G.R. No.

173085 : January 19, 2011

PHILIPPINE VETERANS BANK, Petitioner, v. BASES CONVERSION
DEVELOPMENT AUTHORITY, LAND BANK OF THE PHILIPPINES , ARMANDO
SIMBILLO, CHRISTIAN MARCELO, ROLANDODAVID, RICARDO BUCUD, PABLO SANTOS,
AGRIFINA ENRIQUEZ, CONRADO ESPELETA, CATGERUBE CASTRO, CARLITO
MERCADO and ALFREDO SUAREZ, Respondent.
This case is about the authority of the court in an expropriation case to adjudicate questions of ownership of the
subject properties where such questions involve the determination of the validity of the issuance to the
defendants of Certificates of Land Ownership Awards (CLOAs) and Emancipation Patents (EPs), questions that
fall within the jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).
The Facts and the Case
In late 2003 respondent Bases Conversion Development Authority (BCDA), a government corporation, filed
several expropriation actions before the various branches of the Regional Trial Court (RTC) of Angeles City,
for acquisition of lands needed for the construction of the Subic-Clark-Tarlac Expressway Project. Ten of these
cases were raffled to Branch 58 of the court
1
cralaw and it is these that are the concern of the present petition.
The defendants in Branch 58 cases were respondents Armando Simbillo, Christian Marcelo, Rolando David,
Ricardo Bucud, Pablo Santos, Agrifina Enriquez, Conrado Espeleta, Catgerube Castro, Carlito Mercado, and
Alfredo Suarez. They were the registered owners of the expropriated lands that they acquired as beneficiaries of
the comprehensive agrarian reform program. Another defendant was Land Bank of the Philippines, the
mortgagee of the lands by virtue of the loans it extended for their acquisition. The lands in these cases were
located in Porac and Floridablanca, Pampanga.
On learning of the expropriation cases before Branch 58, petitioner Philippine Veterans Bank (PVB) filed
motions to intervene in all the cases with attached complaints-in-intervention, a remedy that it adopted in
similar cases with the other branches. PVB alleged that the covered properties actually belonged to Belmonte
Agro-Industrial Development Corp. which mortgaged the lands to PVB in 1976. PVB had since foreclosed on
the mortgages and bought the same at public auction in 1982. Unfortunately, the bank had been unable to
consolidate ownership in its name.
But, in its order of August 18, 2004,
2
cralaw Branch 58 denied PVB's motion for intervention on the ground that
the intervention amounts to a third-party complaint that is not allowed in expropriation cases and that the
intervention would delay the proceedings in the cases before it. Besides, said Branch 58, PVB had a pending
action for annulment of the titles issued to the individual defendants and this was pending before Branch 62 of
the court.
PVB filed its motion for reconsideration but Branch 58 denied the same, prompting the bank to file a petition
for certiorari with the Court of Appeals (CA).
3
cralaw On January 26, 2006 the CA rendered a decision,
dismissing the petition for lack of merit.
4
cralaw It also denied in a resolution dated June 2, 2006
5
cralawPVB's
motion for reconsideration.
Meanwhile, on April 3, 2006 Branch 58 issued separate decisions in all 10 cases before it, granting the
expropriation of the subject properties. The court noted the uncertainty as to the ownership of such properties
but took no action to grant BCDA's prayer in its complaint that it determine the question of ownership of the
same pursuant to Section 9, Rule 67 of the Revised Rules of Civil Procedure.
6
cralawredlaw
The Issue Presented
The issue presented in this case is whether or not the CA erred in holding that PVB was not entitled to intervene
in the expropriation cases before Branch 58 of the Angeles City RTC.
The Court's Ruling
PVB maintains that in deciding the case, the RTC and the CA ignored Section 9, Rule 67 of the 1997 Rules of
Civil Procedure, which authorizes the court adjudicating the expropriation case to hear and decide conflicting
claims regarding the ownership of the properties involved while the compensation for the expropriated property
is in the meantime deposited with the court. Section 9 provides: chanrob1esvirtwallawlibrary
Sec. 9. Uncertain ownership; conflicting claims. - If the ownership of the property taken is uncertain, or
there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the court for the benefit of the person adjudged in the same
proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums
awarded to either the defendant or the court before the plaintiff can enter upon the property, or retain it
for the public use or purpose if entry has already been made.
PVB's point regarding the authority of the court in expropriation cases to hear and adjudicate conflicting claims
over the ownership of the lands involved in such cases is valid. But such rule obviously cannot apply to PVB
for the following reasons: chanrob1esvirtwallawlibrary
1. At the time PVB tried to intervene in the expropriation cases, its conflict with the farmer beneficiaries who
held CLOAs, EPs, or TCTs emanating from such titles were already pending before Angeles City RTC Branch
62, a co-equal branch of the same court. Branch 58 had no authority to pre-empt Branch 62 of its power to hear
and adjudicate claims that were already pending before it.
2. Of course, subsequently, after the CA dismissed PVB's petition on January 26, 2006, the latter filed a motion
for reconsideration, pointing out that it had in the meantime already withdrawn the actions it filed with Branch
62 after learning from the decision of the Supreme Court in Department of Agrarian Reform v.
Cuenca,
7
cralaw that jurisdiction over cases involving the annulment of CLOAs and EPs were vested by
Republic Act 6657 in the DARAB.
8
cralawredlaw
PVB now points out that, since there was no longer any impediment in RTC Branch 58 taking cognizance of its
motion for intervention and adjudicating the parties' conflicting claims over the expropriated properties, the CA
was in error in not reconsidering its decision.
But PVB's withdrawal of its actions from Branch 62 cannot give Branch 58 comfort. As PVB itself insists,
jurisdiction over the annulment of the individual defendants' CLOAs and EPs (which titles if annulled would
leave PVB's titles to the lands unchallenged) lies with the DARAB. Branch 58 would still have no power to
adjudicate the issues of ownership presented by the PVB's intervention.
Actually, PVB's remedy was to secure an order from Branch 58 to have the proceeds of the expropriation
deposited with that branch in the meantime, pending adjudication of the issues of ownership of the expropriated
lands by the DARAB. Section 9 above empowers the court to order payment to itself of the proceeds of the
expropriation whenever questions of ownership are yet to be settled. There is no reason why this rule should not
be applied even where the settlement of such questions is to be made by another tribunal.
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals dated
January 26, 2006 and its resolution dated June 2, 2006 in CA-G.R. SP 88144.
SO ORDERED.
Digested
FACTS:
BCDA filed several expropriation actions before the branches of the RTC of Angeles City for the acquisition of
lands needed to construct the Subic-Clark-Tarlac Expressway (SCTEX). The defendants in this case are the
registered owners of the expropriated lands that they acquired as beneficiaries of the Comprehensive Agrarian
Reform Program (CARP). Ten of these cases were raffled off to Branch 58 of the RTC of Angeles City.

Upon learning of the expropriation cases filed, PVB filed a motion to intervene and alleged that the properties
actually belonged to Belmonte Agro-Industrial Development Corp. which mortgaged the lands to PVB in 1976.
PVB bought the land upon foreclosure but was not able to consolidate ownership in its name. PVB's motion was
denied on the ground that the intervetion amounted to a third-party complaint that is not allowed in
expropriation cases and that it will only serve to delay the proceedings. PVB's motion for reconsideration was
also denied by the CA.

ISSUE:
Whether or not PVB is entitled to intervene in expropriation cases.

HELD:
No. Sec 9, Rule 67 of the Rules of Civil Procedure empowers the court to order payment to itself of the
proceeds of the expropriation whenever questions of ownership are yet to be settled. At the time PVB tried to
intervene, its conflict with the farmer beneficiaries were already pending before another branch of RTC Angeles
City. Branch 58 had no authority to pre-empt the other branch of its power to hear and adjudicate claims before
it.

PVB's withdrawal of its actions in the other branch because it was found that jurisdiction lies with the
Department of Agrarian Reform Adjudication Board (DARAB) will still leave Branch 58 with no power to
adjudicate the issues of ownership presented by PVB's intervention. PVB's remedy is to secure an order from
Branch 58 to have the proceeds of the expropriation deposited with that branch, pending the adjudication of
ownership by the DARAB.

























Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

REPUBLIC OF THE PHILIPPINES,
represented by the DEPARTMENT OF
AGRARIAN REFORM, through the
HON. SECRETARY NASSER C.
PANGANDAMAN,
Petitioner,

- versus -

SALVADOR N. LOPEZ AGRI-
BUSINESS CORP., represented by
SALVADOR N. LOPEZ, JR., President
and General
Manager,
Respondent.
x- - - - - - - - - - - - - - - - - - - - -
xSALVADOR N. LOPEZ AGRI-
BUSINESS CORP., represented by
SALVADOR N. LOPEZ, JR., President
and General Manager,
Petitioner,


- versus -


DEPARTMENT OF AGRARIAN
REFORM, through the Honorable
Secretary,
Respondent.

G.R. No. 178895
















G.R. No. 179071

Present:

CARPIO MORALES, J.,
Chairperson,
BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

Promulgated:

January 10, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

Before us are two Rule 45 Petitions
[1]
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
[2]
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:
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:

Title No. Area Location
TCT No. T-12635 (Lot 1454-A & 1296) 49.5706 has. Bo. Limot,
Mati,Davao Oriental
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 petitioners 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 datedMarch 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.

x x x

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 Directors Orders to respondent DAR.
On June 10, 1998, the latter issued its assailed Order affirming the Regional Directors 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 petitioners 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, petitioners Motion for Reconsideration was denied by respondent
prompting the former to file the instant petition.
[3]


In the assailed Decision dated 30 June 2006,
[4]
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
[5]
and the DAR
[6]
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.
[7]

The DAR and SNLABC elevated the matter to this Court by filing separate Rule 45 Petitions (docketed
as G.R. No. 178895
[8]
and 179071,
[9]
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 Courts ruling in Luz Farms v. DAR.
[10]
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.
[11]
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.
[12]
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 SNLABCs 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 SNLABCs
livestock business prior to the enactment of the CARL.
In Luz Farms v. Secretary of the Department of Agrarian Reform,
[13]
the Court declared unconstitutional
the CARL provisions
[14]
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.
[15]
Thus, lands devoted to the raising of livestock, poultry and swine have been classified as
industrial, not agricultural, and thus exempt from agrarian reform.
[16]

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;
[17]
and
for ascertaining whether the area subject of the application for exemption had been devoted to livestock-raising
as of 15 June 1988.
[18]
The MAROs authority to investigate has subsequently been replicated in the current
DAR guidelines regarding lands that are actually, directly and exclusively used for livestock raising.
[19]
As the
primary official in charge of investigating the land sought to be exempted as livestock land, the MAROs
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.
[20]
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.
[21]

In the instant case, the MARO in its ocular inspection
[22]
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 SNLABCs 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 DARs claims, the lack of information as regards the initial breeders and the specific date
when the cattle were first introduced in the MAROs 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 MAROs
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.
[23]

The DAR, however, insisted in its Petition
[24]
on giving greater weight to the inconsistencies appearing in
the documentary evidence presented, and noted by the DAR Secretary, in order to defeat SNLABCs 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.
[25]
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 MAROs 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 latters
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 lands 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.
[26]
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 latters
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.
[27]
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,
[28]
wherein we ruled thus:
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 SNLABCs 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.
[29]

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 SNLABCs 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.
[30]
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. SNLABCs 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 SNLABCs use of the area as a seasonal extension of the applicants grazing
lands during the summer. Therefore, the Limot lands cannot be claimed to have been actually, directly and
exclusively used for SNLABCs 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.
SNLABCs 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 SNLABCs farm workers.
[31]
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. SNLABCs
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.






ROXAS & COMPANY, INC.,
Petitioner,





- versus -





DAMBA-NFSW and the
DEPARTMENT OF AGRARIAN
REFORM,
Respondents.

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



G.R. No. 149548

Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO, BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA,
PEREZ,
MENDOZA, and
SERENO, JJ.

This resolves the Motion for Reconsideration filed on January 13, 2010 by Roxas & Co., Inc. (Roxas &
Co.) and the Motion for Partial Reconsideration filed on January 29, 2010 by Damayan ng Manggagawang
Bukid sa Asyenda Roxas-National Federation of Sugar Workers (DAMBA-NFSW) and Katipunan ng mga
Magbubukid sa Hacienda Roxas, Inc. (KAMAHARI), et al., which both assail the Courts December 4, 2009
Decision in these consolidated cases.

After the above-mentioned Motions were filed, Roxas & Co. filed on April 26, 2010 a Motion to Hold in
Abeyance the Resolution of its earlier Motion for Reconsideration.

Roxas & Co. moves for reconsideration on the following grounds:

I. CLOA 6654, INSOFAR AS IT COVERS THE 3 PARCELS OF
LAND WITH AN AGGREGATE AREA OF 103.1436 HECTARES,
SHOULD BE CANCELLED IN VIEW OF THE FINAL AND
EXECUTORY 02 APRIL 1996 COURT OF APPEALS DECISION
EXEMPTING THE SAID PROPERTIES FROM THE COVERAGE OF
THE COMPREHENSIVE AGRARIAN REFORM LAW (CARL).

II. CLOA 6654, INSOFAR AS IT COVERS THE REMAINING 410
HECTARES, SHOULD BE CANCELLED PURSUANT TO SECTION IV
(B) (10) OF DAR MEMORANDUM ORDER NO. 2, SERIES OF 1994.

III. WITH THE CARP-EXEMPTION OF THE 9 PARCELS OF
LAND WITH AN AGGREGATE AREA OF 45.9771 HECTARES,
ROXAS LIABILITY TO PAY DISTURBANCE COMPENSATION IS
LIMITED TO ITS AGRICULTURAL LESSEES AND NOT TO ALL
FARMER-BENEFICIARIES FOUND IN THE SUBJECT PROPERTIES
PURSUANT TO REPUBLIC ACT NO. 3844, AS AMENDED, AND THE
RULING IN BACALING VS. MUYA.

IV. THE ADDITIONAL CERTIFICATIONS WERE SUBMITTED
TO PROVE THAT THE 51.5472-HECTARE PROPERTIES ARE CARP-
EXEMPT, AND COROLLARILY, ADDRESS THE GROUNDS USED
BY THEN DAR SECRETARY IN DENYING ROXAS INITIAL
EXEMPTION APPLICATION. THE ALLEGED INCONSISTENCIES
ARE EITHER IMMATERIAL OR CAN BE READILY EXPLAINED.

V. BASED ON THE EVIDENCE SUBMITTED BY ROXAS, THE
51.5472-HECTARE PROPERTIES SUBJECT OF G.R. NO. 179650
ARE CARP-EXEMPT. HENCE, THE PREMATURE INSTALLATION
BY THE DAR OF SEVERAL FARMER-BENEFICIARIES IN THE
PROPERTIES IS ILLEGAL.

