secretary Eduardo
Ermita. The Office of the President declared that the main issue was whether or not the subject property had been
reclassified as residential so as to exempt it from Comprehensive Agrarian Report Program (CARP) coverage. The
Office of the President found that "[a] closer scrutiny of the facts will reveal that the DAR Secretary concurred
with the findings of the DAR Regional Director, who in turn relied on his own belief that the land is agricultural
and not otherwise." The Office of the President. reversed and set aside the questioned DAR Orders and approved
petitioners' application for clearance, "exempting from CARP coverage the 40.5 hectares property with TCT No.
T-17045, situated in Barangay Dogongan, Daet, Camarines Norte."
We quote below relevant portions of the September 5, 2005 Decision of the Office of the President:
A careful reading of the map would show that what the DAR Secretaries referred to as having been fully
exhausted/allocated, are those actual and original residential areas of the municipality totaling 278.465 hectares, as
indicated in colored map. It does not refer to those additional built-up residential areas of the Municipality covered
by the Ordinance in the total area of 556.93 hectares pointed out by DZA, which includes the property in question.
Thus, as between the findings of the DAR Regional Director and the DZA, we must favor the expertise of
the latter. The determination and classification of land areas within their jurisdiction is rightfully vested in
the local government unit concerned, in this case, the Deputy Zoning Administrator of Daet, as approved
through municipal ordinance.
Under the foregoing circumstances, the denial of the exemption on the ground that the MARO has already issued a
NOTICE OF ACQUISITION in 1994 is flawed. The area having already been reclassified as residential prior to
June 1988 (as established by the DAR RCLUPPI V), it cannot be the subject of a Notice of Acquisition which
covers only agricultural lands. Perforce, the Notice of Acquisition over the subject properly is void ab initio.
Finally, the ruling of the DAR Secretary that the application for exemption was belatedly filed in order to defeat
CARP coverage of the property is untenable. What invalidated CARP coverage over the subject property is not the
application for exemption, but the fact the land in question not being anymore agricultural, is beyond the coverage
of CARP, pursuant to Section 4 of R.A; 6657 (Natalia Realty vs. Department of Agrarian Reform, supra).
In a subsequent Order dated March 3, 2006, the Office of the President resolved the Verified Motion for
Intervention with Motion for Reconsideration (of the September 5, 2005 Decision of the Office of the President)
filed by Nicolasa O. Imperial, Dario R. Echaluce, Roel I. Robelo, Serafin R. Robelo, Efren R. Robelo, Ronilo S.
Agno, Lorena Robelo, Romeo O. Imperial, Nanilon I. Cortez, Joven I. Cortez, and Rodelio O. Imperial
(respondents), who raised the following as grounds for reconsideration:cralawlawlibrary
1. The Decision violates their constitutional rights to due process;
2. The opinion of the Municipal Deputy Zoning Administrator (DZA) of Daet cannot prevail over the
expert opinion of the Department of Land Reform on the matter;
3. The application for exemption by the applicants-appellants was a mere afterthought intended merely to
defeat the CARP coverage; and
4. There is no proof that prior to the alleged reclassification of the subject land, a public hearing was
conducted and the required percentage of the total agricultural land area at the time of the passage of the
ordinance was considered.
The Office of the President denied the Motion for Intervention and Reconsideration and reaffirmed its earlier
Decision, reasoning as follows:
While it is true that movants were not made parties to the case, this was so because applicants Ong, et al. filed
their application for exemption from CARP coverage pursuant to DOJ Opinion No. 44, Series of 1990, as
implemented by DAR Administrative Order No. 06, Series of 1994. The application for exemption was
premised on the doctrine (as affirmed by DOJ Opinion No. 44) that a land already converted to residential
prior to June 15, 1988 cannot be the subject of a Notice of Acquisition since the subject land, being
residential and not agricultural, is already beyond the coverage of CARP. (Natalia Realty vs. DAR, 225
SCRA 278) Hence, the application was not adversarial against any other parties, but personal to the
landowner-petitioner.
Nevertheless, the implementation of DAR A.O. No. 6, series of 1994, puts in place a process of application and
notice so that all parties concerned are fully aware of the pending application for exemption clearance.
Upon receipt of an application for exemption pursuant to DOJ Opinion No. 44, the DAR Regional Center for Land
Use, Policy, Planning and Implementation (RCLUPPI) field unit conducts an ocular inspection. In that inspection,
the field unit interviews and informs the tenants/farmers if any, that such an application is pending.
Further, the RCLUPPI unit files a detailed report, indicating therein the number of farmer-beneficiaries affected
and whether or not a Deed of Undertaking was executed by the landowner to pay disturbance compensation to
affected tenants. In this case, appellants Ong et al. executed a Deed of Undertaking dated January 11, 1997, in
favor of tenants Nicolasa vda. De Imperial, Efren Robelo and Julio Jamito. The RCLUPPI Region V also reported
that there were only three tenants at the time of the inspection. Hence, the rest of the intervenors-movants herein
are either children or relatives of the above-named three tenants of the Ong family.
It is therefore incorrect to say that movants-intervenors were totally unaware of the proceedings until they
received the questioned Decision on September 26, 2005. Thus, we hold that there was reasonable
opportunity to intervene since the application was filed in 1996. During this period, the proceedings were
elevated from the Regional to Department level, and finally on appeal to this Office. (Emphases added, citation
omitted.)
Unsatisfied, respondents filed a petition for review with the Court of Appeals under Rule 43 seeking to nullify and
set aside the Decision dated September 5, 2005 and the Order dated March 3, 2006, both of the Office of the
President. This was docketed as CA-G.R. SP. No. 93941.
RULING OF THE COURT OF APPEALS

In its November 30, 2010 Decision, the Court of Appeals ruled "that the Office of the President committed
reversible error in reversing the Orders of the DAR Secretaries and in approving [petitioners'] Application for
Exemption of their property from the CARP." The Court of Appeals ratiocinated as follows:
While WE agree with the Office of the President that lands which have been reclassified as residential prior to
June 15, 1988 [cannot] be the subject of compulsory acquisition by the DAR for its agrarian reform program, WE
are not inclined to sustain its ruling approving the application for clearance of respondents exempting from CARP
coverage the subject landholding because of respondents' failure to comply with the requirements for such
exemption.
A careful scrutiny of the record of this case reveals that the Office of the President failed to judiciously examine
the supporting documents submitted by respondents in their application for exemption.
xxxx
As can be gleaned from [DAR Administrative Order No. 6, series of 1994, or the "Guidelines for the Issuance of
Exemption Clearances based on Sec. 3(c) of RA 6657 and the Department of Justice (DOJ) Opinion No. 44, Series
of 1990"], an application for exemption from the coverage of the CARP must be accompanied by a certification
from the HLURB that the pertinent zoning ordinance has been approved by the Board prior to June 15, 1988 (the
date of effectivity of the CARL). In the instant case, respondents did file an accompanying Certification from
the HLURB. However, a meticulous perusal of the Certification issued by the HLURB as compared with
the one issued by the Deputized Zoning Ordinance shows glaring inconsistencies which cast doubt as to the
land use classification of respondents' landholding. x x x.
xxxx
The glaring inconsistency and discrepancy in the foregoing certifications are readily apparent. According to the
Deputized Zoning Administrator of Daet, Camarines Norte, the Zoning Ordinance reclassifying the landholding of
respondents into residential land was passed in 1980, however, in the Certification of the HLURB the said "Town
Plan and Zoning Ordinance of Daet, Camarines Norte was approved by the Housing and Land Regulatory Board,
then Human Settlements Regulatory Commission on September 21, 1978." Obviously, the approved Zoning
Ordinance being referred to in the Certification of the HLURB was not Zoning Ordinance No. 4, Series of 1980
mentioned by the Deputized Zoning Administrator in his Certification. For how could the HLURB [approve] on
September 21, 1978 a town plan and zoning ordinance still to be passed in 1980. Certainly, the HLURB could not
approve a zoning ordinance which was not yet existing at the time of the passage of the approval. The HLURB
must have been referring to another town plan and zoning ordinance of Daet, Camarines Norte which was passed
in 1978 and not in 1980. This can be inferred from the letter of Deputized Zoning Administrator Jesus L.
Fernandez, Jr. x x x.
xxxx
If what was approved by the HLURB on September 21, 1978 was the 1978 original land use plan of Daet,
Camarines Norte [t]hen the inescapable conclusion would be that subject landholding of respondents is not exempt
from CARP coverage since the same was classified as agricultural in nature as found by the then DAR Secretary
Horacio R. Morales, Jr. x x x.
xxxx
Even assuming for the sake of argument, that a zoning ordinance was enacted after 1978, particularly in 1980 or
1982, reclassifying respondents' landholding from agricultural to non-agricultural or residential, still OUR
conclusion would be the same since no proof was ever presented that the later zoning ordinance was approved by
the HLURB. We are, therefore, in accord with the x x x disquisition of the DAR Secretary x x x.
The Court of Appeals denied petitioners' Motion for Reconsideration. Hence, this appeal.
The parties submitted their respective Memoranda on July 1, 2013 (petitioners) and July 12, 2013 (respondents).
THEORY OF PETITIONERS
Petitioners are now before us to raise the following issues which they allege to be purely questions of law:
1. Whether or not the subject landholding of the petitioners is exempted from the coverage of the
government's Comprehensive Agrarian Reform Program;
2. Whether or not the petition filed by respondents before the Court of Appeals is exempted from the rule
that errors not assigned on appeal cannot be passed upon.
Petitioners claim that the Court of Appeals failed to take into consideration that with respect to the alleged
discrepancy involving the approval of Zoning Ordinance No. 4, series of 1980, and the ratification of Daet's Town
Plan by the National Coordinating Council for Town Planning, Housing and Zoning (NCCTPHZ) in 1978, the
NCCTPHZ was created as a first attempt to formulate and approve the Comprehensive Development Town Plans
in selected municipalities throughout the country as mandated by Letter of Instructions No. 729; that almost all the
town plans then approved by the NCCTPHZ included a Land Use Plan, but not a Zoning Plan or an adopted
Zoning Ordinance; that after one year, the NCCTPHZ was dissolved, and the Human Settlements Regulatory
Commission (now HLURB) subsequently formed was the one that required a Zoning Ordinance as part of the
Comprehensive Development Plan to be submitted by each municipality for approval. Petitioners contend that
Daet, Camarines Norte was among the first' municipalities which formulated its Comprehensive Development
Plan approved by NCCTHPZ without a zoning ordinance and that "it was only in 1980 that the Sangguniang
Bayan of Daet adopted their zoning ordinance based on their previously approved Land Use Plan."
Petitioners contend that they are deemed to have substantially complied with the requirements of Administrative
Order No. 6, series of 1994, particularly with respect to the HLURB certification that the pertinent zoning
ordinance must have been approved by the board prior to June 15, 1988. Petitioners point out that "there was no
HLURB yet at the time that Daet's Town Plan was prepared and the Zoning Ordinance was passed" and that the
"HLURB came about when the former Human Settlements Regulatory Commission was renamed" per Executive
Order No. 90 dated December 17, 1986. Petitioners allege that it is absurd to require approval by the HLURB of
the subject 1980 Zoning Ordinance. Petitioners further allege that the approval of Daet's Town Plan or Land Use
Plan on September 21, 1978 by NCCTPHZ or HSRC must be favorably considered to have carried with it the
corresponding approval of the Zoning Ordinance subsequently passed in 1980 which, in the first place, was based
on the HSRC-approved 1978 Town Plan or Land Use Plan.
Petitioners cite Junio v. Garilao:
The Certification issued by the Board expressly mentioned that the "property x x x, Lot 835-B located at Brgy.
Tangub, Bacolod City, covered by TCT T-79622, x x x was identified for residential use under the 1976
Framework Plan of the City of Bacolod prepared pursuant to the Program of the then Ministry of Local
Government and approved by the City Council in its Resolution No. 5153-A, Series of 1976." It also certified that
the "area where the aforecited property is located was likewise identified for residential use under the Town
Planning, Housing Zoning Program of the National Coordinating Council of the then Ministry of Human
Settlements as approved under the City Council Resolution No. 5792, Series of 1977. x x x." (Citations omitted.)
Petitioners, alternatively, submit that the HLURB approval of the 1980 Zoning Ordinance is not necessary
following the provision of Section 4 in relation to Section 3(c) of Republic Act No. 6657, which reads:
SECTION 3. Definitions. — For the purpose of this Act, unless the context indicates otherwise:
xxxx
(c) Agricultural land refers to land devoted to agricultural activity and not classified as mineral, forest, residential,
commercial or industrial land.
SECTION 4. Scope. — The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation No.
131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act
until Congress, taking into account ecological, developmental and equity considerations, shall have determined by
law, the specific limits of the public domain.
(b) All lands of the public domain in excess of the specific limits as determined by Congress in the preceding
paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that can
be raised thereon.
Petitioners submit that there is nothing in the above provisions of law that requires the exercise of the power to
reclassify an agricultural land to be approved by the HLURB. Petitioners claim that such power to reclassify is
exclusively within the authority of the local government unit concerned. Petitioners allege that given the
reclassification of the subject property to residential pursuant to Ordinance No. 04, series of 1980, based on the
1978 approved Town Plan, the same can no longer be reverted to agricultural. Petitioners conclude that since the
subject property was reclassified from agricultural to residential long before June 15, 1988, it is therefore exempt
from the coverage of the CARL.
Petitioners likewise argue that the Court of Appeals "committed palpable and patent error and/or grave abuse of
discretion in holding that the present case is exempted from the rule that errors not assigned on appeal cannot be
passed upon."
According to petitioners, the Court of Appeals expressly admitted that the issue regarding the alleged lack of proof
of approval by the PiLURB of the 1980 Zoning Ordinance was not raised as an error in the appealed case, but the
Court of Appeals was able to justify its action by enumerating the instances when an appellate court is clothed
with ample authority to review rulings even if they are not assigned as errors in the appeal, and claiming that the
present case fell squarely under the enumerated exceptions. Petitioners submit that the instant case does not fall
under any of the mentioned exceptions.
Petitioners claim injustice because the Court of Appeals allegedly allowed respondents to intervene in the instant
case even beyond the period prescribed by the Rules of Court.
THEORY OF RESPONDENTS
Respondents allege that a careful reading of the Certification issued by the HLURB as compared with the one
issued by the Deputized Zoning Administrator would show "glaring inconsistencies which cast doubt as to the
land use classification of petitioners' landholding."
Respondents contend that if "what was approved by the HLURB on September 21, 1978 was the original land use
plan of Daet, Camarines Norte, then the inescapable conclusion would be that the subject landholding of
respondents is not exempt from CARP coverage since the same was classified as agricultural in nature."
Respondents claim that HLURB approval is required for reclassification of land through local ordinance, contrary
to petitioners' contention.
As regards petitioners' allegation that the Court of Appeals committed grave abuse of discretion when it passed
upon an issue not assigned as error, respondents argue that this maxim is subject to exceptions as provided in
Section 8 of Rule 51.
Claiming that they are indispensable parties, respondents finally argue that the allowance of their motion to
intervene by the Court of Appeals even beyond the period prescribed by the Rules of Court was proper.
THIS COURT'S RULING
The petition has merit. We sustain the September 5, 2005 Decision of the Office of the President and its Order
dated March 3, 2006 and thus reverse the questioned Decision and Resolution of the Court of Appeals, which
upheld the decision of the DAR to deny petitioner's request for exemption from CARP for the subject property.
The power to reclassify land is granted by law to the local government, which was validly exercised in this case.
The subject property having already been validly reclassified to residential land by the municipality of Daet prior
to June 15, 1988, when the CARL took effect, then it is exempt from the coverage of CARP.
DISCUSSION
At the outset, we would like to address petitioners' contention that the Court of Appeals allegedly allowed
respondents to intervene in the instant case even beyond the period prescribed by the Rules of Court. The Court of
Appeals found, however, that being the farmer-beneficiaries, respondents "have substantial rights or interests in
the outcome of the case;" that "[i]ndisputably, they stand to be directly injured by the assailed Decision of the
Office of the President;" and that "their rights or interests cannot be adequately pursued and protected in another
proceeding." Furthermore, the Court of Appeals, in giving due course to respondents' intervention, reasoned that
this Court has in the past allowed a party to intervene even beyond the period prescribed by the Rules, as "the
allowance or disallowance of a motion for intervention rests on the sound discretion of the court after
consideration of the appropriate circumstances." We see no reason to question the Court of Appeals' discretion on
this matter.
Nevertheless, we disagree with the Court of Appeals' disposition of the substantive issue of whether subject
property is exempt from the coverage of the CARP.
We have unequivocally held that "to be exempt from CARP, all that is needed is one valid reclassification of the
land from agricultural to non-agricultural by a duly authorized government agency before June 15, 1988, when the
CARL took effect."
As to what is a "duly authorized government agency," the DAR Handbook for CARP Implementors recognizes
and discusses the LGU's authority to reclassify lands under Republic Act No. 7160 or the Local Government
Code.
Moreover, in Heirs of Dr. Jose Deleste v. Land Bank of the Philippines, the Court held that "[it] is undeniable that
the local government has the power to reclassify agricultural into non-agricultural lands." Citing Pasong Bayabas
Farmers Association, Inc. v. Court of Appeals, the Court further held that this power is not subject to DAR
approval, and we quote:
[P]ursuant to Sec. 3 of Republic Act No. (RA) 2264, amending the Local Government Code, municipal and/or city
councils are empowered to "adopt zoning and subdivision ordinances or regulations in consultation with the
National Planning Commission." It was also emphasized therein that "[t]he power of the local government to
convert or reclassify lands [from agricultural to non-agricultural lands prior to the passage of RA 6657] is
not subject to the approval of the [DAR]." (Emphasis ours, citation omitted.)
In the case now before us, the Court of Appeals reversed the Office of the President's ruling approving petitioners'
application for exemption clearance "because of [petitioners'] failure to comply with the requirements for such
exemption." Even though not specifically assigned as an error, the Court of Appeals focused on the discrepancy it
had allegedly found between the certification issued by the Deputized Zoning Administrator and the one from the
HLURB regarding the year that the subject property was reclassified by the local government from agricultural to
residential. The Court of Appeals even went on to state that "[a] careful scrutiny of the record of this case reveals
that the Office of the President failed to judiciously examine the supporting documents submitted by respondents
in their application for exemption."
The Court of Appeals found it material that the HLURB certified that the "Town Plan and Zoning Ordinance of
Daet, Camarines Norte was approved by the Housing and Land Use Regulatory Board, then Human Settlements
Regulatory Commission on September 21, 1978" while the Deputized Zoning Administrator authorized that as per
Zoning Ordinance No. 4, series of 1980, subject property was within the residential built-up area. The Court of
Appeals insisted that petitioners should have submitted the HLURB certification for Zoning Ordinance No. 4.
The Certification from Deputized Zoning Administrator Engr. Jesus Fernandez, Jr. dated October 9, 1996, reads in
part:
This is to certify that the parcel of land owned [in] common by NOEL L. ONG, OMAR ANTHONY L. ONG
and NORMAN L. ONG situated at Barangay Dogongan, Daet, Camarines Norte, described under Transfer
Certificate of Title No. T-17045 and Sketch Plan of Lot 1, Psu-19545, surveyed by JOSE A. GOC, JR. Geodetic
Engineer, with an area of FOUR HUNDRED FIVE THOUSAND SIX HUNDRED FORTY-FIVE
(405,645) square meters is within the RESIDENTIAL BUILT-UP area as per Zoning Ordinance No. 4, series
of 1980, outside the ten meters right of way and the municipality has no proposed road expansion and
improvement on the area as per record of existing Town Plan.
The body of the Certification dated December 9, 1996 from the HLURB Regional Director Jesse A. Obligacion
reads as follows:
This is to certify that as per records on file, the Town Plan and Zoning Ordinance of Daet, Camarines Norte
was approved by the Housing and Land Use Regulatory Board, then Human Settlements Regulatory
Commission on September 21, 1978 in accordance with official practices and procedures carried out pursuant to
Letter of Instruction No. 511 which established a National Coordinating Council for Town Planning, Housing and
Zoning (NCCTPHZ), and pursuant to HLRB Memorandum Circular No. 15, Series of 1995.
Factual as this may seem, this brings to us the crucial question of whether, based on these two certifications,
petitioners had effectively complied with the requirements for exemption.
Looking at such requirements, DAR Administrative Order No. 06-9442 or the "Guidelines for the Issuance of
Exemption Clearances Based on Sec. 3(c) of Republic Act No. 6657 and the Department of Justice (DOJ) Opinion
No. 44, Series Of 1990" was the prevailing rule when petitioners filed their petition for exemption. Under A.O.
No. 06-94's chapter entitled "Legal Basis," it is stated that:
Department of Justice Opinion No. 44 series of 1990 has ruled that with respect to the conversion of agricultural
lands covered by R.A. No. 6657 to non-agricultural uses, the authority of DAR to approve such conversion may be
exercised from the date of its effectivity, on June 15, 1988. Thus, all lands that already classified as
commercial, industrial or residential before 15 June 1988 no longer need any conversion clearance.
DAR A.O. No. 06-94 also provided a list of required documents to be attached to the application for exemption
clearance, as follows:
The application should be duly signed by the landowner or his representative, and should be accompanied by the
following documents:
1. Duly notarized Special Power of Attorney, if the applicant is not the landowner himself;
2. Certified true copies of the titles which is the subject of the application;
3. Current tax declaration (s) covering the property;
4. Location Map or Vicinity Map;
5. Certification from the Deputized Zoning Administrator that the land has been reclassified to
residential industrial or commercial use prior to June 15, 1988;
6. Certification from the HLURB that the pertinent zoning ordinances has been approved by the
Board prior to June 15, 1988;
7. Certification from the National Irrigation Administration that the land is not covered by Administrative
Order No. 20, s. 1992, i.e., that the area is not irrigated, nor scheduled for irrigation rehabilitation nor
irrigable with firm funding commitment.
8. Proof of payment of disturbance compensation, if the area is presently being occupied by farmers, or
waiver/undertaking by the occupants that they will vacate the area whenever required.
The Court of Appeals focused on petitioners' alleged "failure to comply with the requirements for such
exemption," a matter not even assigned by respondents (petitioners therein) as an error, which fact the Court of
Appeals itself admits in its questioned decision, and which it further admits it may not rule upon, but which it
claims falls under one of the exceptions to the general rule.
The respondents' Verified Petition for Review with Prayer for Preliminary Injunction and TRO filed before the
Court of Appeals contains a "Concise Statement of the issues & Assignment of Errors Found in the Questioned
O.P. Decision & O.P. Order committed by the Honorable Office of the President," which reads:
I - THE HONORABLE OFFICE OF THE PRESIDENT GRAVELY ERRED IN HOLDING THAT
RESPONDENTS' PARCEL OF LAND COVERED BY TCT NO. T-17045 WITH AN AREA OF 405,605
SQUARE METERS HAS BEEN RECLASSIFIED AS RESIDENTIAL LAND, HENCE, EXEMPT FROM
CARP COVERAGE.
II - THE HONORABLE OFFICE OF THE PRESIDENT GRAVELY ERRED IN APPLYING THE CASE
OF NATALIA REALTY VS. DAR, 225 SCRA 278 IN THE INSTANT CASE NOTWITHSTANDING THE
GREAT VARIANCE IN THE PECULIAR FACTUAL MILIEU OR ENVIRONMENT OF EACH CASE.
III - THE HONORABLE OFFICE OF THE PRESIDENT GRAVELY ERRED IN ADMITTING HOOK, LINE &
SINKER THE [BIASED], SELF-SERVING, VAGUE, AND AMBIGUOUS CERTIFICATION OF THE
DEPUTY ZONING ADMINISTRATOR & THE INADEQUATE & INSUFFICIENT HLURB
CERTIFICATION, AS AGAINST THE THOROUGH & EXPERT INVESTIGATION & CONSISTENT
FINDINGS THAT THE SUBJECT LAND IS AGRICULTURAL OF THE DAR RCLUPPI INVESTIGATING
TEAM, THE HONORABLE DAR REGIONAL DIRECTOR, & THE HONORABLE DAR SECRETARIES. 44
The Court of Appeals wrote:
After a judicious review of the record of this case, WE rule to grant the Petition but on another ground.
xxxx
While the foregoing issue has not been raised as an error, and therefore, WE may not pass upon it, as this
would contravene the basic rules of fair play and justice, however, it is jurisprudentially recognized that it
is well within the authority of this Court to raise, if it deems proper under the circumstances obtaining,
error/s not assigned on an appealed case. Thus, in several cases, the Supreme Court declared that an appellate
court is clothed with ample authority to review rulings even if they are not assigned as errors in the appeal in these
instances: (a) grounds not assigned as errors but affecting jurisdiction over the subject matter; (b) matters not
assigned as errors on appeal but are evidently plain or clerical errors within contemplation of law; (c) matters not
assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete
resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (d) matters not
specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing
on the issue submitted which the parties failed to raise or which the lower court ignored; (e) matters not assigned
as errors on appeal but closely related to an error assigned; and (f) matters not assigned as errors on appeal but
upon which the determination of a question properly assigned, is dependent. The present case undoubtedly falls
squarely under the above-enumerated exceptions. (Emphasis ours.)
To our mind, the Court of Appeals committed a reversible error when it decided the case based on a ground
neither found in the aforequoted assignment of errors submitted by respondents nor in the arguments propounded
in the appellants' brief. The applicable rule is Section 8, Rule 51 of the 1997 Rules of Civil Procedure, which
reads:
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.
Although the Court has declared many exceptions to the above rule, and the Court of Appeals painstakingly
enumerated some of these exceptions, the Court of Appeals omitted to discuss to which exception this alleged
error belongs, and exactly how this error falls under such exception. To our mind, flexibility in applying the rules
must be balanced with sufficient reason and justification, clearly arrived at and explained by the Court of Appeals,
so as not to "contravene the basic rules of fair play and justice.”
We find that the decision of the Office of the President is more consistent with law and jurisprudence. The Office
of the President found that the subject property had been properly reclassified by the appropriate local government
authority as residential, a fact even noted by the DAR.
To reiterate, we have held that "lands previously converted by government agencies to non-agricultural uses prior
to the effectivity of the CARL are outside its coverage."
As to the appropriateness of an HSRC approval, the Court in Heirs of Deleste ruled on the validity of a local
government's reclassification of land that was subsequently approved not by the HLURB, but by its predecessor,
the HSRC. The Court held that the HSRC approval is enough, and it is a valid reclassification, as explained
in the following quoted portion of the decision:
Likewise, it is not controverted that City Ordinance No. 1313, which was enacted by the City of Iligan in 1975,
reclassified the subject property into a commercial/residential area. DARAB, however, believes that the
approval of HLURB is necessary in order for the reclassification to be valid.
We differ. As previously mentioned, City Ordinance No. 1313 was enacted by the City of Iligan in
1975. Significantly, there was still no HLURB to speak of during that time. It was the Task Force on Human
Settlements, the earliest predecessor of HLURB, which was already in existence at that time, having been created
on September 19, 1973 pursuant to Executive Order No. 419. It should be noted, however, that the Task Force was
not empowered to review and approve zoning ordinances and regulations. As a matter of fact, it was only on
August 9, 1978, with the issuance of Letter of Instructions No. 729, that local governments were required to
submit their existing land use plans, zoning ordinances, enforcement systems and procedures to the
Ministry of Human Settlements for review and ratification. The Human Settlements Regulatory
Commission (HSRC) was the regulatory arm of the Ministry of Human Settlements.
Significantly, accompanying the Certification dated October 8, 1999 issued by Gil R. Balondo, Deputy Zoning
Administrator of the City Planning and Development Office, Iligan City, and the letter dated October 8, 1999
issued by Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of Approval issued by Imelda
Romualdez Marcos, then Minister of Human Settlements and Chairperson of the HSRC, showing that the local
zoning ordinance was, indeed, approved on September 21, 1978. This leads to no other conclusion than that
City Ordinance No. 1313 enacted by the City of Iligan was approved by the HSRC, the predecessor of
HLURB. The validity of said local zoning ordinance is, therefore, beyond question.
