G.R. No.
169514 March 30, 2007 individual member organizations;3 (4) the Panay Federation of Sugarcane Farmers, Inc.
CONFEDERATION OF SUGAR PRODUCERS ASSOCIATION, INC.,
(CONFED), NATIONAL FEDERATION OF SUGARCANE PLANTERS, INC.
(NFSP), UNITED SUGAR PRODUCERS FEDERATION OF THE PHILS., INC.
(UNIFED), PANAY FEDERATION OF SUGAR-CANE FARMERS, INC.
(PANAYFED), FIRST FARMERS HOLDING CORPORATION, NATIONAL
CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES
(NACUSIP), LEAGUE OF MUNICIPALITIES OF THE PHILIPPINES –
NEGROS OCCIDENTAL CHAPTER. Petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM (DAR), (Now also known as
DEPARTMENT OF LAND REFORM), LAND BANK OF THE PHILIPPINES
(LBP), LAND REGISTRATION AUTHORITY (LRA). Respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for prohibition and mandamus under Rule 65 of the Rules
of Court with prayer for the issuance of a writ of preliminary injunction or temporary
restraining order filed by the
___________
* No part.
Confederation of Sugar Producers Association, Inc., et al. It seeks, inter alia, to enjoin
the Department of Agrarian Reform, the Land Bank of the Philippines, and the Land
Registration Authority from "subjecting the sugarcane farms of Petitioner Planters to
eminent domain or compulsory acquisition without filing the necessary expropriation
proceedings pursuant to the provisions of Rule 67 of the Rules of Court and/or without
the application or conformity of a majority of the regular farmworkers on said farms."
The Parties
The petition is filed by the following: (1) the Confederation of Sugar Producers
Association, Inc. (CONFED), a national federation of sugar planters’ associations and
cooperatives from Luzon, Visayas and Mindanao, which is purportedly joined by its
individual member organizations;1 (2) the National Federation of Sugarcane Planters,
Inc. (NFSP), a duly organized federation of sugar planters’ associations and
cooperatives from Luzon, Visayas and Mindanao, which is also purportedly joined by
its individual member organizations;2 (3) the United Sugar Producers Federation of the
Phil., Inc. (UNIFED), likewise a national federation of sugar planters’ associations and
cooperatives from Luzon, Visayas and Mindanao, and is purportedly joined by its
(PANAYFED), a federation of sugarcane planters’ organizations and cooperatives from
Panay Island, also purportedly joined by its individual member organizations; 4 (5) the
First Farmers Holding Co., a domestic corporation principally engaged in operating a
sugar mill for the milling and manufacture or processing of sugarcane into sugar and
the distribution of sugar and its by-products; (6) the National Congress of Unions in the
Sugar Industry of the Philippines (NACUSIP), a labor organization; and (7) the League
of Municipalities of the Philippines, Negros Occidental Chapter.
For the purpose of the present petition, CONFED, NFSP, UNIFED and PANAYFED
are represented by their Chairman or President, namely, Bernardo C. Trebol, Enrique
D. Rojas, Manuel R. Lamata and Francis P. Trenas, respectively.
On the other hand, named as respondents are the Department of Agrarian Reform
(DAR), the Land Bank of the Philippines (LBP) and the Land Registration Authority
(LRA).
The Petitioners’ Case
Petitioners CONFED, NFSP, UNIFED and PANAYFED claim that their members own
or administer private agricultural lands devoted to sugarcane. They and their
predecessors-in-interest have been planting sugarcane on their lands allegedly since
time immemorial. While their petition is denominated as one for prohibition and
mandamus, the petitioners likewise seek to nullify paragraphs (d), (e) and (f) of Section
165 of Republic Act No. (RA) 6657, otherwise known as the Comprehensive Agrarian
Reform Law. In other words, their arguments, which will be discussed shortly, are
anchored on the proposition that these provisions are unconstitutional.
They allege the following grounds in support of their petition:
A. RESPONDENT DAR ACTED WITHOUT OR IN EXCESS OF JURISDICTION
OR WITH GRAVE ABUSE OF DISCRETION BY THE COMMISSION OF THE
FOLLOWING ACTS:
1. By Exercising the Power of Eminent Domain to Deprive Thousands of
Landowners, including the Member-Planters of Petitioner-Federations of their
Private Agricultural Lands, without Filing the Necessary Expropriation
Proceedings pursuant to Rule 67 of the Rules of Court in Gross Violation of
the Bill of Rights of the Constitution and in Lawless Usurpation of the
Exclusive Power of the Supreme Court to Promulgate Rules of Procedure as
vested by the Constitution. Paragraphs (d), (e) and (f) Section 16 of R.A. 6657
are Unconstitutional.
2. In Usurping the Powers and Functions of the Presidential Agrarian Reform
Council or PARC by Promulgating and Issuing Ultra Vires Rules and
 Procedures Governing the Acquisition and Distribution of Agricultural Lands
in Gross Violation of the Provisions of E.O. 229 and R.A. 6657 or the CARL.
3. In Unlawfully Delegating to the MAROs the Authority to Issue Notices of
Coverage and Acquisition to Landowners of Private Agricultural Lands in
their Respective Cities and Municipalities in violation of R.A. 6657.
4. In Subjecting the Sugar Lands of the Planters to CARP Coverage and
Acquisition, Without First Ascertaining: No. 1. Whether there are Regular
Farmworkers on said lands and No. 2. Whether the Regular Farmworkers, if
any, are Interested to Own, Directly or Collectively the Lands they Till.
5. In Choosing and Designating Non-Tillers, Non-Regular Farmworkers and
Outsiders of the sugar lands as Beneficiaries and later, Forcibly Installing
Them in said lands.
6. By Disturbing and Outlawing the Farming System of LABOR
ADMINISTRATION obtaining in the Sugar Lands Knowing As it Does that
Under R.A. 6657 and By the Very Definition of Agrarian Reform in said Act,
Labor Administration is Recognized as an Alternative Mode of Agrarian
Reform.
7. In Assuming Jurisdiction, through DARAB, over Cases and Controversies
which, by virtue of the provisions of B.P. 129 or the Judiciary Reorganization
Act, in relation to P.D. 946 should fall under the original jurisdiction of the
Regional Trial Courts.
B. THE LAND BANK OF THE PHILIPPINES ACTED WITHOUT OR IN EXCESS
OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION.
By Making or Causing Payment, Through a Deposit or Opening a Trust Account with a
Bank designated by DAR for the Alleged Compensation for the Land, without Waiting
For the Final Determination of Such Compensation By the Court.
C. THE LAND REGISTRATION AUTHORITY OR LRA ACTED WITHOUT OR IN
EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION.
By Authorizing the Registers of Deeds under its Jurisdiction to Cancel, upon being
directed by DAR, the Certificates of Title of the Registered Owners without the Notice
to or Consent of the latter or an Order from the Court in Gross Violation of the Property
Rights of the Latter and the provisions of the Land Registration Laws.6
It is the principal contention of the petitioners that, in the exercise by the State of the
power of eminent domain, which in the case of RA 6657 is the acquisition of private
lands for distribution to farmer-beneficiaries, expropriation proceedings, as prescribed
in Rule 67 of the Rules of Court, must be strictly complied with. The petitioners rely on
the case of Visayas Refining Company v. Camus and Paredes7 decided by the Court in
1919. In the said case, the Government of the Philippine Islands, through the Governor-
General, instructed the Attorney-General to initiate condemnation proceedings for the
purpose of expropriating a tract of land containing an area of 1,100,463 square meters
to be used for military and aviation purposes. In compliance therewith, the Attorney-
General filed a complaint with the Court of First Instance (CFI) and among the
defendants impleaded was Visayan Refining Co. which owned a portion of the property
intended to be expropriated. The CFI provisionally fixed the total value of the subject
property at P600,000 and upon payment thereof as deposit, the CFI authorized that the
Government be placed in possession thereof.
Visayan Refining Co. questioned the validity of the proceedings on the ground that
there was no law enacted by the Philippine Legislature authorizing the exercise of the
power of eminent domain to acquire land for military or aviation purposes. The Court,
speaking through Justice Street, upheld the right of the Governor-General to authorize
the condemnation of the subject property for military and aviation purposes. It pointed
to Sections 241 up to 2538 of the Code of Civil Procedure as the applicable provisions
for the conduct of expropriation proceedings. It likewise pointed to Sections 2 and 39 of
Act No. 2826 as authorizing immediate possession when the Government is the
plaintiff. Further, Article 349 of the Old Civil Code was also cited as it stated that:
ART. 349. No one may be deprived of his property unless it be by competent authority
for some purpose of proven public utility and after payment of the proper
compensation.
Unless this requisite has been complied with, it shall be the duty of the court to protect
the owner of such property in its possession or to restore its possession to him, as the
case may be.
The Court stated that "[t]aken together the laws mentioned supply a very complete
scheme of judicial expropriation, deducing the authority from its ultimate source in
sovereignty, providing in detail for the manner of its exercise, and making the right of
the expropriator finally dependent upon the payment of the amount awarded by the
court."10
The petitioners also quote the following disquisition in Visayan Refining Co. on
expropriation vis-à-vis due process of law:
Nevertheless it should be noted that the whole problem of expropriation is resolvable in
its ultimate analysis into a constitutional question of due process of law. The specific
provisions that just compensation shall be made is merely in the nature of a superadded
requirement to be taken into account by the Legislature in prescribing the method of
expropriation. Even were there no organic or constitutional provision in force requiring
compensation to be paid, the seizure of one’s property without payment, even though
intended for a public use, would undoubtedly be held to be a taking without due process
of law and a denial of the equal protection of the laws.
This point is not merely an academic one, as might superficially seem. On the contrary
it has a practical bearing on the problem before us, which may be expressed by saying
that, if the Legislature has prescribed a method of expropriation which provides for the
payment of just compensation, and such method is so conceived and adapted as to
fulfill the constitutional requisite of due process of law, any proceeding conducted in
conformity with that method must be valid.11
Citing Visayan Refining Co. as well as other cases12 and statutes,13 the petitioners thus
contend that a landowner cannot be deprived of his property until expropriation
proceedings are instituted in court. They insist that the expropriation proceedings to be
followed are those prescribed under Rule 67 of the Revised Rules of Court. In other
words, for a valid exercise of the power of eminent domain, the Government must
institute the necessary expropriation proceedings in the competent court in accordance
with the provisions of the Rules of Court.