VI. THE ROXAS LANDHOLDINGS SHOULD BE DECLARED
EXEMPT FROM THE COVERAGE OF CARP.

A. APPLYING DAR V. FRANCO, THE ROXAS
LANDHOLDINGS SHOOULD BE DECLARED CARP-EXEMPT
IN VIEW OF THE PTA ENACTMENT DELINEATING
SPECIFIC TOURISM AREAS.
B. CONSISTENT WITH THE DAR EXEMPTION ORDER
CITED IN THE FRANCO CASE AND THE SUBMISSION OF
THE OFFICE OF THE SOLICITOR GENERAL, THE ROXAS
LANDHOLDINGS, WHICH ARE (A) LOCATED WITHIN THE
PTA-IDENTIFIED TOURISM PRIORITY AREAS AND (B)
INCLUDED IN THE NASUGBU TOURISM DEVELOPMENT
PLAN, SHOULD BE DECLARED CARP-EXEMPT.
C. WITH THE PTA ENACTMENT, THE ROXAS
LANDHOLDINGS ARE CARP-EXEMPT FOLLOWING THE
COURTS PRONOUNCEMENT THAT THE ONLY TIME
[THE NATALIA AND ALLARDE CASES] MAY FIND
APPLICATION IS WHEN THE PTA ACTUALLY IDENTIFIES
WELL-DEFINED GEOGRAPHIC AREAS WITHIN THE ZONE
WITH POTENTIAL TOURISM VALUE.
[1]


On the other hand, DAMBA-NFSW and KAMAHARI, et al. move for partial reconsideration of the
assailed Decision on the following grounds:

I. THE [COURT] COMMITTED A REVERSIBLE ERROR IN RULING TO
EXEMPT FROM CARP COVERAGE THE SUBJECT NINE (9) LOTS WITH ALLEGED
AREA OF 45.9771 HECTARES OF HACIENDA PALICO BASED ON NASUGBU
MUNICIPAL ZONING ORDINANCE NO. 4, SERIES OF 1982, NOTWITHSTANDING
THE FACT THAT:

A. ROXAS [& CO.] MISERABLY FAILED TO SHOW PROOF
THAT THE SUBJECT ZONING ORDINANCE UNDER ZONE A. VII
THEREOF, SPECIFICALLY DELINEATE THE SAID LOTS TO HAVE
BEEN RE-CLASSIFIED TO NON-AGRICULTURAL USE;

B. ROXAS [& CO.] HAS MERE FALSE CERTIFICATIONS
ISSUED BY THE HLURB AND MPDC OF NASUGBU WHICH DO
NOT FIND SUPPORT IN THE REFERRED MUNICIPAL ZONING
ORDINANCE;

C. ROXAS [& CO.] FAILED TO SUBMIT IN EVIDENCE THE
COMPREHENSIVE LAND USE PLAN OF NASUGBU, BATANGAS
PROVING SUCH RECLASSIFICATION TO NON-AGRICULTURAL
USE OF SUBJECT LOTS PRIOR TO THE ENACTMENT OF R.A. 6657
ON JUNE 15, 1988; AND

D. ROXAS [& CO.] MISERABLY FAILED TO IDENTIFY
SUBJECT LOTS BOTH IN AREAS COVERED AND LOCATIONS.

II. GRANTING ARGUENDO THAT THE SUBJECT NASUGBU MUNICIPAL ZONING
ORDINANCE NO. 4, SERIES OF 1982 IS A VALID BASIS FOR EXEMPTION FROM
CARP COVERAGE OF SUBJECT PARCELS OF LAND, AND FURTHER
GRANTING ARGUENDO THAT ROXAS WAS ABLE TO PROVE THAT THE SUBJECT
LOTS ARE WITHIN THE PU[R]PORTED URBAN CORE ZONE, STILL THE
[COURT] COMMITTED A REVERSIBLE ERROR IN UPHOLDING THE COURT OF
APPEALS AND THE DAR SECRETARY[S] ORDER OF CARP EXEMPTION
WITHOUT OBSERVING THE RIGHT OF THE FARMER-BENEFICIARIES TO
PROCEDURAL DUE PROCESS.

Preliminarily, the Court denies Roxas & Co.s Motion to Hold in Abeyance the Resolution of its earlier
Motion for Reconsideration for lack of merit. Roxas & Co. asks the Court to hold its judgment on its motion
for reconsideration pending the outcome of its application with the Tourism Infrastructure and Enterprise Zone
Authority (TIEZA) for the designation of fourteen geographic areas of the Roxas Properties as [tourism
enterprise zones], pursuant to the Tourism Act.

It bears stressing that Roxas & Co.s pending application with TIEZA is totally immaterial to the
resolution of the present petitions which delve mainly on the issue of whether the subject lands are exempt from
Comprehensive Agrarian Reform Program (CARP) coverage.

While the Court acknowledged the passage of the Tourism Act as another vehicle for potential tourism
areas to be exempted from CARP coverage, that did not in any way pronounce as meritorious Roxas & Co.s
subsequent application with the TIEZA to declare its properties as tourism enterprise zones. That is for the
TIEZA, not this Court, to determine. Whatever decision the TIEZA renders in Roxas & Co.s application does
not in any way affect the merits of these consolidated cases.

Roxas & Co. cannot have it both ways. It must either zealously argue its legal position if it believes it to
be meritorious or altogether abandon it if it has reservations. Its Motion to Hold in Abeyance the Resolution of
its earlier Motion for Reconsideration effectively coaxes the Court to wait for the outcome of its TIEZA
application and ultimately delay the final resolution of these consolidated cases.

On Roxas & Co.s Motion for Reconsideration, no substantial arguments were raised to warrant a
reconsideration of the Decision. The Motion contains merely an amplification of the main arguments and
factual matters already submitted to and pronounced without merit by the Court in its Decision. In the Courts
considered view, nothing more is left to be discussed, clarified or done in these cases since all the main issues
raised have been passed upon and definitely resolved.

Roxas & Co. raises the fringe issue that DAR Memorandum Circular No. 7 (Series of 2004) has no force
and effect since the said DAR Memorandum Circular was not published and filed with the Office of the
National Administrative Register.

The contention fails. It should be stressed that there is no need for the publication and filing of the said
DAR Memorandum Circular with the ONAR as it is merely an administrative interpretation.
[2]


Interpretative rule x x x x is promulgated by the administrative agency to interpret,
clarify or explain statutory regulations under which the administrative body operates. The
purpose or objective of an interpretative rule is merely to construe the statute being
administered. It purports to do no more than interpret the statute. Simply, the rules tries to
say what the statute means. Generally, it refers to no single person or party in particular but
concerns all those belonging to the same class which may be covered by the said
interpretative rule. It need not be published and neither is a hearing required since it is
issued by the administrative body as an incident of its power to enforce the law and is
intended merely to clarify statutory provisions for proper observance by the people. x x
x x.
[3]
(Emphasis and underscoring supplied)

Roxas & Co. goes on to contend that its liability to pay disturbance compensation is limited to
its agricultural lessees only and not to farmer-beneficiaries, citing Republic Act No. 3844 (RA 3844), as
amended, and Bacaling v. Muya.
[4]


Roxas & Co. is merely nitpicking on the issue. Since the DAR had initially issued CLOAs to the
farmer-beneficiaries of the nine parcels of land in Hacienda Palico, the assailed Decision merely reiterated the
original designation of the affected individuals as farmer-beneficiaries who should be entitled to disturbance
compensation before the cancellation of their respective CLOAs is effected. This is in pursuance of the
directive of DAR Administrative Order No. 6 (Series of 1994) which mandates the payment of disturbance
compensation before Roxas & Co.s application for exemption may be completely granted.

As for the Motion for Partial Reconsideration of DAMBA-NFSW and KAMAHARI, et al., the same
likewise fails as it only rehashes earlier arguments which have been adequately passed upon by the
Court. Notably, the main arguments raised by the Motion are evidentiary in nature that have been resolved by
the DAR Secretary, whose decision on factual controversies deserve utmost respect, if not finality.

Finally, the Court reiterates the explanation of the DAR Secretary why CLOA holders need not be
informed of the pending application for exemption, to wit:

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

x x x x

With regard [to] the allegation that oppositors-movants are already CLOA
holders of subject propert[ies] and deserve to be notified, as owners, of the initiated
questioned exemption application, is of no moment. The Supreme Court in the case
of Roxas [&] Co., Inc. v. Court of Appeals, 321 SCRA 106, held:

We stress that the failure of respondent DAR to comply with the requisites of
due process in the acquisition proceedings does not give this Court the power to
nullify the CLOAs already issued to the farmer beneficiaries. x x x x. Anyhow, the
farmer[-]beneficiaries hold the property in trust for the rightful owner of the land.

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

Finally, this Office finds no substantial basis to reverse the assailed Orders
since there is substantial compliance by the applicant with the requirements for the
issuance of exemption clearance under DAR AO 6 (1994).
[5]

WHEREFORE, the Motion for Reconsideration filed by Roxas & Co., Inc. and the Motion for
Partial Reconsideration filed by DAMBA-NFSW and KAMAHARI are DENIEDfor lack of merit.

No further pleadings shall be entertained. Let entry of judgment be made in due course.
SO ORDERED.

JOSE MENDOZA, cralaw
*
Petitioner, v. NARCISO GERMINO and BENIGNO GERMINO, Respondents.
Before us is the petition for review on certiorari filed by petitioner Jose Mendoza to challenge the decision and
the resolutioncof the Court of Appeals (CA) in CA-G.R. SP No. 48642.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly summarized below.
On June 27, 1988, the petitioner and Aurora C. Mendozacralaw
5
(plaintiffs) filed a complaint with the
Municipal Trial Court (MTC) of Sta. Rosa, Nueva Ecija against respondent Narciso Germino for forcible
entry.cralaw
6

The plaintiffs claimed that they were the registered owners of a five-hectare parcel of land in Soledad, Sta.
Rosa, Nueva Ecija (subject property) under Transfer Certificate of Title No. 34267. Sometime in 1988,
respondent Narciso unlawfully entered the subject property by means of strategy and stealth, and without their
knowledge or consent. Despite the plaintiffs' repeated demands, respondent Narciso refused to vacate the
subject property.cralaw
7

On August 9, 1988, respondent Narciso filed his answer, claiming, among others, that his brother, respondent
Benigno Germino, was the plaintiffs' agricultural lessee and he merely helped the latter in the cultivation as a
member of the immediate farm household.cralaw
8

After several postponements, the plaintiffs filed a motion to remand the case to the Department of Agrarian
Reform Adjudication Board (DARAB), in view of the tenancy issue raised by respondent Narciso.
Without conducting a hearing, and despite respondent Narciso's objection, the MTC issued an order on October
27, 1995, remanding the case to the DARAB, Cabanatuan City for further proceedings.cralaw
9

On December 14, 1995, the plaintiffscralaw
10
filed an amended complaint with the Provincial Agrarian Reform
Adjudicator (PARAD), impleading respondent Benigno as additional defendant.
The plaintiffs alleged that Efren Bernardo was the agricultural lessee of the subject property. Respondent
Benigno unlawfully entered the subject property in 1982 or 1983 through strategy and stealth, and without their
knowledge or consent. He withheld possession of the subject property up to 1987, and appropriated for himself
its produce, despite repeated demands from the plaintiffs for the return of the property. In 1987, they discovered
that respondent Benigno had transferred possession of the subject property to respondent Narciso, who refused
to return the possession of the subject property to the plaintiffs and appropriated the land's produce for himself.
The subject property was fully irrigated and was capable of harvest for 2 cropping seasons. Since the subject
property could produce 100 cavans of palay per hectare for each cropping season, or a total of 500 cavans per
cropping season for the five-hectare land, the plaintiffs alleged that the respondents were able to harvest a total
of 13,000 cavans of palay from the time they unlawfully withheld possession of the subject property in 1982
until the plaintiffs filed the complaint. Thus, they prayed that the respondents be ordered to jointly and severally
pay 13,000 cavans of palay, or its monetary equivalent, as actual damages, to return possession of the subject
property, and to pay P15,000.00 as attorney's fees.cralaw
11

On January 9, 1996, the respondents filed their answer denying the allegations in the complaint, claiming,
among others, that the plaintiffs had no right over the subject property as they agreed to sell it to respondent
Benigno for P87,000.00. As a matter of fact, respondent Benigno had already made aP50,000.00 partial
payment, but the plaintiffs refused to receive the balance and execute the deed of conveyance, despite repeated
demands. The respondents also asserted that jurisdiction over the complaint lies with the Regional Trial Court
since ownership and possession are the issues.cralaw
12

THE PARAD RULING
In a March 19, 1996 decision, PARAD Romeo Bello found that the respondents were mere usurpers of the
subject property, noting that they failed to prove that respondent Benigno was the plaintiffs' bona
fide agricultural lessee. The PARAD ordered the respondents to vacate the subject property, and pay the
plaintiffs 500 cavans of palay as actual damages.cralaw
13

Not satisfied, the respondents filed a notice of appeal with the DARAB, arguing that the case should have been
dismissed because the MTC's referral to the DARAB was void with the enactment of Republic Act (R.A.) No.
6657,cralaw
14
which repealed the rule on referral under Presidential Decree (P.D.) No. 316.cralaw
15

THE DARAB RULING
The DARAB decided the appeal on July 22, 1998. It held that it acquired jurisdiction because of the amended
complaint that sufficiently alleged an agrarian dispute, not the MTC's referral of the case. Thus, it affirmed the
PARAD decision.cralaw
16

The respondents elevated the case to the CA via a petition for review under Rule 43 of the Rules of
Court.cralaw
17

THE CA RULING
The CA decided the appeal on October 6, 2003.cralaw
18
It found that the MTC erred in transferring the case to
the DARAB since the material allegations of the complaint and the relief sought show a case for forcible entry,
not an agrarian dispute. It noted that the subsequent filing of the amended complaint did not confer jurisdiction
upon the DARAB.

Thus, the CA set aside the DARAB decision and remanded the case to the MTC for further
proceedings.
When the CA deniedcralaw
19
the subsequent motion for reconsideration,cralaw
20
the petitioner filed the present
petition.cralaw
21

THE PETITION
The petitioner insists that the jurisdiction lies with the DARAB since the nature of the action and the allegations
of the complaint show an agrarian dispute.
THE CASE FOR THE RESPONDENTS
The respondents submit that R.A. No. 6657 abrogated the rule on referral previously provided in P.D. No. 316.
Moreover, neither the Rules of Court nor the Revised Rules on Summary Procedure (RRSP) provides that
forcible entry cases can be referred to the DARAB.
THE ISSUE
The core issue is whether the MTC or the DARAB has jurisdiction over the case.
OUR RULING
We deny the petition.
J urisdiction is determined by the allegations in the complaint
It is a basic rule that jurisdiction over the subject matter is determined by the allegations in the
complaint.cralaw
22
It is determined exclusively by the Constitution and the law. It cannot be conferred by the
voluntary act or agreement of the parties, or acquired through or waived, enlarged or diminished by their act or
omission, nor conferred by the acquiescence of the court. Well to emphasize, it is neither for the court nor the
parties to violate or disregard the rule, this matter being legislative in character.cralaw
23

Under Batas Pambansa Blg. 129,cralaw
24
as amended by R.A. No. 7691,cralaw
25
the MTC shall have exclusive
original jurisdiction over cases of forcible entry and unlawful detainer. The RRSPcralaw
26
governs the remedial
aspects of these suits.cralaw
27

Under Section 50cralaw
28
of R.A. No. 6657, as well as Section 34cralaw
29
of Executive Order No. 129-
A,cralaw
30
the DARAB has primary and exclusive jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program,
and other agrarian laws and their implementing rules and regulations.
An agrarian dispute refers to any controversy relating to, among others, tenancy over lands devoted to
agriculture.cralaw
31
For a case to involve an agrarian dispute, the following essential requisites of an
agricultural tenancy relationship must be present: (1) the parties are the landowner and the tenant; (2) the
subject is agricultural land; (3) there is consent; (4) the purpose is agricultural production; (5) there is personal
cultivation; and (6) there is sharing of harvest or payment of rental.cralaw
32