Since the subject property had been reclassified as residential/commercial land with the enactment of City
Ordinance No. 1313 in 1975, it can no longer be considered as an "agricultural land" within the ambit of RA 6657.
x x x. (Emphases supplied, citations omitted.)
The Court then cited a similar case, Remman Enterprises, Inc. v. Court of Appeals, wherein it was held:
In the main, REMMAN hinges its application for exemption on the ground that the subject lands had ceased to be
agricultural lands by virtue of the zoning classification by the Sangguniang Bayan of Dasmariñas, Cavite, and
approved by the HSRC, specifying them as residential.
In Natalia Realty, Inc. v. Department of Agriculture, this Court resolved the issue of whether lands already
classified for residential, commercial or industrial use, as approved by the Housing and Land Use Regulatory
Board (HLURB) and its precursor agencies, i.e., National Housing Authority and Human Settlements Regulatory
Commission, prior to 15 June 1988, are covered by Republic Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988. We answered in the negative x x x. (Citation omitted.)
We discussed the history of the HSRC in Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E. M. Ramos and
Sons, Inc.50 wherein we said:cralawlawlibrary
The Court again agrees with the Court of Appeals that Resolution No. 29-A need not be subjected to review and
approval by the HSRC/HLURB. Resolution No. 29-A was approved by the Municipality of Dasmariñas on July 9,
1972, at which time, there was even no HSRC/HLURB to speak of.
The earliest predecessor of the HSRC, the Task Force on Human Settlements, was created through Executive
Order No. 419 more than a year later on September 19, 1973. And even then, the Task Force had no power to
review and approve zoning and subdivision ordinances and regulations.
It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that local governments were
required to submit their existing land use plans, zoning ordinances, enforcement systems, and procedures to the
Ministry of Human Settlements for review and ratification.
The HSRC was eventually established on February 7, 1981. Section 5(b) of the HSRC Charter contained the
explicit mandate for the HSRC to:
b. Review, evaluate and approve or disapprove comprehensive land use development plans and zoning
ordinances of local government; and the zoning component of civil works and infrastructure projects of national,
regional and local governments; subdivisions, condominiums or estate development projects including industrial
estates, of both the public and private sectors and urban renewal plans, programs and projects: Provided, that the
land use Development Plans and Zoning Ordinances of Local Governments herein subject to review, evaluation
and approval of the commission shall respect the classification of public lands for forest purposes as certified by
the Ministry of Natural Resources: Provided, further, that the classification of specific alienable and disposable
lands by the Bureau of Lands shall be in accordance with the relevant zoning ordinance of Local government
where it exists; and provided, finally, that in cities and municipalities where there are as yet no zoning ordinances,
the Bureau of Lands may dispose of specific alienable and disposable lands in accordance with its own
classification scheme subject to the condition that the classification of these lands may be subsequently change by
the local governments in accordance with their particular zoning ordinances which may be promulgated later. x x
x.
Neither the Ministry of Human Settlements nor the HSRC, however, could have exercised its power of review
retroactively absent an express provision to that effect in Letter of Instructions No. 729 or the HSRC Charter,
respectively. A sound cannon of statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by the express terms of the statute
or by necessary implication. Article 4 of the Civil Code provides that: "Laws shall have no retroactive effect,
unless the contrary is provided." Hence, in order that a law may have retroactive effect, it is necessary that an
express provision to this effect be made in the law, otherwise nothing should be understood which is not embodied
in the law. Furthermore, it must be borne in mind that a law is a rule established to guide our actions without no
binding effect until it is enacted, wherefore, it has no application to past times but only to future time, and that is
why it is said that the law looks to the future only and has no retroactive effect unless the legislator may have
formally given that effect to some legal provisions.
xxxx
Since the subject property had been reclassified as residential land by virtue of Resolution No. 29-A dated
July 9, 1972, it is no longer agricultural land by the time the CARL took effect on June 15, 1988 and is,
therefore, exempt from the CARP. (Emphases supplied, citations omitted.)
In Buklod, the Court cited previous decisions with the same conclusion, and we quote the relevant points of
discussion below:
This is not the first time that the Court made such a ruling.
xxxx
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies
other than respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural
Lands to Non-Agricultural Uses, DAR itself defined "agricultural land" thus —
"x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified
as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor
agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use
Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential,
commercial or industrial use."
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. It
was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within, the coverage of
CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted in an
Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
part, having been reserved for townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of Section 3(c) of R.A. No.
6657." Not being deemed "agricultural lands," they are outside the coverage of CARL. x x x.
That the land in the Natalia Realty case was reclassified as residential by a presidential proclamation, while the
subject property herein was reclassified as residential by a local ordinance, will not preclude the application of the
ruling of this Court in the former to the latter. The operative fact that places a parcel of land beyond the ambit
of the CARL is its valid reclassification from agricultural to non-agricultural prior to the effectivity of the
CARL on June 15, 1988, not by how or whose authority it was reclassified.
In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals (Pasong Bay abas case), the Court made the
following findings:
Under Section 3(c) of Rep. Act No. 6657, agricultural lands refer to lands devoted to agriculture as conferred in
the said law and not classified as industrial land. Agricultural lands are only those lands which are arable or
suitable lands that do not include commercial, industrial and residential lands. Section 4(e) of the law provides that
it covers all private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that
can be raised thereon. Rep. Act No. 6657 took effect only on June 15, 1988. But long before the law tools effect,
the property subject of the suit had already been reclassified and converted from agricultural to non-
agricultural or residential land by the following administrative agencies: (a) the Bureau of Lands, when it
approved the subdivision plan of the property consisting of 728 subdivision lots; (b) the National Planning
Commission which approved the subdivision plan subdivided by the LDC/CAI for the development of the
property into a low-cost housing project; (c) the Municipal Council of Carmona, Cavite, when it approved
Kapasiyahang Blg. 30 on May 30, 1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979,
when he granted the application of the respondent for the development of the Hakone Housing Project with an
area of 35.80 hectares upon the recommendation of the Agrarian Reform Team, Regional Director of Region IV,
which found, after verification and investigation, that the property was not covered by P.D. No. 27, it being
untenanted and not devoted to the production of palay/or corn and that the property was suitable for conversion to
residential subdivision; (e) by the Ministry of Local Government and Community Development; (f) the Human
Settlements Regulatory Commission which issued a location clearance, development permit, Certificate of
Inspection and License to Sell to the LDC/private respondent; and, (g) the Housing and Land Use Regulatory
Board which also issued to the respondent CAI/LDC a license to sell the subdivision lots. xxx.
Noticeably, there were several government agencies which reclassified and converted the property from
agricultural to non-agricultural in the Pasong Bayabas case. The CARL though does not specify which specific
government agency should have done the reclassification. To be exempt from CARP, all that is needed is one
valid reclassification of the land from agricultural to non-agricultural by a duly authorized government agency
before June 15, 1988, when the CARL took effect. All similar actions as regards the land subsequently rendered
by other government agencies shall merely serve as confirmation of the reclassification. The Court actually
recognized in the Pasong Bayabas case the power of the local government to convert or reclassify lands through a
zoning ordinance:
Section 3 of Rep. Act No. 2264, amending the Local Government Code, specifically empowers municipal and/or
city councils to adopt zoning and subdivision ordinances or regulations in consultation with the National Planning
Commission. A zoning ordinance prescribes, defines, and apportions a given political subdivision into specific
land uses as present and future projection of needs. The power of the local government to convert or reclassify
lands to residential lands to non-agricultural lands reclassified is not subject to the approval of the Department of
Agrarian Reform. Section 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to applications by the
landlord or the beneficiary for the conversion of lands previously placed under the agrarian reform law after the
lapse of five years from its award. It does not apply to agricultural lands already converted as residential lands
prior to the passage of Rep. Act No. 6657. xxx.
At the very beginning of Junio v. Garilao, the Court already declared that:
Lands already classified and identified as commercial, industrial or residential before June 15, 1988 — the date of
effectivity of the Comprehensive Agrarian Reform Law (CARL) — are outside the coverage of this law.
Therefore, they no longer need any conversion clearance from the Department of Agrarian Reform (DAR).
The Court then proceeded to uphold the authority of the City Council of Bacolod to reclassify as residential a
parcel of land through Resolution No. 5153-A, series of 1976. The reclassification was later affirmed by the
HSRC. Resultantly, the Court sustained the DAR Order dated September 13, 1994, exempting the same parcel of
land from CARP Coverage.
Therefore, the Office of the President was correct when it ruled that the DAR's "denial of the exemption on the
ground that the MARO [had] already issued a NOTICE OF ACQUISITION in 1994 is flawed" and that "[the] area
having already been reclassified as residential prior to June 1988 (as established by the DAR RCLUPPI V), it
cannot be the subject of a Notice of Acquisition which covers only agricultural lands." The Office of the President
likewise correctly held that "the Notice of Acquisition over the subject property is void ab initio."
WHEREFORE, in view of the foregoing, we GRANT the petition. We hereby SET ASIDE the November 30,
2010 Decision and the May 11, 2011 Resolution of the Court of Appeals in CA-G.R. SP No.
93941 and REINSTATE the September 5, 2005 Decision and the March 3, 2006 Order of the Office of the
President.
SO ORDERED.
Sereno, C.J., (Chairperson), Bersamin, Perez, and Perlas-Bernabe, JJ., concur.
[G.R. No. 131481, March 16 : 2011]
BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E. M.
RAMOS AND SONS, INC., RESPONDENT.
[G.R. No. 131624]
DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND SONS,
INC., RESPONDENT.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of the 1997 Rules of Civil
Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing Ramos, Inc. (Buklod) and the Department of Agrarian
Regorm (DAR), assailing the Decision dated March 26, 1997 and the Resolution dated November 24, 1997 of the
Court of Appeals in CA G.R. SP No. 40950.
The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons, Inc. (EMRASON), located in
Barangay Langkaan, Dasmariñas, Cavite (subject property), exempt from the coverage of the Comprehensive
Agrarian Reform Program (CARP), thus, nullifying and setting aside the Decision dated February 7, 1996 and
Resolution dated May 14, 1996 of the Office of hte President (OP) in O.P. Case No. 5461.
Quoted hereunder are the facts of the case as found by the Court of Appeals:
At the core of the controversy are several parcels of unirrigated land (303.38545 hectares) which from part of a
larger expanse with an area of 372 hectares situated at Barangay Langkaan, Dasmariñas, Cavite.  Originally
owned by the MAnila Golf and Country Club, he property was aquired by the [herein repondent EMRASON] in
1965 for the purpose of developing the same into a residential subdivision known as "Traveller's Life Homes".
Sometime in 1971, the Municipal Council of Dasmariñas, Cavite, acting pursuant to Republic Act (R.A.) No.
2264, otherwise known as the "Loval Autonomy Act", enacteed Municipal Ordinance No. 1, hereinafter referred
to as Ordinance No. 1, enitled "An Ordinance Providing Subdivision Regulation and Providing Penalties for
Violation Thereof."
In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to convert and development its
aforementioned 372-hectare property into a residential subdivision, ataching to the apllication detailed
development plans and development proposals from Bancom Development Corporation and San Miguel
Corporation.  Acting thereon the Municipal Council of Dasmariñas, Cavite passed on July 9, 1972 Municipal
Ordinance No. 29-A (Ordinance "No. 29-A, for brevity), approving [EMRASON's] application. Ordinance No.
29-A pertinently reads:
"Resolved, as it is hereby resolved, to approve the application for subdivision containing an area of Three
Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and Langkaan, named as Traveller's Life Homes.
Resolved that the Municipal Ordinance regarding subdivision regulations existing in this municipality shall be
strictly followed by the subdivision ".
Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with property development.
It appears, however, that the actual implementation of the subdivision project suffered delay owing to the
confluence of events. Among these was the fact that the property in question was then mortgaged to, and the titles
thereto were in the possession of, the Overseas Bank of Manila, which during the period material was under
liquidation.
On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law or
CARL, took effect, ushering in a new process of land classification, acquisition and distribution.
On September 23, 1988, the Municipal Mayor of Dasmariñas, Cavite addressed a letter to [EMRASON], stating in
part, as follows:
"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality of Dasmariñas, Cavite, has
approved the development of your property situated in Barrios Bukal and Langkaan, Dasmariñas, Cavite, with a
total area of 3 72 hectares, more or less, into residential, industrial, commercial and golf course project.
This conversion conforms with the approved Development Plan of the Municipality of Dasmariñas Cavite ".
Then came the Aquino government's plan to convert the tenanted neighboring property of the National
Development Company (NDC) into an industrial estate to be managed through a joint venture scheme by NDC
and the Marubeni Corporation. Part of the overall conversion package called for providing the tenant-farmers,
opting to remain at the NDC property, with three (3) hectares each. However, the size of the NDC property turned
out to be insufficient for both the demands of the proposed industrial project as well as the government's
commitment to the tenant-farmers. To address this commitment, the Department of Agrarian Reform (DAR) was
thus tasked with acquiring additional lands from the nearby areas. The DAR earmarked for this purpose the
subject property of [EMRASON].
On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four batches of notices of
acquisition, each of which drew protest from [EMRASON]. All told, these notices covered 303.38545 hectares of
land situated at Barangay Langkaan, Dasmariñas, Cavite owned by [EMRASON].
In the meantime, [EMRASON] filed with the Department of Agrarian Reform Adjudication Board (DARAB),
Region IV, Pasig, Metro Manila, separate petitions to nullify the first three sets of the above notices. Collectively
docketed as DARAB Case No. IV-Ca-0084-92, these petitions were subsequently referred to the Office of the
Regional Director, Region IV, which had jurisdiction thereon. In his referral action, the Provincial Agrarian
Adjudicator directed the DAR Region IV, through its Operations Division, to conduct a hearing and/or
investigation to determine whether or not the subject property is covered by the Comprehensive Agrarian Reform
Program (CARP) and, if not, to cancel the notices of acquisition.
Forthwith, the DAR regional office conducted an on-site inspection of the subject property.
In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-2" as documentary
evidence, [EMRASON] received another set of notices of acquisition. As lo be expected, [EMRASON] again
protested.
On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer Victor Baguilat, rendered a
decision declaring as null and void all the notices of acquisitions, observing that the property covered thereby is,
pursuant to Department of Justice (DOJ) Opinion No. 44, series of 1990, exempt from CARP. The dispositive
portion of the decision reads, as follows;
''WHEREFORE, in the light of the foregoing x x x, considering that the notices of acquisition dated August 29,
1990 relative to the 39 hectares partly covered by Transfer Certificate of Title No. T-19298; notices of acquisition
all dated April 3, 1991 relative to the 131.41975 hectares partly covered by Transfer Certificates of Title Nos. x x
x; notices of acquisition all dated August 28, 1991 relative to the 56.9201 hectares covered by Transfer
Certificates of Title Nos. x x x; and notices of acquisition all dated May 15, 1992 relative to the 76.0456 covered
by Transfer Certificates of Title Nos. xx, all located at Barangay Langkaan, Dasmariñas, Cavite and owned by
petitioner EM RAMOS and SONS, INC. are null and void on the ground that the subject properties are exempted
from CARP coverage pursuant to DOJ Opinion No. 44, Series of 1990,  therefore, the aforesaid notices of
acquisition be cancelled and revoked. "
The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon, clarified that lands already
converted to non-agricultural uses before June 15, 1988 were no longer covered by CARP.
On September 3, 1992, the Region IV DAR Regional Director motu propio elevated the case to the Office of the
Agrarian Reform Secretary, it being his view that Hearing Officer Baguilat's decision ran contrary to the
department's official position "to pursue the coverage of the same properties and its eventual distribution to
qualified beneficiaries particularly the Langkaan farmers in fulfillment of the commitment of the government to
deliver to them the balance of thirty-nine hectares x x x".
On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR Secretary Garilao)] issued an
order, the decretal portion of which partly reads:
"WHEREFORE, in the interest of law and justice, an order is hereby rendered:
1.  Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August 28, 1991 and May 15, 1992
covering 303.38545 hectares of the property owned by the E.M. RAMOS & SONS, INC, located at Barangay
Langkaan, Dasmarinas, Cavite x x x;
xxxx
3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657 of the properties of E.M. 
Ramos & Sons,  Inc. for which subject Notices of Acquisition had been issued.
SO ORDERED".
Its motion for reconsideration of the aforesaid order having been denied by the [DAR Secretary Garilao] in his
subsequent order of January 6, 1993, [EMRASON] appealed to the Office of the President where the recourse was
docketed as O.P. Case No. 5461.
On February 7, 1996, the Office of the President, through herein respondent Deputy Executive Secretary Renato
C. Corona [(Deputy Executive Secretary Corona)], rendered the herein assailed decision x x x, dismissing
[EMRASON's] appeal on the strength of the following observation:
"To recapitulate, this Office holds that [EMRASON's] property has remained AGRICULTURAL in classification
and therefore falls within the coverage of the CARP, on the basis of the following:
1. [EMRASON] failed to comply with the mandatory requirements and conditions of Municipal Ordinance
Nos. 1 and 29-A, specifically, among others, the need for approval of the National   Planning  
Commission through the Highway District Engineer, and the Bureau of Lands before final submission to
the Municipal Council and Municipal Mayor;
2. [EMRASON] failed to comply with Administrative Order No. 152, dated December 16, 1968, and
3. The  certification  of the  Human Settlements Regulatory Commission (HSRC)  in  1981  and the
Housing and Land Use Regulatory Board (HLRB) in 1992 that the property of [EMRASON] is
agricultural".
Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by another motion whereunder it
invited attention to legal doctrines involving land conversion recently enunciated by no less than the Office of the
President itself.
On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his second challenged issuance
denying [EMRASON's] aforementioned motion for reconsideration x x x.
From the denial of its Motion for Reconsideration by the OP, EMRASON filed a Petition for Review with the
Court of Appeals, which was docketed as CA-G.R. SP No. 40950.
On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO), which enjoined then DAR
Secretary Ernesto Garilao and Deputy Executive Secretary Renato C. Corona  from implementing the OP Decision
of February 7, 1996 and Resolution of May 14, 1996 until further orders from the court. On September 17, 1996,
the appellate court issued a Resolution granting the prayer of EMRASON for the issuance of a writ of preliminary
injunction.  The writ of preliminary injunction was actually issued on September 30, 1996 after EMRASON
posted the required bond of P500,000,00.
The DAR Secretary filed a Motion for Reconsideration of the Resolution dated September 17, 1996 of the Court
of Appeals, with the prayer that the writ of preliminary injunction already issued be lifted, recalled and/or
dissolved.
At this juncture, the DAR had already prepared Certificates of Land Ownership Award (CLOAs) to distribute the
subject property to farmer-beneficiaries.  However, the writ of preliminary injunction issued by the Court of
Appeals enjoined the release of the CLOAs. Buklod, on behalf of the alleged 300 farmer-beneficiaries of the
subject property, filed a Manifestation and Omnibus Motion, wherein it moved that it be allowed to intervene as
an indispensable party in CA-G.R. SP No. 40950; that the writ of preliminary injunction be immediately
dissolved, having been issued in violation of Section 55 of the CARL; and that the Petition for Review of
EMRASON be dismissed since the appropriate remedy should have been a petition for certiorari before the
Supreme Court.
On March 26, 1997, the Court of Appeals promulgated its assailed Decision.
The Court of Appeals allowed the intervention of Buklod because -the latter's participation was "not being in any
way prejudicial to the interest of the original parties, nor will such intervention change the factual legal
complexion of the case." The appellate court, however, affirmed the propriety of the remedy availed by
EMRASON given that under Section 5 of Supreme Court Revised Administrative Circular No. 1-95 dated May
16, 1995, appeals from judgments or final orders of the OP or the DAR under the CARL shall be taken to the
Court of Appeals, through a verified petition for review; and that under Section 3 of the same Administrative
Circular, such a petition for review may raise questions of facts, law, or mixed questions of facts and law.
Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject property was already
converted/classified as residential by the Municipality of Dasmariñas prior to the effectivity of the CARL. The
appellate court reasoned:
For one, whether or not the Municipality of Dasmariñas, Cavite had in place in the early seventies a general
subdivision plan is to us of no moment. The absence of such general plan at that time cannot be taken, for the
nonce, against the [herein respondent EMRASON]. To our mind, the more weighty consideration is the
accomplished fact that the municipality, conformably with its statutory-conferred local autonomy, had passed a
subdivision measure, I.e., Ordinance No. 1, and had approved in line thereto, through the medium of Ordinance
No. 29-A, [EMRASON's] application for subdivision, or with like effect approved the conversion/classification of
the lands in dispute as residential. Significantly, the Municipal Mayor of Dasmariñas, Cavite, in his letter of
September 23, 1988 to [EMRASON], clarified that such conversion conforms with the approved development
plan of the municipality.
For another, the requirement prescribed by the cited Section 16[a] of Ordinance No. 1 relates to the approval in the
first instance by the National Planning Commission of the final plat of the scheme of the subdivision, not the
conversion from agricultural to residential itself. As [EMRASON] aptly puts it:
"x x x the final plat or final plan, map or chart of the subdivision is not a condition sine qua non for the
conversion x x x as the conversion was already done by the Municipal Council of Dasmariñas, Cavite.
Municipal Ordinance NO. 29-A merely required that the final plat, or final plan x x x of the subdivision be done in
conformity with Municipal Ordinance No. 1, the same to be followed by (he subdivision itself. [EMRASON]
therefore did not have to undertake the immediate actual development of the subject parcel of lands as the same
had already been converted and declared residential by law. x x x " (Petition, pp. 17 and 18).
[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A contained two (2) resolutory
portions, each interrelated to, but nonetheless independent of, the other. The first resolution, reading -
"Resolved, as it is hereby resolved, to approve the application for subdivision containing an area of Three
Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and Langkaan, named as Travellers Life Homes"
approved the application for subdivision or the conversion of the 372-hectare area into residential, while the
second, reading -
"Resolved that the Municipal Ordinance regarding subdivision regulations existing in this municipality shall be
strictly followed by the subdivision"
provides that the subdivision owner/developer shall follow subdivision regulations, it will be noted further that the
second resolution already referred to the [EMRASON's] property as "'subdivision", suggesting that the Municipal
Council already considered as of that moment [EMRASON's] area to be for residential use.
Another requirement which [EMRASON] allegedly failed to comply with is found in Administrative Order (A.O.)
No. 152, series of 1968, which pertinently provides -
"1. All Municipal Boards or City Councils, and all Municipal Councils in cities and municipalities in which a
subdivision ordinance is in force, shall submit three copies of every proposed subdivision plan for which approval
is sought together with the subdivision ordinance, to the National Planning Commission for comment and
recommendation ".
This Court is at a loss to understand how [EMRASON] could be expected to heed a directive addressed to local
government legislative bodies. From a perusal of the title of A.O. No. 152, it is at once obvious from whom it
exacts compliance with its command, thus: "REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS
AND MUNICIPAL COUNCILS TO SUBMIT PROPOSED ORDINANCES AND SUBDIVISION PLANS TO
THE NATIONAL PLANNING COMMISSION FOR COMMENT AND RECOMMENDATION, BEFORE
TAKING ACTION ON THE SAME, AND TO FORWARD A COPY OF THEIR APPROVED SUBDIVISION
ORDINANCES TO THE SAID COMMISSION".
To be sure, [EMRASON] cannot be made to bear the consequences for the non-compliance, if this be the case, by
the Municipal Council of Dasmarinas, Cavite with what A.O. 152 required. A converse proposition would be
antithetical to the sporting idea of fair play.
As for the other requirements which EMRASON purportedly failed to comply with, the Court of Appeals held that
these became obligatory only after the subject property was already converted to non-agricultural, to wit:
Foregoing considered, this Court holds that everything needed to validly effect the conversion of the disputed area
to residential had been accomplished. The only conceivable step yet to be taken relates to the obtention of a
conversion order from the DAR, or its predecessor, the Ministry of Agrarian Reform (MAR.) under its rather
intricate procedure established under Memorandum Circular No. 11-79. But then, this omission can hardly
prejudice the [herein respondent EMRASON] for the DAR7MAR guidelines were promulgated only in 1979, at
which time the conversion of [EMRASON's] property was already a fait accompli.
Like the conversion procedure set up under Memorandum Circular No. 11-79, the revised methodology under the
CARL cannot also be made to apply retroactively to lands duly converted/classified as residential under the aegis
of the Local Autonomy Act. For, as a rule, a statute is not intended to affect transactions which occurred before it
becomes operational (Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE, Vol.
I, 1983 ed.; p. 23). And as the landmark case of Natalia Realty, Inc. vs. Department of Agrarian Reform, 225
SCRA 278, teaches:
"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectively of CARL by government agencies other than
respondent DAR x x x.
xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is hound by such conversion. 
It was therefore error to include the underdeveloped portions x x x within the  coverage  of CARL".
It may be so, as the assailed decision stated, that in Natalia the lands therein involved received a locational
clearance from the Housing and Land Use Regulatory Board (HLRB, formerly the Human Settlement Regulatory
Commission [HSRC], as residential or commercial, a factor [EMRASON] cannot assert in its favor. This
dissimilarity, however, hardly provides a compelling justification not to apply the lessons of Natalia. This is
because the property involved in this case, unlike that in Natalia, underwent classification/conversion before the
creation on May 13, 1976 of the HSRC, then known as the Human Settlements Regulatory Commission (P.D. No.
933). Furthermore, what is recognized as the HSRC's authority to classify and to approve subdivisions and
comprehensive land use development plans of local governments devolved on that agency only upon its
reorganization on February 7, 1981, with the issuance of Executive Order No. 648 known as the Charter of the
Human Settlements Regulatory Commission. Section 5 of the same executive order invested the HSRC with the
above classifying and approving authority. In fine, the property of [EMRASON] went into the process of
conversion at the time when the intervention thereon of the HSRC, which was even then non-existent, was
unnecessary. Shortly before the creation of the HSRC, it would appear that to provincial, city, or municipal
councils/boards, as the case may be, belong the prerogative, albeit perhaps not exclusive, to classify private lands
within their respective territorial jurisdiction and approve their conversion from agricultural to residential or other
non-agricultural uses. To paraphrase the holding in Patalinghug vs. Court of Appeals, 229 SCRA 554, once a
local government has, pursuant to its police power, reclassified an area as residential, that determination ought to
prevail and must be respected.
The Court of Appeals further observed that the subject property has never been devoted to any agricultural activity
and is, in fact, more suitable for non-agricultural purposes, thus:
It is worthy to note that the CARL defines "agricultural lands" as "lands devoted to agricultural activity x x x and
not classified as mineral, forest, residential, commercial or industrial lands" (Sec. 3[c]). Guided by this definition,
it is clear that [herein respondent EMRASON's] area does not fall under the category of agricultural lands.  For, let
alone the reality that the property is not devoted to some agricultural activity, being in fact unirrigated, and, as
implied in the decision of the DAR Hearing Officer Victor Baguilat, without duly instituted tenants, the same had
been effectively classified as residential.  The bare circumstance of its not being actually developed as subdivision
or that it is underdeveloped would not alter the conclusion. For, according to Natalia, what actually determines the
applicability of the CARL to a given piece of land is its previous classification and not its current use or stages of
development as non-agricultural property.
As a pragmatic consideration, the disputed area, in terms of its location in relation to existing
commercial/industrial sites and its major economic use, is more suitable for purposes other than agriculture. In this
connection, this Court notes that the property is situated at the heart of the CALABARZON, and, as Annex "C" of
the petition demonstrates, lies adjacent to huge industrial/commercial complexes. The San Miguel-Monterey meat
plant, the NDC-Marubeni complex and the Reynolds Aluminum plant may be mentioned. For sure, the
Sangguniang Panlalawigan of Cavite, obviously cognizant of the economic potential of certain areas in the
Municipality of Dasmariñas has, by Resolution No. 105, series of 1988. declared defined tracts of lands in the
Municipality of Dasmariñas as "industrial-residential-institutional mix."