In this connection, they cite Section 1 of Rule 67, which they stress is entitled
EXPROPRIATION, thus:
SEC. 1. The complaint. - The right of eminent domain shall be exercised by the filing
of a verified complaint which shall state with certainty the right and purpose of
expropriation, describe the real or personal property sought to be expropriated, and join
as defendants all persons owning or claiming to own, or occupying, any part thereof or
interest therein, showing, so far as practicable, the separate interest of each defendant.
If the title to any property sought to be expropriated appears to be in the Republic of the
Philippines, although occupied by private individuals, or if the title is otherwise obscure
or doubtful so that the plaintiff cannot with accuracy or certainty specify who are the
real owners, averment to that effect shall be made in the complaint.
The DAR, however, according to the petitioners, particularly through the process of
compulsory acquisition, has managed to operate outside of the Constitution and the
Rules of Court. They alleged that the compulsory acquisition process adopted by the
DAR is absolutely without any constitutional or lawful basis whatsoever. It is allegedly
"utterly repugnant to the principle of eminent domain" or "expropriation" and an
"unmitigated and lawless usurpation of the constitutional power of the Supreme Court
to promulgate rules of procedure." As such, the process of compulsory acquisition is
allegedly null and void.
The petitioners add that Section 22, Article XVII (Transitory Provisions) of the
Constitution states that "[a]t the earliest possible time, the Government shall
expropriate idle or abandoned lands as may be defined by law, for distribution to the
beneficiaries of the agrarian reform program." The use of the word "expropriate" in this
provision allegedly underscores the necessity of expropriation proceedings pursuant to
Rule 67 of the Rules of Court in the acquisition of private agricultural lands.
It is the petitioners’ view that the following provisions of RA 3844, 14 as amended,
remain effective:
SEC. 51. Powers and Functions. – It shall be the responsibility of the Department:
(1) to initiate and prosecute expropriation proceedings for the acquisition of private
agricultural lands as defined in Section one hundred sixty-six of Chapter XI of this
Code for the purpose of subdivision into economic family-size farm units and resale of
said farm units to bona fide tenants, occupants and qualified farmers; Provided, That
the powers herein granted shall apply only to private agricultural lands subject to the
terms and conditions and order of priority hereinbelow specified.
xxx
SEC. 53. Compulsory Purchase of Agricultural Lands. – The Authority shall, upon
petition in writing of at least one-third of the lessees and subject to the provisions of
Chapter VII of this Code, institute and prosecute expropriation proceedings for the
acquisition of private agricultural lands and home lots enumerated under Section fifty-
one. In the event a landowner agrees to sell his property under the terms specified in
this Chapter and the National Land Reform Council finds it suitable and necessary to
acquire such property, a joint motion embodying the agreement, including the valuation
of the property, shall be submitted by the Land Authority and the landowner to the
court for approval; Provided, That in such case, any person qualified to be a beneficiary
of such expropriation or purchase may object to the valuation as excessive, in which
case the Court shall determine the just compensation in accordance with Section fifty-
six of this Code.
According to the petitioners, the foregoing provisions have not been repealed by RA
6657; hence, in consonance therewith, the acquisition of private agricultural lands for
purposes of agrarian reform can only be exercised by the Government through
expropriation proceedings under Rule 67 of the Rules of Court. On the other hand, the
process of compulsory acquisition adopted by the DAR, as embodied in its
administrative orders, is allegedly violative of the landowners’ rights enshrined in the
Constitution.
The petitioners specifically refer to Section 16 of RA 6657, which 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
former.
(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 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.
They clarify that while they concede the validity of paragraphs (a), (b) and (c), they
vigorously assail the validity of paragraphs (d), (e) and (f) of the above-quoted
provision. Under the assailed paragraphs, a landowner is allegedly deprived of his right
to question or challenge the legality or necessity of the taking of his land by the DAR.
The "public purpose and necessity" of the taking is already assumed without the
predicate of a prior hearing where the landowner is given an opportunity to be heard.
He is allegedly only allowed in paragraph (d) to question or reject the compensation
offered by the DAR. This procedure allegedly violates the rights of the landowners
under Sections 1 and 9 of Article III (Bill of Rights) of the Constitution, to wit:
SEC. 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.
xxx
SEC. 9. Private property shall not be taken for public use without just compensation.
Paragraph (e) is assailed by the petitioners as it authorizes the DAR, by allegedly
merely causing the deposit with the Land Bank of the compensation, to immediately
take possession of the property and to direct the Register of Deeds to cancel the
certificate of title of the landowner without notice to and consent of the latter. The
petitioners contend that, in contrast, under the Civil Code, if the creditor or obligee
refuses to accept the tender of payment, it is the duty of the debtor or obligor to make
consignation of the thing or amount due. Under the Civil Code, there is no effective
payment without valid tender of payment and consignation in court. 15 The petitioners
theorize that, in the same manner, the DAR cannot be allowed to take possession of the
property of a landowner, by mere deposit of the compensation that it has summarily
fixed under paragraph (e), without having to go to court.
Paragraph (f) is characterized by the petitioners as meaningless and useless to the
landowner. It allegedly compels him to file a case, and in the process incur costs
therefor, for the final determination of just compensation when, in the meantime, he has
already been deprived of possession of his property and his certificate of title cancelled.
The petitioners cite EPZA v. Dulay16 where the Court ruled that:
We, therefore, hold that P.D. 1533 which eliminates the court’s discretion to appoint
commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void.
To hold otherwise would be to undermine the very purpose why this Court exists in the
first place.17
Relying on the above pronouncement, the petitioners submit that paragraphs (d), (e) and
(f) of Section 16 of RA 6657, as they similarly eliminate the appointment by the court
of commissioners to appraise the valuation of the land, are unconstitutional, null and
void.
The petitioners next assail the Court’s Decision in Association of Small Landowners in
the Philippines, Inc. v. Secretary of Agrarian Reform18 which affirmed the
constitutionality of RA 6657. They describe the Decision as a "riddle wrapped in an
enigma." They refer to pronouncements made therein that are allegedly inconsistent
with its conclusion, i.e., affirming the validity of RA 6657, including paragraphs (d), (e)
and (f) of Section 16. For example, while the Decision, citing EPZA, pronounced that
"[t]o be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any other branch or official of the
government"19 and that "the determination made by the DAR is only preliminary unless
accepted by all parties concerned,"20 these pronouncements are allegedly irreconcilable
with paragraphs (d) and (e) which allow the DAR, through summary administrative
proceeding, "to take immediate possession of the land" and cause "the cancellation of
the certificate of title of the landowner."
Further, the petitioners maintain that paragraphs (d) and (e) contemplate a transfer of
possession and ownership even before full payment of compensation. They thus wonder
how these paragraphs were allowed to survive and remain despite the avowals of the
Court in the Decision that "[t]he recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the expropriator only upon full payment of
the just compensation"21 and its dispositive portion that "2. Title to all expropriated
properties shall be transferred to the State only upon full payment of compensation to
their respective owners."22
The petitioners opine that even as the Decision affirmed the validity of RA 6657, the
pronouncements made in the body, quoted earlier, actually support their argument that
paragraphs (d), (e) and (f) of Section 16 are invalid as they dispense with the
expropriation proceedings under Rule 67 of the Rules of Court in the acquisition of
private agricultural lands. The petitioners assert that the only procedure for the exercise
by the State of eminent domain in the implementation of agrarian reform is through
expropriation under Rule 67 of the Rules of Court.
The DAR is also being accused by the petitioners of usurping the powers and functions
of the Presidential Agrarian Reform Council (PARC),23 which is allegedly the body
charged under RA 6657 with the task of promulgating the rules for the schedule of
acquisition and redistribution of agricultural lands.24 No law has allegedly been passed
transferring the powers of the PARC to DAR; consequently, the various administrative
orders that it has issued to implement RA 6657 are ultra vires.
The petitioners also assail as undue and unlawful delegation to the Municipal Agrarian
Reform Officers (MAROs) the authority to issue notices of coverage and compulsory
acquisition. Section 16 (a), quoted earlier, provides that "[a]fter having identified the
land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the
land to the owners thereof x x x." According to the petitioners, this function has been
delegated to the DAR Secretary and it can and should only be exercised by the said
official. The DAR Secretary cannot allegedly delegate the same to a subordinate
official or employee. Consequently, the delegation by the DAR Secretary to the
MAROs of the authority and discretion to send the notices of coverage and compulsory
acquisition involving sugar lands to be brought under RA 6657 allegedly constituted
grave abuse of discretion amounting to lack or excess of jurisdiction.
Citing Section 4, Article XIII (Social Justice and Human Rights) which states in part
that "[t]he State shall, by law, undertake an agrarian reform program founded on the
right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till x x x," the petitioners posit that only the regular
farmworkers or farmers are entitled to own the land they till. Further, this entitlement or
right may be waived or declined by the regular farmworkers or farmers. As a corollary,
they must first express their willingness or conformity to own the lands they are tilling
before the DAR may allegedly send the notices of coverage and acquisition.
Allegedly in violation thereof, notices of coverage and acquisition are being sent out by
the DAR "indiscriminately" without first identifying the land, the landowners and the
beneficiaries. The petitioners emphasize that, with respect to the regular farmworkers in
sugar lands, a majority of the regular farmworkers must first agree to exercise their
right to own the land they till. In other words, the regular farmworkers in sugar lands
can exercise their right to own the land only collectively, not individually. If they
decide against the exercise of the said right, the DAR cannot choose to replace them
with non-regular farmworkers or non-tillers thereon because they would not qualify as
beneficiaries.
What is actually implemented in the sugar lands of the members of petitioners-
federations is that the DAR, allegedly in collusion with some non-governmental
organizations (NGOs) and farmer organizations, ejects and replaces the regular
farmworkers with non-tillers, non-regular farmworkers or outsiders who are falsely
designated as "beneficiaries." These "beneficiaries" are then installed on the sugar lands
with the assistance of members of the Armed Forces of the Philippines (AFP) or the
Philippine National Police (PNP). The petitioners claim that these incidents have
resulted in heightened tension and anxiety and even violent confrontations in the sugar
lands in the Visayas.
By these alleged acts, the petitioners charge the DAR with "deliberate and unmitigated
distortion" of Section 2225of RA 6657. In contravention of the letter of the said
provision, the DAR has allegedly included landless residents who are non-tillers and
who are outsiders as beneficiaries in the distribution of private agricultural lands.