In the present case, the petitioner, as one of the plaintiffs in the MTC, made the following allegations and prayer
in the complaint:chanrobles virtual law library
3. Plaintiffs are the registered owners of a parcel of land covered by and described in Transfer Certificate of
Title Numbered 34267, with an area of five (5) hectares, more or less situated at Bo. Soledad, Sta. Rosa, Nueva
Ecija. x x x;chanroblesvirtualawlibrary
4. That so defendant thru stealth, strategy and without the knowledge, or consent of administrator x x x much
more of the herein plaintiffs, unlawfully entered and occupied said parcel of land;chanroblesvirtualawlibrary
5. Inspite of x x x demands, defendant Germino, refused and up to the filing of this complaint, still refused to
vacate the same;chanroblesvirtualawlibrary
6. The continuos (sic) and unabated occupancy of the land by the defendant would work and cause prejudice
and irreparable damage and injury to the plaintiffs unless a writ of preliminary injunction is
issued;chanroblesvirtualawlibrary
7. This prejudice, damage or injury consist of disturbance of property rights tantamount to deprivation of
ownership or any of its attributes without due process of law, a diminution of plaintiffs' property rights or
dominion over the parcel of land subject of this dispute, since they are deprived of freely entering or possessing
the same;chanroblesvirtualawlibrary
8. The plaintiffs are entitled to the relief demanded or prayed for, and the whole or part of such relief/s consist
of immediately or permanently RESTRAINING, ENJOINING or STOPPING the defendant or any person/s
acting in his behalf, from entering, occupying, or in any manner committing, performing or suffering to be
committed or performed for him, any act indicative of, or tending to show any color of possession in or about
the tenement, premises or subject of this suit, such as described in par. 3 of this
complaint;chanroblesvirtualawlibrary
9. Plaintiffs are ready and willing to post a bond answerable to any damage/s should the issuance of the writ x x
x;chanroblesvirtualawlibrary
10. As a consequence of defendant's malevolent refusal to vacate the premises of the land in dispute, plaintiffs
incurred litigation expenses of P1,500.00, availing for the purpose the assistance of a counsel at an agreed
honorarium of P5,000.00 and P250.00 per appearance/ not to mention the moral damages incurred due to
sleepless nights and mental anxiety, including exemplary damages, the award and amount of which are left to
the sound discretion of this Honorable Court.
P R A Y E R
WHEREFORE, it is respectfully prayed of this Honorable Court that pending the resolution of the issue in this
case, a restraining order be issued RESTRAINING, ENJOINING, or STOPPING the defendant or any person/s
acting in his behalf, from ENTERING OR OCCUPYING the parcel of land, or any portion thereof, described in
paragraph 3 of this complaint, nor in any manner committing, performing or suffering to be committed or,
performed for him, by himself or thru another, any act indicative of, or tending to show any color of possession
in or about the premises subject of this suit;chanroblesvirtualawlibrary
THEREAFTER, making said writ of preliminary injunction PERMANENT; and on plaintiffs' damages,
judgment be rendered ordering the defendant to pay to the plaintiffs the sum alleged in paragraph 10 above.
GENERAL RELIEFS ARE LIKEWISE PRAYED FOR.cralaw
33

Based on these allegations and reliefs prayed, it is clear that the action in the MTC was for forcible entry.
Allegation of tenancy does not divest the MTC of jurisdiction
Although respondent Narciso averred tenancy as an affirmative and/or special defense in his answer, this did
not automatically divest the MTC of jurisdiction over the complaint. It continued to have the authority to hear
the case precisely to determine whether it had jurisdiction to dispose of the ejectment suit on its
merits.cralaw
34
After all, jurisdiction is not affected by the pleas or the theories set up by the defendant in an
answer or a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims
of the defendant.cralaw
35

Under the RRSP, the MTC is duty-bound to conduct a preliminary conferencecralaw
36
and, if necessary, to
receive evidence to determine if such tenancy relationship had, in fact, been shown to be the real
issue.cralaw
37
The MTC may even opt to conduct a hearing on the special and affirmative defense of the
defendant, although under the RRSP, such a hearing is not a matter of right.cralaw
38
If it is shown during the
hearing or conference that, indeed, tenancy is the issue, the MTC should dismiss the case for lack of
jurisdiction.cralaw
39

In the present case, instead of conducting a preliminary conference, the MTC immediately referred the case to
the DARAB. This was contrary to the rules. Besides, Section 2cralaw
40
of P.D. No. 316, which required the
referral of a land dispute case to the Department of Agrarian Reform for the preliminary determination of the
existence of an agricultural tenancy relationship, has indeed been repealed by Section 76cralaw
41
of R.A. No.
6657 in 1988.
Amended complaint did confer jurisdiction on the DARAB
Neither did the amendment of the complaint confer jurisdiction on the DARAB. The plaintiffs alleged in the
amended complaint that the subject property was previously tilled by Efren Bernardo, and the respondents took
possession by strategy and stealth, without their knowledge and consent. In the absence of any allegation of a
tenancy relationship between the parties, the action was for recovery of possession of real property that was
within the jurisdiction of the regular courts.cralaw
42

The CA, therefore, committed no reversible error in setting aside the DARAB decision. While we lament the
lapse of time this forcible entry case has been pending resolution, we are not in a position to resolve the dispute
between the parties since the evidence required in courts is different from that of administrative
agencies.cralaw
43

WHEREFORE, the petition is DENIED. The October 6, 2003 Decision and October 12, 2004 Resolution of
the Court of Appeals in CA-G.R. SP No. 48642 are AFFIRMED. No pronouncement as to costs.
SO ORDERED.














G.R. No. 164195 April 5, 2011
APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
We resolve Land Bank of the Philippines (LBPs) 2nd Motion for Reconsideration of December 14, 2010
that addresses our Resolutions of October 12, 2010 and November 23, 2010. This motion prays as well for the
holding of oral arguments. We likewise resolve the Office of the Solicitor Generals (OSG) Motion for Leave to
Intervene and to Admit Motion for Reconsideration-in-Intervention dated February 15, 2011 in behalf of the
Republic of the Philippines (Republic).
The Motion for Reconsideration
The LBP submits the following arguments in support of its 2nd motion for reconsideration:
a) the test of "transcendental importance" does not apply to the present case;
b) the standard of "transcendental importance" cannot justify the negation of the doctrine of
immutability of a final judgment and the abrogation of a vested right in favor of the Government that
respondent LBP represents;
c) the Honorable Court ignored the deliberations of the 1986 Constitutional Commission showing that
just compensation for expropriated agricultural property must be viewed in the context of social justice;
and
d) granting arguendo that the interest payment has factual and legal bases, only six (6%) percent interest
per annum may be validly imposed.
We have more than amply addressed argument (d) above in our October 12, 2010 Resolution, and we see no
point in further discussing it. Without in any way detracting from the overriding effect of our main and primary
ruling that the present 2nd motion for reconsideration is a prohibited motion that the Court can no longer
entertain, and if only to emphatically signal an unequivocal finis to this case, we examine for the last and final
time the LBPs other arguments.
In the course of the Courts deliberations, Mr. Justice Roberto A. Abad questioned the application of Section 3,
Rule 15 of the Internal Rules of the Supreme Court to the present 2nd motion for reconsideration. He posited
that instead of voting immediately on the present 2nd motion for reconsideration, the Court should instead first
consider the validity of our October 12, 2010 Resolution; he claimed that this Resolution is null and void
because the Court violated the above-cited provision of the Internal Rules when it did not first vote on whether
the Resolutions underlying motion (itself a 3rd motion for reconsideration) should be entertained before voting
on the motions merits. We shall lay to rest Mr. Justice Abads observation before dwelling on the merits of the
present 2nd motion for reconsideration.
Our Ruling
We find no merit in the LBPs second motion for reconsideration, and reject as well the Mr. Justice
Abads observation on how to approach the consideration of the present motion.
Mr. Justice Abads Observations/Objections;
The Rules on 2nd Motions for Reconsideration.
Mr. Justice Abads observation apparently stemmed from the peculiar history of the present case.
a. A recap of the history of the case.
This case was originally handled by the Third Division of this Court. In its original Decision of February 6,
2007, the Division affirmed the RTCs decision setting the just compensation to be paid and fixing the interest
due on the balance of the compensation due at 12% per annum. In its Resolution of December 19, 2007, the
Third Division resolved the parties motions for reconsideration by deleting the 12% interest due on the balance
of the awarded just compensation. The parties subsequent motions to reconsider this Resolution were denied on
April 30, 2008; on May 16, 2008, entry of judgment followed. Despite the entry of judgment, the present
petitioners filed a second motion for reconsideration that prayed as well that the case be referred to the Court en
banc. Finding merit in these motions, the Third Division referred the case to the En Banc for its disposition. On
December 4, 2009, the Court en banc denied the petitioners second motion for reconsideration. Maintaining
their belief in their demand to be granted 12% interest, the petitioners persisted in filing another motion for
reconsideration. In the interim, the Court promulgated its Internal Rules that regulated, among others, 2nd
motions for reconsideration. On October 12, 2010, the Court en banc granted by a vote of 8 for and 4 against
the petitioners motion and awarded the 12% interests the petitioners prayed for, thus affirming the interests
the RTC originally awarded. The Court subsequently denied the respondents motion for reconsideration, giving
rise to the present 2nd motion for reconsideration. It was at this point that the OSG moved for leave to
intervene.
b. The governing rules on
2nd motions for reconsideration
The basic rule governing 2nd motions for reconsideration is Section 2, Rule 52 (which applies to original
actions in the Supreme Court pursuant to Section 2, Rule 56) of the Rules of Court. This Rule expressly
provides:
Sec. 2. Second Motion for Reconsideration. No second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained.
The absolute terms of this Rule is tempered by Section 3, Rule 15 of the Internal Rules of the Supreme Court
that provides:
Sec. 3. Second Motion for Reconsideration. The Court shall not entertain a second motion for reconsideration
and any exception to this rule can only be granted in the higher interest of justice by the Court en banc upon a
vote of at least two-thirds of its actual membership. There is reconsideration "in the higher interest of justice"
when the assailed decision is not only legally erroneous, but is likewise patently unjust and potentially capable
of causing unwarranted and irremediable injury or damage to the parties. A second motion for reconsideration
can only be entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Courts declaration. [Emphases supplied.]
Separately from these rules is Article VIII, Section 4 (2) of the 1987 Constitution which governs the decision-
making by the Court en banc of any matter before it, including a motion for the reconsideration of a previous
decision. This provision states:
Section 4.
x x x x
(2) All cases involving the constitutionality of a treaty, international or executive agreement, or law, which shall
be heard by the Supreme Court en banc, and all other cases which under the Rules of Court are required to be
heard en banc, including those involving the constitutionality, application, or operation of presidential decrees,
proclamations, orders, instructions, ordinances, and other regulations, shall be decided with the concurrence of a
majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon.
Thus, while the Constitution grants the Supreme Court the power to promulgate rules concerning the practice
and procedure in all courts
1
(and allows the Court to regulate the consideration of 2nd motions for
reconsideration, including the vote that the Court shall require), these procedural rules must be consistent with
the standards set by the Constitution itself. Among these constitutional standards is the above quoted Section 4
which applies to "all other cases which under the Rules of Court are required to be heard en banc," and does not
make any distinction as to the type of cases or rulings it applies to, i.e, whether these cases are originally filed
with the Supreme Court, or cases on appeal, or rulings on the merits of motions before the Court. Thus, rulings
on the merits by the Court en banc on 2nd motions for reconsideration, if allowed by the Court to be entertained
under its Internal Rules, must be decided with the concurrence of a majority of the Members who actually took
part in the deliberations.
When the Court ruled on October 12, 2010 on the petitioners motion for reconsideration by a vote of 12
Members (8 for the grant of the motion and 4 against), the Court ruled on the merits of the petitioners motion.
This ruling complied in all respects with the Constitution requirement for the votes that should support a ruling
of the Court.
Admittedly, the Court did not make any express prior ruling accepting or disallowing the petitioners motion as
required by Section 3, Rule 15 of the Internal Rules. The Court, however, did not thereby contravene its own
rule on 2nd motions for reconsideration; since 12 Members of the Court opted to entertain the motion by voting
for and against it, the Court simply did not register an express vote, but instead demonstrated its compliance
with the rule through the participation by no less than 12 of its 15 Members.1avvphi1 Viewed in this light, the
Court cannot even be claimed to have suspended the effectiveness of its rule on 2nd motions for
reconsideration; it simply complied with this rule in a form other than by express and separate voting.
Based on these considerations, arrived at after a lengthy deliberation, the Court thus rejected Mr. Justice Abads
observations, and proceeded to vote on the question of whether to entertain the respondents present 2nd motion
for reconsideration. The vote was 9 to 2, with 9 Members voting not to entertain the LBPs 2nd motion for
reconsideration. By this vote, the ruling sought to be reconsidered for the second time was unequivocally
upheld; its finality already declared by the Court in its Resolution of November 23, 2010 was reiterated. To
quote the dispositive portion of the reiterated November 23, 2010 Resolution:
On these considerations, we hereby DENY the Motion for Reconsideration with FINALITY. No further
pleadings shall be entertained. Let entry of judgment be made in due course.
Thus, this Court mandated a clear, unequivocal, final and emphatic finis to the present case.
Landowners right to just compensation:
a matter of public interest
In assailing our October 12, 2010 resolution, the LBP emphasizes the need to respect the doctrine of
immutability of final judgments. The LBP maintains that we should not have granted the petitioners motion for
reconsideration in our October 12, 2010 Resolution because the ruling deleting the 12% interest had already
attained finality when an Entry of Judgment was issued. The LBP argues, too, that the present case does not
involve a matter of transcendental importance, as it does not involve life or liberty. The LBP further contends
that the Court mistakenly used the concept of transcendental importance to recall a final ruling; this standard
should only apply to questions on the legal standing of parties.
In his dissenting opinion, Mr. Justice Roberto Abad agrees with the LBPs assertion, positing that this case does
not fall under any of the exceptions to the immutability doctrine since it only involves money and does not
involve a matter of overriding public interest.
We reject the basic premise of the LBP's and Mr. Justice Abads arguments for being flawed. The present case
goes beyond the private interests involved; it involves a matter of public interest the proper application of a
basic constitutionally-guaranteed right, namely, the right of a landowner to receive just compensation when the
government exercises the power of eminent domain in its agrarian reform program.
Section 9, Article III of the 1987 Constitution expresses the constitutional rule on eminent domain "Private
property shall not be taken for public use without just compensation." While confirming the States inherent
power and right to take private property for public use, this provision at the same time lays down the limitation
in the exercise of this power. When it takes property pursuant to its inherent right and power, the State has the
corresponding obligation to pay the owner just compensation for the property taken. For compensation to be
considered "just," it must not only be the full and fair equivalent of the property taken;
2
it must also be paid to
the landowner without delay.
3

To fully and properly appreciate the significance of this case, we have to consider it in its proper context.
Contrary to the LBPs and Mr. Justice Abads assertions, the outcome of this case is not confined to the fate of
the two petitioners alone. This case involves the governments agrarian reform program whose success largely
depends on the willingness of the participants, both the farmers-beneficiaries and the landowners, to cooperate
with the government. Inevitably, if the government falters or is seen to be faltering through lack of good faith in
implementing the needed reforms, including any hesitation in paying the landowners just compensation, this
reform program and its objectives would suffer major setbacks. That the governments agrarian reform program
and its success are matters of public interest, to our mind, cannot be disputed as the program seeks to remedy
long existing and widespread social justice and economic problems.
In a last ditch attempt to muddle the issues, the LBP focuses on our use of the phrase "transcendental
importance," and asserts that we erred in applying this doctrine, applicable only to legal standing questions, to
negate the doctrine of immutability of judgment. This is a very myopic reading of our ruling as the context
clearly shows that the phrase "transcendental importance" was used only to emphasize the overriding public
interestinvolved in this case. Thus, we said:
That the issues posed by this case are of transcendental importance is not hard to discern from these discussions.
A constitutional limitation, guaranteed under no less than the all-important Bill of Rights, is at stake in this case:
how can compensation in an eminent domain case be "just" when the payment for the compensation for
property already taken has been unreasonably delayed? To claim, as the assailed Resolution does, that only
private interest is involved in this case is to forget that an expropriation involves the government as a necessary
actor. It forgets, too, that under eminent domain, the constitutional limits or standards apply to government who
carries the burden of showing that these standards have been met. Thus, to simply dismiss the case as a private
interest matter is an extremely shortsighted view that this Court should not leave uncorrected.
x x x x
More than the stability of our jurisprudence, the matter before us is of transcendental importance to the nation
because of the subject matter involved agrarian reform, a societal objective of that the government has
unceasingly sought to achieve in the past half century.
4