As a last point, the Court of Appeals justified its issuance of a writ of preliminary injunction enjoining the
implementation of the OP Decision dated February 7, 1996 and Resolution dated May 14, 1996, viz:
As a final consideration, we will address the [herein petitioners] OAR Secretary's and Buklod's joint concern
regarding the propriety of the preliminary injunction issued in this case. They alleged that the issuance is violative
of Section 55 of the CARL which reads:
"SEC. 55. No Restraining Order or Preliminary
Injunction. - No Court in the Philippines shall have jurisdiction to issue any restraining order or writ of
preliminary injunction against the PARC or any of its duly authorized or designated agencies in any case, dispute,
controversy arising from, necessary to, or in connection with the application, implementation, enforcement, or
interpretation of this Act and other pertinent laws on agrarian reform". (Underscoring added.)
As will be noted, the aforequoted section specifically mentions the Presidential Agrarian Reform Council (PARC)
of which the DAR Secretary is the Vice Chairman, or any of its duly designated agencies as protected from an
injunctive action of any court. These agencies include the PARC Executive Committee, the PARC Secretariat,
which the DAR Secretary heads, and. on the local level, the different Agrarian Reform Action Committees (Sees.
41 to 45, R.A. No. 6657).
From the records, there is no indication that the [petitioner] Agrarian Reform Secretary acted vis-a-vis the
present controversy for, or as an agency of, the PARC. Hence, he cannot rightfully invoke Section 55 of the CARL
and avail himself of the protective mantle afforded by that provision.  The PARC, it bears to stress, is a policy-
formulating and coordinating body (Sec. 18. E.O. 229, July 22, 1987) without express adjudicatory mandate,
unlike the DAR Secretary who, as department head, is "vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive jurisdiction over all matters involving the
implementation of agrarian reform" (Sec. 50. R.A. 6657). Thus, it is easy lo accept the proposition that the
[petitioner] Agrarian Reform Secretary issued his challenged orders in the exercise of his quasi-judicial power
as department head.
In the end, the Court of Appeals decreed:
WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the challenged decision dated
February 7, 1996 and the resolution of May 14, 1996 of the Office of the President in O.P. Case No. 5461 are
hereby NULLIFIED, VACATED and SET ASIDE, and the notices of acquisition issued by the Department of
Agrarian Reform covering the 372-hectare property of the [herein respondent EMRASON] at Barangay Langkaan,
Dasmariñas, Cavite declared VOID.
The writ of preliminary injunction issued by this Court on September 30, 1996 is hereby made permanent.
Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing Decision but both Motions
were denied by the Court of Appeals in a Resolution dated November 24, 1997.
Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by this Court in a
Resolution dated August 19, 1998.
In G.R. No. 131481, Buklod raises the following arguments:
1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF THE PROPERTY IN
QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL COUNCIL OF DASMARIÑAS, CAVITE IS
IMPOTENT BECAUSE THE MUNICIPAL ORDINANCE IMPOSED CONDITIONS WHICH [EMRASON]
NEVER COMPLIED. NO COMPLIANCE NO CONVERSION.
2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM LAW WAS
ALREADY IN EFFECT GRANTING SECURITY OF TENURE TO THE FARMERS SO THAT A
LANDOWNER CANNOT ARBITRARILY CONVERT AN AGRICULTURAL LAND INTO A DIFFERENT
CLASSIFICATION WITHOUT COMPLYING WITH LEGAL REQUIREMENTS (R.A. 3844).
3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS GRANTED TO THE
FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844 AND SUBSEQUENT LAWS. LAND
REFORM LAW BEING A SOCIAL LEGISLATION IS PARAMOUNT.
4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE LANDLESS
FARMERS SO THAT THE LAND REFORM LAW SHOULD BE CONSTRUED AND APPLIED IN ORDER
TO ATTAIN THE LEGISLATIVE INTENT OF RELIEVING THE FARMERS FROM THEIR POVERTY AND
BONDAGE.  THE COURT OF APPEALS IGNORED THIS CONSTITUTIONAL MANDATE TO FAVOR
THE LANDLORD [EMRASON].
5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION AGAINST THE CLEAR
PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO FAR DEPARTED FROM THE USUAL COURSE
OF BY REFUSING TO GRANT THE PETITIONER FARMERS A HEARING INSPITE OF THE
PROCEDURE PRESCRIBED BY RA 7902 (SEC. ]).
In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court of Appeals:
I.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE MUNICIPALITY OF
DASMARIŇAS, CAVITE, WAS AUTHORIZED, UNDER THE LOCAL AUTONOMY ACT, TO CLASSIFY
AND/OR RECLASSIFY LANDS CONSIDERING THAT WHAT WAS CONFERRED THEREUNDER WAS
ONLY ZONING AUTHORITY, THUS, RENDER THE EXERCISE THEREOF BY THE MUNICIPAL
COUNCIL OF DASMARIŇAS, CAVITE, ULTRA VIRES;
II.
EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO CLASSIFY AND RECLASSIFY
LANDS IS POSSESSED BY MUNICIPAL CORPORATIONS, STILL THE HONORABLE COURT OF
APPEALS ERRED WHEN IT CONSIDERED THE ALLEGED PASSAGE OF ORDINANCE NO. 29-A OF
THE MUNICIPAL COUNCIL OF DASMARIŇAS, CAVITE, AS A VALID MEASURE RECLASSIFYING
SUBJECT AGRICULTURAL LAND TO NON-AGRICULTURAL USE CONSIDERING THAT THE SAID
APPROVAL OF THE SUBDIVISION, PER LETTER OF THE MUNICIPAL MAYOR, FAILED TO COMPLY
WITH EXISTING RULES AND REGULATIONS ON THE MATTER AND, THEREFORE,
NONCOMPLYING AND INEFFECTUAL; AND
III.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING OF THE
HONORABLE COURT IN THE NATALIA REALTY CASE DUE TO SUBSTANTIAL DISSIMILARITY IN
FACTUAL SETTING AND MILIEU.
At the crux of the present controversy is the question of whether the subject property could be placed under the
CARP.
DAR asserts that the subject property could be compulsorily acquired by the State from EMRASON and
distributed to qualified farmer-beneficiaries under the CARP since it was still agricultural land when the CARL
became effective on June 15, 1988. Ordinance Nos. 1 and 29-A, approved by the Municipality of Dasmariñas on
July 13, 1971 and July 9, 1972, respectively, did not reclassify the subject property from agricultural to non-
agricultural. The power to reclassify lands is an inherent power of the National Legislature under Section 9 of
Commonwealth Act No. 141, otherwise known as the Public Land Act, as amended, which, absent a specific
delegation, could not be exercised by any local government unit (LGU). The Local Autonomy Act of 1959 - in
effect when the Municipality of Dasmariñas approved Ordinance Nos. 1 and 29-A - merely delegated to cities and
municipalities zoning authority, to be understood as the regulation of the uses of property in accordance with the
existing character of the land and structures.  It was only Section 20 of Republic Act No. 7160, otherwise known
as the Local Government Code of 1991, which extended to cities and municipalities limited authority to reclassity
agricultural lands.
DAR also argues that even conceding that cities and municipalities were already authorized in 1972 to issue an
ordinance reclassifying lands from agricultural to non-agricultural, Ordinance No. 29-A of the Municipality of
Dasmariñas was not valid since it failed to comply with Section 3 of the Local Autonomy Act of 1959, Section
16(a) of Ordinance No. 1 of the Municipality of Dasmarinas, and Administrative Order No. 152 dated December
16, 1968, which all required review and approval of such an ordinance by the National Planning Commission
(NPC). Subsequent developments further necessitated review and approval of Ordinance No. 29-A by the Human
Settlements Regulatory Commission (HSRC), which later became the Housing and Land Use Regulatory Board
(HLURB).
DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc. v. Department of Agrarian
Reform (Natalia Realty case) is misplaced because the lands involved therein were converted from agricultural to
residential use by Presidential Proclamation No. 1637, issued pursuant to the authority delegated to the President
under Section 71, et seq., of the Public Land Act.
Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to Ordinance Nos. 1 and 29-A,
there were already laws implementing agrarian reform, particularly: (1) Republic Act No. 3844, otherwise known
as the Agricultural Land Reform Code, in effect since August 8, 1963, and subsequently amended by Republic Act
No. 6389 on September 1.0, 1971, after which it became known as the Code of Agrarian Reforms; and (2)
Presidential Decree No. 27, otherwise known as the Tenants Emancipation Decree, which took effect on
November 19, 1972. Agricultural land could not be converted for the purpose of evading land reform for there
were already laws granting farmer-tenants security of tenure, protection from ejectment without just cause, and
vested rights to the land they work on.
Buklod contends that EMRASON failed to comply with Section 36 of the Code of Agrarian Reforms, which
provided that the conversion of land should be implemented within one year, otherwise, the conversion is deemed
in bad faith. Given the failure of EMRASON to comply with many other requirements for a valid conversion, the
subject property has remained agricultural. Simply put, no compliance means no conversion.  In fact, Buklod
points out, the subject property is still declared as "agricultural" for real estate tax purposes. Consequently,
EMRASON is now estopped from insisting that the subject property is actually "residential."
Furthermore, Buklod posits that land reform is a constitutional mandate which should be given paramount
consideration. Pursuant to said constitutional mandate, the Legislature enacted the CARL. It is a basic legal
principle that a legislative statute prevails over a mere municipal ordinance.
Finally, Buklod questions the issuance by the Court of Appeals of a writ of preliminary injunction enjoining the
distribution of the subject property to the farmer-beneficiaries in violation of Section 55 of the CARL; as well as
the refusal of the appellate court to hold a hearing despite Section 1 of Republic Act No. 7902, prescribing the
procedure for reception of evidence before the Court of Appeals. At such a hearing, Buklod intended to present
evidence that the subject property is actually agricultural and that Buklod members have been working on said
property for decades, qualifying them as farmer-beneficiaries.
EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the subject property is exempt from
CARP because it had already been reclassified as residential with the approval of Ordinance No. 29-A by the
Municipality of Dasmariñas on July 9, 1972. EMRASON cites Ortigas & Co., Ltd. Partnership v. Feati Bank
and Trust Co. (Ortigas case) where this Court ruled that a municipal council is empowered to adopt zoning and
subdivision ordinances or regulations under Section 3 of the Local Autonomy Act of 1959.
Still relying on the Ortigas case, EMRASON avows that the Municipality of Dasmariñas, taking into account the
conditions prevailing in the area, could validly zone and reclassify the subject property in the exercise of its police
power in order to safeguard the health, safety, peace, good order, and general welfare of the people in the locality.
EMRASON describes the whole area surrounding the subject property as residential subdivisions (i.e., Don
Gregorio, Metro Gate, Vine Village, and Cityland Greenbreeze 1 and 2 Subdivisions) and industrial estates (i.e.,
Reynolds Aluminum Philippines, Inc. factory; NDC-Marubeni industrial complex, San Miguel Corporation-
Monterey cattle and piggery farm and slaughterhouse), traversed by national highways (i.e., Emilio Aguinaldo
National Highway, Trece Martirez, Puerto Azul Road, and Governor's Drive). EMRASON mentions that on
March 25, 1988, the Sangguniang Panlalawigan of the Province of Cavite passed Resolution No. 105 which
declared the area where subject property is located as "industrial-residential-institutional mix."
EMRASON further maintains that Ordinance No. 29-A of the Municipality of Dasmariñas is valid. Ordinance No.
29-A is complete in itself, and there is no more need to comply with the alleged requisites which DAR and Buklod
are insisting upon. EMRASON quotes from Patalinghug v. Court of Appeals (Patalinghug case) that "once a local
government has reclassified an area as commercial, that determination for zoning purposes must prevail."
EMRASON points out that Ordinance No. 29-A, reclassifying the subject property, was approved by the
Municipality of Dasmariñas on July 9, 1972. Executive Order No. 648, otherwise known as the Charter of the
Human Settlements Regulatory Commission (HSRC Charter) - which conferred upon the HSRC the power and
duty to review, evaluate, and approve or disapprove comprehensive land use and development plans and zoning
ordinances of LGUs - was issued only on February 7, 1981. The exercise by HSRC of such power could not be
applied retroactively to this case without impairing vested rights of EMRASON. EMRASON disputes as well the
absolute necessity of submitting Ordinance No. 29-A to the NPC for approval. Based on the language of Section 3
of the Local Autonomy Act of 1959, which used the word "may," review by the NPC of the local planning and
zoning ordinances was merely permissive. EMRASON additionally posits that Ordinance No. 1 of the
Municipality of Dasmariñas simply required approval by the NPC of the final plat or plan, map, or chart of the
subdivision, and not of the rcclassification and/or conversion by the Municipality of the subject property from
agricultural to residential.  As for Administrative Order No. 152 dated December 16, 1968, it was directed to and
should have been complied with by the city and municipal boards and councils. Thus, EMRASON should not be
made to suffer for the non-compliance by the Municipal Council of Dasmariñas with said administrative order.
EMRASON likewise reasons that since the subject property was already reclassified as residential with the mere
approval of Ordinance No. 29-A by the Municipality of Dasmariñas, then EMRASON did not have to
immediately undertake actual development of the subject property. Reclassification and/or conversion of a parcel
of land are different from the implementation of the conversion.
EMRASOK is resolute in its stance that the Court of Appeals correctly applied the Natalia Realty case to the
present case since both have similar facts; the only difference being that the former involves a presidential fiat
while the latter concerns a legislative fiat.
EMRASON denies that the Buklod members are farmer-tenants of the subject property. The subject property has
no farmer-tenants because, as the Court of Appeals observed, the property is unirrigated and not devoted to any
agricultural activity. The subject property was placed under the CARP only to accommodate the farmer-tenants of
the NDC property who were displaced by the NDC-Marubeni Industrial Project. Moreover, the Buklod members
are still undergoing a screening process before the DAR-Region IV, and are yet to be declared as qualified farmer-
beneficiaries of the subject property. Hence, Buklod members tailed to establish they already have vested right
over the subject property.
EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may be recalled that Buklod
intervened in CA-G.R. SP No. 40950 just before the Court of Appeals rendered judgment in said case. When the
appellate court promulgated its Decision on March 26, 1997 favoring EMRASON, Buklod filed a Motion for
Reconsideration of said judgment, to which EMRASON, in turn, filed a Comment and Opposition. In its Reply to
the aforementioned Comment and Opposition of EMRASON, Buklod raised new factual matters, specifically,
that: (1) EMRASON has not even subdivided the title to the subject property 27 years after its purported
reclassification/conversion; (2) EMRASON never obtained a development permit nor mayor's permit to operate a
business in Dasmarinas; and (3) the farmer-tenants represented by Buklod have continuously cultivated the subject
property. There was no cogent or valid reason for the Court oi' Appeals to allow Buklod to present evidence to
substantiate the foregoing allegations. The DAR Region IV Hearing Officer already conducted extensive hearings
during which the farmers were duly represented. Likewise, Buklod raises for the first time in its Petition before
this Court the argument that the Tenants Emancipation Decree prescribes a procedure for conversion which
EMRASON failed to comply with.
Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of preliminary injunction in CA-G.R.
SP No. 40950. Section 55 of the CARL is inapplicable to the case at bar because said provision only prohibits the
issuance by a court of a TRO or writ of preliminary injunction "against the PARC or any of its duly authorized or
designated agencies." As the Court of Appeals declared, the PARC is a policy-formulating and coordinating body.
There is no indication whatsoever that the DAR Secretary was acting herein as an agent of the PARC. The DAR
Secretary issued the orders of acquisition for the subject property in the exercise of his quasi-judicial powers as
department head.
The Court, after consideration of the issues and arguments in the Petitions at bar, affirms the Court of Appeals and
rules in favor of EMRASON.
CARP  coverage limited to agricultural land
Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage of the CARP, to wit:
SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation
No. 131 and Executive Order No. 229, including other lands of the public domain suitable for
agriculture: Provided, That landholdings of landowners with a total area of five (5) hectares and below shall not be
covered for acquisition and distribution to qualified beneficiaries.
More specifically, the following lands are covered by the CARP:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act
until Congress, taking into account ecological, developmental and equity considerations, shall have determined by  adopt zoning and subdivision ordinances or regulations" for the municipality. Clearly, the law docs not restrict
law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress in the preceding
paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or
that can be raised thereon.
A comprehensive inventory system in consonance with the national land use plan shall be instituted by the
Department of Agrarian Reform (DAR), in accordance with the Local Government Code, for the purpose of
properly identifying and classifying farmlands within one (1) year from effectivity of this /Vet. without prejudice
to the implementation of the land acquisition and distribution." (Emphases supplied.)
Section 3(c), Chapter I of the CARL further narrows down the definition of agricultural land that is subject to
CARP to "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest,
residential, commercial or industrial land."
The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject property should have already
been reclassified as residential prior to said date.
The Local Autonomy Act of 1959
The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991, provided;
SEC. 3. Additional powers of provincial boards, municipal boards or city councils and municipal and regularly
organized municipal district councils. - x x x
xxxx
Power to adopt zoning and planning ordinances. — Any provision of law to the contrary notwithstanding,
Municipal Boards or City Councils in cities, and Municipal Councils in municipalities are hereby authorized
to adopt zoning and subdivision ordinances or regulations for their respective cities and municipalities subject
to the approval of the City Mayor or Municipal Mayor, as the case may be. Cities and municipalities may,
however, consult the National Planning Commission on matters pertaining to planning and zoning. (Emphases
supplied.)
Pursuant to the foregoing provision, the Municipal Council of Dasmariñas approved Ordinance No. 1 on July
13, 1971, which laid down the general subdivision regulations for the municipality; and Resolution No. 29-
A on July 9, 1972, which approved the application for subdivision of the subject property.
The Court observes that the OP, the Court of Appeals, and even the parties themselves referred to Resolution No.
29-A as an ordinance. Although it may not be its official designation, calling Resolution No. 29-A as Ordinance
No. 29-A is not completely inaccurate. In the Ortigas & Co. case, the Court found it immaterial that the then
Municipal Council of Mandaluyong declared certain lots as part of the commercial and industrial zone through a
resolution, rather than an ordinance, because:
Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers a Municipal Council "to
the exercise of the power through an ordinance. Therefore, granting that Resolution No. 27 is not an ordinance,
it certainly is a regulatory measure within the intendment or ambit of the word "regulation" under the
provision. As a matter oi' fact the same section declares that the power exists "(A)ny provision of law to the
contrary notwithstanding x x x." (Emphases supplied.)
Zoning and reclassification
Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for non-agricultural uses prior
to June 15, 1988 shall no longer be considered agricultural land subject to CARP. The Court is now faced with the
question of whether Resolution No. 29-A of the Municipality of Dasmariñas dated July 9, 1972, which approved
the subdivision of the subject property for residential purposes, had also reclassified the same from agricultural to
residential.
Zoning classification is an exercise by the local government of police power, not the power of eminent domain. A
zoning ordinance is defined as a local city or municipal legislation which logically arranges, prescribes, defines,
and apportions a given political subdivision into specific land uses as present and future projection of needs.
The Court gave a more extensive explanation of zoning in Pampanga Bus Company, Inc. v. Municipality of
Tarlac, thus:
The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal Council is authorized to
adopt. McQuillin in his treaties on Municipal Corporations (Volume 8, 3rd ed.) says:
Zoning is governmental regulation of the uses of land and buildings according to districts or zones. It is
comprehensive where it is governed by a single plan for the entire municipality and prevails throughout the
municipality in accordance with that plan. It is partial or limited where it is applicable only to a certain part of the
municipality or to certain uses. Fire limits, height districts and building regulations are forms of partial or limited
zoning or use regulation that are antecedents of modern comprehensive zoning, (pp. 11-12.)
The term "zoning," ordinarily used with the connotation of comprehensive or general zoning, refers to
governmental regulation of the uses of land and buildings according to districts or zones. This regulation must and
does utilize classification of uses within districts as well as classification of districts, inasmuch as it manifestly is
impossible to deal specifically with each of the innumerable uses made of land and buildings.  Accordingly,
(zoning has been defined as the confining of certain classes of buildings and uses to certain localities, areas,
districts or zones.) It has been stated that zoning is the regulation by districts of building development and uses of
property, and that the term "zoning" is not only capable of this definition but has acquired a technical and artificial
meaning in accordance therewith. (Zoning is the separation of the municipality into districts and the regulation of
buildings and structures within the districts so created, in accordance with their construction, and nature and extent
of their use. It is a dedication of districts delimited to particular uses designed to subserve the general welfare.)
Numerous other definitions of zoning more or less in accordance with these have been given in the cases, (pp. 27-
28.)
According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a tract or parcel of land into
two or more lots, sites or other divisions for the purpose, whether immediate or future, o[f| a sale or building
development. It includes resubdivision, and when appropriate to the context, relates to the process of subdividing
as to the land of territory subdivided." Subdivision ordinances or regulations such as Resolution No. 29-A, in
relation to Ordinance No. 1, constitute partial or limited zoning, for they are applicable to a specific property in
the city or municipality to be devoted for a certain use.

Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported delegation by the National
Legislature of the power to reclassify - is immaterial to the instant cases.  Said provision reads:
SEC. 9. For the purpose of their administration and disposition, the lands of the public domain alienable or open to
disposition shall be classified, according to the use or purposes to which such lands are destined, as follows:
(a)    Agricultural;
(b)    Residential,  commercial,  industrial,  or  for  similar productive purposes;
(c)    Educational, charitable, or other similar purposes; and
(d)    Reservations for townsites and for public and quasi-public uses.
The President, upon recommendation by the Secretary of Agriculture and Natural Resources, shall from time to
time make the classifications provided for in this section, and may, at any time and in a similar manner, transfer
lands from one class to another. (Emphasis supplied.)
The power delegated to the President under the aforequoted provision of the Public Land Act is limited to the
classification of lands of the public domain that are alienable or open to disposition. It finds no application in
the present cases for the simple reason that the subject property involved herein is no longer part of the public
domain. The subject property is already privately owned and accordingly covered by certificates of title.
The concept that concerns this Court in the instant cases is the reclassification of agricultural lands. In Alarcon v.
Court of Appeals, the Court had the occasion to define and distinguish reclassification from conversion as follows:
Conversion is the act of changing the current use of a piece of agricultural land into some other use as approved by
the Department of Agrarian Reform. Reclassification, on the other hand, is the act of specifying how agricultural
lands shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in the land
use plan, subject to the requirements and procedure for land use conversion, x x x. (Italics supplied.)
Reclassification also includes the reversion of non-agricultural  lands to agricultural use.
Under the present Local Government Code, it is clear that the authority to reclassify agricultural lands primarily
resides in the sanggunian of the city or municipality.  Said provision reads in full:
Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an ordinance passed by the
sanggunian after conducting public hearing for the purpose, authorize the reclassification of agricultural
lands and provide for the manner of their utilization or disposition in the following cases: (X) 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: Provided, That such reclassification shall be
limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance:
(1)    For highly urbanized and independent component cities, fifteen percent (15%);
(2)    For component cities  and first to the third  class municipalities, ten percent (10%); and
(3)    For fourth to sixth class municipalities, five percent (5%): Provided, further,  That  agricultural lands  an ordinance should already be understood to include approval of the reclassification of the land, covered by said
distributed  to agrarian  reform  beneficiaries pursuant  to  Republic  Act Numbered Sixty-six hundred fifty-seven
(R.A. No. 6657), otherwise known as "The Comprehensive Agrarian Reform Law", shall not be affected by the
said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said
Act.
(b)    The President may, when public interest so requires and upon recommendation of  the National Economic
and Development Authority, authorize a city or municipality to reclassify lands in excess of the limits set in the
next preceding paragraph.
(c)    The local government units shall, in conformity with existing laws, continue to prepare their respective
comprehensive land use plans enacted through zoning ordinances which  shall be  the primary and dominant
bases for the future use of land resources: Provided, That  the requirements for food production, human
settlements, and industrial expansion shall be taken into consideration in the preparation of such plans.
(d)    When  approval by a national agency is required for reclassification, such approval shall not be unreasonably
withheld. Failure to act on a proper and complete application for reclassification within three (3) months from
receipt of the same shall be deemed as approval thereof.
(e)    Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions
of R.A. No. 6657. (Emphases supplied.)
Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was silent on the authority to
reclassify agricultural lands. What the earlier statute expressly granted to city and municipal boards and councils,
under Section 3 thereof, was the power to adopt zoning and subdivision ordinances and regulations.
DAR and Buklod insist that zoning is merely the regulation of land use based on the existing character of the
property and the structures thereon; and that zoning is a lesser power compared to reclassification so that the
delegation of the former to the local government should not be deemed to include the latter.
Such arguments are easily refuted by reference to the definitions of zoning and reclassification earlier presented
herein, which support a more extensive concept of zoning than that which DAR and BUKLOD assert.
By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define, and apportion the land within
its political jurisdiction into specific uses based not only on the present, but also on the future projection of
needs. To limit zoning to the existing character of the property and the structures thereon would completely negate
the power of the local legislature to plan land use in its city or municipality. Under such circumstance, zoning
would involve no planning at all, only the rubber-stamping by the local legislature of the current use of the land.
Moreover, according to the definition of reclassification, the specified non-agricultural use of the land must be
embodied in a land use plan, and the land use plan is enacted through a zoning ordinance. Thus, zoning and
planning  ordinances  take  precedence  over reclassification.  The reclassification of land use is dependent on the
zoning and land use plan, not the other way around.
It may, therefore, be reasonably presumed that when city and municipal boards and councils approved an
ordinance delineating an area or district in their cities or municipalities as residential, commercial, or industrial
zone, pursuant to the power granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the
same time, reclassifying any agricultural lands within the zone for non-agri cultural use; hence, ensuring the
implementation of and compliance with their zoning ordinances.  The logic and practicality behind such a
presumption is more evident when considering the approval by local legislative bodies of subdivision ordinances
and regulations. The approval by city and municipal boards and councils of an application for subdivision through
application, from agricultural to the intended non-agricultural use. Otherwise, the approval of the subdivision
application would serve no practical effect; for as long as the property covered by the application remains
classified as agricultural, it could not be subdivided and developed for non-agricultural use.
A liberal interpretation of the zoning power of city and municipal boards and councils, as to include the power to
accordingly reclassify the lands within the zones, would be in accord with the avowed legislative intent behind the
Local Autonomy Act of 1959, which was to increase the autonomy of local governments. Section 12 of the Local
Autonomy Act of 1959 itself laid down rules for interpretation of the said statute:
SEC. 12. Rules for the interpretation of the Local Autonomy Act. -
1.    Implied power of a province, a city or municipality shall be liberally construed in its favor. Any fair and
reasonable doubt as to the existence of the power should be interpreted in favor of the local government and it
shall be presumed to exist.
2.   The general welfare clause shall be liberally interpreted in case of doubt so as to give more power to local
governments in promoting the economic condition, social welfare and material progress of the people in the
community.
3.   Vested rights existing at the time of the promulgation of this law arising out of a contract between a province,
city or municipality on one hand and a third party on the other, should be governed by the original terms and
provisions of the same, and in no case would this act infringe existing rights.
Moreover, the regulation by local legislatures of land use in their respective territorial jurisdiction through zoning
and reclassification is an exercise of police power. In Binay v. Domingo,32] the Court recognized that police
power need not always be expressly delegated, it may also be inferred:
The police power is a governmental function, an inherent attribute of sovereignty, which was born with civilized
government. It is founded largely on the maxims, "Sic utere tuo et alienum non laedas" and "Salus populi est
suprema lex" Its fundamental purpose is securing the general welfare, comfort and convenience of the people.
Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of Agusan del Norte, 163
SCRA 182). Before a municipal corporation may exercise such power, there must be a valid delegation of such
power by the legislature which is the repository of the inherent powers of the State. A valid delegation of police
power may arise from express delegation, or be inferred from the mere fact of the creation of the municipal
corporation; and as a general rule, municipal corporations may exercise police powers within the fair intent
and purpose of their creation which are reasonably proper to give effect to the powers expressly granted,
and statutes conferring powers on public corporations have been construed as empowering them to do the
things essential to the enjoyment of life and desirable for the safety of the people. (62 C.J.S., p. 277). The so-
called inferred police powers of such corporations are as much delegated powers as arc those conferred in express
terms, the inference of their delegation growing out of the fact of the creation of the municipal corporation and the
additional fact that the corporation can only fully accomplish the objects of its creation by exercising such powers.
(Crawfordsville vs. Braden, 28 N.E. 849). Furthermore, municipal corporations, as governmental agencies,
must have such measures of the power as are necessary to enable them to perform their governmental
functions. The power is a continuing one, founded on public necessity. (62 C.J.S. p. 273) Thus, not only does the
State effectuate its purposes through the exercise of the police power but the municipality does also. (U.S. v.
Salaveria, 39 Phil. 102).
Municipal governments exercise this power under the general welfare clause: pursuant thereto they are clothed
with authority to "enact such ordinances and issue such regulations as may be necessary to carry out and discharge
the responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health,
safety, comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and
general welfare of the municipality and the inhabitants thereof, and insure the protection of property therein."
(Sections 91, 149, 177 and 208, BP 337). And under Section 7 of BP 337, "every local government unit shall
exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary and
proper for governance such as to promote health and safety, enhance prosperity, improve morals, and maintain
peace and order in the local government unit, and preserve the comfort and convenience of the inhabitants
therein."
Police power is the power to prescribe regulations to promote the health, morals, peace, education, good order or
safety and general welfare of the people. It is the most essential, insistent, and illimitable of powers. In a sense it is
the greatest and most powerful attribute of the government. It is elastic and must be responsive to various social
conditions. (Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends the security of social order, the life and
health of the citizen, the comfort of an existence in a thickly populated community, the enjoyment of private and
social life, and the beneficial use of property, and it has been said to be the very foundation on which our social
system rests. (16 C.J.S., p. 896) However, it is not confined within narrow circumstances of precedents resting on
past conditions; it must follow the legal progress of a democratic way of life. (Sangalang, el al. vs. IAC, supra).
xxxx
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an exact definition but has
been, purposely, veiled in general terms to underscore its all-comprehensiveness. Its scope, over-expanding to
meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the greatest benefits.
The police power of a municipal corporation is broad, and has been said to be commensurate with, but not to
exceed, the duty to provide for the real needs of the people in their health, safely, comfort, and convenience as
consistently as may be with private rights. It extends to all the great public needs, and, in a broad sense includes all
legislation and almost every function of the municipal government. It covers a wide scope of subjects, and, while
it is especially occupied with whatever affects the peace, security, health, morals, and general welfare of the
community, it is not limited thereto, but is broadened to deal with conditions which exists so as to bring out of
them the greatest welfare of the people by promoting public convenience or general prosperity, and to everything
worthwhile for the preservation of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is
deemed inadvisable to attempt to frame any definition which shall absolutely indicate the limits of police
power. (Emphases supplied.)
Based on the preceding discussion, it cannot be said that the power to reclassify agricultural land was first
delegated to the city and municipal legislative bodies under Section 26 of the Local Government Code of 1991.
Said provision only articulates a power of local legislatures, which, previously, had only been implied or inferred.
Compliance with other requirements or conditions 
Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972, immediately effected the
zoning and reclassifying of the subject property for residential use. It need not comply with any of the
requirements or conditions which DAR and Buklod are insisting upon.
DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by the NPC, in violation of the
line in Section 3 of the Local Autonomy Act of 1959, stating that "[c]ities and municipalities may, however,
consult the National Planning Commission on matters pertaining to planning and zoning." Consideration must be
given, however, to the use of the word "may" in the said sentence. Where the provision reads "may," this word
shows that it is not mandatory but discretionary. It is an auxiliary verb indicating liberty, opportunity, permission
and possibility. The use of the word "may" in a statute denotes that it is directory in nature and generally
permissive only. The "plain meaning rule" or verba legis in statutory construction is thus applicable in this case.
Where the words of a statute are clear, plain, and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation. Since consultation with the NPC was merely discretionary, then there
were only two mandatory requirements for a valid zoning or subdivision ordinance or regulation under Section 3
of the Local Autonomy Act of 1959, namely, that (1) the ordinance or regulation be adopted by the city or
municipal board or council; and (2) it be approved by the city or municipal mayor, both of which were complied
with by Resolution No. 29-A.
Section 16(a) of Ordinance No. 1 of the Municipality of Dasmariñas likewise mentions the NPC, to wit:
a. Final plat of subdivision - As essential requirements before a subdivision is accepted for verification by the
Bureau of Lands, the final plat of the scheme of the subdivision must comply with the provision of this
ordinance. Application for plat approval shall be submitted to the Municipal Mayor and shall be forwarded
to the National Planning Commission thru the Highway District Engineer for comment and/or
recommendations, before action is taken by the Municipal Council. The final approval of the plat shall be
made by the Municipal Mayor upon recommendation of the Municipal Council by means of a resolution.
(Emphasis supplied.)
The aforementioned provision of Ordinance No. 1 refers to the final plat of the subdivision. The term plat
includes "plat, plan, plot or replot." It must be distinguished from the application for subdivision.
The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A actually contains two
resolutions. The first reads:
Resolved, As it is hereby Resolved to approve the application for subdivision containing an area of Three
Hundred Seventy-Two Hectares (372) situated in barrio Bocal and Langkaan, named as Travellers Life Homes.
(Efriphasis supplied.)
It is manifest, even from just a plain reading of said resolution, that the application for subdivision covering the
subject property was categorically and unconditionally approved by the Municipality of Dasmariñas.  As a
consequence of such approval, the subject property is immediately deemed zoned and reclassified as residential.
Meanwhile, the second resolution in Resolution No. 29-A states:
Resolved, that this municipal ordinance regarding subdivision regulations existing in this municipality shall be
strictly followed by the subdivision. (Emphases supplied.)
Significantly, this second resolution already refers to a "subdivision," supporting the immediately executory nature
of the First resolution.  The municipal ordinance which the subdivision must follow is Ordinance No. 1, the
general subdivision regulations of the Municipality of Dasmariñas. Most provisions of Ordinance No. 1 laid down
the minimum standards for the streets, roadways, sidewalks, intersections, lots and blocks, and other
improvements in the subdivision, with which the final plat must comply or conform. Irrefragably, the review of
the final plat of the subdivision calls for a certain level of technical expertise; hence, the directive to the Municipal
Mayor to refer the final plat to the NPC, through the Highway District Engineer, for comments and
recommendation, before the same is approved by the Municipal Council, then the Mayor.
In relation to the preceding paragraph, Administrative Order No. 152 dated December 16, 1968 required city and
municipal boards and councils to submit proposed subdivision ordinances and plans or forward approved
subdivision ordinances to the NPC. The OP imposed such a requirement because "it has come to the attention of
[the] Office that the minimum standards of such ordinances regarding design, servicing and streets, and open
spaces for parks and other recreational purposes are not being complied with[.]" Review by the NPC of the
proposed subdivision plan was for the purpose of determining "if it conforms with the subdivision ordinance."
It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance No. 152 contained the same
directive: that the final plat of the subdivision be reviewed by the NPC to determine its conformity with the
minimum standards set in the subdivision ordinance of the municipality. A closer scrutiny will reveal that Section
16(a) of Ordinance No. 1 and Administrative Order No. 152 related to the duties and responsibilities of local
government and NPC officials as regards the final plat of the subdivision. There is no evidence to establish that the
concerned public officers herein did not follow the review process for the final plat as provided in Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 before approving the same. Under Section 3(m), Rule 131 of
the Rules of Court, there is a presumption that official duty has been regularly performed. Thus, in the absence of
evidence to the contrary, there is a presumption that public officers performed their official duties regularly and
legally and in compliance with applicable laws, in good faith, and in the exercise of sound judgment. And - just as
the Court of Appeals observed - even if it is established that the accountable public officials failed to comply with
their duties and responsibilities under Section 16(a) of Ordinance No. 1 and Administrative Order No. 152, it
would be contrary to the fundamental precepts of fair play to make EMRASON bear the consequences of such
non-compliance.
Although the two resolutions in Resolution No. 29-A may be related to the same subdivision, they are independent
and separate. Non-compliance with the second resolution may result in the delay or discontinuance of subdivision
development, or even the imposition of the penalties provided in Ordinance No. 1, but not the annulment or
reversal of the first resolution and its consequences.
The Court again agrees with the Court of Appeals that Resolution No. 29-A need not be subjected to review and
approval by the HSRC/HLURB. Resolution No. 29-A was approved by the Municipality of Dasmariñas on July 9,
1972, at which time, there was even no HSRC/HLURB to speak of.
The earliest predecessor of the HSRC, the Task Force on Human Settlements, was created through Executive
Order No. 419 more than a year later on September 19, 1973. And even then, the Task Force had no power to
review and approve zoning and subdivision ordinances and regulations.
It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that local governments were
required to submit their existing land use plans, zoning ordinances, enforcement systems, and procedures to the
Ministry of Human Settlements for review and ratification.
The HSRC was eventually established on February 7, 1981. Section 5(b) of the HSRC Charter43 contained the
explicit mandate for the HSRC to:
b. Review, evaluate and approve or disapprove comprehensive land use development plans and zoning
ordinances of local government; and the zoning component of civil works and infrastructure projects of national,
regional and local governments; subdivisions, condominiums or estate development projects including industrial
estates, of both the public and private sectors and urban renewal plans, programs and projects: Provided, that the
land use Development Plans and Zoning Ordinances of Local Governments herein subject to review, evaluation
and approval of the commission shall respect the classification of public lands for forest purposes as certified by
the Ministry of Natural Resources: Provided, further, that the classification of specific alienable and disposable
lands by the Bureau of Lands shall be in accordance with the relevant zoning ordinance of: Local government
where it exists; and provided, finally, that in cities and municipalities where there are as yet no zoning ordinances,
the Bureau of Lands may dispose of specific alienable and disposable lands in accordance with its own
classification scheme subject to the condition that the classification of these lands may be subsequently change by
the local governments in accordance with their particular zoning ordinances which may be promulgated later.
(Emphases supplied.)

Neither the Ministry of Human Settlements nor the HSRC, however, could have exercised its power of review
retroactively absent an express provision to that effect in Letter of Instructions No.  729 or the HSRC Charter,
respectively.  A sound cannon of statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by the express terms oi' the statute
or by necessary implication. Article 4 of the Civil Code provides that: "Laws shall have no retroactive effect,
unless the contrary is provided." Hence, in order that a law may have retroactive effect, it is necessary that an
express provision to this effect be made in the law, otherwise nothing should be understood which is not embodied
in the law. Furthermore, it must be borne in mind that a law is a rule established to guide our actions without no
binding effect until it is enacted, wherefore, it has no application to past times but only to future time, and that is
why it is said that the law looks to the future only and has no retroactive effect unless the legislator may have
formally given that effect to some legal provisions.
Subsequent zoning ordinances
Still by the authority vested upon it by Section 3 of the Local Autonomy Act, the Sangguniang Bayan of
Dasmariñas subsequently enacted a Comprehensive Zoning Ordinance, ratified by the HLURB under Board
Resolution No. 42-A-3 dated February 11, 1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas). Upon
the request of the DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical Coordinator, issued a
certification dated September 10, 1992 stating that per the 1981 Comprehensive Zoning Ordinance of Dasmariñas,
the subject property was within the agricultural zone. Does this mean that the subject property reverted from
residential to agricultural classification?
The Court answers in the negative. While the subject property may be physically located within an agricultural
zone under the 1981 Comprehensive Zoning Ordinance of Dasmariñas, said property retained its residential
classification.
According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning Ordinance of Dasmariñas:
"AH other ordinances, rules or regulations in conflict with the provision of this Ordinance are hereby repealed:
Provided, that rights that have vested before the effectivity of this Ordinance shall not be impaired."
In Ayog v. Cusi, Jr., the Court expounded on vested right and its protection:
That vested right has to be respected. It could not be abrogated by the new Constitution. Section 2, Article XIII of
the 1935 Constitution allows private corporations to purchase public agricultural lands not exceeding one thousand
and twenty-four hectares. Petitioners' prohibition action is barred by the doctrine of vested rights in constitutional
law.
"All right is vested when the right to enjoyment has become the property of some particular person or persons as a
present interest" (16 C.J.S. 1173). It is "the privilege to enjoy property legally vested, to enforce contracts, and
enjoy the rights of property conferred by the existing law" (12 C.J.S. 955, Note 46, No. 6) or "some right or
interest in property which has become fixed and established and is no longer open to doubt or controversy"
(Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. "A state may not impair vested rights by
legislative enactment, by the enactment or by the subsequent repeal of a municipal ordinance, or by a
change in the constitution of the State, except in a legitimate exercise of the police power" (16 C.J.S. 1177-
78).
It has been observed that, generally, the term "vested right" expresses the concept of present fixed interest, which
in right reason and natural justice should be protected against arbitrary State action, or an innately just and
imperative right which an enlightened free society, sensitive to inherent and irrefragable individual rights, cannot
deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd
587).47 (Emphasis supplied.)
It is true that protection of vested rights is not absolute and must yield to the exercise of police power:
A law enacted in the exercise of police power to regulate or govern certain activities or transactions could be given
retroactive effect and may reasonably impair vested rights or contracts. Police power legislation is applicable not
only to future contracts, but equally to Ihose already in existence. Non-impairment of contracts or vested rights
clauses will have to yield to the superior and legitimate exercise by the State of police power to promote the
health, morals, peace, education, good order, safety, and general welfare of the people, x x x.
Nonetheless, the Sangguniang Bayan of Dasmariñas in this case, in its exercise of police power through the
enactment of the 1981 Comprehensive Zoning Ordinance, itself abided by the general rule and included in the very
same ordinance an express commitment to honor rights that had already vested under previous ordinances, rules,
and regulations. EMRASON acquired the vested right to use and develop the subject property as a residential
subdivision on July 9, 1972 with the approval of Resolution No. 29-A by the Municipality of Dasmarinas. Such
right cannot be impaired by the subsequent enactment of the 1981 Comprehensive Zoning Ordinance of
Dasmarinas, in which the subject property was included in an agricultural zone. Hence, the Municipal Mayor of
Dasmariflas had been continuously and consistently recognizing the subject property as a residential subdivision.
Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the Boundaries of Industrial and
Residential Land Use Plan in the Municipalities of Imus and Parts of Dasmariflas, Carmona, Gen. Mariano
Alvarez, Gen. Trias, Silang, Tanza, Naic, Rosario, and Trece Martires City, Province o[ Cavite, approved by
the Sangguniang Panlalawigan of Cavite on March 25, 1988. The Sangguniang Panlalawigan determined that
"the lands extending from the said designated industrial areas would have greater economic value for residential
and institutional uses, and would serve the interest and welfare for the greatest good of the greatest number of
people."50 Resolution No. 105, approved by the HLURB in 1990, partly reads:
Tracts of land in the Municipality of Carmona from the People's Technology Complex to parts of the Municipality
of Silang, parts of the Municipalities of Dasmariñas, General Trias, Trece Martires City, Municipalities of
Tanza and Naic forming the strip of land traversed by the Puerto Azul Road extending two kilometers more or less
from each side of the road which are hereby declared as industrial-residential-institutional mix. (Emphases
supplied.)
There is no question that the subject property is located within the afore-described area.  And even though
Resolution No. 105 has no direct bearing on the classification of the subject property prior to the CARL - it taking
effect only in 1990 after being approved by the HLURB - it is a confirmation that at present, the subject property
and its surrounding areas are deemed by the Province of Cavite better suited and prioritized for industrial and
residential development, than agricultural purposes.
CARP exemption
The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by the Municipality of
Dasmarinas, the subject property had been reclassified from agricultural to residential. The tax declarations
covering the subject property, classifying the same as agricultural, cannot prevail over Resolution No. 29-A. The
following pronouncements of the Court in the Patalinghug case are of particular relevance herein:
The reversal by the Court of Appeals of the trial court's decision was based on Tepoot's building being declared
for taxation purposes as residential. It is our considered view, however, that a tax declaration is not conclusive of
(he nature of the property for zoning purposes.  A property may have been declared by its owner as residential "x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified
for real estate taxation purposes but it may well be within a commercial zone. A discrepancy may thus exist in the as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor
determination of the nature of property for real estate taxation purposes vis-a-vis the determination of a property agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use
for zoning purposes. Regulatory Board (BLURB) and its preceding competent authorities prior to 15 June 1988 for residential,
commercial or industrial use."
xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. It
The trial court's determination that Mr. Tepoot's building is commercial and, therefore, Sec. 8 is inapplicable, is
was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of
strengthened by the fact that the Sangguniang Panlungsod has declared the questioned area as commercial or C-2.
CARL.
Consequently, even if Tepoot's building was declared for taxation purposes as residential, once a local
government has reclassified an area as commercial, that determination for zoning purposes must prevail.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted in an
While the commercial character of the questioned vicinity has been declared thru the ordinance, private
Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
respondents have failed to present convincing arguments to substantiate their claim that Cabaguio Avenue, where
part, having been reserved for townsite purposes "to be developed as human settlements by the proper land and
the funeral parlor was constructed, was still a residential zone. Unquestionably, the operation of a funeral parlor
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No.
constitutes a "commercial purpose," as gleaned from Ordinance No. 363. (Emphases supplied.)
6657." Not being deemed "agricultural lands," they are outside the coverage of CARL. (Emphases supplied.)

Since the subject property had been reclassified as residential land by virtue of Resolution No. 29-A dated July 9,
That the land in the Natalia Realty case was reclassified as residential by a presidential proclamation, while the
1972, it is no longer agricultural land by the time the CARL took effect on June 15, 1988 and is, therefore, exempt
subject property herein was reclassified as residential by a local ordinance, will not preclude the application of the
from the CARP.
ruling of this Court in the former to the latter. The operative fact that places a parcel of land beyond the ambit of
the CARL is its valid reclassification from agricultural to non-agricultural prior to the effectivity of the CARL on
This is not the first time that the Court made such a ruling.
June 15, 1988, not by how or whose authority it was reclassified.
In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18, 1979 set aside land in the
In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals (Pasong Bayabas case), the Court made the
Municipalities of Antipolo, San Mateo, and Montalban, Province of Rizal, as townsite areas. The properties owned
following findings:
by Natalia Realty, Inc. (Natalia properties) were situated within the areas proclaimed as townsite reservation.  The
developer of the Natalia properties was granted the necessary clearances and permits by the PJSRC for the
development of a subdivision in the area.  Thus, the Natalia properties later became the Antipolo Hills Under Section 3(c) of Rep. Acl No. 6657. agricultural lands refer to lands devoted to agriculture as conferred in
Subdivision.  Following the effectivity of the CARL on June 15, 1988, the DAR placed the undeveloped portions the said law and not classified as industrial land. Agricultural lands are only those lands which are arable or
of the Antipolo Hills Subdivision under the CARP. For having done so, the Court found that the DAR committed suitable lands that do not include commercial, industrial and residential lands. Section 4(e) of the law provides that
grave abuse of discretion, thus: it covers all private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that
can be raised thereon. Rep. Act No. 6657 took effect only on June 15, 1988. But long before the law took effect,
the property subject of the suit had already been reclassified and converted from agricultural to non-
Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial arrangement and commodity
agricultural or residential land by the following administrative agencies: (a) the Bureau of Lands, when it
produced, all public and private agricultural lands." As to what constitutes "agricultural land," it is referred to as
approved the subdivision plan of the property consisting of 728 subdivision lots; (b) the National Planning
"land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential,
Commission which approved the subdivision plan subdivided by the LDC/CAI for the development of the
commercial or industrial land." The deliberations of the Constitutional Commission confirm this limitation.
property into a low-cost housing project; (c) the Municipal Council of Carmona, Cavite, when it approved
"Agricultural lands" arc only those lands which are "arable and suitable agricultural lands" and "do not include
Kapasiyahang Blg. 30 on May 30, 1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979,
commercial, industrial and residential lands."
when he granted the application of the respondent for the development of the Hakone Housing Project with an
area of 35.80 hectares upon the recommendation of the Agrarian Reform Team, Regional Director of Region IV,
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
which found, after verification and investigation, that the property was not covered by P.D. No. 27, it being
language be considered as "agricultural lands." These lots were intended for residential use. They ceased to be
untenanted and not devoted to the production of palay/or corn and that the property was suitable for conversion to
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the
residential subdivision: (e) by the Ministry of Local Government and Community Development; (f) the Human
areas in question continue to be developed as a low-cost housing subdivision, albeit at a snail's pace, x x x The
Settlements Regulatory Commission which issued a location clearance, development permit, Certificate of
enormity of the resources needed for developing a subdivision may have delayed its completion but this
Inspection and License to Sell to the LDC/private respondent: and, (g) the Housing and Land Use Regulatory
does not detract from the fact that these lands are still residential lands and outside the ambit of the CARL.
Board which also issued to the respondent CAI/LDC a license to sell the subdivision lots." (Emphases supplied.)
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the eifectivity of CARL by government agencies other than Noticeably, there were several government agencies which reclassified and converted the property from
respondent OAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to agricultural to non-agricultural in the Pasong Bayabas case.  The CARL though does not specify which specific
Non-Agricultural Uses, DAR itself defined ''agricultural land" thus - government agency should have done the reclassification.  To be exempt from CARP, all that is needed is one
valid reclassification of the land from agricultural to non-agricultural by a duly authorized government agency
before June 15, 1988, when the CARL took effect.  All similar actions as regards the land subsequently rendered
by other government agencies shall merely serve as confirmation of the reclassification. The Court actually
recognized in the Pasong Bayabas case the power of the local government to convert or reclassify lands through a
zoning ordinance:
Section 3 of Rep. Act No. 2264, amending the Local Government Code, specifically empowers municipal
and/or city councils to adopt zoning and subdivision ordinances or regulations in consultation with the
National Planning Commission. A zoning ordinance prescribes, defines, and apportions a given political
subdivision into specific land uses as present and future projection of needs. The power of the local government
to convert or reclassify lands to residential lands to non-agricultural lands rcclassificd is not subject to the
approval of the Department of Agrarian Reform. Section 65 of Rep. Act No. 6657 relied upon by the petitioner
applies only to applications by the landlord or the beneficiary for the conversion of lands previously placed under
the agrarian reform law after the lapse of five years from its award. It docs not apply to agricultural lands already
converted as residential lands prior to the passage of Rep. Act No. 6657. (Emphases supplied.)
At the very beginning of Junto v. Garilao, the  Court already declared that:
Lands already classified and identified as commercial, industrial or residential before June 15, 1988 - the date of
effectivity of the Comprehensive Agrarian Reform Law (CARL) - are outside the coverage of this law. Therefore,
they no longer need any conversion clearance from the Department of Agrarian Reform (DAR).
The Court then proceeded to uphold the authority of the City Council of Bacolod to reclassify as residential a
parcel of land through Resolution No. 5153-A, series of 1976. The reclassification was later affirmed by the
HSRC. Resultantly, the Court sustained the DAR Order dated September 13, 1994, exempting the same parcel of
land from CARP Coverage.
The writ of preliminary injunction
Any objection of Buklod against the issuance by the Court of Appeals of a writ of preliminary injunction,
enjoining then DAR Secretary Garilao and Deputy Executive Secretary Corona from implementing the OP
Decision of February 7, 1996 and Resolution of May 14, 1996 during the pendency of CA-G.R. SP No. 40950,
had been rendered moot and academic when the appellate court already promulgated its Decision in said case on
March 26, 1997 which made the injunction permanent. As the Court held in Kho v. Court of Appeals:
We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. The
dispositive portion of said decision held that the petitioner does not have trademark rights on the name and
container of the beauty cream product. The said decision on the merits of the trial court rendered the issuance of
the writ of a preliminary injunction moot and academic notwithstanding the fact that the same has been appealed
in the Court of Appeals. This is supported by our ruling in La Vista Association, Inc. v. Court of Appeals, to wit:
Considering that preliminary injunction is a provisional remedy which may be granted at any time after the
commencement of the action and before judgment when it is established that the plaintiff is entitled to the relief
demanded and only when his complaint shows facts entitling such reliefs xxx and it appearing that the trial court
had already granted the issuance of a final injunction in favor of petitioner in its decision rendered after trial on
the merits xxx the Court resolved to Dismiss the instant petition having been rendered moot and academic. An
injunction issued by the trial court after it has already made a clear pronouncement as to the plaintiffs right
thereto, that is, after the same issue has been decided on the merits, the trial court having appreciated the
evidence presented, is proper, notwithstanding the fact that the decision rendered is not yet final xxx. Being an
ancillary remedy, the proceedings for preliminary injunction cannot stand separately or proceed independently of
the decision rendered on the merit of the main case for injunction. The merit of the main case having been already
determined in favor of the applicant, the preliminary determination of its non-existence ceases to have any force
and effect, (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any question on the preliminary
injunctive order moot and academic despite the fact that the decision granting a final injunction is pending appeal.
Conversely, a decision denying the applicant-plaintiffs right to a final injunction, although appealed, renders moot
and academic any objection to the prior dissolution of a writ of preliminary injunction.
Issues belatedly raised
Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court of Appeals, by filing a
Manifestation and Omnibus Motion in which it argued only two points: (1) the writ of preliminary injunction be
immediately dissolved for having been issued in violation of Section 55 of the CARL; and (2) that the Petition for
Review of EMRASON be dismissed for being the wrong remedy.
It was only after the Court of Appeals rendered its Decision dated March 26, 1997 unfavorable to both DAR and
Buklod did Buklod raise in its Motion for Reconsideration several other issues, both factual and legal, directly
assailing the exemption of the subject property from the CARP.  The Court of Appeals refused to consider said
issues because they were raised by Buklod for the first time in its Motion for Reconsideration.
Buklod persistently raises the same issues before this Court, and the Court, once more, refuses to take cognizance
of the same.
As a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal for its
consideration. Higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised
during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal.
The issues were first raised only in the Motion for Reconsideration of the Decision of the Court of Appeals, thus,
it is as if they were never duly raised in that court at all. "Hence, this Court cannot now, for the first time on
appeal, entertain these issues, for to do so would plainly violate the basic rule of fair play, justice and due process.
The Court reiterates and emphasizes the well-settled rule that an issue raised for the first time on appeal and not
raised timely in the proceedings in the lower court is barred by estoppel.
Indeed, there are exceptions to the aforecited rule that no question may be raised for the first time on appeal.
Though not raised below, the issue of lack of jurisdiction over the subject matter may be considered by the
reviewing court, as it may be raised at any stage. The said court may also consider an issue not properly raised
during trial when there is plain error.  Likewise, it may entertain such arguments when there are jurisprudential
developments affecting the issues, or when the issues raised present a matter of public policy. Buklod, however,
did not allege, much less argue, that its case falls under any of these exceptions.
Nonetheless, even when duly considered by this Court, the issues belatedly raised by Buklod are without merit.
Contrary to the contention of Buklod, there is no necessity to carry out the conversion of the subject property to a
subdivision within one year, at the risk of said property reverting to agricultural classification.
Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963, provided:
SEC. 36. Possession of Landholding; Exceptions.— Notwithstanding any agreement as to the period or future
surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding
except when his dispossession has been authorized by the Court in a judgment that is final and executory if after
due hearing it is shown that:
(1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding or
will convert the landholding, if suitably located, into residential, factory, hospital or school site or other useful
non-agricultural purposes: Provided, That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five years rental on his landholding in addition to his rights under Sections twenty-five and thirty-
four, except when the land owned and leased by the agricultural lessor is not more than five hectares, in which
case instead of disturbance compensation the lessee may be entitled to an advanced notice of at least one
agricultural year before ejectment proceedings are filed against him: Provided, further, That should the
landholder not cultivate the land himself for three years or fail to substantially carry out such conversion
within one year after the dispossession of the tenant, it shall be presumed that he acted in bad faith and the
tenant shall have the right to demand possession of the land and recover damages for any loss incurred by
him because of said dispossessions; xxx. (Emphasis supplied.)