As an alternative mode of agrarian reform, the petitioners aver that the system of Land
Administration, as recognized in RA 3844, should continue to be allowed particularly
in sugar lands. Labor Administration,26 they explain, is a farming system that has been
adopted and followed by sugar planters in the operation of their farms. Under this
system, the planters employ or hire farmworkers who supply the labor required for the
entire farm operations. Aside from their salaries and wages, which are covered by the
minimum wage law, the farmworkers also receive other benefits from the planters such
as housing, medical services and education for their children.
The petitioners contend that RA 6657 expressly recognizes Land Administration as an
alternative mode of agrarian reform as it defines "agrarian reform" in this wise:
SEC. 3. Definitions. – For the purpose of this Act, unless the context indicates
otherwise:
(a) Agrarian Reform means the redistribution of lands, regardless of crops or fruits
produced, to farmer and regular farmworkers who are landless, irrespective of tenurial
arrangement, to include the totality of factors and support services designed to lift the
economic status of the beneficiaries and all other arrangements alternative to the
physical redistribution of lands, such as production or profit-sharing, labor
administration, and the distribution of shares of stock, which will allow beneficiaries to
receive a just share of the fruits of the lands they work.
Another indication that Land Administration is continued to be recognized in the
operation of farms, according to the petitioners, is the fact that after RA 6657, Congress
amended the minimum wage law several times to provide for the increase of the
minimum wage not only for non-agricultural workers but also for agricultural laborers.
Also, in 1991, Congress enacted RA 698227 which, according to the petitioners, granted
wage and other benefits to workers in the sugar industry. The said law allegedly
recognized that the work in the sugar industry is seasonal. Implicit in these policies of
minimum wage increases and amelioration of benefits for sugar farmworkers is
allegedly the recognition of the system of Land Administration as a legitimate mode of
agrarian reform.
Despite this recognition, the DAR has allegedly outlawed Land Administration as it is
bent on acquiring and distributing thousands of hectares of private agricultural lands. In
so doing, the DAR is allegedly not bothering to find out whether the alternative mode
of agrarian reform, i.e., Land Administration, is already in place and whether the
regular farmworkers entitled to own the land want to exercise their right.
The petitioners explain that there are certain crops, and sugar is one of them, that are
more economically and efficiently produced by organized, mechanized and plantation-
type agriculture than by small, "parcelized" and owner-cultivated farms. This is
allegedly especially true in the sugar producing regions in the Visayas where planting
and harvesting of sugarcane have to be synchronized with the milling season of the
sugar mill in a particular district. The peculiar nature of the sugar industry is allegedly
the reason why RA 3844, RA 6982 and other laws have recognized Labor
Administration as an alternative mode of agrarian reform.
The petitioners stress that the mandate of the Constitution is not only to give the
landless farmers and regular farmworkers the right to own the land they till but also the
right to receive a just share of the fruits of the land. If these farmers then choose not to
exercise their right to own the land they till, then it allegedly behooves the DAR to see
to it that the other laws, such as the minimum wage law and RA 6982, are implemented
to afford the farmworkers a "just share of the fruits of the land." Instead, the DAR, by
its stance of singularly implementing RA 6657, is allegedly violating the rights of the
sugar farmworkers guaranteed by other applicable laws.28Specifically, the DAR is
ousting regular farmworkers and installing outsiders to take over the lands.
The DAR is further allegedly committing grave abuse of discretion by assuming
jurisdiction, through the Department of Agrarian Reform Adjudication Board
(DARAB), over cases and controversies which, by virtue of Batas Pambansa Blg. (BP)
129, known as "The Judiciary Reorganization Act," are properly cognizable by the
Regional Trial Courts (RTCs). The petitioners note that prior to BP 129, "cases
involving expropriation of all kinds of land in furtherance of the agrarian reform
program" and "expropriation proceedings for public purpose of all kinds of tenanted
agricultural lands x x x"29 were exclusively within the jurisdiction of the Court of
Agrarian Relations (CAR). With the enactment of BP 129, the CAR was abolished and
cases under its jurisdiction were transferred to the exclusive and original jurisdiction of
RTCs. The petitioners advance the view that RA 6657 did not repeal BP 129 such that
the RTCs are not divested of their exclusive and original jurisdiction over cases
formerly under the jurisdiction of the CAR. This is so, according to the petitioners,
because the jurisdiction of the CAR involved the exercise of judicial power that could
not be properly transferred to an administrative body like the DAR. The latter’s
jurisdiction is allegedly limited only to matters involving the administrative
implementation of agrarian reform laws, e.g., disputes and controversies "relating to
tenurial arrangements."
With respect to the Land Bank, the petitioners allege that in the light of the Court’s
pronouncement in Association of Small Landowners that "the determination made by
the DAR is only preliminary unless accepted by all parties concerned, [o]therwise, the
courts of justice will still have the right to review with finality the said determination in
the exercise of what is admittedly a judicial function," the Land Bank cannot effect the
payment of compensation as determined by the DAR which is considered as
preliminary. The Land Bank must allegedly wait until such compensation is determined
with finality by the courts.
The Land Registration Authority is similarly assailed as committing grave abuse of
discretion since it, through the various Registers of Deeds in the country and
particularly in the sugar producing regions in the Visayas, has been allegedly
summarily canceling certificates of title merely upon the directive or request of the
DAR and without the knowledge and consent of the registered owners. In violation of
the pertinent provisions30 of the Land Registration Act (Act No. 496), the Registers of
Deeds are allegedly canceling certificates of title of landowners without asking them to
surrender their owners’ duplicate certificates of titles.
The petitioners thus pray, inter alia, for the issuance of a writ to prohibit the DAR, the
Land Bank and the Land Registration Authority from subjecting the petitioners’
sugarcane farms to eminent domain or compulsory acquisition without filing the
necessary expropriation proceedings pursuant to the provisions of Rule 67 of the Rules
of Court and/or without the application or conformity of a majority of the regular
farmworkers on said farms. The petitioners likewise pray that paragraphs (d), (e) and (f)
of Section 16 of RA 6657 be declared unconstitutional.
The Respondents’ Counter-Arguments
The Land Bank urges the Court to dismiss the petition since the constitutionality of RA
6657 had already been categorically upheld by the Court in Association of Small
Landowners. Further, some of the grounds relied upon by the petitioners allege matters
that require factual determination. For example, the allegation that the DAR is
subjecting the sugar lands to the coverage of RA 6657 without first ascertaining
whether there are regular farmworkers therein and whether they are interested to own,
directly or collectively, the land they till, allegedly requires factual determination.
Considering that the Court is not a trier of facts, the Land Bank argues that these
matters are better threshed out in a trial court.
Refuting the petitioners, the Land Bank asserts that taking of private property for
agrarian reform purposes can be effected even without full payment of just
compensation. It cites the following commentary of Fr. Bernas:
xxxx
IS SUCH RIGHT OF IMMEDIATE ENTRY CONSTITUTIONAL? x x x Reviewing
conflicting American authorities, the Court said that "ACCORDING TO THE
WEIGHT OF AUTHORITY, IF THE CONSTITUTION OR STATUTES DO NOT
EXPRESSLY REQUIRE IT, ACTUAL PAYMENT OR TENDER BEFORE TAKING
IS UNNECESSARY, and it will be sufficient if a certain and adequate remedy is
provided by which the owner can obtain compensation without any unreasonable
delay." THE COURT OPTED FOR THIS MORE LIBERAL VIEW and found that the
statute in question with its provision for deposit of the money with the court satisfied
constitutional requirements.31
The Land Bank is also of the view that the framers of the Constitution did not intend to
require full payment of just compensation before taking of private lands for agrarian
reform purposes could be effected. It cites Fr. Bernas anew:
xxx
ANOTHER MATTER TAKEN UP BY THE COMMISSION WAS THE PROPOSAL
TO REQUIRE ‘PRIOR PAYMENT OF JUST COMPENSATION’ IN LAND
REFORM EXPROPRIATIONS. Commissioner Regalado proposed the amendment as
a measure to protect the interest of landowners. Regalado’s explanation, however,
revealed that ALL HE WANTED WAS WHAT ALREADY OBTAINS IN
EXPROPRIATION LAWS WHICH REQUIRES A COURT DEPOSIT PRIOR TO
ENTRY INTO THE CONDEMNED PROPERTY. BUT REGALADO WAS
SATISFIED WHEN THIS MEANING WAS ACCEPTED BY THE COMMISSION
and he did not insist on an explicit constitutional provision. 32
By insisting that title should remain with the landowners until the issue of just
compensation is finally adjudicated by the courts, the petitioners allegedly simply want
to interminably delay the acquisition of lands covered by RA 6657.
Debunking the petitioners’ argument that it may have been "unwise" and "impractical"
for Congress to include sugar lands within the coverage of RA 6657 as certain crops,
including sugar, are more efficiently and more economically produced by organized,
mechanized, plantation-type agriculture than by small, "parcelized," owner-cultivated
farms, the Land Bank opines that the wisdom, morality or practicability of acquiring
sugar lands for agrarian reform is beyond the ambit of judicial review. The remedy to
address this issue, according to the Land Bank, is legislative not judicial. Absent any
amendment to RA 6657 with respect to its coverage, there can be no basis to prohibit
the DAR and the Land Bank from acquiring all agricultural lands, sugar lands included,
for purposes of agrarian reform.
The Land Bank thus denies committing any grave abuse of discretion in "making or
causing the payment of the initial amount of valuation regarding private lands acquired
pursuant to RA 6657 notwithstanding the lack of finality of the decision adjudging the
amount of just compensation of subject properties."33
Through the Office of the Solicitor General, the DAR urges the Court to dismiss the
petition outright on the ground that it is premature. It avers that when issues of
constitutionality are raised, as in this case, the Court can exercise its power of judicial
review only if the following requisites are present: (1) an actual and appropriate case
exists; (2) a personal and substantial interest of the party raising the constitutional
question; (3) the exercise of judicial review is pleaded at the earliest possible
opportunity; and (4) the constitutional question is the lis mota of the case. 34
In the present case, the DAR contends that the first requisite, i.e., the existence of an
actual or appropriate case, is not attendant. There is allegedly no showing that the
petitioners’ sugar lands have been subjected to compulsory acquisition by the DAR.
Even the petition itself is allegedly devoid of such allegation. Accordingly, there is no
actual case or controversy to speak of and the instant petition is, at best, premature.