From this perspective, our Resolution of October 12, 2010 only had to demonstrate, as it did, that the higher
interests of justice are duly served. All these, amply discussed in the Resolution of October 12, 2010, are briefly
summarized and reiterated below.
LBP at fault for twelve-
year delay in payment
In his dissenting opinion, Mr. Justice Abad insists that the LBPs initial valuation of the petitioners properties
was fully in accord with Section 17 of the CARL. He posits that when the RTC gave a significantly higher
value to these lands, the LBP acted well within its rights when it appealed the valuation. Thus, to him, it was
wrong for this Court to characterize the LBPs appeal as malicious or in bad faith.
A simple look at the attendant facts disproves the accuracy of this claim.
First, Mr. Justice Abads allegation that the LBP correctly valued the petitioners properties is not at all
accurate. Significantly, Mr. Justice Abad does not cite any evidence on record to support his claim that "the
Land Bank valued the lands using the compensation formula that Section 17 of Republic Act 6657 and the
DARs implementing rules provide."
5

More to the point, this Court has already determined, in a final and executed judgment, that the RTCs valuation
of the petitioners properties is the correct one. To recall, the LBP initially fixed the value of Apo Fruits
Corporations (AFC) properties at P165,484.47 per hectare or P16.00 per square meter (sqm), while it valued
Hijo Plantation Inc.s (HPI) properties at P201,929.97 per hectare, or approximately P20.00/sqm. In contrast,
the Regional Trial Court fixed the valuation of the petitioners properties at P103.33/sqm., or more than five
times the initial valuation fixed by the LBP.
After reviewing the records, this Court affirmed the RTCs valuation in its February 6, 2007 decision, noting
that it was based on the following evidence: (a) the Commissioners reports, (b) the Cuervo appraisers report,
(c) the schedule of market values of the City of Tagum per its 1993 and 1994 Revision of Assessment and
Property Classification, (d) the value of the permanent improvements found on the expropriated properties, and
(e) the comparative sales of adjacent lands from early 1995 to early 1997. The Court observed that the RTC
valuation also took into consideration the lands nature as irrigated land, its location along the highway, market
value, assessors value, and the volume and value of its produce. This valuation is fully in accordance with
Section 17 of RA 6657, which states:
Section 17. Determination of Just Compensation. - In determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature, actual use and income, the sworn valuation by
the owner, the tax declarations, and the assessment made by government assessors, shall be considered.
The social and economic benefits contributed by the farmers and the farm workers and by government to the
property as well as the non-payment of taxes or loans secured from any government financing institution on the
said land shall be considered as additional factors to determine its valuation.
On its face, the staggering difference between the LBPs initial valuation of the petitioners properties
(totalingP251,379,104.02) and the RTCs valuation (totaling P1,383,179,000.00) a difference
of P1,131,799,895.98 amounting to 81% of the total price betrays the lack of good faith on the part of the
government in dealing with the landowners. The sheer enormity of the difference between the two amounts
cannot but lead us to conclude that the LBPs error was grievous and amounted to nothing less than gross
negligence in the exercise of its duty in this case, to properly ascertain the just compensation due to the
petitioners.
Mr. Justice Abad further argues that interest on just compensation is due only where there is delay in payment.
In the present case, the petitioners allegedly did not suffer any delay in payment since the LBP made partial
payments prior to the taking of their lands.
This argument completely overlooks the definition of just compensation already established in jurisprudence.
Apart from the requirement that compensation for expropriated land must be fair and
reasonable, compensation, to be "just," must also be made without delay.
6
In simpler terms, for the
governments payment to be considered just compensation, the landowner must receive it in full without delay.
In the present case, it is undisputed that the government took the petitioners lands on December 9, 1996; the
petitioners only received full payment of the just compensation due on May 9, 2008. This circumstance, by
itself, already confirms the unconscionable delay in the payment of just compensation.
Admittedly, a grain of truth exists in Justice Abads observation that the petitioners received partial payments
from the LBP before the titles to their landholdings were transferred to the government. The full and exact
truth, however, is that the partial payments at the time of the taking only amounted to a trifling five percent
(5%) of the actual value of the expropriated properties, as determined with finality by this Court. Even taking
into consideration the subsequent partial payments made totaling P411,769,168.32 (inclusive of the amounts
deposited prior to the taking), these payments only constituted a mere one-third (1/3) of the actual value of
the petitioners properties.
It should be considered as highlighted in our October 12, 2010 Resolution that the properties the
government took were fully operating and earning plantations at the time of the taking. Thus, the landowners
lost not only their properties, but the fruits of these properties. These were all lost in 1996, leaving the
landowners without any replacement income from their properties, except for the possible interest for the
trifling payment made at the time of the taking that, together with the subsequent payment, only amounted to a
third of the total amount due. Thus, for twelve long years, the amount of P971,409,831.68 was withheld from
the landowners.
An added dimension to this delayed payment is the impact of the delay. One impact as pointed out above is
the loss of income the landowners suffered. Another impact that the LBP now glosses over is the income that
the LBP earned from the sizeable sum it withheld for twelve long years. From this perspective, the
unaccounted-for LBP income is unjust enrichment in its favor and an inequitable loss to the landowners. This
situation was what the Court essentially addressed when it awarded the petitioners 12% interest.
Mr. Justice Abad goes on to argue that the delay should not be attributed to the LBP as it could not have
foreseen that it would take twelve years for the case to be resolved. Justice Abads stance could have been
correct were it not for the fact that the delay in this case is ultimately attributable to the government. Two
significant factors justify the attribution of the delay to the government.
The first is the DARs gross undervaluation of the petitioners properties the government move that started the
cycle of court actions.
The second factor to consider is government inaction. Records show that after the petitioners received the
LBPs initial valuation of their lands, they filed petitions with the DARAB, the responsible agency of the DAR,
for the proper determination of just compensation. Instead of dismissing these petitions outright for lack of
jurisdiction, the DARAB sat on these cases for three years. It was only after the petitioners resorted to judicial
intervention, filing their petitions for the determination of just compensation with the RTC, that the petitioners
case advanced.
The RTC interpreted the DARABs inaction as reluctance of the government to pay the petitioners just
compensation, a view this Court affirmed in its October 12, 2010 Resolution.
Expropriation for agrarian reform
requires the payment of just compensation
The LBP claims that the just compensation in this case should be determined within the context of the article on
social justice found in the 1987 Constitution. In the LBPs opinion, when we awarded the petitioners 12%
interest by way of potential income, we removed from the taking of agricultural properties for agrarian reform
its main public purpose of righting the wrong inflicted on landless farmers.
By this argument, the LBP effectively attempts to make a distinction between the just compensation given to
landowners whose properties are taken for the governments agrarian reform program and properties taken for
other public purposes. This perceived distinction, however, is misplaced and is more apparent than real.
The constitutional basis for our agrarian reform program is Section 4, Article XIII of the 1987 Constitution,
which mandates:
Section 4. The State shall, by law, undertake an agrarian reform program 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 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.
This provision expressly provides that the taking of land for use in the governments agrarian reform program
isconditioned on the payment of just compensation. Nothing in the wording of this provision even remotely
suggests that the just compensation required from the taking of land for the agrarian reform program should be
treated any differently from the just compensation required in any other case of expropriation. As explained by
Commissioner Roberto R. Concepcion during the deliberations of the 1986 Constitutional Commission:
[T]he term "just compensation" is used in several parts of the Constitution, and, therefore, it must have a
uniform meaning. It cannot have in one part a meaning different from that which appears in the other portion. If,
after all, the party whose property is taken will receive the real value of the property on just compensation, that
is good enough.
7

In fact, while a proposal was made during the deliberations of the 1986 Constitutional Commission to give a
lower market price per square meter for larger tracts of land, the Commission never intended to give agricultural
landowners less than just compensation in the expropriation of property for agrarian reform purposes.
8

To our mind, nothing is inherently contradictory in the public purpose of land reform and the right of
landowners to receive just compensation for the expropriation by the State of their properties. That the
petitioners are corporations that used to own large tracts of land should not be taken against them. As Mr.
Justice Isagani Cruz eloquently put it:
[S]ocial justice - or any justice for that matter - is for the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to tilt the balance in favor
of the poor, to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to
prefer the poor simply because they are poor, or to reject the rich simply because they are rich, for justice must
always be served, for poor and rich alike, according to the mandate of the law.
9

I nterest payments borne by government,
not by farmers-beneficiaries
Nor do we find any merit in the LBPs assertion that the large amount of just compensation that we awarded the
petitioners, together with the amount of interest due, would necessarily result in making the farmers-
beneficiaries endure another form of bondage the payment of an exorbitant amount for the rest of their lives.
As the petitioners correctly pointed out, the governments liability for the payment of interest to the landowner
for any delay attributable to it in paying just compensation for the expropriated property is entirely separate and
distinct from the farmers-beneficiaries obligations to pay regular amortizations for the properties transferred to
them.
Republic Act No. 6657 (The Comprehensive Agrarian Reform Law, or CARL) provides for the specific source
of funding to be used by the government in implementing the agrarian reform program; this funding does not
come directly from the payments made by the farmers-beneficiaries.
10
1avvphi1
More to the point, under the CARL, the amount the farmers-beneficiaries must pay the LBP for their land is, for
the most part, subsidized by the State and is not equivalent to the actual cost of the land that the Department of
Agrarian Reform paid to the original landowners. Section 26, Chapter VII of the CARL provides:
SEC. 26. Payment by Beneficiaries. - Lands awarded pursuant to this Act shall be paid for by the beneficiaries
to the LBP in thirty (30) annual amortizations at six percent (6%) interest per annum. The payments for the first
three (3) years after the award may be at reduced amounts as established by the PARC: Provided, That the first
five (5) annual payments may not be more than five percent (5%) of the value of the annual gross
productions paid as established by the DAR. Should the scheduled annual payments after the fifth year
exceed ten percent (10) of the annual gross production and the failure to produce accordingly is not due to the
beneficiary's fault, the LBP may reduce the interest rate or reduce the principal obligation to make the payment
affordable.
Interpreting this provision of the law, DAR Administrative Order No. 6, Series of 1993 provides:
A. As a general rule, land awarded pursuant to E.O. 229 and R.A. 6657 shall be repaid by the Agrarian
Reform Beneficiary (ARB) to LANDBANK in thirty (30) annual amortizations at six (6%) percent
interest per annum. The annual amortization shall start one year from date of Certificate of
Landownership Award (CLOA) registration.
B. The payments by the ARBs for the first three (3) years shall be two and a half percent (2.5%) of AGP
[Annual Gross Production] and five percent (5.0%) of AGP for the fourth and fifth years. To further
make the payments affordable, the ARBs shall pay ten percent (10%) of AGP or the regular
amortization, whichever is lower, from the sixth (6th) to the thirtieth (30th) year.
Clearly, the payments made by the farmers-beneficiaries to the LBP are primarily based on a fixed
percentage of their annual gross production, or the value of the annual yield/produce of the land awarded to
them.
11
The cost of the land will only be considered as the basis for the payments made by the farmers-
beneficiaries when this amount is lower than the amount based on the annual gross production. Thus, there is no
basis for the LBP to claim that our ruling has violated the letter and spirit of the social justice provision of the
1987 Constitution. On the contrary, our ruling is made in accordance with the intent of the 1987 Constitution.
Motion for Oral Arguments
We deny as well the LBPs motion to set the case for oral arguments. The submissions of the parties, as well as
the records of the case, have already provided this Court with enough arguments and particulars to rule on the
issues involved. Oral arguments at this point would be superfluous and would serve no useful purpose.
The OSGs Intervention
The interest of the Republic, for whom the OSG speaks, has been amply protected through the direct action of
petitioner LBP the government instrumentality created by law to provide timely and adequate financial
support in all phases involved in the execution of needed agrarian reform. The OSG had every opportunity to
intervene through the long years that this case had been pending but it chose to show its hand only at this very
late stage when its presence can only serve to delay the final disposition of this case. The arguments the OSG
presents, furthermore, are issues that this Court has considered in the course of resolving this case. Thus, every
reason exists to deny the intervention prayed for.
WHEREFORE, premises considered, the respondents second motion for reconsideration and the motion to set
the case for oral arguments are hereby DENIED WITH ABSOLUTE FINALITY. The motion for intervention
filed by the Office of the Solicitor General is, likewise, denied. We reiterate, under pain of contempt if our
directive is disregarded or disobeyed, that no further pleadings shall be entertained. Let judgment be entered in
due course.
SO ORDERED.



LAND BANK OF THE PHILIPPINES,
Petitioner,





- versus -




CONRADO O. COLARINA,
Respondent.

G.R. No. 176410

Present:

CARPIO, J.,
Chairperson,
NACHURA,
BERSAMIN,
*

ABAD, and
MENDOZA, JJ.

Promulgated:

September 1, 2010

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

Before us is a petition for review on certiorari assailing the Decision of the Court of Appeals (CA) in
CA-G.R. CV No. 68476,
[1]
which affirmed the decision of the Regional Trial Court (RTC), Branch
3, Legazpi City, Albay, sitting as a Special Agrarian Court (SAC) in Agrarian Case No. 95-01.
[2]


The facts are simple.
Respondent Conrado O. Colarina is the registered owner of three (3) parcels of agricultural land which
he acquired from their former owner, Damiana Arcega. The parcels of land have a total area of 972,047 square
meters with the following description:

TRANSFER
CERTIFICATE OF TITLE
(TCT) No.
AREA (hectares) LOCATION
T-86402 12.5718 Herrera, Ligao, Albay
T-86448 48.3062 Herrera, Ligao, Albay
T-86449 36.3267
Amtic, Ligao, Albay

Upon acquisition thereof, respondent manifested his voluntary offer to sell the properties to the
Department of Agrarian Reform (DAR) for coverage under Republic Act (R.A.) No. 6657, the Comprehensive
Agrarian Reform Law (CARL). Respondents assessment value of the properties was P45,000.00 per hectare.

The DAR, through petitioner Land Bank of the Philippines (LBP), assessed the properties and offered to
purchase only 57.2047 hectares out of the 97.2047 hectares voluntarily offered for sale by respondent. The
excluded area (40 hectares) fell under the exemptions and exclusions provided in Section 10
[3]
of the
CARL, i.e., all lands with eighteen percent (18%) slope and over. In addition, the LBP assigned the following
values to the properties:

TCT No. Covered Area Excluded Area Value
T-86402 6.5718 6 P 46,045.60
T-86448 28.3062 20 P 208,144.33
T-86449 22.3267 14 P 154,394.22

As the LBPs assessment and valuation of the properties was unacceptable to, and rejected by,
respondent, he elevated the determination of just compensation of the properties to the Provincial Agrarian
Reform Adjudicator (PARAD). Unfortunately for respondent, the PARAD affirmed the valuation set forth by
the LBP.

Disappointed with the low valuation by petitioner and the DAR, respondent filed a Complaint
[4]
before
the RTC, Branch 3, Legazpi, Albay, for the judicial determination of just compensation.

In refutation, petitioner filed its Answer,
[5]
denied the material allegations in the Complaint, and alleged
that it had correctly assessed and valuated the subject properties consistent with R.A. No. 6657 and DAR
Administrative Order (AO) No. 6, Series of 1992.

During pre-trial, LBP manifested that the subject properties may be reassessed and revaluated based on
the new guidelines set forth in DAR A.O. No. 11, Series of 1994. Intent on finding a common ground between
petitioner and respondent and to amicably settle the case, the SAC ordered the revaluation. The new valuations
of the LBP were:
TCT No. Old Valuation New Valuation
T-86402 P 46,045.60
P51,762.90 at
P7,876.5178/ha.
T-86448 P208,144.33
P259,525.41 at
P9,168.50/ha.
T-86449 P154,394.22
P217,223.60 at
P9,729.3196/ha.
[6]


The foregoing valuation was still rejected by respondent. Hence, trial ensued. To support his Complaint
and valuation of the subject properties, respondent presented in evidence his own testimony and that of Carlito
M. Oliva (Oliva), then Assistant Provincial Assessor of Camarines Sur and President of the Camarines Chapter
of the National Real Estate Association.