On September 10, 1971, the Agricultural Land Reform Code was amended and it came to be known as the Code
of Agrarian Reforms. After its amendment, Section 36(1) stated:
(1) The landholding is declared by the department head upon recommendation of the National Planning
Commission to be suited for residential, commercial, industrial or some other urban purposes: Provided, That the
agricultural lessee shall be entitled to disturbance compensation equivalent to five times the average of the gross
harvests on his landholding during the last five preceding calendar years.
At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas on July 9, 1972, the Code of
Agrarian Reforms was already in effect. The amended Section 36(3) thereof no longer contained the one-year time
frame within which conversion should be carried out.
More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if the land in question was
subject of an agricultural leasehold, a fact that was not established in the proceedings below. It may do well for the
Buklod members to remember that they filed their present Petition to seek award of ownership over portions of the
subject property as qualified farmer-beneficiaries under the CARP; and not payment of disturbance compensation
as agricultural lessees under the Code of Agrarian Reforms. The insistence by Buklod on the requisites under
Section 36(1) of the Agricultural Land Reform Code/Code of Agrarian Reforms only serves to muddle the issues
rather than support its cause.
Buklod likewise invokes the vested rights of its members under the Agricultural Land Reform Code/Code of
Agrarian Reforms and the Tenants Emancipation Decree, which preceded the CARP.  Yet, for the Buklod
members to be entitled to any of the rights and benefits under the said laws, it is incumbent upon them to prove
first that they qualify as agricultural lessees or farm workers of the subject property, as defined in Section
166(2) and (15) of the Code of Agrarian Reforms; and/or they are tenant-farmers of private agricultural lands
primarily devoted to rice and corn, under a system of share-crop or lease tenancy, and are members of a duly
recognized farmer's cooperative, as required by the Tenants Emancipation Decree. None of these determinative
facts were established by Buklod.
Buklod counters that it precisely moved for a hearing before the Court of Appeals so that it could present evidence
to prove such facts, but the appellate court erroneously denied its motion.
The Court finds that the Court of Appeals did not err on this matter.
In the recent case of Office of the Ombudsman v. Sison, the Court expounded on the rules on intervention:
It is fundamental that the allowance or disallowance of a Motion 10 Intervene is addressed to the sound discretion
of the court. The permissive tenor of the rules shows the intention to give to the court the full measure of
discretion in permitting or disallowing the intervention, thus:
SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer in litigation, or in the success
of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be
allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be
fully protected in a separate proceeding.
SECTION 2. Time to intervene. - The motion to intervene may be filed al any time before rendition of
judgment by the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on
the original parties. (Emphasis supplied.)
Simply, intervention is a procedure by which third persons, not originally parties to the suit but claiming an
interest in the subject matter, come into the case in order to protect their right or interpose their claim. Its main
purpose is to settle in one action and by a single judgment all conflicting claims of, or the whole controversy
among, the persons involved.
To warrant intervention under Rule 19 of the Rules of Court, two requisites must concur: (1) the movant has a
legal interest in the matter in litigation; and (2) intervention must not unduly delay or prejudice the adjudication of
the rights of the parties, nor should the claim of the intervenor be capable of being properly decided in a separate
proceeding. The interest,' which entitles one to intervene, must involve the matter in litigation and of such direct
and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the
judgment.
To apply the rules strictly, the motion of Buklod to intervene was filed too late. According to Section 2, Rule 19 of
the Rules of Civil Procedure, "a motion to intervene may be filed at any time before rendition of judgment by the
trial court." Judgment was already rendered in DARAB Case No. IV-Ca-0084-92 (the petition of EMRASON to
nullify the notices of acquisition over the subject property), not only by the DAR Hearing Officer, who originally
heard the case, but also the DAR Secretary, and then the OP, on appeal.
Buklod only sought to intervene when the case was already before the Court of Appeals. The appellate court, in
the exercise of its discretion, still allowed the intervention of Buklod in CA-G.R. SP No. 40950 only because it
was "not being in any way prejudicial to the interest of the original parties, nor will such intervention change the
factual legal complexion of the case." The intervention of Buklod challenged only the remedy availed by
EMRASON and the propriety of the preliminary injunction issued by the Court of Appeals, which were directly
and adequately addressed by the appellate court in its Decision dated March 26, 1997.
The factual matters raised by Buklod in its Motion for Reconsideration of the March 26, 1997 Decision of the
Court of Appeals, and which it sought to prove by evidence, inevitably changes "the factual legal complexion of
the case."  The allegations of Buklod that its members are tenant-farmers of the subject property who acquired
vested rights under previous agrarian reform laws, go against the findings of the DAR Region IV Hearing Officer,
adopted by the DAR Secretary, the OP, and Court of Appeals, that the subject property was being acquired under
the CARP for distribution to the tenant-farmers of the neighboring NDC property, after a determination that the
latter property was insufficient for the needs of both the NDC-Marubeni industrial estate and the tenant-farmers.
Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the Court of Appeals, being
within the primary jurisdiction of the DAR. As Section 50 of the CARL, as amended, reads:
SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary jurisdiction to determine
and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).
In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB Case No. IV-CA-0261,
entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by Edgardo Mendoza, et at. v. E.M. Ramos and Sons,
Inc., et al., was pending at about the same time as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON
for nullification of the notices of acquisition covering the subject property. These two cases were initially
consolidated before the DARAB Region IV. The DARAB Region IV eventually dismissed DARAB Case No. IV-
Ca-0084-92 and referred the same to the DAR Region IV Office, which had jurisdiction over the case. Records
failed to reveal the outcome of DARAB Case No. IV-CA-0261,
On a final note, this Court has stressed more than once that social justice - or any justice for that matter - is for the
deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable
doubt, the Court is called upon to tilt the balance in favor of the poor to whom the Constitution fittingly extends its
sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or
to reject the rich simply because they are rich, for justice must always be served for poor and rich alike, according
to the mandate of the law. Vigilance over the rights of the landowners is equally important because social justice
cannot be invoked to trample on the rights of property owners, who under our Constitution and laws are also
entitled to protection.
WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa Lupaing Ramos, Inc. in G.R.
No. 131481 and the Department of Agrarian Reform in G.R. No. 131624 are hereby DENIED. The Decision
dated March 26, 1997 and the Resolution dated November 24, 1997 of the Court of Appeals in CA-G.R. SP No.
40950 are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr., J., (Acting Chairperson), Del Castillo, Perez, and Mendoza, JJ., concur.
[G.R. No. 100091. October 22, 1992.]
CENTRAL MINDANAO UNIVERSITY REPRESENTED BY ITS PRESIDENT DR.
LEONARDO A. CHUA, Petitioner, v. THE DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD, THE COURT OF APPEALS AND ALVIN OBRIQUE,
REPRESENTING BUKIDNON FREE FARMERS AGRICULTURAL LABORERS
ORGANIZATION (BUFFALO), Respondents.
Abundio L. Okit for Petitioner.
Cabanlas, Resma & Cabanlas Law Office for respondent Obrique, Et. Al.
SYLLABUS
1. LABOR LAW; TENANCY; TENANTS’ CLAIM OF BEING LANDLESS REQUIRES PROOFS. —
Complainants claim that they are landless peasants. This allegation requires proof and should not be accepted as
factually true. Obrique is not a landless peasant. The facts showed he was a Physics Instructor at CMU holding a
very responsible position and was separated from the service on account of certain irregularities he committed
while Assistant Director of the Agri-Business Project of cultivating lowland rice. Others may, at the moment, own
no land in Bukidnon but they may not necessarily be so destitute in their places of origin. No proof whatsoever
appears in the record to show that they are landless peasants.
2. ID.; ID.; SQUATTERS CANNOT CLAIM RIGHT UNDER CARP. — After the expiration of their privilege to
occupy and cultivate the land of the CMU, their continued stay was unauthorized and their settlement on the
CMU’s land was without legal authority. A person entering upon lands of another, not claiming in good faith the
right to do so by virtue of any title of his own, or by virtue of some agreement with the owner or with one whom
he believes holds title to the land, is a squatter. Squatters cannot enter the land of another surreptitiously or by
stealth, and under the umbrella of the CARP, claim rights to said property as landless peasants. Under Section 73
of R.A. 6657, persons guilty of committing prohibited acts of forcible entry or illegal detainer do not qualify as
beneficiaries and may not avail themselves of the rights and benefits of agrarian reform. Any such person who
knowingly and wilfully violates the above provision of the Act shall be punished with imprisonment or fine at the
discretion of the Court.
3. ID.; ID.; NEITHER DARAB OR COURT OF APPEALS HAS RIGHT TO PASS UPON NEEDS OF
SCHOOL. — As to the determination of when and what lands are found to be necessary for use by the CMU, the
school is in the best position to resolve and answer the question and pass upon the problem of its needs in relation
to its avowed objectives for which the land was given to it by the State. Neither the DARAB nor the Court of
Appeals has the right to substitute its judgment or discretion on this matter, unless the evidentiary facts are so
manifest as to show that the CMU has no real need for the land.
4. ID.; ID.; DARAB; JURISDICTION; LIMITED ONLY TO MATTERS INVOLVING IMPLEMENTATION
OF CARP. — Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the DARAB
is limited only to matters involving the implementation of the CARP. More specifically, it is restricted to agrarian
cases and controversies involving lands falling within the coverage of the aforementioned program. It does not
include those which are actually, directly and exclusively used and found to be necessary for, among such
purposes, school sites and campuses for setting up experimental farm stations, research and pilot production
centers, etc. Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it
involving a portion of the CMU’s titled school site, as the portion of the CMU land reservation ordered segregated
is actually, directly and exclusively used and found by the school to be necessary for its purposes.
5. ID.; ID.; ID.; AGRARIAN DISPUTE, DEFINED. — There is no doubt that the DARAB has jurisdiction to try
and decide any agrarian dispute in the implementation of the CARP. An agrarian dispute is defined by the same
law as any controversy relating to tenurial rights whether leasehold, tenancy stewardship or otherwise over lands
devoted to agriculture.
6. ID.; ID.; ID.; SEGREGATING SOME HECTARES OF LAND WITHOUT FINDING THAT
COMPLAINANTS ARE TENANTS, GRAVE ABUSE OF DISCRETION. — Where the quasi-judicial body
finds that the complainants/petitioners are not entitled to the rights they are demanding, it is an erroneous
interpretation of authority for that quasi-judicial body to order private property to be awarded to future
beneficiaries. The order segregating 400 hectares of the CMU land was issued on a finding that the complainants
are not entitled as beneficiaries, and on an erroneous assumption that the CMU land which is excluded or
exempted under the law is subject to the coverage of the CARP. Going beyond what was asked by the
complainants who were not entitled to the relief prayed for, constitutes a grave abuse of discretion because it
implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
7. ID.; ID.; NEITHER EDUCATION OF THE YOUTH OR AGRARIAN REFORM NEED GIVE WAY TO THE
OTHER. — The education of the youth and agrarian reform are admittedly among the highest priorities in the
government socio-economic programs. In this case, neither need give way to the other. Certainly, there must still
be vast tracts of agricultural land in Mindanao outside the CMU land reservation which can be made available to
landless peasants, assuming the claimants here, or some of them, can qualify as CARP beneficiaries. To our mind,
the taking of the CMU land which had been segregated for educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority and jurisdiction granted by law to the DARAB.
DECISION
CAMPOS, JR., J.:
This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to nullify the proceedings and
decision of the Department of Agrarian Reform Adjudication Board (DARAB for brevity) dated September 4,
1989 and to set aside the decision * of the Court of Appeals dated August 20, 1990, affirming the decision of the
DARAB which ordered the segregation of 400 hectares of suitable, compact and contiguous portions of the
Central Mindanao University (CMU for brevity) land and their inclusion in the Comprehensive Agrarian Reform
Program (CARP for brevity) for distribution to qualified beneficiaries, on the ground of lack of jurisdiction.
This case originated in a complaint filed by complainants calling themselves as the Bukidnon Free Farmers and
Agricultural Laborers Organization (BUFFALO for brevity) under the leadership of Alvin Obrique and Luis
Hermoso against the CMU, before the Department of Agrarian Reform for Declaration of Status as Tenants, under
the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an agricultural education institution
owned and run by the estate located in the town of Musuan, Bukidnon province. It started as a farm school at
Marilag, Bukidnon, in early 1910, in response to the public demand for an agricultural school in Mindanao. It
expanded into the Bukidnon National Agricultural High School and was transferred to its new site in Managok
near Malaybalay, the provincial capital of Bukidnon.
In the early 1960’s, it was converted into a college with campus at Musuan, until it became what is now known as
the CMU, but still primarily an agricultural university. From its beginning, the school was the answer to the crying
need for training people in order to develop the agricultural potential of the island of Mindanao. Those who
planned and established the school had a vision as to the future development of that part of the Philippines. On
January 16, 1958 the President of the Republic of the Philippines, the late Carlos P. Garcia, "upon the
recommendation of the Secretary of Agriculture and Natural Resources, and pursuant to the provisions of Section
53, of Commonwealth Act No. 141, as amended", issued Proclamation No. 467, withdrawing from sale or
settlement and reserving for the Mindanao Agricultural College, a site which would be the future campus of what
is now the CMU. A total land area comprising 3,080 hectares was surveyed and registered and titled in the name
of the petitioner under OCT Nos. 160, 161 and 162.
In the course of the cadastral hearing of the school’s petition for registration of the aforementioned grant of
agricultural land, several tribes belonging to cultural communities, opposed the petition claiming ownership of
certain ancestral lands forming part of the tribal reservations. Some of the claims were granted so that what was
titled to the present petitioner school was reduced from 3,401 hectares to 3,080 hectares.
In the early 1960’s, the student population of the school was less than 3,000. By 1988, the student population had
expanded to some 13,000 students, so that the school community has an academic population (student, faculty and
non-academic staff) of almost 15,000. To cope with the increase in its enrollment, it has expanded and improved
its education facilities partly from government appropriation and partly by self-help measures.
True to the concept of a land grant college, the school embarked on self-help measures to carry out its educational
objectives, train its students, and maintain various activities which he government appropriation could not
adequately support or sustain. In 1984, the CMU approved Resolution No. 160, adopting a livelihood program
called "Kilusang Sariling Sikap Program" under which the land resources of the University were leased to its
faculty and employees. This arrangement was covered by a written contract. Under this program, the faculty and
staff combine themselves to groups of five members each, and the CMU provided technical know-how, practical
training and all kinds of assistance, to enable each group to cultivate 4 to 5 hectares of land for the lowland rice
projects. Each group pays the CMU a service fee and also a land use participant’s fee. The contract prohibits
participants and their hired workers to establish houses or live in the project area and to use the cultivated land as a
collateral for any kind of loan. It was expressly stipulated that no landlord-tenant relationship existed between the
CMU and the faculty and/or employees. This particular program was conceived as a multi-disciplinary applied
research extension and productivity program to utilize available land, train people in modern agricultural
technology and at the same time give the faculty and staff opportunity within the confines of the CMU reservation
to earn additional income to augment their salaries. The location of the CMU at Musuan, Bukidnon, which is quite
a distance from the nearest town, was the proper setting for the adoption of such a program. Among the
participants in this program were Alvin Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao, Danilo Vasquez,
Aronio Pelayo and other complainants. Obrique was a Physics Instructor at the CMU while the others were
employees in the lowland rice project. The other complainants who were not members of the faculty or non-
academic staff of the CMU, were hired workers or laborers of the participants in this program. When petitioner Dr.
Leonardo Chua became President of the CMU in July 1986, he discontinued the agri-business project for the
production of rice, corn and sugar cane known as Agri-Business Management and Training Project, due to losses
incurred while carrying on the said project. Some CMU personnel, among whom were the complainants, were
laid-off when this project was discontinued. As Assistant Director of this agri-business project, Obrique was found
guilty of mishandling the CMU funds and was separated from service by virtue of Executive Order No. 17, the re-
organization law of the CMU.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project called CMU-Income
Enhancement Program (CMU-IEP) to develop unutilized land resources, mobilize and promote the spirit of self-
reliance, provide socio-economic and technical training in actual field project implementation and augment the
income of the faculty and the staff.
Under the terms of a 3-party Memorandum of Agreement among the CMU, the CMU-Integrated Development
Foundation (CMU-IDF) and groups of "seldas" of 5 CMU employees, the CMU would provide the use of 4 to 5
hectares of land to a selda for one (1) calendar year. The CMU-IDF would provide researchers and specialists to
assist in the preparation of project proposals and to monitor and analyze project implementation. The selda in turn
would pay to the CMU P100 as service fee and P1,000 per hectare as participant’s land rental fee. In addition, 400
kilograms of the produce per year would be turned over or donated to the CMU-IDF. The participants agreed not
to allow their hired laborers or members of their family to establish any house or live within the vicinity of the
project area and not to use the allocated lot as collateral for a loan. It was expressly provided that no tenant-
landlord relationship would exist as a result of the Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff members who were still employed
with the CMU and was not made available to former workers or employees. In the middle of 1987, to cushion the
impart of the discontinuance of the rice, corn and sugar cane project on the lives of its former workers, the CMU
allowed them to participate in the CMU-IEP as special participants.
Under the terms of a contract called Addendum To Existing Memorandum of Agreement Concerning Participation
To The CMU-Income Enhancement Program, a former employee would be grouped with an existing selda of his
choice and provided one (1) hectare for a lowland rice project for one (1) calendar year. He would pay the land
rental participant’s fee of P1,000.00 per hectare but on a charge-to-crop basis. He would also be subject to the
same prohibitions as those imposed on the CMU employees. It was also expressly provided that no tenant-landlord
relationship would exist as a result of the Agreement.
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those whose contracts were not
renewed were served with notices to vacate.
The non-renewal of the contracts, the discontinuance of the rice, corn and sugar can project, the loss of jobs due to
termination or separation from the service and the alleged harassment by school authorities, all contributed to, and
precipitated the filing of, the complaint.
On the basis of the above facts, the DARAB found that the private respondents were not tenants and cannot
therefore be beneficiaries under the CARP. At the same time, the DARAB ordered the segregation of 400 hectares
of suitable, compact and contiguous portions of the CMU land and their inclusion in the CARP for distribution to
qualified beneficiaries.
The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the Court of Appeals,
raised the following issues:
1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for Declaration of Status of
Tenants and coverage of land under the CARP.
2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse of discretion amounting
to lack of jurisdiction in dismissing the Petition for Review on Certiorari and affirming the decision of DARAB.
In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants Obrique, et. al. claimed
that they are tenants of the CMU and/or landless peasants claiming/occupying a part of portion of the CMU
situated at Sinalayan, Valencia, Bukidnon and Musuan, Bukidnon, consisting of about 1,200 hectares. We agree
with the DARAB’s finding that Obrique, et. al. are not tenants. Under the terms of the written agreement signed by
Obrique, et. al., pursuant to the livelihood program called "Kilusang Sariling Sikap Program", it was expressly
stipulated that no landlord-tenant relationship existed between the CMU and the faculty and staff (participants in
the project). The CMU did not receive any share from the harvest/fruits of the land tilled by the participants. What
the CMU collected was a nominal service fee and land use participant’s fee in consideration of all the kinds of
assistance given to the participants by the CMU. Again, the agreement signed by the participants under the CMU-
IEP clearly stipulated that no landlord-tenant relationship existed, and that the participants are not share croppers
nor lessees, and the CMU did not share in the produce of the participants’ labor.
In the same paragraph of their complaint, complainants claim that they are landless peasants. This allegation
requires proof and should not be accepted as factually true. Obrique is not a landless peasant. The facts showed he
was a Physics Instructor at CMU holding a very responsible position and was separated from the service on
account of certain irregularities he committed while Assistant Director of the Agri-Business Project of cultivating
lowland rice. Others may, at the moment, own no land in Bukidnon but they may not necessarily be so destitute in
their places of origin. No proof whatsoever appears in the record to show that they are landless peasants.
The evidence on record establish without doubt that the complainants were originally authorized or given
permission to occupy certain areas of the CMU property for a definite purpose — to carry out certain university
projects as part of the CMU’s program of activities pursuant to its avowed purpose of giving training and
instruction in agricultural and other related technologies, using the land and other resources of the institution as
laboratory for these projects. Their entry into the land of the CMU was with the permission and written consent of
the owner, the CMU, for a limited period and for a specified purpose. After the expiration of their privilege to
occupy and cultivate the land of the CMU, their continued stay was unauthorized and their settlement on the
CMU’s land was without legal authority. A person entering upon lands of another, not claiming in good faith the
right to do so by virtue of any title of his own, or by virtue of some agreement with the owner or with one whom
he believes holds title to the land, is a squatter. Squatters cannot enter the land of another surreptitiously or by
stealth, and under the umbrella of the CARP, claim rights to said property as landless peasants. Under Section 73
of R.A. 6657, persons guilty of committing prohibited acts of forcible entry or illegal detainer do not qualify as
beneficiaries and may not avail themselves of the rights and benefits of agrarian reform. Any such person who
knowingly and wilfully violates the above provision of the Act shall be punished with imprisonment or fine at the
discretion of the Court.
In view of the above, the private respondents, not being tenants nor proven to be landless peasants, cannot qualify
as beneficiaries under the CARP.
The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals, segregating 400
hectares from the CMU land is primarily based on the alleged fact that the land subject hereof is "not directly,
actually and exclusively used for school sites, because the same was leased to Philippine Packing Corporation
(now Del Monte Philippines)" .
In support of this view, the Board held that the "respondent University failed to show that it is using actually,
really, truly and in fact, the questioned area to the exclusion of others, nor did it show that the same is directly
used without any intervening agency or person", and "there is no definite and concrete showing that the use of said
lands are essentially indispensable for educational purposes." The reliance by the respondents Board and Appellate
Tribunal on the technical or literal definition from Moreno’s Philippine Law Dictionary and Black’s Law
Dictionary, may give the ordinary reader a classroom meaning of the phrase "is actually directly and exclusively",
but in so doing they missed the true meaning of Section 10, R.A. 6657, as to what lands are exempted or excluded
from the coverage of the CARP.
The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, are
as follows:.
SECTION 4. Scope. — The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public an private agricultural lands as provided in Proclamation No.
131 and Executive Order No. 229 including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest for mineral lands to agricultural lands shall be undertaken after the approval of this Act
until Congress, taking into account ecological, developmental and equity considerations, shall have determined by
law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress in the preceding
paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that can
be raised thereon.
SECTION 10. Exemptions and Exclusions. — Lands actually, directly and exclusively used and found to be
necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and
mangroves, national defense, school sites and campuses including experimental farm stations operated by public
or private schools for educational purposes, seeds and seedlings research and pilot production centers, church sites
and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial grounds
and cemeteries, penal colonies and penal farms actually worked by the inmates, government and private research
and quarantine centers and all lands with eighteen percent (18%) slope and over, except those already developed
shall be exempt from the coverage of this Act. (Emphasis supplied).
The construction given by the DARAB to Section 10 restricts the land area of the CMU to its present needs or to a
land area presently, actively exploited and utilized by the university in carrying out its present education program
with its present student population and academic facility — overlooking the very significant factor of growth of
the university in the years to come. By the nature of the CMU, which is a school established to promote
agriculture and industry, the need for a vast tract of agricultural land for future programs of expansion is obvious.
At the outset, the CMU was conceived in the same manner as land grant colleges in America, a type of educational
institution which blazed the trail for the development of vast tracts of unexplored and undeveloped agricultural
lands in the Mid-West. What we now know as Michigan State University, Penn State University and Illinois State
University, started as small land grant colleges, with meager funding to support their ever increasing educational
programs. They were given extensive tracts of agricultural and forest lands to be developed to support their
numerous expanding activities in the fields of agricultural technology and scientific research. Funds for the
support of the educational programs of land grant colleges came from government appropriation, tuition and other
student fees, private endowments and gifts, and earnings from miscellaneous sources. It was in this same spirit that
President Garcia issued Proclamation No. 476, withdrawing from sale or settlement and reserving for the
Mindanao Agricultural College (forerunner of the CMU) a land reservation of 3,080 hectares as its future campus.
It was set up in Bukidnon, in the hinterlands of Mindanao, in order that it can have enough resources and wide
open spaces to grow as an agricultural educational institution, to develop and train future farmers of Mindanao and
help attract settlers to that part of the country.
In line with its avowed purpose as an agricultural and technical school, the University adopted a land utilization
program to develop and exploit its 3,080-hectares land reservation as follows:
Portion No. of Hectares Percentage
Livestock and Pasture 1,016.40 33
Upland Crops 616 20
Campus and Residential sites 462 15
Irrigated rice 400.40 13
Watershed and forest reservation 308 10
Fruits and Trees Crops 154 5
Agricultural Experimental stations 123.20 4 (3) It is private land registered and titled in the name of its lawful owner, the CMU;
3, 080.00 100%
The first land use plan of the CMU was prepared in 1975 and since then it has undergone several revisions in line
with changing economic conditions, national economic policies and financial limitations and availability of
resources. The CMU, through Resolution No. 160 S. 1984, pursuant to its development plan, adopted a
multidisciplinary applied research extension and productivity program called the "Kilusang Sariling Sikap Project"
(CMU-KSSP). The objectives of this program were:
1. Provided researchers who shall assist in (a) preparation of proposal; (b) monitor project implementation; and (c)
collect and analyze all data and information relevant to the processes and results of project implementation;
2. Provide the use of land within the University reservation for the purpose of establishing a lowland rice project
for the party of the Second Part for a period of one calendar year subject to discretionary renewal by the Party of
the First Part;
3. Provide practical training to the Party of the Second Part on the management and operation of their lowland
project upon request of Party of the Second Part; and
4. Provide technical assistance in the form of relevant livelihood project specialists who shall extend expertise on
scientific methods of crop production upon request by Party of the Second Part.
In return for the technical assistance extended by the CMU, the participants in a project pay a nominal amount as
service fee. The self-reliance program was an adjunct to the CMU’s lowland rice project. .
The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils.,
Inc.) was leased long before the CARP was passed. The agreement with the Philippine Packing
Corporation was not a lease but a Management and Development Agreement, a joint undertaking
where use by the Philippine Packing Corporation of the land was part of the CMU research program,
with the direct participation of faculty and students. Said contracts with the Philippine Packing
Corporation and others of a similar nature (like MM-Agraplex) were made prior to the enactment of
R.A. 6657 and were directly connected to the purpose and objectives of the CMU as an educational
institution. As soon as the objectives of the agreement for the joint use of the CMU land were achieved
as of June 1988, the CMU adopted a blue print for the exclusive use and utilization of said areas to
carry out its own research and agricultural experiments.
As to the determination of when and what lands are found to be necessary for use by the CMU, the
school is in the best position to resolve and answer the question and pass upon the problem of its needs
in relation to its avowed objectives for which the land was given to it by the State. Neither the DARAB
nor the Court of Appeals has the right to substitute its judgment or discretion on this matter, unless the
evidentiary facts are so manifest as to show that the CMU has no real need for the land.
It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the Court of
Appeals in its Decision dated August 20, 1990, is not covered by the CARP because:
(1) It is not alienable and disposable land of the public domain;
(2) The CMU land reservation is not in excess of specific limits as determined by Congress;
(4) It is exempt from coverage under Section 10 of R.A. 6657 because the lands are actually, directly
and exclusively used and found to be necessary for school site and campus, including experimental
farm stations for educational purposes, and for establishing seed and seedling research and pilot
production centers. (Emphasis).