In this connection, the DAR informs the Court that the concerns of the petitioners are
appropriately within the domain of the Task Force Sugarlandia, created pursuant to
Memorandum Order No. 199 dated December 5, 2005 issued by President Gloria
Macapagal-Arroyo, which reads:
Section 2. Powers and Functions. Task Force Sugarlandia shall exercise the following
powers and functions:
a. Conduct and complete a study identifying and addressing specific problems
in the implementation of the Comprehensive Agrarian Reform Program as
provided under Republic Act 6657 directly affecting the development of the
sugar industry and conduct consultations in areas to be identified by the Task
Force;
 b. Submit recommendations to the President on the formulation of policies,
plans, programs and projects relative to the development of the sugar industry
and implementation of the ethanol program;
c. Recommend modifications/amendments to existing laws, rules, regulations
and procedures to remove impediments in the immediate, effective and
efficient implementation of the programs and activities relative to the
Comprehensive Agrarian Reform Program under Republic Act 6657;
d. Enlist the assistance of any branch, department, bureau, office, agency or
instrumentality of the Government, including government-owned and
controlled corporations, to carry out the provisions of this Memorandum
Order;
e. Perform such other functions as may be directed by the President.
Anent the alleged unconstitutionality of paragraphs (d), (e) and (f) of Section 16 of RA
6657, the DAR invokes Association of Small Landowners which affirmed the
constitutionality of the said law.
For its part, the Land Registration Authority observes that it was impleaded as a
nominal party; nonetheless, it adopts the Comment of the DAR as its own.
The Court’s Rulings
The petition lacks merit.
The validity of Section 16, including paragraphs (d), (e) and (f) thereof, of RA 6657 has
already been affirmed in Association of Small Landowners
In Association of Small Landowners, the Court categorically passed upon and upheld
the validity of Section 16 of RA 6657, including paragraphs (d), (e) and (f), which sets
forth the manner of acquisition of private agricultural lands and ascertainment of just
compensation, in this wise:
Where the State itself is the expropriator, it is not necessary for it to make a deposit
upon its taking possession of the condemned property, as "the compensation is a public
charge, the good faith of the public is pledged for its payment, and all the resources of
taxation may be employed in raising the amount." Nevertheless, Section 16(e) of the
CARP Law provides that:
Upon receipt by the landowner of the corresponding payment, or in case of rejection or
no response from the landowner, upon the deposit with an accessible bank designated
by the DAR of the compensation in cash or in LBP bonds in accordance with this Act,
the DAR shall take immediate possession of the land and shall request the proper
Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the
Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of
the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d), which provides that in case of
the rejection or disregard by the owner of the offer of the government to buy his land -
x x x the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land, within fifteen (15)
days from the receipt of the notice. After the expiration of the above period, the matter
is deemed submitted for decision. The DAR shall decide the case within thirty (30)
days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts
of justice and may not be usurped by any other branch or official of the government.
EPZA v. Dulay resolved a challenge to several decrees promulgated by President
Marcos providing that the just compensation for property under expropriation should be
either the assessment of the property by the government or the sworn valuation thereof
by the owner, whichever was lower. In declaring these decrees unconstitutional, the
Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court
inutile in a matter which under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the
power to determine the just compensation for the property, following the applicable
decrees, its task would be relegated to simply stating the lower value of the property as
declared either by the owner or the assessor. As a necessary consequence, it would be
useless for the court to appoint commissioners under Rule 67 of the Rules of Court.
Moreover, the need to satisfy the due process clause in the taking of private property is
seemingly fulfilled since it cannot be said that a judicial proceeding was not had before
the actual taking. However, the strict application of the decrees during the proceedings
would be nothing short of a mere formality or charade as the court has only to choose
between the valuation of the owner and that of the assessor, and its choice is always
limited to the lower of the two. The court cannot exercise its discretion or independence
in determining what is just and fair. Even a grade school pupil could substitute for the
judge insofar as the determination of constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of whether
the courts under P.D. No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the power and authority to determine
just compensation, independent of what is stated by the decree and to this effect, to
appoint commissioners for such purpose.
This time we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro
and con have been presented, and after all factors and considerations essential to a fair
and just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from
the arbitrariness that rendered the challenged decrees constitutionally objectionable.
Although the proceedings are described as summary, the landowner and other interested
parties are nevertheless allowed an opportunity to submit evidence on the real value of
the property. But more importantly, the determination of the just compensation by the
DAR is not by any means final and conclusive upon the landowner or any other
interested party, for Section(f) clearly provides:
(f) Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with
finality the said determination in the exercise of what is admittedly a judicial function.35
On the matter of when transfer of possession and ownership of the land to the
Government is reckoned, Association of Small Landowners instructs:
The CARP Law, for its part, conditions the transfer of possession and ownership of the
land to the government on receipt by the landowner of the corresponding payment or
the deposit by the DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner. No outright change of
ownership is contemplated either.36
The foregoing disquisition is binding and applicable to the present case following the
salutary doctrine of stare decisis et non quieta movere which means "to adhere to
precedents, and not to unsettle things which are established." 37 Under the doctrine,
when the Supreme Court has once laid down a principle of law as applicable to a
certain state of facts, it will adhere to that principle, and apply it to all future cases,
where facts are substantially the same; regardless of whether the parties and property
are the same.38 The doctrine of stare decisis is based upon the legal principle or rule
involved and not upon the judgment which results therefrom. In this particular sense
stare decisis differs from res judicata which is based upon the judgment. 39
The doctrine of stare decisis is one of policy grounded on the necessity for securing
certainty and stability of judicial decisions, thus:
Time and again, the Court has held that it is a very desirable and necessary judicial
practice that when a court has laid down a principle of law as applicable to a certain
state of facts, it will adhere to that principle and apply it to all future cases in which the
facts are substantially the same. Stare decisis et non quieta movere. Stand by the
decisions and disturb not what is settled. Stare decisis simply means that for the sake of
certainty, a conclusion reached in one case should be applied to those that follow if the
facts are substantially the same, even though the parties may be different. It proceeds
from the first principle of justice that, absent any powerful countervailing
considerations, like cases ought to be decided alike. Thus, where the same questions
relating to the same event have been put forward by the parties similarly situated as in a
previous case litigated and decided by a competent court, the rule of stare decisis is a
bar to any attempt to relitigate the same.40
A careful reading of the petition shows that while it purports to be one for prohibition
and mandamus, it practically seeks a reconsideration, albeit partial, of the Decision in
Association of Small Landowners. It is noted that in G.R. 79310, one of the
consolidated cases therein, the petitioners were landowners and sugar planters in
Victorias, Negros Occidental and Planters’ Committee, Inc., an organization composed
of 1,400 planter-members. Also allowed to intervene as petitioner therein was the
National Federation of Sugarcane Planters, presumably the same organization as one of
the petitioners in this case, which then claimed to represent its members of at least
20,000 individual sugar planters all over the country. The Decision in Association of
Small Landowners is thus final and conclusive on these parties not only on the ground
of stare decisis, but res judicata as well.
In any case, despite its lengthy discussion, the petition has failed to present any cogent
argument for the Court to re-examine Association of Small Landowners. As correctly
observed by the Solicitor General, the petition does not allege that the farm lands of any
of the petitioners have actually been subjected to compulsory acquisition or, at the least,
that the DAR, following Section 16 of RA 6657, has actually given any of the
petitioners notice that it is acquiring their respective properties for the purpose of
agrarian reform. In other words, the allegations of the petition have failed to present an
actual case or controversy, or that it is ripe for adjudication, which would warrant the
Court’s re-examination of its rulings in Association of Small Landowners, including
those pertaining to the validity of Section 16, including paragraphs (d), (e) and (f), of
RA 6657.
DAR’s compulsory acquisition procedure is based on Section 16 of RA 6657. It does
not, in any way, preclude judicial determination of just compensation
Contrary to the petitioners’ submission that the compulsory acquisition procedure
adopted by the DAR is without legal basis, it is actually based on Section 16 of RA
6657. Under the said law, there are two modes of acquisition of private agricultural
lands: compulsory and voluntary. The procedure for compulsory acquisition is that
prescribed under Section 16 of RA 6657.
In Roxas & Co., Inc. v. Court of Appeals,41 the Court painstakingly outlined the
procedure for compulsory acquisition, including the administrative orders issued by the
DAR in relation thereto, in this manner:
In the compulsory acquisition of private lands, the landholding, the landowners and the
farmer beneficiaries must first be identified. After identification, the DAR shall send a
Notice of Acquisition to the landowner, by personal delivery or registered mail, and
post it in a conspicuous place in the municipal building and barangay hall of the place
where the property is located. Within thirty days from receipt of the Notice of
Acquisition, the landowner, his administrator or representative shall inform the DAR of
his acceptance or rejection of the offer. If the landowner accepts, he executes and
delivers a deed of transfer in favor of the government and surrenders the certificate of
title. Within thirty days from the execution of the deed of transfer, the Land Bank of the
Philippines (LBP) pays the owner the purchase price. If the landowner rejects the
DAR’s offer or fails to make a reply, the DAR conducts summary administrative
proceedings to determine just compensation for the land. The landowner, the LBP
representative and other interested parties may submit evidence on just compensation
within fifteen days from notice. Within thirty days from submission, the DAR shall
decide the case and inform the owner of its decision and the amount of just
compensation. Upon receipt by the owner of the corresponding payment, or, in case of
rejection or lack of response from the latter, the DAR shall deposit the compensation in
cash or in LBP bonds with an accessible bank. The DAR shall immediately take
possession of the land and cause the issuance of a transfer certificate of title in the name
of the Republic of the Philippines. The land shall then be redistributed to the farmer
beneficiaries. Any party may question the decision of the DAR in the regular courts for
final determination of just compensation.
The DAR has made compulsory acquisition the priority mode of land acquisition to
hasten the implementation of the Comprehensive Agrarian Reform Program (CARP).
Under Section 16 of the CARL, the first step in compulsory acquisition is the
identification of the land, the landowners and the beneficiaries. However, the law is
silent on how the identification process must be made. To fill in this gap, the DAR
issued on July 26, 1989 Administrative Order No. 12, Series of 1989, which set the
operating procedure in the identification of such lands. The procedure is as follows:
"II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the assistance of the pertinent
Barangay Agrarian Reform Committee (BARC), shall:
1. Update the master list of all agricultural lands covered under the CARP in
his area of responsibility. The master list shall include such information as
required under the attached CARP Master List Form which shall include the
name of the landowner, landholding area, TCT/OCT number, and tax
declaration number.
2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title
(OCT/TCT) or landholding covered under Phase I and II of the CARP except
those for which the landowners have already filed applications to avail of other
modes of land acquisition. A case folder shall contain the following duly
accomplished forms:
a) CARP CA Form 1—MARO Investigation Report
b) CARP CA Form 2-- Summary Investigation Report of Findings
and Evaluation
c) CARP CA Form 3—Applicant’s Information Sheet
d) CARP CA Form 4—Beneficiaries Undertaking
e) CARP CA Form 5—Transmittal Report to the PARO
The MARO/ BARC shall certify that all information contained in the above-
mentioned forms have been examined and verified by him and that the same
are true and correct.