As for petitioner, it presented the testimonies of Armel Alcantara (Alcantara), Chief of the Landowners
Assistance Division of the LBP, and Melchor Balmaceda, officer of LBP, Sipocot Branch.

The SAC summarized the testimonies of the witnesses as follows:

Second witness Carlito M. Oliva, x x x testified that in several instances, he was
deputized by the Honorable Court under RTC BR. 26 to chair the commission in the
determination of the fair market value of properties subject for payment by the government. That
the properties involved in this case is composed of three parcels. [T-86402] is situated at
Barangay Herrera, Ligao, Albay which contains an area of 12.5718 has.; [T-86449] is also
situated in the same Barangay with an area of 36.3267 has.; [a]nd [T-86448] is situated at
Barangay Amtic, Ligao, Albay with an area of 48.3062 has or a total of 97.2047 has. Upon Mr.
Colarinas request, he conducted an investigation and ocular inspection on the subject properties
and made a narrative report relative thereto. That his recommendation as the reasonable market
value of the properties is at P49,201.148/ha or a total of P4,788,415.20 using the productivity
approach since the subject property is mostly agricultural. That the actual area planted to
coconuts is about 43.84%; banana plants is 7.79%; corn land is 1.14%; homelots is 0.50% and
4.97% cogonal, while 5% is non-arable.

x x x x

Armel Alcantara testified that x x x before, he was the Division Chief of the Claim,
Processing and Payment Division (CPPD) [of the LBP]. As such, he conducts review of claim
folders covered by P.D. No. 27, E.O. No. 228 and R.A. No. 6657, most specifically the claim
folders under voluntary offer to sell and compulsory acquisition claim folders. That he valued the
subject lands owned by [respondent] based on AO No. 11 S. of 1996. Pursuant to the Hon.
Courts order dated November 14, 1996. For TCT No. 86448, the area covered is 28.3062 has.
[o]ut of 48.3062 has. Because some portion of the property is hilly and mountainous and
underdeveloped which exceeded the 18% limit set forth under Sec. 10 of RA 6657. This lot is
planted to corn, peanut and cogonal. The corn land is 13 has., peanut land is .25 has., cogonal is
15.0562 has.; the excluded portion which is mountainous and about 25% slope totals 20 has. The
factor considered by Land Bank is under Formula No. 2 which is the Capitalized Net Income
(CNI) x 90% and the market value per Tax declaration wherein they get the remaining 10%. The
CNI was taken from the average gross production based on the field investigation report
multiplied by the selling price from the Department of Agriculture municipal data, arriving at a
total CNI of P10,291.67 per ha. The market value per Tax declaration was based on the third
classification as furnished to Land Bank by the Municipal Assessors office. The total MVPT as
computed by Land Bank is P14,193.22, so, 10% of which is P1,419.32. After computing the CNI
and the MVPT, he applied the applicable formula which is CNI x 90% and the MVPT x 10%.
The CNI total isP9,262.5 and the MV is P1,419.32. Summing up the total amount of the two
factors, the value per ha. Arrived at for corn land is P10,681.82 per ha. Multiply it by 13 has. For
corn land, the total amount is P3,535.66. For peanut land, the total amount is P3,535.66 and for
cogonal where they used the market value per tax declaration multiplied by 2. the total
is P117,126.09. Therefore, the total valuation of this 28.3062 has. portion of the property
acquired by the government is P259,525.41.

For Title No. 86449, 22.3267 has. out of 36.3267 has. [i]s carpable. The 14 has. [w]as
excluded because this falls under the hilly and mountainous portion which is about 18% slope.
Applying the same rules and regulations, the total valuation for this property is P217,223.60.

For Title No. 86402, the area covered is 6.5718 has. [o]ut of 12.5718 has. The area of 6
has. is excluded for it falls above 18% slope. Applying again the same rules and regulations, the
total valuation for the 6.5718 has. [a]cquired by the government is P51,762.90.

That there are several valuations/formulas provided for under RA 6657 and the Land
Bank follows the applicable formula as reflected in the field investigation report. Therefore, their
basis in determining which factors will be applied are the result of the field investigation report.
After determining the existence of the property, the DAR, Land Bank and the other agencies
concerned conducted an ocular inspection of the property being offered for sale under CARP or
covered by the CARP. The data in-put were gathered in the field including the number of fruit
bearing trees also determined. The production data was also taken and a survey was being
conducted in the field on adjacent properties. Said data were compared with the record of the
Municipal agriculturist and other officers. That the valuation of the property was based under
AO No. 11 existing at the time of the valuation of the property as of November 19, 1996.

Melchor Balmaceda testified that at present he is an officer of Land Bank of
the Philippines, Sipocot Branch but before, he was connected with Land Bank VO, Legazpi City
Branch as Agrarian Affairs Specialist. As such, he conducts ocular inspection on the properties
covered by the CARP, and gathers information relative to land valuation. That sometime in
1991, he together with DAR personnel and BARC Chairman and caretakers of the property
conducted an ocular inspection in question in the name of Damian Arcega, the former owner of
the property, which property consisted of 3 parcels. That in connection thereto, they made a
written report that the property is generally mountainous and majority is planted to coconut. A
portion is planted to corn and minimal portion is planted to peanut and there is also a portion
which is cogonal where there is no product. That all the areas are carpable. That they gather data
information from government agencies and they compute the net income of the properties based
on the produce.
[7]


Thereafter, the SAC rendered a decision reconciling the conflicting evidence of the parties. The SAC
followed the formula of the LBP and its land use classification of the subject properties; the appraisal report on
the valuation thereof. It disposed of the case, to wit:

To reconcile the conflicting figures both prayed for by [respondent] and [petitioner] Land
Bank as the computation of the value of the properties to be paid to the [respondent], taking into
account all the factors in determining just compensation and considering that the taking of
private agricultural properties under Agrarian Reform Law is a special kind of eminent domain
which is revolutionary in character, the primary goal of which is to grant land to the landless and
the need for high production, the just compensation for the lots subject matter of this case, using
the value in the [respondents] appraisal report and the land use of the properties as classified by
the Land Bank, are as follows:
1) TCT No. T-86448 carpable area 28.3062 has.

Land Use:

A) Corn land
Area = 13.0000 has.
Value/Ha = P52,700/has (Per Appraisal Report)
Computation:
P52,700/ha x 13.0000 has = P685,100.00

B) Peanut
Area = .2500
Value/Ha = P60,000/has (Per Appraisal Report)
Computation:
P60,000.00/has x .2500 has = P15,000.00
C) Cogonal
Area = 15.0562 has.
Value/Ha = P5,270 (Per Appraisal Report)
Computation:
P5,270.00/has x 15.0562 has = P79,346.17
Total:
Corn land - P685,100.00
Peanut - 15,000.00
Cogonal - 79,346.17
P779,446.17

2) TCT No. T-86449 carpable area 22.3267 has.

Land Use:
A) Corn land
Value/Ha = P52,700.00/ha (Per Appraisal Report)
Area = 15.000 has
Computation:
P52,700.00/has. x 15.0000 has = P790,500.00
B) Cogon:
Value/ha = P5,270/ha (Per Appraisal Report)
Area = 7.3267 has
Computation:
P5,270/ha x 7.3267 has = P38,611.7
Total:
Corn land - P790,500.00
Cogon - 38,611.70
P829,111.70

3) TCT No. T-86402 carpable area 6.5718 has

Land Use:
A) Corn land
Value/ha = P52,700/ha (Per Appraisal Report)
Area = 3.0000 has

Computation:
P52,700/has x 3.0000 has = P158,100
B) Cogonal
Value/ha = P5,270/ha (Per Appraisal Report)
Area = 3.5718 has
Computation:
P5,270/ha x 3.5718 has = P18,823.28
Total:
Corn land = P158,100.00
Cogonal = 18,823.38
Total = P176,923.38

Based on the foregoing computation, the just compensation for 1) TCT No. T-86448 with
a carpable area of 28.3062 has. is fixed at P779,446.17; 2) TCT No. T-86449 with a carpable
area of 22.3267 has. is fixed at P829,111.70; and for 3) TCT No. T-86402 with a carpable area
of 6.5718 has. is fixed at P18,823.38.

Thus, the overall valuation of the property is as follows:

TCT No. T-86648 P 779,446.17
TCT No. T-86649 829,111.70
TCT No. T-86402 176,923.38
TOTAL P1,785,481.25
===========

WHEREFORE, [petitioner LBP] is ordered to pay [respondent] Conrado Colarina the
total sum of ONE MILLION SEVEN HUNDRED EIGHTY FIVE THOUSAND FOUR
HUNDRED EIGHTY ONE PESOS AND TWENTY FIVE CENTAVOS (P1,785,481.25) in
case or in bond or in any other mode of payment under Section 18 of RA 6657 otherwise known
as the Comprehensive Agrarian Reform Law, at the option of the landowner.

SO ORDERED.
[8]



Still dissatisfied with the valuation of just compensation for the subject properties, both parties appealed
to the CA. The appellate court affirmed the ruling of the SAC, to wit:

WHEREFORE, premises considered, the August 7, 2000 Decision of the Regional Trial
Court of Lega[z]pi City, Albay, Branch 3, in Agrarian Case No. 95-01, is hereby AFFIRMED.


SO ORDERED.
[9]


Adamant on the accuracy of its computation, petitioner appeals to this Court, positing the following issues:

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF LAW IN
THE FOLLOWING INSTANCES:

I.

WHEN IT AFFIRMED THE REGIONAL TRIAL COURT OF LEGA[Z]PI CITY, BRANCH 3
DECISION DATED AUGUST 7, 2000 WHICH AWARDED P1,785,481.25 AS JUST
COMPENSATION FOR THE FIFTY-SEVEN-HECTARE PROPERTY, AS THE SAID
DECISION FAILED TO CONFORM TO THIS HONORABLE COURTS RULING IN
LAND BANK OF THE PHILIPPINES V. SPOUSES VICENTE BANAL AND LEONIDES
ARENAS-BANAL (G.R. NO. 143276).

II.

WHEN IT TREATED THE TAKING OF AGRICULTURAL LANDS FOR AGRARIAN
REFORM PURPOSES AS AN ORDINARY EXPROPRIATION OF PRIVATE PROPERTY
FOR PUBLIC USE.
[10]



We impale the foregoing into the singular issue of whether the lower courts computation of just
compensation for the subject properties is correct.

We answer in the negative and find the petition impressed with merit.

As pointed out by petitioner, our ruling in Land Bank of the Philippines v. Sps. Banal
[11]
is definitive on
the factors to be considered, and the formula utilized, for the determination of just compensation:

To begin with, under Section 1 of Executive Order No. 405 (1990), the Landbank is
charged primarily with the determination of the land valuation and compensation for all
private lands suitable for agriculture under the Voluntary Offer to Sell or Compulsory
Acquisition arrangement For its part, the DAR relies on the determination of the land
valuation and compensation by the Landbank.

x x x x

A party who disagrees with the decision of the DAR adjudicator may bring the matter to
the RTC designated as a Special Agrarian Court for final determination of just compensation.

In the proceedings before the RTC, it is mandated to apply the Rules of Court and, on its
own initiative or at the instance of any of the parties, appoint one or more commissioners to
examine, investigate and ascertain facts relevant to the dispute, including the valuation of
properties, and to file a written report thereof x x x. In determining just compensation, the RTC
is required to consider several factors enumerated in Section 17 of R.A. 6657, as amended, thus:

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

These factors have been translated into a basic formula in DAR Administrative Order No.
6, Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, issued
pursuant to the DARs rule-making power to carry out the object and purposes of R.A. 6657, as
amended.


Subsequent rulings of the Court uniformly parleyed that Section 17 of R.A. No. 6657 has been translated
into a formula by the DAR through A.O. No. 6, Series of 1992, as amended by A.O. No. 11, Series of 1994:
[12]


A. There shall be one basic formula for the valuation of lands covered by [Voluntary
Offer to Sell] or [Compulsory Acquisition] regardless of the date of offer or coverage of the
claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

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


A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall
be:

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

A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:

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

A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall
be:

LV = MV x 2

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

x x x x

A.6 The basic formula in the grossing-up of valuation inputs such as LOs Offer, Sales
Transaction (ST), Acquisition Cost (AC), Market Value Based on Mortgage (MVM)
and Market Value per Tax Declaration (MV) shall be:

Grossed-up = Valuation input x
Valuation Input Regional Consumer Price
Index (RCPI) Adjustment
Factor

The RCPI Adjustment Factor shall refer to the ratio of RCPI for the month issued by the
National Statistics Office as of the date when the claimfolder (CF) was received by LBP
from DAR for processing or, in its absence, the most recent available RCPI for the month
issued prior to the date of receipt of CF from DAR and the RCPI for the month as of the
date/effectivity/registration of the valuation input. Expressed in equation form:

RCPI for the Month as of the
Date of Receipt of Claimfolder
by LBP from DAR or the Most
recent RCPI for the Month
Issued Prior to the Date of
RCPI Receipt of CF
Adjustment =
Factor RCPI for the Month Issued as of
the Date/Effectivity/Registration
of the Valuation Input

B. Capitalized Net Income (CNI) This shall refer to the difference between the gross
sales (AGP x SP) and total cost of operations (CO) capitalized at 12%.

Expressed in equation form:

CNI = (AGP x SP) - CO

.12

Where: CNI = Capitalized Net Income
AGP = Latest available 12-month's gross production
immediately preceding the date of offer in case of VOS or date of
notice of coverage in case of CA.

SP = The average of the latest available 12-months selling prices prior
to the date of receipt of the claimfolder by LBP for processing,
such prices to be secured from the Department of Agriculture (DA)
and other appropriate regulatory bodies or, in their absence, from
the Bureau of Agricultural Statistics. If possible, SP data shall be
gathered from the barangay or municipality where the property is
located. In the absence thereof, SP may be secured within the
province or region.

CO = Cost of Operations

Whenever the cost of operations could not be obtained or verified,
an assumed net income rate (NIR) of 20% shall be used.
Landholdings planted to coconut which are productive at the time
of offer/coverage shall continue to use the 70% NIR. DAR and
LBP shall continue to conduct joint industry studies to establish the
applicable NIR for each crop covered under CARP.

.12 = Capitalization Rate

x x x x

C. CS shall refer to any one or the average of all the applicable sub-factors, namely, ST,
AC and MVM:

Where: ST = Sales Transactions as defined under Item C.2
AC = Acquisition Cost as defined under Item C.3
MVM = Market Value Based on Mortgage as defined
under Item C.4
x x x x

D. In the computation of Market Value per Tax Declaration (MV), the most recent Tax
Declaration (TD) and Schedule of Unit Market Value (SMV) issued prior to receipt of
claimfolder by LBP shall be considered. The Unit Market Value (UMV) shall be grossed up
from the date of its effectivity up to the date of receipt of claimfolder by LBP from DAR for
processing, in accordance with item II.A.A.6.

In Land Bank of the Philippines v. Celada,
[13]
we declared:

While SAC is required to consider the acquisition cost of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation by the owner, the tax
declaration and the assessments made by the government assessors to determine just
compensation, it is equally true that these factors have been translated into a basic formula by
the DAR pursuant to its rule-making power under Section 49 of RA No. 6657. As the
government agency principally tasked to implement the agrarian reform program, it is the DARs
duty to issue rules and regulations to carry out the object of the law. DAR AO No. 5, s. of 1998
precisely filled in the details of Section 17, RA No. 6657 by providing a basic formula by
which the factors mentioned therein may be taken into account. The SAC was at no liberty to
disregard the formula which was devised to implement the said provision.