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the DARAB is
limited only to matters involving the implementation of the CARP. More specifically, it is restricted to
agrarian cases and controversies involving lands falling within the coverage of the aforementioned
program. It does not include those which are actually, directly and exclusively used and found to be
necessary for, among such purposes, school sites and campuses for setting up experimental farm
stations, research and pilot production centers, etc.
Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it
involving a portion of the CMU’s titled school site, as the portion of the CMU land reservation ordered
segregated is actually, directly and exclusively used and found by the school to be necessary for its
purposes. The CMU has constantly raised the issue of the DARAB’s lack of jurisdiction and has
questioned the respondent’s authority to hear, try and adjudicate the case at bar. Despite the law and
the evidence on record tending to establish that the fact that the DARAB had no jurisdiction, it made
the adjudication now subject of review.

Whether the DARAB has the authority to order the segregation of a portion of a private property titled
in the name of its lawful owner, even if the claimant is not entitled as a beneficiary, is an issue we feel
we must resolve. The quasi-judicial powers of the DARAB are provided in Executive Order No. 129-
A, quoted hereunder in so far as pertinent to the issue at bar:chanrob1es virtual 1aw library
SECTION 13. Agrarian Reform Adjudication Board. — There is hereby created an Agrarian Reform
Adjudication Board under the Office of the Secretary . . . The Board shall assume the powers and
functions with respect to adjudication of agrarian reform cases under Executive Order 229 and this
Executive Order . . .
SECTION 17. Quasi Judicial Powers of the DAR. — The DAR is hereby vested with quasi-judicial
powers to determine and adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters including implementation of Agrarian Reform.
Section 50 of R.A. 6657 confers on the DAR quasi-judicial powers as follows:
The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform
matters and shall have original jurisdiction over all matters involving the implementation of agrarian
reform . . .
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A. 6657. There is no
doubt that the DARAB has jurisdiction to try and decide any agrarian dispute in the implementation of
the CARP. An agrarian dispute is defined by the same law as any controversy relating to tenurial rights
whether leasehold, tenancy stewardship or otherwise over lands devoted to agriculture.
In the case at bar, the DARAB found that the complainants are not share tenants or lease holders of the CMU, yet
it ordered the "segregation of a suitable compact and contiguous area of Four Hundred Hectares, more or less",
from the CMU land reservation, and directed the DAR Regional Director to implement its order of segregation.
Having found that the complainants in this agrarian dispute for Declaration of Tenancy Status are not entitled to
claim as beneficiaries of the CARP because they are not share tenants or leaseholders, its order for the segregation
of 400 hectares of the CMU land was without legal authority. We do not believe that the quasi-judicial function of
the DARAB carries with it greater authority than ordinary courts to make an award beyond what was demanded
by the complainants/petitioners, even in an agrarian dispute. Where the quasi-judicial body finds that the
complainants/petitioners are not entitled to the rights they are demanding, it is an erroneous interpretation of
authority for that quasi-judicial body to order private property to be awarded to future beneficiaries. The order
segregating 400 hectares of the CMU land was issued on a finding that the complainants are not entitled as
beneficiaries, and on an erroneous assumption that the CMU land which is excluded or exempted under the law is
subject to the coverage of the CARP. Going beyond what was asked by the complainants who were not entitled to
the relief prayed for, constitutes a grave abuse of discretion because it implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction.
The education of the youth and agrarian reform are admittedly among the highest priorities in the government
socio-economic programs. In this case, neither need give way to the other. Certainly, there must still be vast tracts
of agricultural land in Mindanao outside the CMU land reservation which can be made available to landless
peasants, assuming the claimants here, or some of them, can qualify as CARP beneficiaries. To our mind, the
taking of the CMU land which had been segregated for educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority and jurisdiction granted by law to the DARAB.
The decision in this case is of far-reaching significance as far as it concerns state colleges and universities whose
resources and research facilities may be gradually eroded by misconstruing the exemptions from the CARP. These
state colleges and universities are the main vehicles for our scientific and technological advancement in the field
of agriculture, so vital to the existence, growth and development of this country.
It is the opinion of this Court, in the light of the foregoing analysis and for the reasons indicated, that the evidence
is sufficient to sustain a finding of grave abuse of discretion by respondents Court of Appeals and DAR
Adjudication Board. We hereby declare the decision of the DARAB dated September 4, 1989 and the decision of
the Court of Appeals dated August 20, 1990, affirming the decision of the quasi-judicial body, as null and void
and hereby order that they be set aside, with costs against the private respondents.chanrobles law library
SO ORDERED.
Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero, Nocon
and Melo, JJ., concur.
Narvasa, C.J., is on official leave.
Bellosillo, J., took no part.
[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 Certiorari under Rule 45 of the Rules of Civil Procedure, seeking the
reversal of the Court of Appeals (CA) Amended Decision dated October 4, 2006 and its Resolution dated March
27, 2008.
The Facts
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and Exchange Commission on
January 8, 1960. 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.
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 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.
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.
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. 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. 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 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 Resolution 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, 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.
Petitioner filed a Motion for Reconsideration, 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.
Aggrieved, petitioner filed its Memorandum on Appeal before the Office of the President (OP).
The OP's Ruling
On February 4, 2000, the OP rendered a decision 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 resolution 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.
br>SO ORDERED.

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.
The Proceedings Before the CA and Its Rulings  maintained no livestock farm thereon.
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.
Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the CA - as the parties did not
inform the appellate court - then DAR Secretary Rene C. Villa (Secretary Villa) issued DAR Conversion Order
No. CON-0410-0016 (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 Espinas (Espinas group), the Pinugay Farmers, and the SAPLAG. The farmer-
groups all claimed that the CA should have accorded respect to the factual findings of the OP. Moreover, the
farmer-groups unanimously intimated that petitioner already converted and developed a portion of the property
into a leisure-residential-commercial estate known as the Palo Alto Leisure and Sports Complex (Palo Alto).
Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured Evidence pursuant to DAR
Administrative Order No. 9, Series of 1993 (Supplement) dated June 15, 2005, the Espinas group submitted the
following as evidence:
1) Conversion Order dated November 4, 2004, issued by Secretary Villa, converting portions of the property from
agricultural to residential and golf courses use, with a total area of 153.3049 hectares; thus, the Espinas group
prayed that the remaining 162.7373 hectares (subject property) be covered by the CARP;
2)  Letter dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer (MARO) Bismark M. Elma
(MARO Elma) and outgoing MARO Cesar C. Celi (MARO Celi) of Baras, Rizal, addressed to Provincial
Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q. Kagahastian, (MARO Report), informing the latter,
among others, that Palo Alto was already under development and the lots therein were being offered for sale; that
there were actual tillers on the subject property; that there were agricultural improvements thereon, including an
irrigation system and road projects funded by the Government; that there was no existing livestock farm on the
subject property; and that the same was not in the possession and/or control of petitioner; and
3)  Certification 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
Four months later, the Espinas group and the DAR filed their respective Manifestations. In its Manifestation dated
November 29, 2005, the DAR confirmed that the subject property was no longer devoted to cattle raising. Hence,
in its Resolution 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, 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.
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, wherein we declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift the exemption of the
subject property from the CARP, not on the basis of DAR A.O. No. 9, but on the strength of evidence such as the
MARO Report and Certification, and the Katunayan 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, 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.

Unperturbed, petitioner filed a Motion for Reconsideration. On January 8, 2007, MARO Elma, in compliance with
the Memorandum of DAR Regional Director Dominador B. Andres, tendered another Report 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 Report dated February 21,
2007, found that, per testimony of petitioner's caretaker, Rogelio Ludivices (Roger), 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. 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.
Finally, petitioner's motion for reconsideration was denied by the CA in its Resolution 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 50 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.
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.
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.
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.
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.
In its Reply 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, the
same is not without exception, such as this case. The CA, under Section 3, 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. Moreover, petitioner cannot validly claim that it was deprived of due process
because the CA afforded it all the opportunity to be heard. 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.
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." Similarly, in Department of Agrarian Reform v.
Uy, 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, 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.
Petitioner's admission that, since 2001, it leased another ranch for its own livestock is fatal to its cause. 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. 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.
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.
Carpio, (Chairperson), Peralta, Abad, and Villarama, Jr., JJ., concur.
[G.R. No. 112526. October 12, 2001.]
STA. ROSA REALTY DEVELOPMENT CORPORATION, Petitioner, v. COURT OF
APPEALS, JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P.
AYENDE, LETICIA P. BALAT, FILOMENA B. BATINO, ANICETO A. BURGOS, JAIME A.
BURGOS, FLORENCIA CANUBAS, LORETO A. CANUBAS, MAXIMO A. CANUBAS,
REYNALDO CARINGAL, QUIRINO C. CASALME, BENIGNO A. CRUZAT, ELINO A.
CRUZAT, GREGORIO F. CRUZAT, RUFINO C. CRUZAT, SERGIO CRUZAT, SEVERINO
F. CRUZAT, VICTORIA DE SAGUN, SEVERINO DE SAGUN, FELICISIMO A. GONZALES,
FRANCISCO A. GONZALES, GREGORIO GONZALES, LEODEGARIO N. GONZALES,
PASCUAL P. GONZALES, ROLANDO A. GONZALES, FRANCISCO A. JUANGCO,
GERVACIO A. JUANGCO, LOURDES U. LUNA, ANSELMO M. MANDANAS, CRISANTO
MANDANAS, EMILIO M. MANDANAS, GREGORIO A. MANDANAS, MARIO G.
MANDANAS, TEODORO MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO B.
MARQUEZ, ARMANDO P. MATIENZO, DANIEL D. MATIENZO, MAXIMINO
MATIENZO, PACENCIA P. MATIENZO, DOROTEA L. PANGANIBAN, JUANITO T.
PEREZ, MARIANITO T. PEREZ, SEVERO M. PEREZ, INOCENCIA S. PASQUIZA,
BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO PETATE, PABLO A. PLATON,
PRECILLO V. PLATON, AQUILINO B. SUBOL, CASIANO T. VILLA, DOMINGO VILLA,
JUAN T. VILLA, MARIO C. VILLA, NATIVIDAD A. VILLA, JACINTA S. ALVARADO,
RODOLFO ANGELES, DOMINGO A. CANUBAS, EDGARDO L. CASALME, QUIRINO DE
LEON, LEONILO M. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R. LANGUE,
QUINTILLANO LANGUE, REYNALDO LANGUE, ROMEO S. LANGUE, BONIFACIO
VILLA, ROGELIO AYENDE, ANTONIO B. FERNANDEZ, ZACARIAS HERRERA,
ZACARIAS HERRERA, REYNARIO U. LAZO, AGAPITO MATIENZO, DIONISIO F.
PETATE, LITO G. REYES, JOSE M. SUBOL, CELESTINO G. TOPI NO, ROSA C.
AMANTE, SOTERA CASALME, REMIGIO M. SILVERIO, THE SECRETARY OF
AGRARIAN REFORM, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, LAND BANK OF THE PHILIPPINES, REGISTER OF DEEDS OF LAGUNA,
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES REGIONAL
EXECUTIVE DIRECTOR FOR REGION IV, and REGIONAL AGRARIAN REFORM
OFFICER FOR REGION IV, Respondents.
DECISION
PARDO, J.:
The case before the Court is a petition for review on certiorari of the decision of the Court of Appeals affirming
the decision of the Department of Agrarian Reform Adjudication Board (hereafter, DARAB) ordering the
compulsory acquisition of petitioner’s property under the Comprehensive Agrarian Reform Program (CARP).
Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the registered owner of two parcels
of land, situated at Barangay Casile, Cabuyao, Laguna covered by TCT Nos. 81949 and 84891, with a total area of
254.6 hectares. According to petitioner, the parcels of land are watersheds, which provide clean potable water to
the Canlubang community, and that ninety (90) light industries are now located in the area.
Petitioner alleged that respondents usurped its rights over the property, thereby destroying the ecosystem.
Sometime in December 1985, respondents filed a civil case with the Regional Trial Court, Laguna, seeking an
easement of a right of way to and from Barangay Casile. By way of counterclaim, however, petitioner sought the
ejectment of private respondents.
In October 1986 to August 1987, petitioner filed with the Municipal Trial Court, Cabuyao, Laguna separate
complaints for forcible entry against respondents.
After the filing of the ejectment cases, respondents petitioned the Department of Agrarian Reform (DAR) for the
compulsory acquisition of the SRRDC property under the CARP.
On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao, Laguna issued a notice of
coverage to petitioner and invited its officials or representatives to a conference on August 18, 1989. During the
meeting, the following were present: representatives of petitioner, the Land Bank of the Philippines, PARCCOM,
PARO of Laguna, MARO of Laguna, the BARC Chairman of Barangay Casile and some potential farmer
beneficiaries, who are residents of Barangay Casile, Cabuyao, Laguna. It was the consensus and recommendation
of the assembly that the landholding of SRRDC be placed under compulsory acquisition.
On August 17, 1989, petitioner filed with the Municipal Agrarian Reform Office (MARO), Cabuyao, Laguna a
"Protest and Objection" to the compulsory acquisition of the property on the ground that the area was not
appropriate for agricultural purposes. The area was rugged in terrain with slopes of 18% and above and that the
occupants of the land were squatters, who were not entitled to any land as beneficiaries.
On August 29, 1989, the farmer beneficiaries together with the BARC chairman answered the protest and
objection stating that the slope of the land is not 18% but only 5-10% and that the land is suitable and
economically viable for agricultural purposes, as evidenced by the Certification of the Department of Agriculture,
municipality of Cabuyao, Laguna.
On September 8, 1989, MARO Belen dela Torre made a summary investigation report and forwarded the
Compulsory Acquisition Folder Indorsement (CAFI) to the Provincial Agrarian Reform Officer (hereafter,
PARO).
On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the compulsory acquisition to the
Secretary of Agrarian Reform.
On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land Acquisition and
Development, DAR forwarded two (2) Compulsory Acquisition Claim Folders covering the landholding of
SRRDC, covered by TCT Nos. T-81949 and T-84891 to the President, Land Bank of the Philippines for further
review and evaluation.
On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago sent two (2) notices of
acquisition to petitioner, stating that petitioner’s landholdings covered by TCT Nos. 81949 and 84891, containing
an area of 188.2858 and 58.5800 hectares, valued at P4,417,735.65 and P1,220,229.93, respectively, had been
placed under the Comprehensive Agrarian Reform Program.
On February 6, 1990, petitioner SRRDC in two letters separately addressed to Secretary Florencio B. Abad and
the Director, Bureau of Land Acquisition and Distribution, sent its formal protest, protesting not only the amount
of compensation offered by DAR for the property but also the two (2) notices of acquisition.
On March 17, 1990, Secretary Abad referred the case to the DARAB for summary proceedings to determine just
compensation under R. A. No. 6657, Section 16.
On March 23, 1990, the LBP returned the two (2) claim folders previously referred for review and evaluation to
the Director of BLAD mentioning its inability to value the SRRDC landholding due to some deficiencies.
On March 28, 1990, Executive Director Emmanuel S. Galvez wrote Land Bank President Deogracias Vistan to
forward the two (2) claim folders involving the property of SRRDC to the DARAB for it to conduct summary
proceedings to determine the just compensation for the land.
On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines stating that its property under the
aforesaid land titles were exempt from CARP coverage because they had been classified as watershed area and
were the subject of a pending petition for land conversion.
On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2) claim folders (CACF’s) to the
Executive Director of the DAR Adjudication Board for proper administrative valuation. Acting on the CACF’s, on
September 10, 1990, the Board promulgated a resolution asking the office of the Secretary of Agrarian Reform
(DAR) to first resolve two (2) issues before it proceeds with the summary land valuation proceedings.
The issues that need to be threshed out were as follows: (1) whether the subject parcels of land fall within the
coverage of the Compulsory Acquisition Program of the CARP; and (2) whether the petition for land conversion
of the parcels of land may be granted.
On December 7, 1990, the Office of the Secretary, DAR, through the Undersecretary for Operations (Assistant
Secretary for Luzon Operations) and the Regional Director of Region IV, submitted a report answering the two
issues raised. According to them, firstly, by virtue of the issuance of the notice of coverage on August 11, 1989,
and notice of acquisition on December 12, 1989, the property is covered under compulsory acquisition. Secondly,
Administrative Order No. 1, Series of 1990, Section IV D also supports the DAR position on the coverage of the
said property. During the consideration of the case by the Board, there was no pending petition for land conversion
specifically concerning the parcels of land in question.
On February 19, 1991, the Board sent a notice of hearing to all the parties interested, setting the hearing for the
administrative valuation of the subject parcels of land on March 6, 1991. However, on February 22, 1991, Atty.
Ma. Elena P. Hernandez-Cueva, counsel for SRRDC, wrote the Board requesting for its assistance in the
reconstruction of the records of the case because the records could not be found as her co-counsel, Atty. Ricardo
Blancaflor, who originally handled the case for SRRDC and had possession of all the records of the case was on
indefinite leave and could not be contacted. The Board granted counsel’s request and moved the hearing to April
4, 1991.
On March 18, 1991, SRRDC, submitted a petition to the Board for the latter to resolve SRRDC’s petition for
exemption from CARP coverage before any administrative valuation of their landholding could be had by the
Board.
On April 4, 1991, the initial DARAB hearing of the case was held and subsequently, different dates of hearing
were set without objection from counsel of SRRDC. During the April 15, 1991 hearing, the subdivision plan of
subject property at Casile, Cabuyao, Laguna was submitted and marked as Exhibit "5" for SRRDC. At the hearing
on April 23, 1991, the Land Bank asked for a period of one month to value the land in dispute.
At the hearing on April 23, 1991, certification from Deputy Zoning Administrator Generoso B. Opina was
presented. The certification issued on September 8, 1989, stated that the parcels of land subject of the case were
classified as "Industrial Park" per Sangguniang Bayan Resolution No. 45-89 dated March 29, 1989.
To avert any opportunity that the DARAB might distribute the lands to the farmer beneficiaries, on April 30, 1991,
petitioner filed a petition with DARAB to disqualify private respondents as beneficiaries. However, DARAB
refused to address the issue of beneficiaries.
In the meantime, on January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision, finding
that private respondents illegally entered the SRRDC property, and ordered them evicted.
On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum directing the Land Bank of the
Philippines to open a trust account in favor of SRRDC, for P5,637,965.55, as valuation for the SRRDC property.
On December 19, 1991, DARAB promulgated a decision, the decretal portion of which reads:
"WHEREFORE, based on the foregoing premises, the Board hereby orders:
"1. The dismissal for lack of merit of the protest against the compulsory coverage of the landholdings of Sta. Rosa
Realty Development Corporation (Transfer Certificates of Title Nos. 81949 and 84891 with an area of 254.766
hectares) in Barangay Casile, Municipality of Cabuyao, Province of Laguna under the Comprehensive Agrarian
Reform Program is hereby affirmed;
"2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty Development Corporation the amount of
Seven Million Eight Hundred Forty-One Thousand, Nine Hundred Ninety Seven Pesos and Sixty-Four centavos
(P7,841,997.64) for its landholdings covered by the two (2) Transfer Certificates of Title mentioned above. Should
there be a rejection of the payment tendered, to open, if none has yet been made, a trust account for said amount in
the name of Sta. Rosa Realty Development Corporation;
"3. The Register of Deeds of the Province of Laguna to cancel with dispatch Transfer Certificate of Title Nos.
84891 and 81949 and new one be issued in the name of the Republic of the Philippines, free from liens and
encumbrances;
"4. The Department of Environment and Natural Resources either through its Provincial Office in Laguna or the
Regional Office, Region IV, to conduct a final segregation survey on the lands covered by Transfer certificate of
Title Nos. 84891 and 81949 so the same can be transferred by the Register of Deeds to the name of the Republic
of the Philippines;
"5. The Regional Office of the Department of Agrarian Reform through its Municipal and Provincial Agrarian
Reform Office to take immediate possession on the said landholding after Title shall have been transferred to the
name of the Republic of the Philippines, and distribute the same to the immediate issuance of Emancipation
Patents to the farmer-beneficiaries as determined by the Municipal Agrarian Reform Office of Cabuyao, Laguna."
On January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision in Civil Case No. B-2333
ruling that respondents were builders in bad faith.
On February 6, 1992, petitioner filed with the Court of Appeals a petition for review of the DARAB decision. On
November 5, 1993, the Court of Appeals promulgated a decision affirming the decision of DARAB. The decretal
portion of the Court of Appeals decision reads:
"WHEREFORE, premises considered, the DARAB decision dated September 19, 1991 is AFFIRMED, without
prejudice to petitioner Sta. Rosa Realty Development Corporation ventilating its case with the Special Agrarian
Court on the issue of just compensation."
Hence, this petition.
On December 15, 1993, the Court issued a Resolution which reads:
"G.R. Nos. 112526 (Sta. Rosa Realty Development Corporation v. Court of Appeals, et. al.) — Considering the
compliance, dated December 13, 1993, filed by counsel for petitioner, with the resolution of December 8, 1993
which required petitioner to post a cash bond or surety bond in the amount of P1,500,000.00 Pesos before issuing
a temporary restraining order prayed for, manifesting that it has posted a CASH BOND in the same amount with
the Cashier of the Court as evidenced by the attached official receipt no. 315519, the Court resolved to ISSUE the
Temporary Retraining Order prayed for.
"The Court therefore, resolved to restrain: (a) the Department of Agrarian Reform Adjudication Board from
enforcing its decision dated December 19, 1991 in DARAB Case No. JC-R-IV-LAG- 0001, which was affirmed
by the Court of Appeals in a Decision dated November 5, 1993, and which ordered, among others, the Regional
Office of the Department of Agrarian Reform through its Municipal and Provincial Reform Office to take
immediate possession of the landholding in dispute after title shall have been transferred to the name of the
Republic of the Philippines and to distribute the same through the immediate issuance of Emancipation Patents to
the farmer-beneficiaries as determined by the Municipal Agrarian Officer of Cabuyao, Laguna, (b) The
Department of Agrarian Reform and/or the Department of Agrarian Reform Adjudication Board, and all persons
acting for and in their behalf and under their authority from entering the properties involved in this case and from
introducing permanent infrastructures thereon; and (c) the private respondents from further clearing the said
properties of their green cover by the cutting or burning of trees and other vegetation, effective today until further
orders from this Court."
The main issue raised is whether the property in question is covered by CARP despite the fact that the entire
property was formed part of a watershed area prior to the enactment of R.A. No. 6657.
Under Republic Act No. 6657, there are two modes of acquisition of private land: compulsory and voluntary. In
the case at bar, the Department of Agrarian Reform sought the compulsory acquisition of subject property under
R. A. No. 6657, Section 16, to wit:
"Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of private lands, the
following procedures shall be followed:
a.) After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire
the land to the owners thereof, by personal delivery or registered mail, and post the same in a conspicuous place in
the municipal building and barangay hall of the place where the property is located. Said notice shall contain the
offer of the DAR to pay corresponding value in accordance with the valuation set forth in Sections 17, 18, and
other pertinent provisions hereof.
b.) Within thirty (30) days from the date of the receipt of written notice by personal delivery or registered mail, the
landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer.
c.) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase price of the land
within thirty (30) days after he executes and delivers a deed of transfer in favor of the government and other
muniments of title.
d.) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to
determine the compensation for the land requiring the landowner, the LBP and other interested parties to submit
fifteen (15) days from receipt of the notice. After the expiration of the above period, the matter is deemed
submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision.
e.) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or no response from the
landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in
LBP bonds in accordance with this act, the DAR shall make immediate possession of the land and shall request the
proper Register of Deeds to issue Transfer Certificate of Titles (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.
f.) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final
determination of just compensation.
In compulsory acquisition of private lands, the landholding, the landowners and farmer beneficiaries must first be
identified. After identification, the DAR shall send a notice of acquisition to the landowner, by personal delivery
or registered mail, and post it in a conspicuous place in the municipal building and barangay hall of the place
where the property is located.
Within thirty (30) days from receipt of the notice of acquisition, the landowner, his administrator or representative
shall inform the DAR of his acceptance or rejection of the offer.
If the landowner accepts, he executes and delivers a deed of transfer in favor of the government and surrenders the
certificate of title. Within thirty (30) days from the execution of the deed of transfer, the Land Bank of the
Philippines (LBP) pays the owner the purchase price. If the landowner accepts, he executes and delivers a deed of
transfer in favor of the government and surrenders the certificate of title. Within thirty days from the execution of
the deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase price. If the landowner
rejects the DAR’s offer or fails to make a reply, the DAR conducts summary administrative proceedings to
determine just compensation for the land. The landowner, the LBP representative and other interested parties may
submit evidence on just compensation within fifteen days from notice. Within thirty days from submission, the
DAR shall decide the case and inform the owner of its decision and the amount of just compensation.
Upon receipt by the owner of the corresponding payment, or, in case of rejection or lack of response from the
latter, the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank. The DAR shall
immediately take possession of the land and cause the issuance of a transfer certificate of title in the name of the
Republic of the Philippines. The land shall then be redistributed to the farmer beneficiaries. Any party may
question the decision of the DAR in the special agrarian courts (provisionally the Supreme Court designated
branches of the regional trial court as special agrarian courts) for final determination of just compensation.
The DAR has made compulsory acquisition the priority mode of land acquisition to hasten the implementation of
the Comprehensive Agrarian Reform Program (CARP). Under Sec. 16 of the CARL, the first step in compulsory
acquisition is the identification of the land, the landowners and the farmer beneficiaries. However, the law is silent
on how the identification process shall be made. To fill this gap, on July 26, 1989, the DAR issued Administrative
Order No. 12, series of 1989, which set the operating procedure in the identification of such lands. The procedure
is as follows:
A. The Municipal Agrarian Reform Officer (MARO), with the assistance of the pertinent Barangay Agrarian
Reform Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered under the CARP in his area of responsibility; the
masterlist should include such information as required under the attached CARP masterlist form which shall
include the name of the landowner, landholding area, TCT/OCT number, and tax declaration number.
2. Prepare the Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding covered
under Phase I and II of the CARP except those for which the landowners have already filed applications to avail of
other modes of land acquisition. A case folder shall contain the following duly accomplished forms:chanrob1es
virtual 1aw library
a) CARP CA Form 1 — MARO investigation report
b) CARP CA Form No 2 — Summary investigation report findings and evaluation
c) CARP CA Form 3 — Applicant’s Information sheet
d) CARP CA Form 4 — Beneficiaries undertaking
e) CARP CA Form 5 — Transmittal report to the PARO
The MARO/BARC shall certify that all information contained in the above-mentioned forms have been examined
and verified by him and that the same are true and correct.
3. Send notice of coverage and a letter of invitation to a conference/meeting to the landowner covered by the
Compulsory Case Acquisition Folder. Invitations to the said conference meeting shall also be sent to the
prospective farmer-beneficiaries, the BARC representatives, the Land Bank of the Philippines (LBP)
representative, and the other interested parties to discuss the inputs to the valuation of the property.
He shall discuss the MARO/BARC investigation report and solicit the views, objection, agreements or suggestions
of the participants thereon. The landowner shall also ask to indicate his retention area. The minutes of the meeting
shall be signed by all participants in the conference and shall form an integral part of the CACF.
4. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO).
B. The PARO shall:chanrob1es virtual 1aw library
1. Ensure the individual case folders are forwarded to him by his MAROs.
2. Immediately upon receipt of a case folder, compute the valuation of the land in accordance with A.O. No. 6,
series of 1988. The valuation worksheet and the related CACF valuation forms shall be duly certified correct by
the PARO and all the personnel who participated in the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO through ocular inspection and verification of the
property. This ocular inspection and verification shall be mandatory when the computed value exceeds P500,000
per estate.
4. Upon determination of the valuation, forward the case folder, together with the duly accomplished valuation
forms and his recommendations, to the Central Office.