3. Send a Notice of Coverage and a letter of invitation to a conference/
meeting to the landowner covered by the Compulsory Case Acquisition
Folder. Invitations to the said conference/ meeting shall also be sent to the
prospective farmer-beneficiaries, the BARC representative(s), the Land Bank
of the Philippines (LBP) representative and other interested parties to discuss
the inputs to the valuation of the property. He shall discuss the MARO/ BARC
investigation report and solicit the views, objection, agreements or suggestions
of the participants thereon. The landowner shall also be asked to indicate his
retention area. The minutes of the meeting shall be signed by all participants in
the conference and shall form an integral part of the CACF.
4. Submit all completed case folders to the Provincial Agrarian Reform Officer
(PARO).
B. The PARO shall:
1. Ensure that the individual case folders are forwarded to him by his MAROs.
2. Immediately upon receipt of a case folder, compute the valuation of the land
in accordance with A.O. No. 6, Series of 1988. The valuation worksheet and
the related CACF valuation forms shall be duly certified correct by the PARO
and all the personnel who participated in the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO through ocular
inspection and verification of the property. This ocular inspection and
verification shall be mandatory when the computed value exceeds 500,000 per
estate.
4. Upon determination of the valuation, forward the case folder, together with
the duly accomplished valuation forms and his recommendations, to the
Central Office. The LBP representative and the MARO concerned shall be
furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau of Land Acquisition and
Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from the PARO, review,
evaluate and determine the final land valuation of the property covered by the
case folder. A summary review and evaluation report shall be prepared and
duly certified by the BLAD Director and the personnel directly participating in
the review and final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized
representative, a Notice of Acquisition (CARP CA Form 8) for the subject
property. Serve the Notice to the landowner personally or through registered
mail within three days from its approval. The Notice shall include, among
others, the area subject of compulsory acquisition, and the amount of just
compensation offered by DAR.
3. Should the landowner accept the DAR’s offered value, the BLAD shall
prepare and submit to the Secretary for approval the Order of Acquisition.
However, in case of rejection or non-reply, the DAR Adjudication Board
(DARAB) shall conduct a summary administrative hearing to determine just
compensation, in accordance with the procedures provided under
Administrative Order No. 13, Series of 1989. Immediately upon receipt of the
DARAB’s decision on just compensation, the BLAD shall prepare and submit
to the Secretary for approval the required Order of Acquisition.
4. Upon the landowner’s receipt of payment, in case of acceptance, or upon
deposit of payment in the designated bank, in case of rejection or non-
response, the Secretary shall immediately direct the pertinent Register of
Deeds to issue the corresponding Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. Once the property is transferred, the
DAR, through the PARO, shall take possession of the land for redistribution to
qualified beneficiaries."
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian
Reform Officer (MARO) keep an updated master list of all agricultural lands under the
CARP in his area of responsibility containing all the required information. The MARO
prepares a Compulsory Acquisition Case Folder (CACF) for each title covered by
CARP. The MARO then sends the landowner a "Notice of Coverage" and a "letter of
invitation" to a "conference/ meeting" over the land covered by the CACF. He also
sends invitations to the prospective farmer-beneficiaries, the representatives of the
Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines
(LBP) and other interested parties to discuss the inputs to the valuation of the property
and solicit views, suggestions, objections or agreements of the parties. At the meeting,
the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer
(PARO) who shall complete the valuation of the land. Ocular inspection and
verification of the property by the PARO shall be mandatory when the computed value
of the estate exceeds P500,000.00. Upon determination of the valuation, the PARO
shall forward all papers together with his recommendation to the Central Office of the
DAR. The DAR Central Office, specifically, the Bureau of Land Acquisition and
Distribution (BLAD), shall review, evaluate and determine the final land valuation of
the property. The BLAD shall prepare, on the signature of the Secretary or his duly
authorized representative, a Notice of Acquisition for the subject property. From this
point, the provisions of Section 16 of R.A. 6657 then apply.
For a valid implementation of the CAR Program, two notices are required: (1) the
Notice of Coverage and letter of invitation to a preliminary conference sent to the
landowner, the representatives of the BARC, LBP, farmer beneficiaries and other
interested parties pursuant to DAR A. O. No. 12, Series of 1989; and (2) the Notice of
Acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of
invitation to the conference, and its actual conduct cannot be understated. They are
steps designed to comply with the requirements of administrative due process. The
implementation of the CARL is an exercise of the State’s police power and the power
of eminent domain. To the extent that the CARL prescribes retention limits to the
landowners, there is an exercise of police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such regulation, the owners
are deprived of lands they own in excess of the maximum area allowed, there is also a
taking under the power of eminent domain. The taking contemplated is not a mere
limitation of the use of the land. What is required is the surrender of the title to and
physical possession of the said excess and all beneficial rights accruing to the owner in
favor of the farmer beneficiary. The Bill of Rights provides that "[n]o person shall be
deprived of life, liberty or property without due process of law." The CARL was not
intended to take away property without due process of law. The exercise of the power
of eminent domain requires that due process be observed in the taking of private
property.
DAR A. O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung,
was amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O.
No. 1, Series of 1993. The Notice of Coverage and letter of invitation to the conference
meeting were expanded and amplified in said amendments.
DAR A. O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of
Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition
Pursuant to R. A. 6657," requires that:
"B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including
supporting documents.
2. Gathers basic ownership documents listed under 1.a or 1.b above and
prepares corresponding VOCF/ CACF by landowner/ landholding.
3. Notifies/ invites the landowner and representatives of the LBP, DENR,
BARC and prospective beneficiaries of the schedule of ocular inspection of
the property at least one week in advance.
4. MARO/ LAND BANK FIELD OFFICE/ BARC
a) Identify the land and landowner, and determine the suitability for
agriculture and productivity of the land and jointly prepare Field
Investigation Report (CARP Form No. 2), including the Land Use
Map of the property.
b) Interview applicants and assist them in the preparation of the
Application For Potential CARP Beneficiary (CARP Form No. 3).
c) Screen prospective farmer-beneficiaries and for those found
qualified, cause the signing of the respective Application to Purchase
and Farmer’s Undertaking (CARP Form No. 4).
d) Complete the Field Investigation Report based on the result of the
ocular inspection/ investigation of the property and documents
submitted. See to it that Field Investigation Report is duly
accomplished and signed by all concerned.
5. MARO
a) Assists the DENR Survey Party in the conduct of a boundary/
subdivision survey delineating areas covered by OLT, retention,
subject of VOS, CA (by phases, if possible), infrastructures, etc.,
whichever is applicable.
b) Sends Notice of Coverage (CARP Form No. 5) to landowner
concerned or his duly authorized representative inviting him for a
conference.
c) Sends Invitation Letter (CARP Form No. 6) for a conference/
public hearing to prospective farmer-beneficiaries, landowner,
representatives of BARC, LBP, DENR, DA, NGO’s, farmers’
organizations and other interested parties to discuss the following
matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/ recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/ public hearing to be
guided by CARP Form No. 7.
e) Forwards the completed VOCF/CACF to the Provincial Agrarian Reform
Office (PARO) using CARP Form No. 8 (Transmittal Memo to PARO).
x x x."
DAR A. O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell
(VOS) and Compulsory Acquisition (CA) transactions involving lands enumerated
under Section 7 of the CARL. In both VOS and CA transactions, the MARO prepares
the Voluntary Offer to Sell Case Folder (VOCF) and the Compulsory Acquisition Case
Folder (CACF), as the case may be, over a particular landholding. The MARO notifies
the landowner as well as representatives of the LBP, BARC and prospective
beneficiaries of the date of the ocular inspection of the property at least one week coverage and for LO
before the scheduled date and invites them to attend the same. The MARO, LBP or to select his
BARC conducts the ocular inspection and investigation by identifying the land and retention area, if he
landowner, determining the suitability of the land for agriculture and productivity, desires to avail of
interviewing and screening prospective farmer beneficiaries. Based on its investigation, his right of
the MARO, LBP or BARC prepares the Field Investigation Report which shall be retention; and at the
signed by all parties concerned. In addition to the field investigation, a boundary or same time invites
subdivision survey of the land may also be conducted by a Survey Party of the him to join the field
Department of Environment and Natural Resources (DENR) to be assisted by the investigation to be
MARO. This survey shall delineate the areas covered by Operation Land Transfer conducted on his
(OLT), areas retained by the landowner, areas with infrastructure, and the areas subject property which
to VOS and CA. After the survey and field investigation, the MARO sends a "Notice of should be scheduled
Coverage" to the landowner or his duly authorized representative inviting him to a at least two weeks in
conference or public hearing with the farmer beneficiaries, representatives of the advance of said
BARC, LBP, DENR, Department of Agriculture (DA), non-government organizations, notice.
farmer’s organizations and other interested parties. At the public hearing, the parties
shall discuss the results of the field investigation, issues that may be raised in relation A copy of said CARP Form No.
thereto, inputs to the valuation of the subject landholding, and other comments and Notice shall be 17
recommendations by all parties concerned. The Minutes of the conference/ public posted for at least
hearing shall form part of the VOCF or CACF which files shall be forwarded by the one week on
MARO to the PARO. The PARO reviews, evaluates and validates the Field bulletin board of the
Investigation Report and other documents in the VOCF/ CACF. He then forwards the municipal and
records to the RARO for another review. barangay halls
where the property
DAR A. O. No. 9, Series of 1990 was amended by DAR A. O. No. 1, Series of 1993. is located. LGU
DAR A. O. No. 1, Series of 1993 provided, among others, that: office concerned
notifies DAR about
compliance with
"IV. OPERATING PROCEDURES: posting requirement
thru return
"Steps Responsible Activity
Agency/Unit Forms/Document indorsement on
(Requirements) CARP Form No. 17.
Notify prospective
A. Identification and Documentation ARBs of the
xxx schedule of the field
6 DARMO Sends
5 DARMO Issues Notice of Form No. 2 notice to the LBP,
Coverage to LO BARC, Form No.3
CARP by personal CARP DENR
delivery with proof representatives and
of service, or by prospective ARBs
registered mail with of the schedule of
return card, the field
informing him that investigation to be
his property is now conducted on the
under CARP subject property.