It is elementary that rules and regulations issued by administrative bodies to interpret the
law which they are entrusted to enforce, have the force of law, and are entitled to great respect.
Administrative issuances partake of the nature of a statute and have in their favor a presumption
of legality. As such, courts cannot ignore administrative issuances especially when, as in this
case, its validity was not put in issue. Unless an administrative order is declared invalid, courts
have no option but to apply the same.
In the same vein, Land Bank of the Philippines v. Lim
[14]
did not depart from the previous rulings and
explicitly affirmed the mandatory nature of Section 17 of RA No. 6657 and DAR A.O. No. 6092, as amended
by DAR A.O. No. 11-94:

In Land Bank of the Philippines v. Spouses Banal, this Court underscored the mandatory
nature of Section 17 of RA 6657 and DAR AO 6-92, as amended by DAR AO 11-94, viz.:

In determining just compensation, the RTC is required to consider several factors enumerated
in Section 17 of R.A. 6657, as amended, thus:
Sec. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner,
the tax declarations, and the assessment made by government assessors shall be
considered. The social and economic benefits contributed by the farmers and the
farmworkers and by the Government to the property, as well as the non-payment
of taxes or loans secured from any government financing institution on the said
land, shall be considered as additional factors to determine its valuation.

These factors have been translated into a basic formula in [DAR AO 6-92], as amended
by [DAR AO 11-94], issued pursuant to the DARs rule-making power to carry out the object and
purposes of R.A. 6657, as amended.

The formula stated in [DAR AO 6-92], as amended, is as follows:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

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

A.1 When the CS factor is not present and CNI and MV are applicable, the
formula shall be:

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

x x x x

While the determination of just compensation involves the exercise of judicial discretion,
however, such discretion must be discharged within the bounds of the law. Here, the RTC
wantonly disregarded R.A. 6657, as amended, and its implementing rules and regulations.
([DAR AO 6-92], as amended by [DAR AO 11-94]).

x x x x

WHEREFORE, x x x. Civil Case No. 6806 is REMANDED to the RTC x x x. The trial
judge is directed to observe strictly the procedures specified above in determining the proper
valuation of the subject property.

The recent case of Heirs of Lorenzo and Carmen Vidad and Agvid Construction Co., Inc. v. Land Bank
of the Philippines
[15]
is most propinquity on the same point:

LBPs valuation of lands covered by the CARP Law is considered only as an initial
determination, which is not conclusive, as it is the RTC, sitting as a SAC, that could make the
final determination of just compensation, taking into consideration the factors enumerated
in Section 17 of RA 6657 and the applicable DAR regulations. LBPs valuation has to be
substantiated during an appropriate hearing before it could be considered sufficient in accordance
with Section 17 of RA 6657 and the DAR regulations.
In Land Bank of the Philippines v. Celada, the Court ruled that the factors enumerated under
Section 17 of RA 6657 had already been translated into a basic formula by the DAR pursuant to
its rule-making power under Section 49 of RA 6657. Thus, the Court held that the formula
outlined in DAR AO No. 5, series of 1998, should be applied in computing just compensation.
DAR AO No. 5, series of 1998, provides:
A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant and applicable.
A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)

A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV = MV x 2
In no case shall the value of idle land using the formula MV x 2 exceed the lowest value
of land within the same estate under consideration or within the same barangay or
municipality (in that order) approved byLBP within one (1) year from receipt of
claimfolder.

In Land Bank of the Philippines v. Spouses Banal, we remanded the case to the SAC for
further reception of evidence because the trial court based its valuation upon a different formula
and did not conduct any hearing for the reception of evidence.

The mandatory application of the aforementioned guidelines in determining just
compensation has been reiterated recently in Land Bank of the Philippines v. Lim and Land
Bank of the Philippines v. Heirs of Eleuterio Cruz, where we also ordered the remand of the
cases to the SAC for the determination of just compensation strictly in accordance with the
applicable DAR regulations.
[16]



The factors for the determination of just compensation in Section 17 of R.A. No. 6657, and consequently
converted into a formula in A.O. No. 6, Series of 1992, as amended by A.O. No. 11, Series of 1994, is
mandatory. Land Bank of the Philippines v. Sps. Banal,
[17]
as affirmed by our subsequent rulings, did not
equivocate.

We note that A.O. No. 6, Series of 1992 (as amended by A.O. No. 11, Series of 1994) has been
superseded by A.O. No. 5, Series of 1998. However, A.O. No. 5, Series of 1998, is not applicable to the present
case as the subject properties were assessed and valued prior to its effectivity.
A perusal of the records of this case readily reveals the Claims
Valuation and Processing Form
[18]
accomplished by petitioner when it
reassessed and revaluated the subject properties. The document follows the required formula for valuation of
properties under A.O. No. 6, Series of 1992, as amended by A.O. No. 11, Series of 1994. In fact, even the RTC
used the formula of petitioner to compute just compensation based on petitioners findings on land use of the
subject properties. However, the RTC, as well as the CA, was gravely mistaken in using respondents
valuation of the properties contained in Olivas appraisal report, i.e., P52,700.00/ha.

We note that Olivas appraisal report did not attach pertinent documents thereto, considering that, as he
had testified, he used the productivity approach:

Q Mr. Witness [Oliva] you said that you gave the valuation of the coconut land in that
property of Mr. Colarina. What is your valuation to the coconut land per hectare?

WITNESS:

A For the coconut land, the valuation I arrived at for the coconut land is the amount
of P45,300.00 per hectare. That is the market value of the 4
th
class coconut land and the
improvements already, sir.

Q What about the banana lands?

A The valuation is P70,800.00 per hectare, that is the valuation of the land, 4
th
class banana
land including already the improvements.

Q Why did you conclude this high valuation of banana lands?

A Considering that I have compressed all these banana in every hectare, I have a reason to
believe that it is a 4
th
class banana land. And in a 4
th
class banana land, the price per kilo is
only P15.00 to P30.00 per kilo. The effective number of bananas per hectare is only 600
clusters considering that this is the productivity for a 4
th
class banana land. The produce
annually of 4,000 kilos is very minimal. So at P15.00 per kilo, I arrived at a valuation
of P60,000.00 per hectare. The appraisal, on the other hand, for taxation purposes, we just
state there the area actually being planted to bananas not considering the clusters of
bananas in one hectare. Banana plantation with this kind of clusters will cost more than this
if it will be properly fertilized by the owner. So this banana land is only a 4
th
class banana
land and is about 7.5764 hectares of the subject property with only 4,000 to 8,000 kilos of
banana fruits annually.

[Counsel of defendant DAR]

Q What about the corn land area?

A I valued it at P52,700.00 per hectare, sir.
Q What is your basis?

A I have also here on page 5 of my report. I have classified the subject portion as a second
class corn land. With a production of 101 to 150 cavans per hectare per year and the price
of corn which is P420.00 per cavan, I arrived at a valuation of P52,700 per hectare, sir.

x x x x

Q But that is not the data established by the [DAR]?

A That is why I made a separate actual investigation. I made personal interviews with the
farmers and so we arrived at this production.

Q So your basis is the information which you gathered from the farmers?

A Considering the kind of soil of the property planted by the farmers to corn, we will have to
arrive at this productivity, sir.

Q Did you inquire about the government support price of corn per kilo?

A The government support price is at P7.00 or P8.00 per kilo, sir.

Q Did you get that from the National Food Authority?

A I got this from the [C]hinese traders because I want to arrive at the open market valuation. I
am not prone to adopt the government price as I was deputized by Mr. Colarina
[respondent] to appraise his property independently, not as an assessor but as a private
appraiser from the open market. And I know that this is still subject for review by the
honorable court.

x x x x

Q So do you have the data where you based the valuation?

A That was the result of my actual interview with the farmers and traders.

x x x x

Q How much is the valuation you gave to this rootcrops area?
A The subject portion was classified by me as a 3
rd
class rootcrop land and so I valued it
at P60,000.00 per hectare, sir.

Q Do you mean to tell this honorable court that this rootcrops land, the banana land and corn
land are distinct areas separate from each other?

A I apprised this honorable court that I appraised this property not exactly on what is
being produced in the area. I considered the land itself, the classification of the land,
the boundaries there but some are ogacon (lazy) to cultivate this property. Because
I am also an agriculturist and I also have a lot which is planted to this kind of plants
and I know what will be the actual produce of the CROPS [inserted in the TSN] with
a certain kind of land. If we consider the actual produce, it is very low. Because we
are ogacon (lazy). What I am very much concerned is the kind of the land and then
I asked them if we will have to cultivate the property properly, how much are we
going to expect.

Q Do you mean to impress to us that while you conducted the ocular inspection, there
were area which were not cultivated?

A When I conducted the ocular inspection, I was able to classify an area of around 4.8
hectares which has no value at all, sir.

x x x x

Q So you had the ocular inspection without anybody from the government or from the
barangay going with you?

A Nobody but I told the barangay captain of the place that we will be going there for an
ocular inspection and from the barangay captain, we have learned that that there is a
subdivision for sale which is adjoining the subject properties for that much amount
also.

x x x x

[On questioning by the SAC]

A (Perusing the report submitted by the Land Bank of the Philippines). This is a very low
valuation, your honor.

Q Why?

A Considering that I did not take into consideration the valuation that was done by the
Assessors Office to the schedule of value because as an assessor, in gathering data, we
have to base the valuation of every kind of property. It takes us a hard time to consolidate
all these things because, first of all, one, the comparative sales approach, for example, your
honor, we seldom find the consideration in a certain sale that is the true and actual selling
price perhaps because of the implementation of the capital gains tax of the Bureau of
Internal Revenue. Most of them are under valued. Now, that is why I based my valuation
from the actual procedure. First of all I considered the kind of land thereon and thereby
considered also the different kinds of perennial trees or plants and based on the actual
interviews I conducted with the farmers, I arrived at the actual produce where I based my
computation not really considering the assessors value because it is only for taxation
purposes. Nowhere in the Philippines that the government assessments are reliable.
[19]



In stark contrast is the valuation made by witness Alcantara:

Q Mr. Witness, what rule is followed by Land Bank in arriving at the valuation as contained
in this exhibit?

A The guidelines followed by Land Bank: properties valued under Administrative Order No.
11 Series of 1996 based on the Honorable Courts Order dated November 14, 1996.

Q In Exh. 1, how many hectares were valued for the contemplated acquisition of the
property?

A The area for acquisition under Title No. 86448 is 28.3062 hectares.

Q x x x Will you please explain why only a total of 28.3062 [hectares] was computed in the
valuation of the property?

A Some portion of the property is hilly and mountainous which exceeded the 18% limit set
forth under Section 10 of R.A. 6657. Said portions of land were mountainous and
undeveloped and therefore excluded from acquisition under existing guidelines.

Q What is the basis of said exclusion from coverage?

A Section 10 of R.A. 6657.

Q Will you please explain to us the character, land use and condition of this particular land as
described in Exh. 1?

A The property which contains an area of 48.3062 hectares per title is planted to corn, peanut
and a large portion is cogonal. The corn land is 13 hectares, peanut land is .25 hectares and
the cogonal is 15.0562 hectares. A hilly portion which is about 18% slope and a
mountainous portion which is about 25% slope totals 20 hectares. This portion is the
excluded one.

Q Will you please tell this Honorable Court what factors were considered by Land Bank in
arriving at the valuation of the property?

A The factor considered by Land Bank is under Formula No. 2 which is the capitalized net
income (CNI) x 90% and the market value per tax declaration wherein we get the
remaining 10%.

Q There appears a computation for the CNI. Will you please explain how the total value was
arrived at?

A CNI for corn was taken from the average gross production based on the field investigation
report multiplied by the selling price from the Department of Agriculture municipal data,
arriving at a total CNI ofP10,291.67 per hectare.

Q What about the computation for the market value per tax declaration (MVPT)? Will you
explain how the total valuation for the MVPT was arrived at?

A The market value per tax declaration was based on the third classification as furnished to
Land Bank by the Municipal Assessors Office. The total MVPT as computed by Land
Bank is P14,193.22, so, 10% of which is P1,419.32.

Q Now, after computing the CNI and the MVPT, what steps did you undertake to arrive at the
total valuation of the property?

A We applied the applicable formula which is the CNI x 90% and the MVPT x 10%. The CNI
total is P9,262.5 and the market value is P1,419.32. Summing up the total amount of the
two factors, the value per hectare arrived at for corn land is P10,681.82 per hectare. So, if
we will apply the amount arrived at for the value per hectare of corn, P10,681.82 x 13 has.
for corn land, the total is P138,863.66. The for peanut land, the total amount is P3,535.66
and for the cogonal land where we used the market value per tax declaration multiplied by
2, the total is P117,126.09. Therefore, the total valuation of this 28.3062 portion of the
property acquired by the government is P259,525.41.

x x x x

A The total area acquired for Title No. 86449 is 22.3267 hectares out of 36.267 hectares per
title.

Q What is the basis of your exclusion of the 14 hectares?

A This 14 hectares fall also under the hilly and mountainous portion which is about 18%
slope.

Q x x x [D]id you apply the same rules and regulations covered by such valuation? Did you
apply the same factors?

A Yes.

Q What is the total?
A The total valuation for this property [TCT No. 86449] is P217,223.60.

x x x x


Q Lastly, in Exh. 3, will you please tell us what is the area acquired for coverage under
CARP?
A The area acquired is 6.5718 hectares out of 12.5718 has.

Q What is the area excluded for valuation?

A The area excluded for valuation falling above 18% slope is 6 hectares.

Q x x x [D]id you still adopt the same rules and regulations in computing the valuation?

A The same.

Q What is the total valuation [for TCT No. 86402]?

A The total valuation for Title No. 86402 for the 6.5718 hectares acquired by the government
is P51,762.90.

x x x x

Q Are there any guidelines under the law which limits or defines what can be used in the
valuation of the property under the CARP?

A There are several valuations/formulas provided for under R.A. 6657 and Land Bank
follows the applicable formula as reflected in the field investigation report. Therefore, our
basis in determining which factors will be applied are the result of the field investigation
report.

Q Will you please tell this Honorable Court what particular activities are to be taken for the
purpose of being able to value the property?

A After determining the existence of the property, the DAR, Land Bank and other agencies
concerned conduct an ocular inspection of the property being offered for sale under CARP
or covered by the CARP. The data in-put were gathered in the field including the number
of fruit bearing trees, they were also determined. The production data is also taken and a
survey is being conducted in the field on adjacent properties. Said data were being
compared with the record of the Municipal agriculturist and other officers.

Q Last question Mr. Witness, the total valuation of the subject property is as of what point of
time?

A The valuation of the property was based under Administrative Order No. 11 existing at the
time of the valuation of the property.

x x x x

COURT:

When was that?

WINTNESS:

November 19, 1996.
[20]



Clearly from the foregoing, the valuation of the subject properties by petitioner was based on data
gathered by DAR and contained in its Field Investigation Report.
[21]
The data correctly reflected actual use and
produce of the subject properties and did not factor in potential use as what respondents appraiser did. In fact,
we note that the data obtained by Oliva was based on his unofficial surveys of farmers and Chinese traders.
Oliva readily dismisses government valuation as unreliable without proffering evidence to support his
statement. This explains the big discrepancy in Olivas Appraisal Report and petitioners valuation.

While we commend respondent in readily participating in the governments agrarian reform program,
our previous rulings preclude us from validating the valuation of the subject properties proffered to, and
affirmed by, the SAC. The government cannot be forced to purchase land which it finds no need for, regardless
of Olivas unschooled opinion. Considering respondents belief that the properties are worth more than the
valuation made by the DAR, he can proceed to develop the land excluded by the DAR from expropriation into
its potential use as assessed by Oliva.

Thus, replacing the valuation of the subject properties pursuant to the determination of petitioner where
the LV was pegged using the formula {CNI x 90%} + {MV x 2}, we arrive at a different amount:

1) TCT No. T-86448 carpable area 28.3062 has.

Land Use:

A) Corn land
Area = 13.0000 has.
Value/Ha = P10,681.82/ha
Computation:
P10,681.82/ha x 13.0000 has = P138,863.66
B) Peanut
Area = .2500
Value/Ha = P14,142.65/ha
Computation:
P14,142.65/ha x .2500 has = P3,535.66
C) Cogonal
Area = 15.0562 has.
Value/Ha = P7,779.26/ha
Computation:
P7,779.26/ha x 15.0562 has = P117,126.09
Total:
Corn land - P138,863.66
Peanut - 3,535.66
Cogonal - 117,126.09
P259,525.41

2) TCT No. T-86449 carpable area 22.3267 has.