The LBP representative and the MARO concerned shall be furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau of Land Acquisition and Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from the PARO, review, evaluate and determine the final land
valuation of the property covered by the case folder. A summary review and evaluation report shall be prepared
and duly certified by the BLAD Director and the personnel directly participating in the review and final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized representative, a notice of acquisition (CARP
Form 8) for the subject property. Serve the notice to the landowner personally or through registered mail within
three days from its approval. The notice shall include among others, the area subject of compulsory acquisition,
and the amount of just compensation offered by DAR.
3. Should the landowner accept the DAR’s offered value, the BLAD shall prepare and submit to the Secretary for
approval the order of acquisition. However, in case of rejection or non-reply, the DAR Adjudication Board
(DARAB) shall conduct a summary administrative hearing to determine just compensation, in accordance with the
procedures provided under Administrative Order No. 13, series of 1989. Immediately upon receipt of the
DARAB’s decision on just compensation, the BLAD shall prepare and submit to the Secretary for approval the
required order of acquisition.
4. Upon the landowner’s receipt of payment, in case of acceptance, or upon deposit of payment in the designated
bank, in case of rejection or non-response, the Secretary shall immediately direct the pertinent Register of Deeds
to issue the corresponding Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. Once
the property is transferred, the DAR, through the PARO, shall take possession of the land for redistribution to
qualified beneficiaries."
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer (MARO) keep
an updated master list of all agricultural lands under the CARP in his area of responsibility containing all the
required information. The MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered
by CARP. The MARO then sends the landowner a "Notice of Coverage" and a "letter of invitation" to a
"conference/meeting" over the land covered by the CACF. He also sends invitations to the prospective farmer-
beneficiaries, the representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the property and solicit
views, suggestions, objections or agreements of the parties. At the meeting, the landowner is asked to indicate his
retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall complete
the valuation of the land. Ocular inspection and verification of the property by the PARO shall be mandatory when
the computed value of the estate exceeds P500,000.00. Upon determination of the valuation, the PARO shall
forward all papers together with his recommendation to the Central Office of the DAR. The DAR Central Office,
specifically, the Bureau of Land Acquisition and Distribution (BLAD) shall prepare, on the signature of the
Secretary or his duly authorized representative, a notice of acquisition of the subject property. From this point, the
provisions of Section 16 of R. A. No. 6657 shall apply.
For a valid implementation of the CARP Program, two notices are required: (1) the notice of coverage and letter of
invitation to a preliminary conference sent to the landowner, the representative of the BARC, LBP, farmer-
beneficiaries and other interested parties pursuant to DAR A.O. No. 12, series of 1989; and (2) the notice of
acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, that is, the notice of coverage and the letter of invitation to a conference, and its
actual conduct cannot be understated. They are steps designed to comply with the requirements of administrative
due process. The implementation of the CARL is an exercise of the 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 mere limitation on the use of the land.
What is required is the surrender of the title to and physical possession of the excess and all beneficial rights
accruing to the owner in favor of the farmer-beneficiary.
In the case at bar, DAR has executed the taking of the property in question. However, payment of just
compensation was not in accordance with the procedural requirement. The law required payment in cash or LBP
bonds, not by trust accounts as was done by DAR.
In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform, we held that "The CARP
Law, for its part, conditions the transfer of possession and ownership of the land to the government on receipt of
the landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds
with an accessible bank. Until then, title also remains with the landowner. No outright change of ownership is
contemplated either."
Consequently, petitioner questioned before the Court of Appeals DARAB’s decision ordering the compulsory
acquisition of petitioner’s property. Here, petitioner pressed the question of whether the property was a watershed,
not covered by CARP.
Article 67 of the Water Code of the Philippines (P. D. No. 1067) provides:
"Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any ground water may be
declared by the Department of Natural resources as a protected area. Rules and Regulations may be promulgated
by such Department to prohibit or control such activities by the owners or occupants thereof within the protected
area which may damage or cause the deterioration of the surface water or ground water or interfere with the
investigation, use, control, protection, management or administration of such waters."
Watersheds may be defined as "an area drained by a river and its tributaries and enclosed by a boundary or divide
which separates it from adjacent watersheds." Watersheds generally are outside the commerce of man, so why was
the Casile property titled in the name of SRRDC? The answer is simple. At the time of the titling, the Department
of Agriculture and Natural Resources had not the declared the property as watershed area. The parcels of land in
Barangay Casile were declared as "PARK" by a Zoning Ordinance adopted by the municipality of Cabuyao in
1979, as certified by the Housing and Land Use Regulatory Board. On January 5, 1994, the Sangguniang Bayan of
Cabuyao, Laguna issued a Resolution voiding the Zoning classification of the lands at Barangay Casile as Park
and declaring that the land was now classified as agricultural land.
The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an exercise of its police
power, not the power of eminent domain. "A zoning ordinance is defined as a local city or municipal legislation
which logically arranges, prescribes, defines and apportions a given political subdivision into specific land uses as
present and future projection of needs."
In Natalia Realty, Inc. v. Department of Agrarian Reform, we held that lands classified as non-agricultural prior to
the effectivity of the CARL, may not be compulsorily acquired for distribution to farmer beneficiaries.
However, more than the classification of the subject land as PARK is the fact that subsequent studies and survey
showed that the parcels of land in question form a vital part of a watershed area.
Now, petitioner has offered to prove that the land in dispute is a "watershed or part of the protected area for
watershed purposes." Ecological balances and environmental disasters in our day and age seem to be
interconnected. Property developers and tillers of the land must be aware of this deadly combination. In the case at
bar, DAR included the disputed parcels of land for compulsory acquisition simply because the land was allegedly
devoted to agriculture and was titled to SRRDC, hence, private and alienable land that may be subject to CARP.
However, the scenario has changed, after an in-depth study, survey and reassessment. We cannot ignore the fact
that the disputed parcels of land form a vital part of an area that need to be protected for watershed purposes. In a
report of the Ecosystems Research and Development Bureau (ERDB), a research arm of the DENR, regarding the
environmental assessment of the Casile and Kabanga-an river watersheds, they concluded that:
"The Casile barangay covered by CLOA in question is situated in the heartland of both watersheds. Considering
the barangays proximity to the Matangtubig waterworks, the activities of the farmers which are in conflict with
proper soil and water conservation practices jeopardize and endanger the vital waterworks. Degradation of the land
would have double edge detrimental effects. On the Casile side this would mean direct siltation of the Mangumit
river which drains to the water impounding reservoir below. On the Kabanga-an side, this would mean destruction
of forest covers which acts as recharged areas of the Matang Tubig springs.
Considering that the people have little if no direct interest in the protection of the Matang Tubig structures they
couldn’t care less even if it would be destroyed.
The Casile and Kabanga-an watersheds can be considered a most vital life support system to thousands of
inhabitants directly and indirectly affected by it. From these watersheds come the natural God-given precious
resource — water. . . . . .
Clearing and tilling of the lands are totally inconsistent with sound watershed management. More so, the
introduction of earth disturbing activities like road building and erection of permanent infrastructures. Unless the
pernicious agricultural activities of the Casile farmers are immediately stopped, it would not be long before these
watersheds would cease to be of value. The impact of watershed degradation threatens the livelihood of thousands
of people dependent upon it. Toward this, we hope that an acceptable comprehensive watershed development
policy and program be immediately formulated and implemented before the irreversible damage finally happens.
Hence, the following are recommended:
7.2 The Casile farmers should be relocated and given financial assistance.
7.3 Declaration of the two watersheds as critical and in need of immediate rehabilitation.
7.4 A comprehensive and detailed watershed management plan and program be formulated and implemented by
the Canlubang Estate in coordination with pertinent government agencies."
The ERDB report was prepared by a composite team headed by Dr. Emilio Rosario, the ERDB Director, who
holds a doctorate degree in water resources from U.P. Los Baños in 1987; Dr. Medel Limsuan, who obtained his
doctorate degree in watershed management from Colorado University (US) in 1989; and Dr. Antonio M. Dano,
who obtained his doctorate degree in Soil and Water Management Conservation from U.P. Los Baños in 1993.
Also, DENR Secretary Angel Alcala submitted a Memorandum for the President dated September 7, 1993
(Subject: PFVR HWI Ref.: 933103 Presidential Instructions on the Protection of Watersheds of the Canlubang
Estates at Barrio Casile, Cabuyao, Laguna) which reads:
"It is the opinion of this office that the area in question must be maintained for watershed purposes for ecological
and environmental considerations, among others. Although the 88 families who are the proposed CARP
beneficiaries will be affected, it is important that a larger view of the situation be taken as one should also consider
the adverse effect on thousands of residents downstream if the watershed will not be protected and maintained for
watershed purposes.
"The foregoing considered, it is recommended that if possible, an alternate area be allocated for the affected
farmers, and that the Canlubang Estates be mandated to protect and maintain the area in question as a permanent
watershed reserved."
The definition does not exactly depict the complexities of a watershed. The most important product of a watershed
is water which is one of the most important human necessity. The protection of watersheds ensures an adequate
supply of water for future generations and the control of flashfloods that not only damage property but cause loss
of lives. Protection of watersheds is an "intergenerational responsibility" that needs to be answered now.
Another factor that needs to be mentioned is the fact that during the DARAB hearing, petitioner presented proof
that the Casile property has slopes of 18% and over, which exempted the land from the coverage of CARL. R. A.
No. 6657, Section 10, provides:
"Section 10. Exemptions and Exclusions. — Lands actually, directly and exclusively used and found to be
necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and
mangroves, national defense, school sites and campuses including experimental farm stations operated by public
or private schools for educational purposes, seeds and seedlings research and pilot production centers, church sites
and convents appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms
actually worked by the inmates, government and private research and quarantine centers, and all lands with
eighteen percent (18%) slope and over, except those already developed shall be exempt from coverage of this Act.
Hence, during the hearing at DARAB, there was proof showing that the disputed parcels of land may be excluded
from the compulsory acquisition coverage of CARP because of its very high slopes.
To resolve the issue as to the nature of the parcels of land involved in the case at bar, the Court directs the
DARAB to conduct a re-evaluation of the issue.
IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP No. 27234.
In lieu thereof, the Court REMANDS the case to the DARAB for re-evaluation and determination of the nature of
the parcels of land involved to resolve the issue of its coverage by the Comprehensive Land Reform Program.
In the meantime, the effects of the CLOAs issued by the DAR to supposed farmer beneficiaries shall continue to
be stayed by the temporary restraining order issued on December 15, 1993, which shall remain in effect until final
decision on the case.
No costs.
SO ORDERED.
Davide, Jr., and Ynares-Santiago, JJ., concur.
Puno, J., no part due to relationship.
Kapunan, J., on official leave.
G.R. No. 190482, December 09, 2015
DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY MS. FRITZI C. PANTOJA
IN HER CAPACITY AS PROVINCIAL AGRARIAN REFORM OFFICER OF
LAGUNA, Petitioner, v. IGMIDIO D. ROBLES, RANDY V. ROBLES, MARY KRIST B.
MALIMBAN, ANNE JAMAICA G. ROBLES, JOHN CARLO S. ROBLES AND CHRISTINE
ANN V. ROBLES, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and
set aside the Court of Appeals (CA) Decision dated May 29, 2009 and its Resolution dated December 2, 2009 in
CA-G.R. SP No. 104896.
The facts are as follows:
During his lifetime, Eduardo Reyes, married to Nenita P. Reyes, was the registered owner of certain properties
located at Barangay Ambiling, Magdalena, Laguna, covered by Transfer Certificate of Title (TCT) Nos. T-85055
and T-116506, with areas of about 195,366 and 7,431 square meters (sq. m.), respectively. He later caused the
subdivision of the land covered by TCT No. T-85055 into five (5) lots.
On April 17, 1997, Eduardo sold the said properties to respondents, as follows:
 1. Igmidio D. Robles - Lot 6-B-1 of TCT No. T-85055, 38,829 sq. m.;
2. Randy V. Robles - Lot 6-B-2 of TCT No. T-85055, 39,896 sq. m.;
3. Mary Krist B. Malimban - Lot No 6-B-3 of TCT No. T-85055, 38,904 sq. m.;
4. Anne Jamaca G. Robles - Lot No. 6-B-4 of TCT No. T-85055, 38,595 sq. m.;
5. John Carlo S. Robles - Lot No. 6-B-5 of TCT No. T-85055, 39,142 sq. m.; and
6. Christine Anne V. Robles - Lot No. 3-1-2-C-2-G-3 of TCT No. T-116506, 7,431 sq. m.
On May 3, 2005, the deeds of absolute sale covering the properties were duly registered with the Registry of
Deeds for the Province of Laguna in the names of respondents under the following TCT Nos.:
1. Igmidio D. Robles - TCT No. T-238504;
2. Randy V. Robles - TCT No. T-238305;
3. Mary Krist B. Malimban - TCT No. T-238506:
4. Anne Jamaca G Robles - TCT No. T-238507;
5. John Carlo S. Robles - TCT No. T-238503; and
6. Christine Anne V. Robles - TCT No. 238502.
On May 26, 2006, petitioner Department of Agrarian Reform (DAR) Region IV-A Laguna Provincial Office,
represented by Fritzi C. Pantoja in her capacity as Provincial Agrarian Reform Officer II (PARO), filed Petition for
Annulment of Deeds of Absolute Sale and Cancellation of Transfer Certificates of Title Nos. T-238502, T-
238503, T-238504, T-238505, T-238506 and T-238507. It alleged that the deeds of absolute sale were executed by
Eduardo without prior DAR clearance under Administrative Order No. 01-89, series of 1989, 3 in violation of
Section 6, paragraph 4 of Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1988, as amended (CARL).
On September 9, 2006, respondents received a Summons and Notice of Hearing, together with a copy of the said
petition from the Office of the Provincial Adjudicator, Department of Agrarian Reform Adjudication Board
(DARAB), Region IV, requiring them to answer the petition and appear for the initial preliminary conference set
on October 10, 2006. Thus, they filed their Answer and Supplemental Answer to the petition.
On October 10 and 23, 2006, Julieta R. Gonzales and Nenita Reyes, the surviving spouse and the daughter of
Eduardo, respectively, filed a motion to dismiss on the ground that the DARAB has no jurisdiction over the nature
of the action and the subject matter of the case, and that the DAR has no cause of action against them.
On November 2, 2006, respondents filed a Manifestation adopting the motion to dismiss filed by Julieta and
Nenita.
On November 30, 2006, the DARAB Provincial Adjudicator issued a Resolution denying the motion to dismiss
for lack of merit.
Julieta and Nenita filed a motion for reconsideration.
At the hearing on January 24, 2008, respondents, through counsel, manifested that they are joining the motion for
reconsideration filed by Julieta and Nenita.
On February 7, 2008, the Provincial Adjudicator issued another Resolution dismissing the case against Julieta and
Nenita for lack of cause of action, but not against respondents.
Respondents then filed their motion to reconsider the Resolution dated February 7, 2008 and to defer the
preliminary conference set on March 13, 2008.
On June 26, 2008, the Provincial Adjudicator issued a Resolution denying respondents' motion for reconsideration,
and setting the preliminary conference anew on August 28, 2008.
Aggrieved by the Provincial Adjudicator's Resolutions, respondents filed with the CA a petition for review under
Rule 43 of the Rules of Court.
On May 29, 2009, the CA rendered the assailed Decision, the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED. The three (3) questioned Resolutions of the PARAD dated 30
November 2006, 7 February 2008 and 26 June 2008 are all REVERSED AND SET ASIDE. The DAR's petition
before the PARAD is hereby DISMISSED for lack of jurisdiction.
SO ORDERED.
In dismissing the DAR's petition for annulment of deeds of sale and cancellation of titles before the PARAD for
lack of jurisdiction, the CA held:
In this case before us, the DAR's petition before the PARAD sought to annul the deeds of absolute sale as well as
the subsequently issued torrens titles. Surprisingly, however, the said petition was not brought for or on behalf of
any purported tenants, farmworkers or some other beneficiaries under RA 6657. While the said petition claimed,
without any supporting documents/evidence however, that DAR was in the process of generating CLOAs for the
said landholding, it did subsequently admit that the same petition does not seek to place the subject land
"immediately under CARP" but rather to annul the conveyance of the original owner in favor of the petitioners
since this was allegedly in violation of RA 6657. Without any averment of some tenurial arrangement/relationship
between the original owner and some definite leaseholder, tenant or CARL beneficiary plus the admission that the
land has not yet been placed under CARP, neither DARAB nor its adjudicators would have jurisdiction over a
simple case of annulment of sale and cancellation of title. Considering that the subject landholding were sold to
petitioners way before any notice of coverage was ever issued and torrens titles have subsequently been issued in
their favor, it is the regular courts who should determine if indeed there were certain violations of the law which
would justify annulment of the sales and cancellation of the titles.
Still on the said notice of coverage, a review of the pertinent documents reveals that the same was not issued to the
present owners but to the heirs of the late Eduardo Reyes. Thus, not only was the notice of coverage belatedly
issued to the wrong person/s for the said heirs to whom the notice of coverage was issued were in fact dismissed
from the original petition before the PARAD. Next, DAR argues that a notice of coverage need not be issued to
the present owners/petitioners otherwise it would validate or recognize the purported irregular or illegal transfer or
conveyance. We find it foolhardy for DAR to argue this way when the very fact of issuance of the notice of
coverage was one of its main anchors in its petition for annulment and cancellation of title before the PARAD.
DAR also cites Section 4 of RA 6657 which refers to the scope of CARL. While the scope under the said
provision is quite encompassing, the same will not automatically include every agricultural land. In Dandoy v.
Tongson, the High Tribunal was explicit,
"(T)he fact that Lot No. 294 is an agricultural land does not ipso facto make it an agrarian dispute within the
jurisdiction of the DARAB. For the present case to fall within the DARAB jurisdiction, there must exist a tenancy
relationship between the parties. An allegation that an agricultural tenant tilled the land in question does not make
the case an agrarian dispute."
Again, the High Court reiterated the necessity of a tenurial arrangement/relationship in order for a case to be
classified as an agrarian dispute within the jurisdiction of the DARAB or its adjudicators. While we are mindful
not to preempt any subsequent inquiry on the matter, we would just like to take note of the fact that petitioners
also offered documents to show that the subject land/s were free of any tenants at the time these were sold to them.
Even without ruling on the authenticity of this evidence, the same further casts doubt on the existence of any
tenurial arrangement or relationship which could or may bring the present controversy into the folds of the
DARAB.
Besides, RA 6657, particularly Section 16 thereof, lays down the very procedure for the acquisition of private
lands for coverage of the CARL. And DAR's belated issuance of the notice of coverage miserably falls short of the
above-cited procedures.
It is very clear that the relief sought by the DAR, annulment of the contracts and cancellation of titles, would
necessarily involve the adjustment/adjudication of the private rights of the parties to the sale, which is beyond the
jurisdiction of the DARAB to resolve.
7 cases involving the sale of agricultural lands and those cases involving the annulment or rescission of deeds of
The DAR filed a motion for reconsideration, but the CA denied it in a Resolution  dated December 2, 2009.
Dissatisfied with the CA Decision, the DAR filed a petition for review on certiorari raising the sole issue, to wit:
WHETHER OR NOT THE DAR ADJUDICATION BOARD HAS JURISDICTION OVER ANNULMENT OF
DEEDS OF ABSOLUTE SALE AND THE SUBSEQUENT CANCELLATION OF TITLES INVOLVING
LANDS UNDER THE ADMINISTRATION AND DISPOSITION OF THE DEPARTMENT OF AGRARIAN
REFORM.
Citing the DAR Memorandum Circular No. 2, Series of 2001, the DAR argues that its petition for annulment of
deeds of sale and cancellation of titles falls under the jurisdiction of the DARAB; and that such jurisdiction is not
limited to agrarian disputes, but also on other matters or incident involving the implementation of all agrarian
laws. Invoking Section 1, Rule II of the 2003 DARAB Rules of Procedure, it questions the CA ruling that disputes
cognizable by the DARAB are limited to those which involve some kind of tenurial arrangement/relationship, and
that only lands under the administration and disposition of the DAR or the Land Bank of the Philippines (LBP) are
subject to the DARAB jurisdiction.
The DAR also claims that the CA overlooked that the notices of coverage issued by the Municipal Agrarian
Reform Officer (MARO) of Magdalena, Laguna, were duly served to the heirs of Eduardo, namely, Julieta and
Nenita. It stresses that despite claiming no interest as successors over the subject properties in their motion to
dismiss filed before the DARAB, the letter of Atty. Norberto Gonzales dated February 21, 2005 to MARO
Cuaresma showed that Julieta and Nenita were opposing the coverage of the said properties under the CARL. It
thus concludes that the subject properties were placed under the coverage of the compulsory acquisition scheme of
the CARL.
The DAR further takes exception to the CA ruling that the notice of coverage was issued to the heirs of Eduardo,
instead of the present owners, respondents. It explains that only after such notice was issued to the said heirs in
2005 and upon verification with the Register of Deeds that it found out that the property was already transferred to
respondents. It further argues that the notice of coverage need not be issued to the present title holders
(respondents) because if such notice will be issued to them, then it would validate or recognize the purported
irregular or illegal transfer or conveyance.
Finally, the DAR contends that under Section 4 of RA 6657, the CARP covers, among other things, all private
lands devoted to or suitable for agriculture, regardless of the agricultural products raised or that can be raised
thereon, and that such provision makes no qualification that only lands issued with notice of coverage are covered.
Applying the statutory construction principle of exclusio unius est exclusio alterius, it posits that there being no
showing that the subject agricultural lands are exempted from the CARP, then they are covered and deemed under
the administration and disposition of the DAR. Hence, its petition for annulment of deeds of sale and cancellation
of titles is cognizable by the DARAB.
On the other hand, respondents counter that the CA did not err in dismissing for lack of jurisdiction DAR's petition
for annulment of deeds of sale and cancellation of titles before the DARAB because such case neither involves an
agrarian dispute nor does the case concern; an agricultural land under the administration and disposition of the
DAR or the LBP. Citing the definition of "agrarian dispute" under Section 3 (d) of R.A. No. 6657 and
jurisprudence to the effect that there must exist a tenancy relationship between the parties for DARAB to have
jurisdiction over a case, respondents point out that the petition was not brought for and on behalf of any purported
tenants, farmworker or some other beneficiaries and the notice of coverage was belatedly issued to the wrong
persons, the heirs of Eduardo, and not to them who are the present owners. Hence, there was no valid notice of
coverage to place the properties within the coverage of agrarian reform and of DARAB's jurisdiction.
Respondents also reject as inaccurate and misleading petitioner's contention that the DARAB has jurisdiction over
sale, and the cancellation of titles pertaining to such lands, pursuant to Section 1 (1.5) and (1.9), Rule II of the
2003 DARAB Rules of Procedure.13 They insist that for the Adjudicator to have jurisdiction over a case, the
agricultural land involved—unlike the subject properties—must be under the coverage of the CARL or other
agrarian laws, or under the administration and disposition of the DAR or the LBP, i.e., the land involved must
already be taken or acquired for CARP purposes for distribution to qualified farmer-beneficiaries.
Respondents stress that the certificates of title of Eduardo and the derivative TCTs issued to them were all free
from liens and encumbrances, and that there was no annotation of any disposition of the properties or limitation on
the use thereof by virtue of, or pursuant to Presidential Decree (P.D.) No. 27, CARL or any other law or
regulations on agrarian reform inscribed on the titles. They argue that since no such annotations, like a notice of
coverage or acquisition by DAR, were inscribed on Eduardo's titles which will caution respondents and/or the
Register of Deeds of the Province of Laguna from registering the titles and deeds, prior DAR clearance is
unnecessary. Thus, the properties embraced by Eduardo's titles are outside the coverage of CARP and registerable.
Lastly, respondents claim to be innocent purchasers in good faith and for value because they bought the subject
properties and paid a full and fair price without notice of some other person's claim on or interest in them. They
also seek refuge under Section 32 of P.D. No. 1529 which provides that after the expiration of one (1) year from
and after the date of entry of the decree of registration, not only such decree but also the corresponding certificate
of title, becomes incontrovertible and infeasible, and cannot be altered, modified, cancelled, or subject to any
collateral attack, except in a direct proceeding in accordance with law.
The petition is meritorious.
In resolving the sole issue of whether or not the DARAB has jurisdiction over the DAR's petition for annulment of
deeds of sale and cancellation of titles, the Court is guided by the following rules on jurisdiction laid down
in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz:
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government agency, over the
nature and subject matter of a petition or complaint is determined by the material allegations therein and the
character of the relief prayed for, irrespective of whether the petitioner or complainant is entitled to any or all such
reliefs. Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the law,
and not by the consent or waiver of the parties where the court otherwise would have no jurisdiction over the
nature or subject matter of the action. Nor can it be acquired through, or waived by, any act or omission of the
parties. Moreover, estoppel does not apply to confer jurisdiction to a tribunal that has none over the cause of
action. The failure of the parties to challenge the jurisdiction of the DARAB does not prevent the court from
addressing the issue, especially where the DARAB's lack of jurisdiction is apparent on the face of the complaint or
petition.
Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories set up by the defendant or
respondent in his answer or motion to dismiss. Jurisdiction should be determined by considering not only the
status or the relationship of the parties but also the nature of the issues or questions that is the subject of the
controversy. If the issues between the parties are intertwined with the resolution of an issue within the exclusive
jurisdiction of the DARAB, such dispute must be addressed and resolved by the DARAB. The proceedings before
a court or tribunal without jurisdiction, including its decision, are null and void, hence, susceptible to direct and
collateral attacks.
In Department of Agrarian Reform v. Paramount Holdings Equities, Inc., the Court defined the limits of the quasi-
judicial power of DARAB, thus:
The jurisdiction of the DARAB is limited under the law, as it was created under Executive Order (E.O.) No. 129-
A specifically to assume powers and functions with respect to the adjudication of agrarian reform cases under E.O.
No. 229 and E.O. No. 129-A. Significantly, it was organized under the Office of the Secretary of Agrarian
Reform. The limitation on the authority of it to mere agrarian reform matters is only consistent with the extent of
DAR's quasi-judicial powers under R.A. No. 6657 and E.O. No. 229, which read:
SECTION 50 [of R.A. No. 6657]. Quasi-Judicial Powers of the DAR.—The DAR is hereby vested with
the primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform except those falling under
the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural
Resources (DENR).
SECTION 17 [of E.O. No. 229]. Quasi-Judicial Powers of the DAR.—The DAR is hereby vested with quasi-
judicial powers to determine and adjudicate agrarian. reform matters, and shall have exclusive original
jurisdiction over all matters involving implementation of agrarian reform, except those falling under the exclusive
original jurisdiction of the DENR and the Department of Agriculture (DA).
In Sta. Rosa Realty Development Corporation v. Amante, the Court pointed out that the jurisdiction of the DAR
under the aforequoted provisions is two-fold. The first is essentially executive and pertains to the enforcement and
administration of the laws, carrying them into practical operation and enforcing their due observance, while the
second is quasi-judicial and involves the determination of rights and obligations of the parties.