7 DARMO With the CARP BARC representatives inspection report of
LBP participation of LO, No. 4 Land Use of the LBP DAR, he signs the
DENR BARC, and DENR Map Form FIR (Part I) and
Local prospective ARBs, accomplishes Part II
Office conducts the thereof.
investigation on
subject Office In the event that there is a difference or variance
property to identify between the findings of the DAR and the LBP as to the
the landholding, propriety of covering the land under CARP, whether in
deter- mines its whole or in part, on the issue of suitability to agriculture,
suitability and degree of development or slope, and on issues affecting
product- vity; and idle lands, the conflict shall be resolved by a composite
jointly prepares the team of DAR, LBP, DENR and DA which shall jointly
Field Investigation conduct further investigation thereon. The team shall
Report (FIR) and submit its report of findings which shall be binding to
Land Use Map. both DAR and LBP, pursuant to Joint Memorandum
However, the field Circular of the DAR, LBP, DENR and DA dated 27
investigation shall January 1992. 8 DARMO Screens prospective ARBS
proceed even if the and CARP BARC causes the signing of Application
LO, the Form of Purchase and Farmers' under- No. 5 taking
representatives of (APFU).
the DENR and 9 DARMO Furnishes a copy of CARP Form No.
prospective ARBs the duly 4
are not available accomplished FIR to
provided, they were the landowner by
given due notice of personal delivery
the time and date of with proof of
the investigation to service or regis-
be conducted. tered mail with
Similarly, if the return card and
LBP representative posts a copy thereof
is not available or for at least one week
court or could not on the bulletin board
come on the of the municipal and
scheduled date, the barangay halls
field investigation where the property
shall also be is located.
conducted, after
which the duly LGU office CARP Form No.
accomplished Part I concerned notifies 17
of CARP Form No. notifies DAR about
4 shall be forwarded posting requirement
to the LBP thru return
representative for endorsement on
validation. If he CARP Form No. 17.
agrees to the ocular
 B. Land Survey reform, the land’s suitability to agriculture, the degree or development of the slope, etc.,
the conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA
10 DARMO Conducts perimeter Perimeter DENR which shall jointly conduct further investigation. The team’s findings shall be binding
and/or or segregation or delineating on both DAR and LBP. After the field investigation, the DAR Municipal Office shall
Local survey covered by Survey Plan areas prepare the Field Investigation Report and Land Use Map, a copy of which shall be
Office OLT , "uncarpable Segregation furnished the landowner "by personal delivery with proof of service or registered mail
areas such as 18% with return card." Another copy of the Report and Map shall likewise be posted for at
slope and above, least one week in the municipal or barangay halls where the property is located.
unproductive/unsuit-
able to agriculture, Clearly then, the notice requirements under the CARL are not confined to the Notice of
retention, Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage
infrastructure. In first laid down in DAR A. O. No. 12, Series of 1989 and subsequently amended in
case of segregation DAR A. O. No. 9, Series of 1990 and DAR A. O. No. 1, Series of 1993. This Notice of
or subdivision Coverage does not merely notify the landowner that his property shall be placed under
survey, the plan CARP and that he is entitled to exercise his retention right; it also notifies him, pursuant
shall be approved by to DAR A. O. No. 9, Series of 1990, that a public hearing shall be conducted where he
DENR-LMS. and representatives of the concerned sectors of society may attend to discuss the results
C. Review and Completion of Documents. of the field investigation, the land valuation and other pertinent matters. Under DAR A.
O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner that a field
11 DARMO Forwards CARP Form No investigation of his landholding shall be conducted where he and the other
VOCF/CACFto 6 representatives may be present.42
DARPO.
The procedure prescribed in Section 16 of RA 6657 is a summary administrative
x x x." proceeding. As outlined in Roxas, the said procedure, taken together with the pertinent
administrative issuances of the DAR, ensures compliance with the due process
requirements of the law. More importantly, this summary administrative proceeding
DAR A. O. No. 1, Series of 1993, modified the identification process and increased the does not preclude judicial
number of government agencies involved in the identification and delineation of the
land subject to acquisition. This time, the Notice of Coverage is sent to the landowner
before the conduct of the field investigation and the sending must comply with specific determination of just compensation. In fact, paragraph (e) of Section 16 of RA 6657 is
requirements. Representatives of the DAR Municipal Office (DARMO) must send the categorical on this point as it provides that "[a]ny party who disagrees with the decision
Notice of Coverage to the landowner by "personal delivery with proof of service, or by may bring the matter to the court of proper jurisdiction for final determination of just
registered mail with return card," informing him that his property is under CARP compensation."
coverage and that if he desires to avail of his right of retention, he may choose which
area he shall retain. The Notice of Coverage shall also invite the landowner to attend In Land Bank of the Philippines v. Court of Appeals,43 the Court underscored that the
the field investigation to be scheduled at least two weeks from notice. The field jurisdiction of the RTCs, sitting as Special Agrarian Courts, over petitions for the
investigation is for the purpose of identifying the landholding and determining its determination of just compensation is original and exclusive as provided in Section
suitability for agriculture and its productivity. A copy of the Notice of Coverage shall 5744 of RA 6657. As such, direct resort to the RTC, sitting as a Special Agrarian Court,
be posted for at least one week on the bulletin board of the municipal and barangay is valid:
halls where the property is located. The date of the field investigation shall also be sent
by the DAR Municipal Office to representatives of the LBP, BARC, DENR and x x x It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has
prospective farmer beneficiaries. The field investigation shall be conducted on the date "original and exclusive jurisdiction over all petitions for the determination of just
set with the participation of the landowner and the various representatives. If the compensation to landowners." This "original and exclusive" jurisdiction of the RTC
landowner and other representatives are absent, the field investigation shall proceed, would be undermined if the DAR would vest in administrative officials original
provided they were duly notified thereof. Should there be a variance between the jurisdiction in review of administrative decisions. Thus, although the new rules speak of
findings of the DAR and the LBP as to whether the land be placed under agrarian directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian
Courts, it is clear from Sec. 57 that the original and exclusive jurisdiction to determine
such cases is in the RTCs. Any effort to transfer such jurisdiction of the RTCs into an
appellate jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus,
direct resort to the SAC by private respondent is valid.45
In relation thereto, the Court in its Administrative Circular No. 29-2002 dated July 1,
2002, delineated the jurisdiction of the DAR and the Special Agrarian Courts with the
view of avoidance of conflict of jurisdiction under RA 6657, thus:
In view of the increasing number of complaints on matters of jurisdiction over agrarian
disputes, the concerned trial court judges are reminded of the need for a careful and
judicious application of Republic Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, in order to avoid conflict of jurisdiction
with the Department of Agrarian Reform (DAR) or the Department of Environment and
Natural Resources (DENR). Conflict in jurisdiction must be avoided to prevent delay in
the resolution of agrarian problems. In appropriate cases before it the court concerned
must not tolerate any delay.
For this purpose, pertinent provisions of R.A. No. 6657 delineating jurisdiction over
agrarian disputes are hereby reproduced:
Section 50. Quasi-Judicial Powers of the DAR. – The DAR is hereby vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the implementing of agrarian
reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).
Section 55. No Restraining Order or Preliminary Injunction. – No court in the
Philippines shall have jurisdiction to issue any restraining order or writ of preliminary
injunction against PARC or any of its duly authorized or designated agencies in any
case, dispute or application, implementation, enforcement, or interpretation of this Act
and other pertinent laws on agrarian reform.
Section 56. Special Agrarian Courts. -- The Supreme Court shall designate at least one
(1) branch of the Regional Trial Court (RTC) within each province to act as a Special
Agrarian Court.
The Supreme Court may designate more branches to constitute such additional Special
Agrarian Courts as may be necessary to cope with the number of agrarian cases in each
province. In the designation, the Supreme Court shall give preference to the Regional
Trial Courts which have been assigned to handle agrarian cases or whose presiding
judges were former judges of the defunct Court of Agrarian Relations.
The Regional Trial Court (RTC) judges assigned to said courts shall exercise said
special jurisdiction in addition to the regular jurisdiction of their respective courts.
The Special Agrarian Courts shall have the powers and prerogatives inherent in or
belonging to the Regional Trial Courts.
Section 57. Special Jurisdiction. – The special Agrarian Courts shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation to
land owners, and the prosecution of all criminal offenses under this Act. The Rules of
Court shall apply to all proceedings before the Special Agrarian Courts, unless
modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special
jurisdiction within thirty (30) days from submission of the case for decision.
Further, the trial court judges concerned are directed to take note of the decisions of the
Supreme Court of 3 December 1990 in Vda. De Tangub vs. Court of Appeals [191
SCRA 885), and of 13 September 1991 in Quismundo vs. Court of Appeals (201 SCRA
609).
Strict compliance is hereby enjoined. The Office of the Court Administrator is directed
to implement this Administrative Circular, which shall take effect upon its issuance.
Rule 67 of the Rules of Court is not entirely disregarded in the implementation of RA
6657
The petitioners’ main objection to paragraphs (d), (e) and (f) of Section 16 of RA 6657
is that they are allegedly in complete disregard of the expropriation proceedings
prescribed under Rule 67 of the Rules of Court. The petitioners’ argument does not
persuade. As declared by the Court in Association of Small Landowners, we are not
dealing here with the traditional exercise of the power of eminent domain, but a
revolutionary kind of expropriation:
x x x However, we do not deal here with the traditional exercise of the power of
eminent domain. This is not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its owner for a specific
and perhaps local purpose. What we deal with here is a revolutionary kind of
expropriation.
The expropriation before us affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention limits allowed
their owners. This kind of expropriation is intended for the benefit not only of a
particular community or of a small segment of the population but of the entire Filipino
nation, from all levels of our society, from the impoverished farmer to the land-glutted
owner. Its purpose does not cover only the whole territory of this country but goes
beyond in time to the foreseeable future, which it hopes to secure and edify with the
vision and the sacrifice of the present generation of Filipinos. Generations yet to come
are as involved in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less
than the Constitution itself that has ordained this revolution in the farms, calling for "a
just distribution" among the farmers of lands that have heretofore been the prison of
their dreams and deliverance.46
Despite the revolutionary or non-traditional character of RA 6657, however, the chief
limitations on the exercise of the power of eminent domain, namely: (1) public use; and
(2) payment of just compensation, are embodied therein as well as in the Constitution.