Land Use:
A) Corn land
Value/Ha = P10,681.82/ha
Area = 15.00 has
Computation:
P10,681.82/ha x 15.0000 has = P160,227.30
B) Cogon:
Value/ha = P7,779.26/ha
Area = 7.3267 has
Computation:
P7,779.26/ha x 7.3267 has = P56,996.30
Total:
Corn land - P160,227.30
Cogon - 56,996.30
P217,223.60

3) TCT No. T-86402 carpable area 6.5718 has
Land Use:
A) Corn land
Value/ha = P7,992.31/ha
Area = 3.0000 has
Computation
P7,992.31/ha x 3.0000 has = P23,976.94
B) Cogonal
Value/ha = P7,779.26/ha
Area = 3.5718 has
Computation:
P7,779.26/ha x 3.5718 has = P27,785.96
Total:
Corn land = P 23,976.94
Cogonal = 27,785.96
Total = P 51,762.90

TCT No. T-86448 - P259,525.41
TCT No. T-86449 217,223.60
TCT No. T-86402 51,762.90
TOTAL P528,511.91
===========

WHEREFORE, the petition is hereby GRANTED. The Decision of the Court of Appeals in CA-G.R.
CV No. 68476 and the decision of the Regional Trial Court, Branch 3, Legazpi City, Albay, in Agrarian Case
No. 95-01 are REVERSED and SET ASIDE. Petitioner Land Bank of the Philippines is hereby ordered to pay
respondent Conrado O. Colarina the following amounts:

1. P259,525.41 for 28.3062 hectares of TCT No. 86448;
2. P217,223.60 for 22.3267 hectares of TCT No. 86449; and
3. P51,762.90 for 6.5718 hectares of TCT No. 86402.

Petitioner shall pay twelve percent (12%) interest per annum from finality of this judgment until complete
satisfaction thereof.

SO ORDERED.

LAND BANK OF THEPHILIPPINES,
Petitioner,



- versus -
G.R. No. 161834

Present:

CARPIO MORALES, J.,
Chairperson,
BRION,
BERSAMIN,
ABAD,
*
and
VILLARAMA, JR., JJ.,
HEIR OF TRINIDAD S. VDA. DE
ARIETA, represented by the sole and
only heir, ALICIA ARIETA TAN,
Respondent.

Promulgated:

August 11, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

Before us is a petition for review on certiorari filed by petitioner under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, to reverse and set aside the Decision
[1]
dated August 8, 2003 of the Court of
Appeals (CA) in CA-G.R. SP No. 76572 denying its petition for certiorari and sustaining the Orders dated
December 12, 2002 and February 17, 2003 of the Regional Trial Court (RTC) (Special Agrarian Court [SAC])
of Tagum City, Davao del Norte, Branch 2 in DAR Case No. 79-2002.
The antecedents are set forth in the CA Decision:
Private respondent is the registered owner of a parcel of agricultural land situated in
Sampao, Kapalong, Davao del Norte with an approximate area of 37.1010 hectares covered by
Transfer Certificate of Title No. T-49200, 14.999 hectares of which was covered by RA No.
6657 through the Voluntary Offer to Sell (VOS) scheme of the Comprehensive Agrarian Reform
Program (CARP).
Private respondent offered to the Department of Agrarian Reform (DAR) the price
of P2,000,000.00 per hectare for said portion of the land covered by CARP.
Petitioner Land Bank of the Philippines (LBP) valued and offered as just compensation for
said 14.999 hectares the amount of P1,145,806.06 or P76,387.57 per hectare. The offer was
rejected by private respondent.
In accordance with Section 16 of RA No. 6657, petitioner LBP deposited for the account of
private respondent P1,145,806.06 in cash and in bonds as provisional compensation for the
acquisition of the property.
Thereafter, the DAR Adjudication Board (DARAB), through the Regional Adjudicator
(RARAD) for Region XI conducted summary administrative proceedings under DARAB Case
No. LV-XI-0330-DN-2002 to fix the just compensation.
On June 26, 2002, the DARAB rendered a decision fixing the compensation of the property
at P10,294,721.00 or P686,319.36 per hectare.
Petitioner LBP filed a motion for reconsideration of the above decision but the same was
denied on September 4, 2002.
Petitioner LBP filed a petition against private respondent for judicial determination of just
compensation before the Special Agrarian Court, Regional Trial Court, Branch 2, Tagum City,
docketed as DAR Case No. 78-2002, which is the subject of this petition.
Private respondent, on the other hand, filed a similar petition against DAR before the
same Special Agrarian Court docketed as DAR Case No. 79-2002, to which petitioner LBP filed
its answer and moved for the dismissal of the petition for being filed out of time.
Private respondent filed a Motion for Delivery of the Initial Valuation praying that
petitioner LBP be ordered to deposit the DARAB determined amount of P10,294,721.00 in
accordance with the Supreme Court ruling in Land Bank of the Philippines vs. Court of
Appeals, Pedro L. Yap, Et Al., G.R. No. 118712, October 6, 1995.
Petitioner LBP filed a Manifestation praying that the amount of the deposit should only be
the initial valuation of the DAR/LBP in the amount of P1,145,806.06 and not P10,294,721.00 as
determined by the DARAB.
On December 12, 2002, public respondent rendered the assailed resolution ordering
petitioner LBP to deposit for release to the private respondent the DARAB determined just
compensation of P10,294,721.00.
On December 13, 2002, petitioner LBP filed a motion for reconsideration of the said order
to deposit.
On December 17, 2002, private respondent filed a motion to cite Romeo Fernando Y.
Cabanal and Atty. Isagani Cembrano, manager of petitioner LBPs Agrarian Operations Office in
Region XI and its handling lawyer, respectively, for contempt for failure to comply with the
order to deposit.
After the filing of private respondents comment to the motion for reconsideration and
petitioner LBPs explanation and memorandum to the motion for reconsideration, public
respondent rendered the assailed resolution dated February 17, 2003, denying petitioner LBPs
motion for reconsideration.
Petitioner LBP filed a motion to admit a second motion for reconsideration which still
remains unacted upon by public respondent.
Hence, this petition based on the following grounds:
I. THE SAC ORDER TO DEPOSIT HAD NO LEGAL BASIS,
CONSIDERING THAT THE REQUIREMENT FOR THE PROMPT
PAYMENT OF JUST COMPENSATION TO THE PRIVATE
RESPONDENT WAS SATISFIED BY THE DEPOSIT OF THE
PROVISIONAL COMPENSATION OF P1,145,806.06 REQUIRED
UNDER SECTION 16 (E) OF RA 6657 AND THE RULING IN THE
CASE OF LAND BANK OF THE PHILIPPINES V. COURT OF
APPEALS, PEDRO L. YAP, ET AL., G.R. NO. 118712, OCTOBER 6,
1995AND JULY 5, 1996.
II. THE SPECIAL AGRARIAN COURT IS NOT AN APPELLATE
COURT FOR DARAB DECISIONS ON COMPENSATION AND
HAS NO JURISDICTION TO REVIEW, ADOPT, OR ORDER THE
EXECUTION OF DARAB DECISIONS ON COMPENSATION
PENDING FINAL DETERMINATION OF JUST COMPENSATION
OR TO PREJUDGE THE CASE IN VIOLATION OF PETITIONERS
RIGHT TO DUE PROCESS OF LAW.
[2]

On August 8, 2003, the CA dismissed the petition holding that the assailed orders of the SAC are correct
and within the parameters of Republic Act (R.A.) No. 6657, thus:
Section 16 (a) refers to an offer of the DAR to pay a corresponding value of the
land. Facts of the case show that P1,145,806.06 was the offered price which was rejected by the
private respondent.
In cases of rejection of the offer, Section 16(d) states that there shall be a summary
administrative proceedings to determine the compensation for the land. Hence, the proceedings
before the DARAB, through the RARAD for Region XI as in this case.
Note that in Sections 16(a) to (d), or, during the offer until its rejection, there was no
reference to a deposit of the compensation.
The reference to a deposit of the compensation appears only in Section 16(e) or after the
DAR, in a summary administrative proceedings, had determined or decided the case relative to
the compensation of the land.
If it had been the intention of the law to require the deposit of the compensation based on
the offer or in the amount of P1,145,806.06, the law should have stated such.
The reference to the deposit right after [the] decision of the DARAB shall have been
rendered, obviously means that the amount of the deposit should be based on the DARAB
decision. Otherwise, there would be no need to institute an administrative proceeding before the
DARAB, before a deposit shall be required.
In the case of Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform, the Supreme Court held that the determination made by the DAR is
only preliminary unless accepted by all parties concerned.
Apropos, it was held in the case of Land Bank of the Philippines vs. Court of Appeals and
Jose Pascual that it is the DARAB which has the authority to determine the initial valuation of
lands involving agrarian reform although such valuation may only be considered preliminary as
the final determination of just compensation is vested in the courts.
Therefore, the deposit of the initial valuation referred to in Section 16 of RA No. 6657 is
the DAR-determined amount or in this case, the amount of P10,294,721.00.
The assailed orders of the SAC are correct and within the parameters of RA No.
6657.
[3]
[ITALICS SUPPLIED.]
Petitioner LBP filed a motion for reconsideration but the same was denied by the CA on January 21,
2004.
[4]

In this recourse from the appellate courts ruling, petitioner alleges that:
THE COURT OF APPEALS GRAVELY ERRED ON A QUESTION OF LAW IN
DENYING AND/OR DISMISSING THE PETITION FOR CERTIORARI FILED BY LBP,
THEREBY AFFIRMING THE ORDER OF THE SAC A QUO THAT THE DEPOSIT OF THE
INITIAL VALUATION REFERRED TO IN SECTION 16 OF RA 6657 IS THE NON-FINAL
DAR ADJUDICATION BOARD (DARAB)-DETERMINED AMOUNT OR IN THIS CASE,
THE AMOUNT OF P10,294,721.00.
[5]

Petitioner argues that a reading of Section 16 shows that the rejection by the landowner refers to the
offer of the DAR as compensation for the land as initially valued by LBP pursuant to Executive Order (EO)
No. 405, and not the compensation award contained in the decision of the DARAB/RARAD. It contends that
the CAs interpretation would only inject obscurity and vagueness in the law, which is otherwise clear and
unambiguous. The over-stretching of the connotation and meaning of rejection as relating to the decision of
the DARAB/RARAD, as the CA would have it, is utterly wrong and not within the intendment of Section
16. Obviously, sub-paragraph (e) does not make any reference at all to the decisions of quasi-judicial bodies. If
the law so intended to attach connotation to the word rejection in sub-paragraph (e) in relation to the decisions
of the DARAB/RARAD, or the word deposit in relation to the compensation award of the DARAB/RARAD,
sub-paragraph (e) should have stated it plain and clear.
[6]

Petitioner points out that the amount it deposited as provisional compensation is the starting point for the
cancellation of the title of the landowner in favor of the Government, while the administrative proceeding for
the determination of just compensation is ongoing with the DARAB. Thus, if the amount to be deposited is the
amount as determined by the PARAD, RARAD or DARAB, then the implementation of the CARP will be
adversely affected since the cancellation of the landowners title will now depend on how fast the decision
would be rendered by said quasi-judicial bodies. Logic, therefore, dictates that the amount that should be
deposited is the amount initially offered by the DAR and not the amount as determined by a quasi-judicial body
like the PARAD, RARAD or DARAB.
[7]

Citing DAR Administrative Order (AO) No. 02, series of 1996, which converted all existing trust
deposits and instituted a new procedure on the direct deposit in cash and bonds, petitioner asserts that the
provisional compensation consists of the original DAR/LBP valuation offered to the landowner, following the
correct interpretation of Section 16 (e) of R.A. No. 6657. This deposit is done only once, that is, after the
landowner rejects the original valuation offered by DAR/LBP. It must also be noted from the procedure
provided in DAR AO No. 02, the request by the DAR to the DARAB/RARAD/PARAD to conduct
administrative proceedings is done only after a request to deposit the initial/original compensation proceeds had
been made by the DAR to LBP; the amount to be deposited is that offered initially by the DAR based on the
valuation made by LBP pursuant to EO No. 405.
[8]

Petitioner further points out that with thousands of cases involving compensation of lands, if LBP were
to implement the SAC order that the PARAD/RARAD valuation is the one (1) to be deposited but thereafter the
valuation by LBP is finally upheld by the Court as the just compensation due to the landowner, petitioner will
be faced with an enormous responsibility of filing recovery suits against thousands of landowners. It stressed
that once deposited, the inordinately high valuation would be under the complete disposal of the landowner, the
withdrawal thereof, pending final determination by the Court of just compensation, is only made subject to
compliance with payment release requirements of petitioner. Indeed, the SAC misinterpreted the law and if its
erroneous order is implemented, it will create financial havoc to the already scarce Agrarian Reform Fund
(ARF) because every victorious party before the RARAD/PARAD/DARAB will surely move for a similar
order to deposit their compensation award even if the cases for judicial determination of just compensation
are still pending before the SAC.
[9]


On the other hand, respondent points out that petitioner did not appeal the decision of the RARAD to the
Board, and hence, the administrative proceeding for determination of just compensation is over. The
proceeding before the SAC is not an appeal from the decision of the RARAD. Consequently, what is to be
deposited is not the initial valuation by petitioner but that of the RARAD. Moreover, if petitioners
interpretation of Section 16 is upheld, it will render the proceedings before the DARAB useless, for after all it is
the LBPs valuation which will be followed.
[10]

The lone issue in this controversy is the correct amount of provisional compensation which the LBP is
required to deposit in the name of the landowner if the latter rejects the DAR/LBPs offer. Petitioner maintains
it should be its initial valuation of the land subject of Voluntary Offer to Sell (VOS) while respondent claims it
pertains to the sum awarded by the PARAD/RARAD/DARAB in a summary administrative proceeding pending
final determination by the courts.
The petition is meritorious.
Section 16 of R.A. No. 6657 reads:
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 a
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 receipt of written notice by personal delivery
or registered mail, the landowners, his administrator or representative shall inform the DAR of
his acceptance or rejection of the 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 surrenders the Certificate of Title and other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land by requiring the
landowner, the LBP and other interested parties to submit evidence as to the just compensation
for the land, within fifteen (15) days from the receipt of 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 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.
(f) Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation. [EMPHASIS SUPPLIED.]
According to the CA, the deposit of provisional compensation mentioned in sub-paragraph (e) pertains to
that amount awarded by the DAR in the summary administrative proceeding under the preceding sub-paragraph
(d). It noted that the word deposit was not mentioned until after sub-paragraph (d), when the DAR is tasked
to conduct a summary administrative proceeding. Otherwise, said the appellate court, there would be no need to
institute an administrative proceeding before the DARAB, before a deposit is required.
We find the foregoing as a strained interpretation of a simple and clear enough provision on the
procedure governing acquisition of lands under CARP, whether under the compulsory acquisition or VOS
scheme. Indeed, it would make no sense to mention anything about the provisional deposit in sub-paragraphs
(a) and (b) the landowner is sent a notice of valuation to which he should reply within a specified time, and in
sub-paragraph (c) when the landowner accepts the offer of the DAR/LBP as compensation for his land. Sub-
paragraph (d) provides for the consequence of the landowners rejection of the initial valuation of his land, that
is, the conduct of a summary administrative proceeding for a preliminary determination by the DARAB through
the PARAD or RARAD, during which the LBP, landowner and other interested parties are required to submit
evidence to aid the DARAB/RARAD/PARAD in the valuation of the subject land. Sub-paragraph (e), on the
other hand, states the precondition for the States taking of possession of the landowners property and the
cancellation of the landowners title, thus paving the way for the eventual redistribution of the land to qualified
beneficiaries: payment of the compensation (if the landowner already accepts the offer of the
DAR/LBP) or deposit of the provisional compensation (if the landowner rejects or fails to respond to the offer
of the DAR/LBP). Indeed, the CARP Law 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 of the compensation
in cash or LBP bonds with an accessible bank.
[11]