At the time the petition for annulment of deeds of sale and cancellation of titles was filed on May 26, 2006, the
administrative function of the DAR was governed by Administrative Order No. 03, Series of 2003 which provides
for the 2003 Rules of Procedure for Agrarian Law Implementation (ALI) Cases. Under said Rules of Procedure,
the Regional Director has primary jurisdiction over all ALI cases, while the DAR Secretary has appellate
jurisdiction over such cases. Section 2 of the said Rules provides:
Section 2. ALI Cases. These Rules shall govern all cases arising from or involving:
a) Classification and identification of landholdings for coverage under the agrarian reform program and the
initial issuance of Certificate of Land Ownership Awards (CLOAs) and Emancipation Patents (EPs),
including protests or oppositions thereto and petitions for lifting of such coverage.
b) Classification, identification, inclusion, exclusion, qualification or disqualification of potential/actual
farmer-beneficiaries.
c) Subdivision surveys of land under Comprehensive Agrarian Reform Program (CARP)
d) Recall, or cancellation of provisional release rentals, Certificates of Land Transfers (CLTs), and CARP
Beneficiary Certificates (CBCs) in cases outside the purview of Presidential Decree (P.D.) No. 816,
including the issuance, recall or cancellation of Emancipation Patents (EPs) or Certificates of Land
Ownership Awards (CLOAs) not yet registered with the Register of Deeds;
e) Exercise of the right of retention by the landowner;
f) Application for exemption from coverage under Section 10 of RA 6657;
g) Application for exemption pursuant to Department of Justice (DOJ) Opinion No. 44 (1990)
h) Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry raising;
i) Cases of exemption/exclusion of fishpond and prawn farms from the coverage of CARP pursuant to RA
7881;
j) Issuance of Certificate of Exemption for land subject to Voluntary Offer to Sell (VOS) and Compulsory
Acquisition (CA) found unsuitable for agricultural purposes;
k) Application for conversion of agricultural land to residential, commercial, industrial or other non agricultural
uses and purposes including protests or oppositions thereto;
l) Determination of rights of agrarian reform beneficiaries to homelots;
m) Disposition of excess area of the tenant's/farmer-beneficiary's landholdings;
n) Increase in area of tillage of a tenant/farmer-beneficiary;
o) Conflict of claims in landed estates administered by the DAR and its predecessors; and
p) Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.
On the other hand, in the exercise of its quasi-judicial function, the DAR, through its adjudication arm, i.e., the
DARAB and its regional and provincial adjudication boards, adopted the 2003 DARAB Rules of Procedure.
Under Section 2, Rule II of the said Rules of Procedure, the DARAB shall have exclusive appellate jurisdiction to
review, reverse, modify, alter, or affirm resolutions, orders, and decisions of its Adjudicators who have primary
and exclusive original jurisdiction over the following cases:
Rule II
Jurisdiction of the Board and its Adjudicators
SECTION 1. Primary and Exclusive Original Jurisdiction. — The Adjudicator shall have primary and exclusive
original jurisdiction to determine and adjudicate the following cases:
a) 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;
b) The preliminary administrative determination of reasonable and just compensation of lands acquired under
Presidential Decree (PD) No. 27 and the Comprehensive Agrarian Reform Program (CARP);
c) The annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands under
the administration and disposition of the DAR or Land Bank of the Philippines (LBP);
d) Those cases involving the ejectment and dispossession of tenants and/or leaseholders;
e) Those cases involving the sale, alienation, pre-emption, and redemption of agricultural lands under the
coverage of the CARL or other agrarian laws;
f) Those involving the correction, partition, cancellation, secondary and subsequent issuances of Certificates of
Land Ownership Award (CLOAs) and Emancipation-Patents (EPs) which are registered with the Land
Registration Authority;
g) Those cases involving the review of leasehold rentals;
h) Those cases involving the collection of amortizations on payments for lands awarded under PD No. 27, as
amended, RA No. 3844, as amended, and RA No. 6657, as amended, and other related laws, decrees, orders,
instructions, rules, and regulations, as well as payment for residential, commercial, and industrial lots within
the settlement and resettlement areas under the administration and disposition of the DAR;
i) Those cases involving the annulment or rescission of lease contracts and deeds of sale, and the cancellation
or amendment of titles pertaining to agricultural lands under the administration and disposition of the DAR
and LBP; as well as EPs issued under PD 266, Homestead Patents, Free Patents, and miscellaneous sales
patents to settlers in settlement and' re-settlement areas under the administration and disposition of the DAR;
 j) Those cases involving boundary disputes over lands under the administration and disposition of the DAR
and the LBP, which arc transferred, distributed, and/or sold to tenant-beneficiaries and are covered by deeds
of sale, patents, and certificates of title;
k) Those cases involving the determination of title to agricultural lands where this issue is raised in an agrarian
dispute by any of the parties or a third person in connection with the possession thereof for the purpose of
preserving the tenure of the agricultural lessee or actual tenant-farmer or farmer-beneficiaries and effecting
the ouster of the interloper or intruder in one and the same proceeding; and
l) Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian
Relations under Section 12 of PD No. 946 except those cases falling under the proper courts or other quasi-
judicial bodies;
m) Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.
Section 3, Rule II of the 2003 DARAB Rules of Procedure further states that the Adjudicator or the Board shall
have no jurisdiction over matters involving the administrative implementation of R.A. No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law 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.
Meanwhile, the Regional Trial .Courts (RTCs) have not been completely divested of jurisdiction over agrarian
reform matters. Section 56 of RA 6657 confers "special jurisdiction" on "Special Agrarian Courts," which are
RTCs designated by the Court — at least one (1) branch within each province — to act as such. As Special
Agrarian Courts (SACs), these RTCs have, according to Section 57 of the same law, original and exclusive
jurisdiction over "all-petitions for the determination of just compensation to land-owners" and "the prosecution of
all criminal offenses under . . [the] Act."
In order to determine in accordance with the foregoing provisions which among the DARAB and the Office of the
Secretary of DAR, and the SACs has jurisdiction over the nature and subject matter of the petition for annulment
of the deeds of sale executed by Eduardo in favor of respondents and the cancellation of the TCTs issued to them,
it is necessary to examine the following allegations therein and the character of the relief sought, irrespective
whether the petitioner is entitled thereto:
4.1 The late Eduardo Reyes was the original registered owner of TCT 85055 and TCT 116506, an
agricultural land situated at Brgy. Ambling, Magdalena, Laguna, consisting of 195,366 sq. meters and 7,431 sq.
meters, respectively.
4.2 The land described under TCT 85055 was issued a notice of coverage under the Compulsory Acquisition (CA)
scheme pursuant to Section 7 of R.A. 6657. Subdivision plan over this property has been approved and the DAR is
now on the process of generating the Certificate of Land Ownership Award (CLOA) to the qualified recipient of
the government's land reform program. However, pending processing of the case folder, the DAR Municipal
Office in Magdalena received on September 8, 2005 a letter coming from Atty. Homer Antazo, the alleged counsel
of Igmidio Robles and Christina Robles informing the MAR Office of the subsequent sale of the property in their
favor attaching documents in support of their claim. It was only then, after proper verification with the Register
of Deeds that the DAR found out that indeed the properties under TCT-T-85055 and TCT T-116506 were
all conveyed and transferred in favor of the herein private respondents by well intentioned deeds of
absolute sale executed in 1997. xxx Subsequently, by virtue of such deeds of sale the Registry of Deeds
caused the cancellation of TCT T-85055 and TCT 116506 and the issuance of new titles in private
respondents' favor without securing the necessary clearance from the DAR as mandated under
Administrative Order No. 1 series of 1989. xxx The said titles were issued arbitrarily and in clear violation
of Section 6 of R.A. 6657, hence null and void. xxx
4.3 Public respondent Registry of Deeds might [have] overlooked the transaction entered into and misplaced
knowledge on these big track of landholdings when it proceeded with the registration of the deeds of sale and the
subsequent cancellation of TCT 85055 and TCT 116506.
4.4 The Registry of Deeds was probably not aware and mindful on the extent of properties of Eduardo Reyes,
that it exceeded more than the retention limit but, thru machinations and crafty action exerted to by the parties
to accomplish an evil end, the immediate cancellation was brought to completion.
4.5 Hence, because it was tainted with fraud and bad faith, said certificate of titles cannot enjoy the presumption of
having been issued by the register of deeds in the regular performance of its official duty;
4.6 That, as a consequence of swift and speedy cancellation of TCT 85055 and TCT 116506 and the instantaneous
issuance of titles, the DAR, because of this intervening development cannot now continue with the generation of
CLOA, prompting the filing of the instant petition.
5. PRAYER
WHEREFORE, above premises considered, it is most respectfully prayed of this Honorable Adjudication Board
that after due notice and hearing, judgment be rendered annulling the Deeds of Absolute Sale executed by the late
Eduardo Reyes in favor of the herein private respondents and the subsequent cancellation of the issued transfer
certificate of titles.
Petitioner likewise pray for such other relief and remedies as this Honorable Board may deem just and equitable
under the premises.
Although no tenancy or agrarian relationship between the parties can be gleaned from the allegations of the
petition in order to be considered an agrarian dispute within the DARAB's jurisdiction, the Court notes that the
petition is anchored on the absence of a clearance for the sale and registration of the subject agricultural lands in
favor of respondents, as required by DAR Administrative Order No. 1, series of 1989 (A.O. No. 01-89) or the
Rules and Procedures Governing Land Transaction. Clearly, such petition involves the matter of implementation
of agrarian laws which is, as a general rule, within the primary jurisdiction of the DAR Regional Director.
It bears stressing that while the rule is that DARAB's jurisdiction is limited to agrarian disputes where tenancy
relationship between the parties exists, Section 50 of R.A. No. 6657 and Section 17 of E.O. No. 229 both plainly
state that the DAR is vested with the primary jurisdiction to determine and adjudicate agrarian reform matters. It is
also noteworthy that while Section 3(d) of R.A. No. 6657 defined the term "agrarian dispute," no specific
definition was given by the same law to the term "agrarian reform matters." In view thereof, the Court cannot
restrict the DARAB's quasi-judicial jurisdiction only to those involving agrarian disputes where tenancy
relationship exists between the parties, for it should also include other "agrarian reform matters" which do not fall
under the exclusive jurisdiction of the Office of the Secretary of DAR, the Department of Agriculture and the
Department of Environment and Natural Resources, as well as the Special Agrarian Courts.
Although they are not deemed as "agrarian disputes" falling under the DARAB's jurisdiction, "[s]uch other
agrarian cases, disputes, matters or concerns" referred to the Adjudicator by the Secretary of the DAR pursuant to
Section 1 (1.13), Rule II of the 2003 DARAB Rules of Procedure, are still considered as "agrarian reform
matters." A case in point is the DAR's petition for annulment of deeds of sale and annulment of titles executed in
violation of the provision Section 6, par. 4 of RA 6657. Despite being an agrarian law implementation case, the
Secretary of the DAR expressly referred jurisdiction over such petition to the Provincial Adjudicator of the
DARAB through Memorandum Circular (M.C.) No. 02-01 on the Guidelines on Annulment of Deeds of
Conveyance of Lands Covered by the Comprehensive Agrarian Reform Program (CARP) Executed in Violation
of Section 6, Paragraph 4 of Republic Act (RA) No. 6657. Section 4 of DAR M.C. No. 02-01 pertinently provides:
b) The Chief, Legal Division, of the Provincial Agrarian Reform Office, shall have the following responsibilities:

1. Upon receipt of the MARO report, determine whether or not there was illegal transfer of agricultural lands
pursuant to Sec. 6, par. 4 of RA 6657;
2. If there was illegal transfer, file a petition for annulment of the deed of conveyance in behalf of the PARO
before the Provincial Agrarian Reform Adjudicator (PARAD). The petition shall state the material facts
constituting the violation and pray for the issuance of an order from the PARAD directing the ROD to cancel the
deed of conveyance and the TCT generated as a result thereof. As legal basis therefor, the petition shall cite
Section 50 of RA 6657 and Rule II, Section 1(c) and (e) of the [1994] DARAB New Rules of Procedure;
Concededly, the properties subject of the petition for annulment of deeds of sale and cancellation of titles cannot
be considered as lands under the administration of the DAR or LBP, i.e., those already acquired for CARP
purposes and distributed to qualified farmer-beneficiaries. Hence, such petition is outside the DARAB jurisdiction
under Section 1 (1.9), Rule II of the 2003 DARAB Rules of Procedure.
Nevertheless, it can be gathered from the allegations in the petition that the subject properties Eduardo conveyed
and transferred to respondents are agricultural lands in excess of the 5-hectare (50,000 sq. m.) retention limit of the
CARL, and that the corresponding TCTs were later issued and registered in their names without the necessary
clearance under DAR A.O. No. 1, series of 1989.
In Sarne v. Hon. Maquiling, the Court construed the phrase "agricultural lands under the coverage of the CARP"
under Section 1(e), in relation to Section 1 (c), Rule II of the 1994 DARAB Rules of Procedure, which are
similarly-worded as Sections 1 (1.3) and (1.5), Rule II of the 2003 DARAB Rules of Procedure, thus:
It is clear that the jurisdiction of the DARAB in this case is anchored on Section 1, paragraph (e), Rule II of the
[1994] DARAB New Rules of Procedure covering agrarian disputes involving the sale, alienation, mortgage,
foreclosure, preemption and redemption of agricultural lands under the coverage of the CARP or other agrarian
laws. There is nothing in the provision from which it can be inferred that the jurisdiction of the DARAB is limited
only to agricultural lands under the administration and disposition of DAR and LBP. We should not distinguish
where the law does not distinguish. The phrase "agricultural lands under the coverage of the CARP" includes
all private lands devoted to or suitable for agriculture, as defined under Section 4 of R.A. No. 6657. It is
worthy to note that in the enumeration defining the DARAB's jurisdiction, it is only in paragraph (c), that is, cases
involving the annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands,
that the phrase "involving lands under the administration and disposition of the DAR or LBP" is used. That the
same proviso does not appear in paragraph (e), which is the basis of respondents' cause of action, could only mean
that it was never intended to be so limited. xxx
Contrary to the view of the CA and the respondents, therefore, a notice of coverage is not necessary in order for
the DARAB to have jurisdiction over a case that involves the sale or alienation of agricultural lands "under the
coverage of the CARP" pursuant to Section 1 (1.5), Rule II of the 2003 DARAB Rules of Procedure, as such
phrase includes all private lands devoted to or suitable for agriculture, as defined under Section 4 of R.A. No.
6657:
CHAPTER II
Coverage.
Section 4. Scope. — The Comprehensive Agrarian Reform Law of 1989 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands, as provided in Proclamation No.
131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture.
More specifically the following lands are covered by the Comprehensive Agrarian Reform Program:
a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this
Act until Congress, taking into account ecological, developmental and equity considerations, shall have
determined by law, the specific limits of the public domain.
b) All lands of the public domain in excess of the specific limits as determined by Congress in the preceding
paragraph;
c) All other lands owned by the Government devoted to or suitable for agriculture; and
d) All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that
can be raised thereon.
In light of the principle that jurisdiction over the subject matter and nature of the petition is conferred by law and
determined by the material allegations therein, and is not affected by the defenses or theories set up in the
respondent's answer or motion to dismiss, the Court finds that the DAR's petition for annulment of deeds of sale
and cancellation of titles falls under the jurisdiction of the PARAD under Section 1 (1.5), Rule II of the 2003
DARAB Rules of Procedure, as it contains sufficient allegations to the effect it involves sales of agricultural lands
under the coverage of the CARL.
To be sure, the Court does not undermine the significance of the notice of coverage for purposes of acquisition of
lands under the CARP. A letter informing a landowner that his/her land is covered by CARP, and is subject to
acquisition and distribution to beneficiaries, and that he/she has rights under the law, including the right to retain 5
hectares, the notice of coverage first sprung from DAR A.O. No. 12, Series of 1989, to fill in the gap under
Section 16 of the CARL on the identification process of lands subject to compulsory acquisition. In Roxas & Co.,
Inc. v. Court of Appeals, the Court stressed the importance of such notice as a step designed to comply with the
requirements of administrative due process:
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 "if no person shall be
deprived of life, liberty or 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.
Given that the notices of coverage were issued to the wrong persons, the heirs of the former owner, Eduardo,
instead of respondents who are the present owners of the subject properties, the DAR can hardly be faulted for
such mistake. It bears emphasis that while Eduardo executed the corresponding deeds of absolute sale in favor of
respondents as early as April 17, 1997, it was only on May 3, 2005 that said deeds were registered in the names of
respondents. Meantime, in view of the death of Eduardo on October 28, 2000, the DAR had no choice but to send
the Notices of Coverage dated September 8, 2004 and November 23, 2004 to his heirs, Julieta and Nenita,
respectively. While said deeds of sale are binding between the said heirs of Eduardo and respondents, the DAR
could not have been aware thereof for lack of registration which is the operative act that binds or affects the land
insofar as third persons are concerned. Thus, the DAR cannot be blamed for erroneously issuing such notices to
the said heirs because it merely relied on available public records at the Register of Deeds, showing that the
original landowner of the said properties is the late Eduardo.
For its part, despite the DAR's allegation that it only found out that the subject properties were already conveyed
and transferred in favor of respondents when its Municipal Office in Magdalena, Laguna, received on September
8, 2005 a letter from the counsel of respondent Igmedio Robles and Christina Robles; it should be deemed to have
constructive notice of said deeds only from the time of their registration on May 3, 2005. From the date of such
registration, the DAR should have also issued respondents notices of coverage pursuant to DAR M.C. No. 18-04
(Clarificatory Guidelines on the Coverage, Acquisition and Distribution of Agricultural Lands Subject of
Conveyance Executed in Violation of Sec. 6, Par. 4 of R.A. No. 6657) which modified DAR M.C. No. 02-01,
3. Notwithstanding the pendency of the investigation and/or the petition for annulment of deed of conveyance, the
DAR shall issue a notice of coverage to both old and new landowner/s in order for the LBP to proceed with the
valuation of the property. For this purpose, the DAR Provincial or Regional Office and the Land Bank of the
Philippines may execute an agreement for purposes of issuing memorandum of valuation and certificate of deposit
to be held in trust for the rightful owner/s.
The Court, however, holds that the DAR cannot be taken to task for failing to issue notices of coverage to
respondents because the land areas of the subject properties sold to them, respectively, are all within the 5-hectare
(50,000 sq. m.) retention limit. Respondents cannot, therefore, contend that a notice of coverage is necessary in
order for a land to be considered under the coverage of the CARP for purposes of filing a petition under DAR
M.C. No. 02-01 in relation to violation of Section 6, paragraph 4 of RA 6651. To sustain respondents' contention
would subvert the objectives of the said provision to prevent circumvention of the retention limits set by law on
ownership of agricultural lands after the effectivity of CARL on June 15, 1988, and to prevent the landowner from
evading CARP coverage. Hence, the Court cannot uphold such contention, as it would ultimately defeat the
purpose of the agrarian reform program of achieving social justice through equitable distribution of large
landholdings to tenants or farmers tilling the same.
Furthermore, at the time of the sale of the subject properties on April 17, 1997, there were existing tenants thereon
as shown by the Deeds of Surrender of Tenancy Rights dated July 10, 1997 later executed in favor of the buyers,
respondents Igmidio and Cristina Robles. Then, in identically-worded certifications dated August 29, 1997, the
BARC Chairman and the Barangay Chairman of Ambiling, Magdalena, Laguna, both stated that the property
covered by TCT No. 85055 with an area of 195,366 sq. m. is a coconut land without any tenant and may be
converted into an industrial, resort, low-cost housing or residential subdivision. Without ruling on the validity of
the deeds of surrender of tenancy rights, the Court finds that the execution thereof subsequent to that of the deeds
of sale, alongside the certifications of the BARC Chairman and Barangay Chairman, casts doubt on the validity of
the transfer and conveyance of the subject properties as a ploy to circumvent the retention limits and. coverage
under the CARP.
It is noteworthy that in Department of Agrarian Reform v. Paramount Holdings Equities, Inc., the Court had
resolved in the negative the issue of whether or not the DARAB has jurisdiction over a dispute that seeks the
nullification of the sale of agricultural lands because (1) the PARO's petition failed to sufficiently allege any
tenurial or agrarian relations and to indicate an agrarian dispute, and (2) the said lands had not been the subject of
any notice of coverage under the CARP.
Despite the fact that the same jurisdictional issue is involved in this case, the Court's ruling in Paramount is
inapplicable because of the difference between the material allegations in the PARO's petitions in both cases.
Given that the PARO's petition in this case likewise failed to allege any tenancy or agrarian relations and to
indicate an agrarian dispute, and its cause of action is merely founded on the absence of a clearance to cover the
sale and registration of the subject lands, it bears emphasis that the D ARAB'S jurisdiction is not limited to
agrarian disputes where tenancy relationship between the parties exists. Under Section 1 (1.13), Rule II of the
2003 DARAB Rules of Procedure, the DARAB also has jurisdiction over agrarian reform matters referred to it by
the Secretary of DAR, such as the PARO's petition for annulment of deeds of sale and annulment of titles filed
pursuant to DAR A.O. No. 01-89 and DAR M.C. No. 02-01 for violation of the legal requirement for clearances in
the sale and transfer of agricultural lands.
In contrast to Paramount where it is undisputed that the subject lands had not been subject of any notice of
coverage under the CARP, the PARO's petition in this case alleged that one of the subject lands was issued a
notice of coverage. At any rate, the Court holds that such notice is unnecessary in order for the DARAB to have
jurisdiction over a case that involves the sale of "agricultural lands under the coverage of the CARP," arsuant to
Section 1 (1.5), Rule II of the 2003 DARAB Rules of Procedure. As held in Sarne v. Maquiling, the said phrase
includes all private lands devoted to or suitable for agi iculture, as defined under Section 4 of RA No. 6657. In
view of the rule that jurisdiction over the subject matter and nature of the petition is determined by the allegations
therein and the character of the relief prayed for, irrespective of whether the petitioner entitled to any or all such
reliefs, the Court finds that the PARO's petition for annulment of sale and cancellation of titles falls under the
jurisdiction of the DARAB, as it contains allegations to the effect that it involves sales of agricultural lands under
the coverage of the CARL.
Significantly, unlike in this case where the transfer of the subject properties appears to have been done to evade
the retention limits and coverage under CARP, the Court found the original petition in Paramount dismissible on
the merits as the records clearly showed that the subject lands were already classified as "industrial" long before
the effectivity of the CARL.
The Court also overrules respondents' argument that the subject properties are outside the coverage of CARP and
registerable, since no annotation of any disposition of the properties or limitation on the use thereof by virtue of, or
pursuant to P.D. No. 27, CARL or any other law or regulations on agrarian reform was inscribed on Eduardo's
titles and their derivative titles. Quite the contrary, TCT Nos. T-85055 and T-116506 under the name of Eduardo
contain provisions stating that he is the owner thereof in fee simple, subject to the encumbrances mentioned in
Section 39 of Act No. 496, or the Land Registration Act, and Section 44 of P.D. 1529, or the Property Registration
Decree, respectively.
Section 39 of Act No. 496 and Section 44 of P.D. No. 1529 similarly provide for statutory liens which subsist and
bind the whole world, even without the benefit of registration under the Torrens System:
Section 39. Every applicant receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith, shall hold the same
free of all encumbrance except those noted on said certificate, and any of the following encumbrances which may
be subsisting, namely:
First. Liens, claims, or rights arising or existing under the laws or Constitution of the United States or of the
Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the
registry. x x
SEC. 44. Statutory liens affecting title. - Every registered owner receiving a certificate of title in pursuance of a
decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and
in good faith, shall hold the same free from all encumbrances except those noted in said certificate and any of the
following encumbrances which may be subsisting, namely: x x x
Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to,
Presidential Decree No. 27 or any other law or regulations on agrarian reform.
The Court is of the view that the provision on retention limits under Section 6 of RA 6657 constitutes as statutory
liens on Eduardo's titles, which were carried over to respondents' derivative titles, even if no such annotations
were inscribed on all of the said titles. In particular, such statutory liens pertain to paragraph 4 of Section 6 of RA
6657 in relation to Section 73 of the same law, which read:
Section 6. Retention Limits. — Except as otherwise provided in this Act, no person may own or retain, directly or In Lacbayan v. Samoy, Jr., the Court noted that what cannot be collaterally attacked is the certificate of title, and
indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a not the title itself:
viable family-size farm, such as commodity produced, terrain, infrastructure, and soil fertility as determined by the x x x The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast,
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner the title referred to by law means ownership which is, more often than not, represented by that document, xxx
exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or although both, are interchangeably used.
directly managing the farm: provided, that landowners whose lands have been covered by Presidential Decree No.
In this case, what is being assailed in the DAR's petition for annulment of deeds of sale and cancellation of titles is
27 shall be allowed to keep the areas originally retained by them thereunder: provided, further; that original
the legality of the transfer of title over the subject properties in favor of respondents, and not their corresponding
homestead grantees or their direct compulsory heirs who still own the original homestead at the time of the
TCTs, due to the absence of DAR clearance and for possible violation of Section 6, paragraph 4 of R.A. No. 6657.
approval of this Act shall retain the same areas as long as they continue to cultivate said homestead.
All told, the CA erred in dismissing for lack of jurisdiction the DAR's petition for annulment of deeds of sale and
xxxx
cancellation of titles before the PARAD, and in holding that it is the regular courts that should determine if indeed
there were violations of the agrarian laws which would justify the grant of such petition. As can be determined
Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of possession of
from the allegations of the petition, the DARAB has jurisdiction over such case which involves agrarian reform
private lands executed by the original landowner in violation of the Act shall be null and void: provided,
matters under Section 1 (1.5) and (1.13), Rule II of the 2003 DARAB Rules of Procedure.
however, that those executed prior to this Act shall be valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall inform
WHEREFORE, the petition is GRANTED, and the Court of Appeals Decision dated May 29, 2009 and its
the Department of Agrarian Reform (DAR) within thirty (30) days of any transaction involving agricultural lands
Resolution dated December 2, 2009 in CA-G.R. SP No. 104896, are REVERSED and SET ASIDE. The
in excess of five (5) hectares.
Resolutions dated February 7, 2008 and June 26, 2008 of the Provincial Adjudicator of the Department of
Agrarian Reform Adjudication Board, Region IV-A, are REINSTATED. The said Adjudicator is ORDERED to
Section 73. Prohibited Acts and Omissions. — The following are prohibited: (a) The ownership or possession,
proceed with dispatch in the resolution of the Petition for Annulment of Deeds of Sale and Cancellation of TCT
for the purpose of circumventing the provisions of this Act, of agricultural lands in excess of the total
Nos. T-238504, T-238505, T-238506, T-238507, T-238503, and T-238502, docketed as DARAB Case No. R-
retention limits or award ceilings by any person, natural or juridical, except those under collective ownership
0403-0032-0037-06.
by farmer-beneficiaries.
xxxx
SO ORDERED.
(e) The sale, transfer, conveyance or change of the nature of lands outside of urban centers and city limits
either in whole or in part after the effectivity of this Act. The date of the registration of the deed of conveyance
in the Register of Deeds with respect to titled lands and the date of the issuance of the tax declaration to the
transferee of the property with respect to unregistered lands, as the case may be. shall be conclusive for the
purpose of this Act.
As Eduardo's titles contain such statutory liens, respondents have imputed knowledge that the transfer of the
subject properties in excess of the landowner's 5-hectare (50,000 sq. m.) retention limit under the CARL could
have been illegal as it appears to circumvent the coverage of CARP. Thus, until the PARAD has decided with
finality the DAR's petition for annulment of deeds of sale and cancellation of titles for alleged violation of Section
6, paragraph 4 of RA 6657, respondents cannot claim that they are innocent purchasers for value and in good faith.

There is also no merit in respondents' contention that the TCTs issued in their favor have become incontrovertible
and indefeasible, and can no longer be altered, canceled or modified or subject to any collateral attack after the
expiration of one (1) year from the date of entry of the decree of registration, pursuant to Section 32 of P.D. No.
1529. In Heirs of Clemente Ermac v. Heirs of Vicente Ermac, the Court clarified the foregoing principle in this
wise:
While it is true that Section 32 of PD 1529 provides that the decree of registration becomes incontrovertible after a
year, it does not altogether deprive an aggrieved party of a remedy in law. The acceptability of the Torrens System
would be impaired, if it is utilized to perpetuate fraud against the real owners.

Furthermore, ownership is not the same as a certificate of title. Registering a piece of land under the Torrens
System does not create or vest title, because registration is not a mode of acquiring ownership. A certificate of title
is merely an evidence of ownership or title over the particular property described therein. Its issuance in favor of a
particular person does not foreclose the possibility that the real property may be co-owned with persons not named
in the certificate, or that it may be held in trust for another person by the registered owner.