With respect to "public use," the Court in Association of Small Landowners declared
that the requirement of public use had already been settled by the Constitution itself as
it "calls for agrarian reform, which is the reason why private agricultural lands are to be
taken from their owners, subject to the prescribed maximum retention limits. The
purposes specified in P.D. No. 27,47 Proc. No. 13148 and RA No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary measures
‘to encourage and undertake the just distribution of all agricultural lands to enable
farmers who are landless to own directly or collectively the lands they till.’ That public
use, as pronounced by the fundamental law itself, must be binding on us." 49
On the other hand, judicial determination of just compensation is expressly prescribed
in Section 57 of RA 6657, quoted above, as it vests on the Special Agrarian Courts
original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners. It bears stressing that the determination of just
compensation during the compulsory acquisition proceedings of Section 16 of RA 6657
is preliminary only.
Section 57 of RA 6657 authorizes not only direct resort to the Special Agrarian Courts
in cases involving petitions for the determination of just compensation, it likewise
mandates that the "Rules of Court shall apply to all proceedings before the Special
Agrarian Courts, unless modified by this Act." Hence, contrary to the contention of the
petitioners, the Rules of Court, including Rule 67 thereof, is not completely disregarded
in the implementation of RA 6657 since the Special Agrarian Courts, in resolving
petitions for the determination of just compensation, are enjoined to apply the pertinent
provisions of the Rules of Court. Moreover, Section 58 of RA 6657, like Rule 67 of the
Rules of Court, provides for the appointment of commissioners by the Special Agrarian
Courts:
SEC. 58. Appointment of Commissioners. – The Special Agrarian Courts, upon their
own initiative or at the instance of any of the parties, may 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 to the court.
The petitioners’ contention that RA 6657 contradicts the dictum in EPZA by
eliminating the appointment by the court of commissioners to appraise the valuation of
the land is, therefore, erroneous.
The inclusion of sugar lands in the coverage of RA 6657 delves into the wisdom of an
act of Congress, beyond the ambit of judicial review
The scope of lands subjected to agrarian reform under RA 6657 has been characterized
as overwhelming, even broader in scope than that of PD 27. While the latter (PD 27)
applies to all private agricultural lands primarily devoted to rice and corn with tenant
farmers under a system of sharecrop or lease tenancy, RA 6657 generally covers all
public and private agricultural lands regardless of tenurial arrangement and commodity
produced.50
The petitioners insist that the system of Land Administration should be maintained to
govern the relations between the sugar planters and the farmworkers because sugar is
one of the crops that is more suitably and efficiently produced by plantation-type
agriculture rather than by small and owner-cultivated farms. In Association of Small
Landowners, however, the matter of the inclusion of sugar farms in the coverage of RA
6657 had already been settled. The sugar planters therein argued that there was no
tenancy problem in the sugar areas that could justify the application of RA 6657 and
that they should not have been lumped in the same legislation as the others because
they (sugar planters) belong to a particular class with particular interests of their own.
Rejecting this particular argument, the Court held that the sugar planters failed to show
that they belong to a different class and are entitled to a different treatment. It thus
upheld the classification made by RA 6657, insofar as it included the sugar farms, as
conforming to the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it must not be limited
to existing conditions only; (4) it must apply equally to all the members of the class. 51
Indeed, it is not within the power of the Court to pass upon or look into the wisdom of
the inclusion by Congress of the sugar lands in the coverage of RA 6657. It is basic in
our form of government that the judiciary cannot inquire into the wisdom or expediency
of the acts of the executive or the legislative department, for each department is
supreme and independent of the others, and each is devoid of authority not only to
encroach upon the powers or field of action assigned to any of the other departments,
but also to inquire into or pass upon the advisability or wisdom of the acts performed,
measures taken or decisions made by the other departments. 52
The other issues raised by the petitioners require factual determination which the Court
cannot properly undertake in the present case
The petitioners allege that the DAR, without consulting the regular farmworkers on
whether or not they want to exercise their right to own the land they till,
"indiscriminately sends notices of coverage and acquisition to practically all the
planters and leaves the matter of identifying and convincing the prospective
beneficiaries later."53 It is also alleged that "in ACTUAL PRACTICE in the sugar lands
of planter members of petitioners-federations, DAR, in collusion with some NGOs and
other ‘instant’ farmer organizations, designated as ‘beneficiaries’, non-tillers, non-
regular farmers, and outsiders of the land and other unqualified groups to eject and
replace the regular farmworkers and later on installed these ‘beneficiaries’ on the sugar
lands, with the assistance of the AFP or the PNP." 54
The petitioners also made the statement that "what is actually happening in the country
today, particularly in the sugar-producing regions, is that Certificates of Title of the
landowners are being canceled by LRA merely upon the directive or request by DAR,
without asking the landowner to surrender his owner’s duplicate of title or even
notifying him that, whether he likes it or not, the Register of Deeds will cancel his
certificate of title and issue a new certificate in the name of the Republic of the
Philippines."55
These allegations of the petitioners, however, remain as such – mere allegations,
unsupported by any evidence to prove their veracity or truthfulness. Moreover, they
require de novo appreciation of factual questions. No trial court has had the opportunity
to ascertain the validity of these factual claims, the appreciation of which is beyond the
function of this Court since it is not a trier of facts.56
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit.
OTILIA STA . ANA vs. SPOUSES LEONG G. CARPO and AURORA CARP
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari [1]
under Rule 45 of the Rules of
Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision [2] dated
March 5, 2004 which reversed and set aside the Decision[3] of the Department of
Agrarian Reform Adjudication Board (DARAB) dated June 24, 1998 and reinstated the
Decision[4] of the Provincial Agrarian Reform Adjudicator (PARAD) of Laguna dated
October 12, 1993.
The Facts
Respondent Leon Carpo[5] (Leon) and his brother Francisco G. Carpo are the registered
co-owners of a parcel of land designated as Lot No. 2175 of the Santa Rosa Estate
Subdivision, situated at Sta. Rosa, Laguna, covered by Transfer Certificate of Title
(TCT) No. T-17272[6] of the Register of Deeds of Laguna, with an area of 91,337
square meters, more or less. A portion thereof, consisting of 3.5 hectares, pertained to
Leon and his wife, respondent Aurora Carpo. It was devoted to rice and corn production
(subject land) and was tenanted by one Domingo Pastolero (Domingo), husband of
Adoracion Pastolero (Adoracion).[7] When Domingo passed away, Adoracion together
with her son Elpidio Pastolero, assumed the tenancy rights of Domingo over the subject
land.
However, on December 29, 1983, Adoracion, by executing a notarized Pinanumpaang
Salaysay[8] with the conformity of Leon, and for a consideration of P72,500.00,
transferred her rights in favor of petitioner Otilia Sta. Ana[9] (petitioner) who, together
with her husband, Marciano de la Cruz (Marciano), became the new tenants of the
subject land.
At the outset, the parties had a harmonious tenancy relationship. [10] Unfortunately,
circumstances transpired which abraded the relationship. The Department of Agrarian
Reform (DAR) mediated in order to amicably settle the controversy, but no settlement
was reached by the parties. Thus, the instant case.
In their Complaint for Ejectment due to Non-Payment of Lease
[11]
Rentals dated December 1, 1989, respondents alleged that it was their agreement
with petitioner and Marciano to increase the existing rentals from 36 cavans to 45
cavans, and that, if respondents wanted to repossess the property, they only had to pay
the petitioner the amount ofP72,500.00, the same amount paid by the latter to
Adoracion. Respondents further averred that despite repeated demands, petitioner
refused to pay the actual rentals from July 1985 to September 1989, in violation of
Presidential Decree (P.D.) No. 817; and that the subject land had been declared, upon
the recommendation of the Human Settlements Committee, suitable for commercial and
industrial purposes, per Zoning Ordinance of 1981 of the Municipality of Sta. Rosa,
Laguna. Respondents prayed that petitioner be ejected from the subject land and be
directed to pay P75,016.00 as unpaid rentals.
 In their Answer[12] dated January 26, 1990, petitioner and Marciano denied that
there was an agreement to increase the existing rental which was already fixed at 36
cavans of palay, once or twice a year depending on the availability of irrigation
water; that neither was there an agreement as to the future surrender of the land in favor
of the respondents; that they did not refuse to pay the rentals because they even sent
verbal and written notices to the respondents, advising them to accept the same; and
that in view of the latters failure to respond, petitioner and Marciano were compelled to
sell the harvest and to deposit the proceeds thereof in Savings Account No. 9166 with
the Universal Savings Bank at Sta. Rosa, Laguna under the names of Leon and
Marciano. As their special affirmative defense, petitioner and Marciano claimed that
Marciano is a farmer-beneficiary of the subject land pursuant to P.D. 27. Petitioner and
Marciano prayed for the outright dismissal of the complaint and for the declaration of
Marciano as full owner of the subject land.
Thereafter, trial on the merits ensued.
The PARADs Ruling
On October 12, 1993, the PARAD ruled that petitioner and Marciano deliberately
defaulted in the payment of the rentals due the respondents. The PARAD found that the
deposit made with Republic Planters Bank was actually in the names of petitioner and
Marciano, hence, personal to them. The PARAD also found that it was only during the
hearing that petitioner and Marciano deposited the amount of P40,000.00 with the
Universal Savings Bank for the unpaid rentals. As such the PARAD considered the
deposits as late payments and as implied admission that indeed petitioner and Marciano
did not pay the past rentals when they fell due. The PARAD further held and disposed
thus:
The intent of the defendant to subject the said area under PD 27
should pass the criteria set. Foremost is the determination of the
aggregate riceland of plaintiff. He must have more than seven (7)
hectares of land principally devoted to the planting of palay. Area
over seven (7) hectares shall be the one to be covered by PD 27 on
Operation Land Transfer (OLT). In the case at bar, defendants failed
to prove that plaintiff has more than the required riceland. In fact the
subject 3.5 hectares are jointly owned by two. Hence, coverage for
OLT is remote.
Defendant claimed that plaintiff is covered by LOI 474, and
therefore, he is zero retention of area. In reference to said law,
wherein it provides landowner with other agricultural land of more
than 7 hectares, or have other industrial lands from where he and his
family derived resources, then, the owner cannot retain any riceland.
However, this is not applicable in the instant case, as the defendant
failed to prove that plaintiff has other source of income from where
they will derive their sustenance.
WHEREFORE, in view of the foregoing, Judgment is hereby
rendered:
a) Ordering the ejectment of defendant from the subject
landholding for non-payment of lease rentals;
b) Ordering the defendant Marciano de la Cruz to
surrender the possession and cultivation of the subject
land to herein plaintiffs;
c)
Ordering the defendant to pay as actual damage the
amount of P75,016.00 corresponding to the unpaid
rentals from July 18, 1985 up to September 16, 1989[;
and]
d) [D]eclaring the subject land not covered by
Presidential Decree No. 27, Republic Act [No.] 6657,
and Executive Order No. 228.