It was thus erroneous for the CA to conclude that the provisional compensation required to be deposited
as provided in Section 16 (e) is the sum determined by the DARAB/PARAD/RARAD in a summary
administrative proceeding merely because the word deposit appeared for the first time in the sub-paragraph
immediately succeeding that sub-paragraph where the administrative proceeding is mentioned (sub-paragraph
d). On the contrary, sub-paragraph (e) should be related to sub-paragraphs (a), (b) and (c) considering that the
taking of possession by the State of the private agricultural land placed under the CARP is the next
step after the DAR/LBP has complied with notice requirements which include the offer of just
compensation based on the initial valuation by LBP. To construe sub-paragraph (e) as the appellate court did
would hamper the land redistribution process because the government still has to wait for the termination of the
summary administrative proceeding before it can take possession of the lands. Contrary to the CAs view, the
deposit of provisional compensation is made even before the summary administrative proceeding commences,
or at least simultaneously with it, once the landowner rejects the initial valuation (offer) by the LBP. Such
deposit results from his rejection of the DAR offer (based on the LBPs initial valuation). Both the conduct of
summary administrative proceeding and deposit of provisional compensation follow as a consequence of the
landowners rejection under both the compulsory acquisition and VOS. This explains why the words rejection
or failure to reply and rejection or no response from the landowner are found in sub-paragraphs (d) and
(e). Such rejection/no response from the landowner could not possibly refer to the award of just
compensation in the summary administrative proceeding considering that the succeeding sub-paragraph (f)
states that the landowner who disagrees with the same is granted the right to petition in court for final
determination of just compensation. As it is, the CAs interpretation would have loosely interchanged the terms
rejected the offer and disagrees with the decision, which is far from what the entire provision plainly
conveys.
We also find the CAs conclusion that petitioners interpretation of Section 16 (e) would render
unnecessary the filing of an administrative proceeding before the deposit is made, as untenable. Said court raised
a perceived inconsistency or contradiction not found in the law. Precisely, the deposit of provisional
compensation is required to be made because the landowner has rejected the initial valuation or amount offered by
the DAR, which is then mandated to conduct a summary administrative proceeding for preliminary determination
of just compensation. It may be that the confusion in reading the provision stems from the words offer of the
DAR/rejection or acceptance of the offer used in Section 16 (b) and (c), which seemingly leaves out the active
role of the LBP at the early stage of the land acquisition procedure, whether under compulsory acquisition or
VOS.
Section 18 of R.A. No. 6657 provides:
SECTION 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.

x x x x
Under the law, the LBP is charged with the initial responsibility of determining the value of lands placed
under land reform and the compensation to be paid for their taking.
[12]
Once an expropriation proceeding or the
acquisition of private agricultural lands is commenced by the DAR, the indispensable role of LBP begins. EO
No. 405, issued on June 14, 1990, provides that the DAR is required to make use of the determination of the
land valuation and compensation by the LBP as the latter is primarily responsible for the determination of the
land valuation and compensation. In fact, the LBP can disagree with the decision of the DAR in the
determination of just compensation, and bring the matter to the RTC designated as SAC for final determination
of just compensation.
[13]

The amount of offer which the DAR gives to the landowner as compensation for his land,
as mentioned in Section 16 (b) and (c), is based on the initial valuation by the LBP.
[14]
This then is the amount
which may be accepted or rejected by the landowner under the procedure established in Section 16. Perforce,
such initial valuation by the LBP also becomes the basis of the deposit of provisional compensation pending
final determination of just compensation, in accordance with sub-paragraph (e).
The procedure for the determination of compensation cases under Republic Act No.
6657, as devised by this Court, commences with the valuation by the LBP of the lands taken by
the State from private owners under the land reform program. Based on the valuation of the
land by the LBP, the DAR makes an offer to the landowner through a written notice. In
case the landowner rejects the offer, a summary administrative proceeding is held and,
afterwards, depending on the value of the land, the Provincial Agrarian Reform Adjudicator
(PARAD), the Regional Agrarian Reform Adjudicator (RARAD), or the DARAB, fixes the price
to be paid for the said land. If the landowner still does not agree with the price so fixed, he may
bring the matter to the RTC, acting as Special Agrarian Court.
[15]
[EMPHASIS SUPPLIED.]
DAR AO No. 02, series of 1996, Revised Rules and Procedures Governing the Acquisition of
Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to Republic Act No.
6657 reinforces the view that it is the initial valuation of the LBP which becomes the basis of the provisional
compensation deposit. The following procedural steps on Valuation and Compensation under DAR AO No. 02
clearly show that such deposit of provisional compensation is to be made by LBP either before or simultaneously
with the conduct of the summary administrative proceedings, without awaiting the termination of the proceedings
or rendition of judgment/decision by the DARAB/RARAD/PARAD. Consequently, the amount of just
compensation determined by the DARAB/RARAD/PARAD cannot be the deposit contemplated in Section 16
(e).
Steps Responsible
Agency/Unit
Activity Forms/Documents
(Requirements)

D. Land Valuation and
Compensation

13 LBP-LVLCO Receives and evaluates the
CF for completeness,
consistency and document
sufficiency. Gathers
additional valuation
documents.


14 LBP-LVLCO Determine land valuation
based on valuation inputs

Note: CFs where the land
valuation amounts to more
thanP3 million shall be
forwarded to LBP-HO.

Claims
Valuation and
Processing Form
(CVPF)

15 LBP-LVLCO Prepares and sends Memo of
Valuation, Claim Folder
Profile and Valuation
Summary (MOV-CFPVS)
to PARO
CARP Form No.
9(Memorandum
of Valuation and
Claim Folder
Profile and
Valuation
Summary)

16 DARPO Receives LBPs MOV-CFPVS
and ascertains the
completeness of the data and
information therein.


17 DARPO Sends Notice of Land
Valuation and Acquisition to
LO by personal delivery with
proof of service or by
registered mail with return
card, attaching copy of MOV-
CFPVS and inviting LOs
attention to the submission
of documents required for
payment of claim.


CARP Form No.
10(Notice of
Land Valuation
and Acquisition)
18 DARPO Posts a copy of the Notice of
Land Valuation (NLVA) for at
least seven (7) working days
on the bulletin board of the
provincial capitol, municipal
and barangay halls where the
property is located and issues
a Certification of Posting
CARP Form No.
11(Certification
of Posting
Compliance)
Compliance.

19 LO Replies to Notice of Land
Valuation and Acquisition and
submits documents required
for payment of compensation
claim.

If LO accepts, proceed to D.1.

If LO rejects or fails to reply,
proceed to D.2.


x x x x

D.2. Where LO rejects the
Land Valuation

20 DARPO If the LO rejects the offered
price or fails to reply within
thirty (30) days from receipt of
the Notice of Land Valuation
and Acquisition, forwards to
LBP the Request to Deposit
the compensation proceeds in
cash and in bonds in the name of
the LO

CARP Form No.
10.a (LOs Reply
to NLVA)

CARP Form No.
15(Request for
Deposit)
21 DARPO Requests the
DARAB/RARAD/ PARAD to
conduct administrative
proceedings pursuant to
DARAB guidelines, as the case
maybe, furnishing therein a
copy each of the LOs Letter of
Rejection, Notice of Land
Valuation and Acquisition and
LBPs Memorandum of
Valuation.

CARP Form No.
14 Advice to
DARAB/
RARAD/PARAD
22 LBP-LVO
LBP-HO
Deposits the compensation
proceeds in the name of the
LOand issues Certification of
Deposit to DAR through the
PARO, copy furnished the LO.

The entire deposit may be
withdrawn by the LO; however,
actual release of same shall be
subject to LOs submission of
all requirements for payment
and execution of Confirmation
of Coverage and Transfer.

CARP Form No.
17 (Certification
of Deposit)



CARP Form No.
17.a
(Confirmation of
Coverage and
Transfer For
Claims of
Individual LOs
Still Pending with
DARAB)

CARP Form No.
17.b
(Confirmation of
Coverage and
Transfer For
Claimsof
Corporate LOs
Still Pending with
DARAB)

23 DARPO Upon receipt of the
Certification of Deposit from
LBP, transmits the same to the
Register of Deeds concerned,
including the approved
segregation/subdivision plan of
subject property, if partially
covered and simultaneously
requests the ROD to issue TCT
in the name of RP.

CARP Form No.
18 (Request to
Issue TCT in the
name of RP)
24 ROD Issues new TCT in the name of
RP and forwards owners
duplicate certificate of title in
the name of RP to LBP-LVO
which furnishes the PARO a
certified xerox copy of the
same.
New TCT in the
name of RP and
owners duplicate
copy of title in the
name of RP.


25 DARAB/
RARAD/
PARAD
Simultaneously with Activity
Nos. 22-24 above, the
DARAB/ RARAD/PARAD
conducts summary
administrative proceedings,
renders decision and informs
parties concerned of the same.


26 DARPO Upon receipt of the
Certificate of Finality of the
DARAB Order, requests LBP
to pay the LO in accordance
with the DARAB decision;
requests LBP to prepare
Confirmation of Coverage and
Transfer for LO to accomplish.
Thereafter, LBP follows
Activity Nos. 25-26 under D.1.
In case the LO still rejects
DARAB decision, he may go to
the Special Agrarian Reform
Court (SAC) for the final
determination of just
compensation.
CARP Form No.
17.c
(Confirmation of
Coverage and
Transfer For
Claims of
Individual LOs
Already decided
by DARAB)

CARP Form No.
17.d
(Confirmation of
Coverage and
Transfer) For
Claims of
Corporate LOs
Already decided
by DARAB)

It must also be noted that under the DARAB 2003 Rules of Procedure, there is no requirement of
delivery or deposit of provisional compensation based on the judgment or award by the PARAD/RARAD or
DARAB. Section 10, Rule XIX of the DARAB 2003 Rules only allows execution of judgments for
compensation which have become final and executory.
[16]
This only underscores the primary responsibility of
the LBP to submit an initial valuation at which DAR would offer to purchase the land, and to deposit said
amount after the landowner has rejected the offer.
There is still another reason why we cannot agree with the appellate courts interpretation of Section 16,
R.A. No. 6657. Petitioner had assumed a more significant role as financial intermediary for the CARP after
1989, primarily due to scandals and anomalies, which stalled its implementation during the Aquino
administration, involving overvalued private haciendasvoluntarily offered by big landowners in collusion with
DAR officers and employees. The most notorious of these land scams even became the subject of a joint inquiry
conducted by the Senate and House of Representatives committees on agrarian reform. With government
acquisition of large landholdings at inflated prices, the farmers are at a losing end, as they can hardly afford the
overpriced land.
[17]

Against this backdrop of exposed irregularities and to ensure the success of the CARP, former President
Corazon C. Aquino issued EO No. 405 which transferred the primary responsibility of determining land
valuation and compensation for all lands covered under CARP from the DAR to the LBP, a specialized
government bank. The intent is to accelerate program implementation by tapping the LBPs professional
expertise, as expressed in the EOs whereas clause:

WHEREAS, the Land Bank of the Philippines employs commercial banking personnel
whose professional expertise includes appraisal of agricultural properties for purposes of
granting loans;

WHEREAS, the implementation of the Comprehensive Agrarian Reform Program,
particularly on the matter of acquisition and distribution of private agricultural lands, may be
accelerated by streamlining certain administrative procedures in land valuation and
compensation;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue
of the powers vested in me by law, do hereby order:

SECTION 1. The Land Bank of the Philippines shall be primarily responsible for the
determination of the land valuation and compensation for all private lands suitable for agriculture
under either the Voluntary Offer to Sell (VOS) or Compulsory Acquisition (CA) arrangements as
governed by Republic Act No. 6657. The Department of Agrarian Reform shall make use of
the determination of the land valuation and compensation by the Land Bank of
the Philippines, in the performance of [its] functions.
The objective of the procedures on land valuation provided by the Comprehensive Agrarian Reform
Law (CARL) as amplified by the issuances of the DAR/DARAB is to enforce the constitutional guarantee of
just compensation for the taking of private agricultural lands placed under the CARP. It must be stressed that
the DARs authority to determine just compensation is merely preliminary. On the other hand, under Section 1
of EO No. 405, series of 1990, the LBP is charged with the initial responsibility of determining the value of
lands placed under land reform and the just compensation to be paid for their taking.
In both voluntary and compulsory acquisitions, wherein the landowner rejects the offer, the DAR opens
an account in the name of the landowner and conducts a summary administrative proceeding. If the landowner
disagrees with the valuation, the matter may be brought to the RTC, acting as a special agrarian court. But as
with the DAR-awarded compensation, LBPs valuation of lands covered by CARL is considered only as an
initial determination, which is not conclusive, as it is the RTC, sitting as a Special Agrarian Court, that should
make the final determination of just compensation, taking into consideration the factors enumerated in Section
17 of R.A. No. 6657 and the applicable DAR regulations.
[18]
It is now settled that the valuation of property in
eminent domain is essentially a judicial function which is vested with the RTC acting as Special Agrarian
Court. The same cannot be lodged with administrative agencies and may not be usurped by any other branch or
official of the government.
[19]

Although under the CARL of 1988, the landowners are entitled to withdraw the amount deposited in
their behalf pending the final resolution of the case involving the final valuation of his property,
[20]
the SAC
may not, as in this case, order the petitioner to deposit or deliver the much higher amount adjudged by the
RARAD considering that it already complied with the deposit of provisional compensation by depositing the
amount of its initial valuation which was rejected by the respondent. And while the DARAB Rules of
Procedure provides for execution pending appeal upon meritorious grounds,
[21]
respondent has not established
such meritorious reasons for allowing execution of the RARAD decision pending final determination of just
compensation by the court.
As the Court had previously declared, the LBP is primarily responsible for the valuation and
determination of compensation for all private lands. It has the discretion to approve or reject the land valuation
and just compensation for a private agricultural land placed under the CARP. In case the LBP disagrees with
the valuation of land and determination of just compensation by a party, the DAR, or even the courts, the LBP
not only has the right, but the duty, to challenge the same, by appeal to the CA or to this Court, if
appropriate.
[22]
Both LBP and respondent filed petitions before the SAC disputing the RARAD judgment
awarding compensation in the amount of P10,294,721.00. In view of the substantial difference in the valuations
-- the initial valuation by the LBP being only P1,145,806.06 -- the more prudent course is to await the final
resolution of the issue of just compensation already filed with said court.
Lastly, the Court finds no merit in the contention of respondent that the RARADs decision had already
become final due to failure of the petitioner to appeal the same to the Board, in accordance with Section 5, Rule
XIX of the 2003 DARAB Rules of Procedure. It must be noted that said Rules was adopted only on January 17,
2003. Section 1, Rule XXIV of the 2003 DARAB Rules explicitly states that:
SECTION 1. Transitory Provisions. These rules shall govern all cases filed on or after its
effectivity. All cases pending with the Board and the Adjudicators, prior to the date of
effectivity of these Rules, shall be governed by the DARAB Rules prevailing at the time of their
filing.
The applicable rule is Section 2, Rule XIV (Judicial Review) of the Revised Rules of the Department of
Agrarian Reform Adjudication Board which provides:
Section 2. Just Compensation Cases to the Special Agrarian Courts. -- The decision,
resolution or order of the Adjudicator or the Board on land valuation or determination of just
compensation, may be brought to the proper Special Agrarian Court for final judicial
determination.
WHEREFORE, the petition is GRANTED. The assailed Decision dated August 8, 2003 of the Court
of Appeals in CA-G.R. SP No. 76572 is hereby REVERSED and SET ASIDE. The Land Bank of
the Philippines is hereby declared to have duly complied with the requirement of deposit of provisional
compensation under Section 16 (e) of R.A. No. 6657 and DAR AO No. 02, series of 1996.
No costs.
SO ORDERED.