SO ORDERED.
Petitioner and Marciano sought relief from the DARAB.[13]
The DARABs Ruling
On June 24, 1998, the DARAB held:
It is a fundamental rule in this jurisdiction that for non-
payment of lease rentals to warrant the dispossession and ejectment
of a tenant, the same must be made in a willful and deliberate manner
(Cabero v. Caturna, et al., CA-G.R. 05886-R, March 10, 1977). For
a valid ouster or ejectment of a farmer-tenant, the willful and
deliberate intent not to pay lease rentals and/or share can be
ascertained when there is a determination of will not to do a certain
act.
 Considering the circumstances obtaining in this case, it
cannot be concluded that the defendants-appellants deliberately
failed or refused to pay their lease rentals. It was not the fault of
defendants-appellants herein that the rentals did not reach the
plaintiffs-appellees because the latter choose to lend a deaf ear to the
notices sent to them. Clearly, therefore plaintiffs-appellees failed to
show by substantial evidence that the defendants-appellants
deliberately failed or refused to pay their lease rentals. It has been
held that the mere failure of a tenant to pay the landowners share
does not necessarily give the latter the right to eject the former when
there is lack of deliberate intent on the part of the tenant to pay
(Roxas y Cia v. Cabatuando, 1 SCRA 1106).
Thus:
WHEREFORE, finding the appeal interposed by the defendants-
appellants to be meritorious, the Decision appealed from is
hereby SET ASIDE and another judgment issued as follows:
1. Enjoining plaintiffs-appellees to respect the peaceful
possession and cultivation of the land in suit by the
defendants-appellants; and
2. Directing the MARO of Sta. Rosa, Laguna to assist the
parties in the proper accounting of lease rentals to be
paid by the defendants-appellants to the plaintiffs-
appellees.
No costs.
SO ORDERED.
Aggrieved, respondents appealed to the CA. On April 16, 2003, Marciano passed
away.[14]
The CAs Ruling
On March 5, 2004, the CA affirmed the factual findings of the PARAD that petitioner
and Marciano failed to pay the rentals and that there was no valid tender of payment.
The CA added that this failure to pay was tainted with bad faith and deliberate intent.
Thus, petitioner and Marciano did not legally comply with their duties as tenants.
Moreover, the CA held that the subject land was not covered by P.D. 27, Republic Act
(R.A.) No. 6657 and Executive Order (E.O.) No. 228, since the same had become a
residential, commercial and industrial land, to wit:
In the case at bar, We opted to give more weight to the petitioners
contention that the subject landholding is for residential, commercial,
and industrial purposes as declared by zoning ordinance of 1981 of
the town of Sta. Rosa, Laguna upon recommendation of the Human
Settlement Committee xxx. The vicinity map of the subject
landholding shows that it is almost beside Nissan Motors
Technopa[r]k and surrounded by the South Expressway and several
companies such as the Coca-Cola Bottlers Philippines, Inc. and
Toyota Motors Philippines along the Pulong Santa Cruz, National
Road. The vicinity map shows therefore that the subject landholding
is a residential, commercial, and industrial area exempted from the
coverage of P.D. No. 27, Republic Act. No. 6657 and Executive
Order No. 228.
The CA ruled in favor of the respondents in this wise:
WHEREFORE, premises considered and pursuant to applicable law
and jurisprudence on the matter, the present Petition is
hereby GRANTED. Accordingly, the decision of the Department of
Agrarian Reform Adjudication Board-Central Office, Elliptical Road,
Diliman, Quezon City (promulgated on June 24, 1998) is
hereby REVERSED and SET ASIDE and a new one entered-
REINSTATING the decision of the Department of Agrarian
Reform Adjudication Board-Region IV, Office of the Provincial
Adjudicator, Sta. Cruz, Laguna (dated October 12, 1993). No
pronouncement as to costs.
SO ORDERED.
Petitioner filed a Motion for Reconsideration[15] assailing the aforementioned Decision
which the CA, however, denied in its Resolution[16] dated June 28, 2004.
Hence, this Petition based on the following grounds:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
IN ARROGATING UPON ITSELF WHAT IS OTHERWISE DARS
POWER TO DETERMINE WHETHER THE SUBJECT
AGRICULTURAL LAND HAS
BECOME RESIDENTIAL/INDUSTRIAL/COMMERCIAL.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT EQUATED LAND RECLASSIFICATION WITH LAND
CONVERSION FOR PURPOSES OF DETERMINING THE
PROPRIETY OF EJECTMENT OF AN AGRICULTURAL
LESSEE.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT FAILED TO NOTE THAT AN EJECTMENT SUIT
BASED ON A CLAIM OF NON-PAYMENT OF LEASE RENTAL
IS DIAMETRICALLY ANTITHETICAL TO THE CLAIM THAT
THE SUBJECT LAND IS NO LONGER AGRICULTURAL BUT A
RESIDENTIAL, COMMERCIAL AND INDUSTRIAL AREA
EXEMPTED FROM THE COVERAGE OF P.D. NO. 27,
REPUBLIC ACT NO. 6657 AND EXECUTIVE ORDER NO. 228.
THE DECISION DATED MARCH 5, 2004--INSOFAR AS IT
ADOPTED THE FINDING OF DARAB-REGION IV, OFFICE OF
THE PROVINCIAL ADJUDICATOR, STA. CRUZ, LAGUNA
INSTEAD OF THAT OF THE DARAB-CENTRAL--IS
VIOLATIVE OF SEC. 14, ART. VIII OF THE 1987
CONSTITUTION FOR HAVING DECIDED WITHOUT
EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE
FACTS AND THE LAW ON WHICH SAID DECISION IS
BASED.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
IN RESORTING TO SURMISES AND CONJECTURES WHEN IT
RULED THAT THE FAILURE OF THE HEREIN PETITIONER
AND HER DECEASED HUSBAND TO DELIVER THE LEASE
RENTALS TO HEREIN RESPONDENTS, WAS DONE SO IN
BAD FAITH AND WITH DELIBERATE INTENT TO DEPRIVE
THE LAND OWNERS THEREOF.
Petitioner asseverates that there is no evidence to support respondents' claim that the
failure to pay the lease rentals was tainted with malevolence, as the records are replete
with acts indicative of good faith on the part of the petitioner and Marciano and bad
faith on the part of respondents.
Moreover, petitioner claimed that the power to determine whether or not the
subject land is non-agricultural, hence, exempt from the coverage of the
Comprehensive Agrarian Reform Law (CARL), lies with the DAR, and not with the
courts; that mere reclassification by way of a zoning ordinance does not warrant the
dispossession of a tenant but conversion does, and entitles the tenant to payment of
disturbance compensation; the legal concepts of reclassification and conversion are
separate and distinct from each other; that respondents' complaint before the PARAD
alleged and established the fact that the subject land is a riceland, therefore,
agricultural; that the CA failed to explain why it upheld the findings of the PARAD on
the issue of non-payment of lease rentals; and that though the issue of non-payment of
lease rentals is a question of fact, due to the conflict of the factual findings of the
PARAD and CA with those of the DARAB, petitioner asks that this Court review the
evidence on record, and pursuant to the CA decision in Cabero v. Caturna, et
al.,[17] rule on whether petitioner willfully and deliberately refused to pay lease rentals
as to warrant her dispossession from the subject land. [18]
On the other hand, respondents aver that petitioner and her family are wealthy,
as they own numerous properties in Sta. Rosa, Laguna including a luxurious
house;[19] that, as such, petitioner cannot be considered as a landless tenant deserving
the protection of agrarian reform laws; that the DARAB negated the highest degree of
respect the factual findings of the PARAD deserved; that petitioner's claims that
Marciano repeatedly made and written notices[20] for Leon to accept their lease rentals
were fraudulent designs to disguise the deliberate intent of petitioner not to pay the
lease rentals; that when Leon went to petitioner's residence, petitioner did not pay
the P10,000.00 due as lease rentals; that during the hearing before the PARAD, when
respondents' counsel requested that they be furnished a bank certificate as to the
existence of said bank deposits in Republic Planters Bank as of April 20, 1987 and
October 1, 1987, petitioner herself commented, Nagdeposito ho talaga kami sa
pangalan namin;[21] that the statement of petitioner is an admission that bank deposits,
if any, were made, not in the name of Leon as contained in the written notices, but
rather in the names of petitioner and Marciano; that such certificate was not introduced
in evidence and that upon inquiry, said deposits do not actually exist; that per recent
inquiry, the bank deposit in Universal Savings Bank only contains P1,020.19 due to
previous withdrawals made by Marciano; that the foregoing circumstances indicate a
pattern of fraudulent misrepresentations by the petitioner to mislead the DARAB into
believing that petitioner and Marciano did not deliberately refuse to pay the lease
rentals; that from July 18, 1985 up to the present, petitioner failed to pay the lease
rentals showing again, the deliberate refusal to pay; that this default on the part of the
petitioner has been recurring for several years already, thus depriving the respondents
as landowners of their share of the subject land in violation of the principle of social
justice; that as raised in respondents Omnibus Supplemental Motion for
[22]
Reconsideration before the DARAB and as found by the CA based on its vicinity
map,[23] the subject land is of a residential, commercial and industrial character,
exempted from agrarian reform coverage; and that the DARAB erred in not finding the
sale of the tenancy rights of Adoracion to petitioner and Marciano for P72,500.00
violative of P.D. 27 even if the same was with Leon's consent. The sale, respondents
[24]
contend was therefore, null and void ab initio, not susceptible of any ratification.
Our Ruling
Before we resolve this case on the merits, a procedural issue must be disposed
of.
Respondents strongly argue that the instant Petition was filed out of time
because, while petitioner originally claimed to have received her copy of the CA
Resolution[25]dated June 28, 2004, denying her Motion for Reconsideration, [26] on July
12, 2004, petitioner eventually admitted, after respondents showed proof to the
contrary, that she actually received the said Resolution on July 7, 2004. [27] Thus,
petitioner had only up to July 22, 2004 to appeal the CA's ruling to this Court. In this
case, petitioner filed her Motion[28] for Extension of Time to File Petition for Review
on Certiorari (Motion) on July 23, 2004. As such, there was no more period to extend.
Further, the instant Petition was filed on August 27, 2004, or three (3) days beyond the
thirty-day extended period. Hence, respondents submit that the CA decision had already
become final and executory.[29]
Petitioner alleges that on July 15, 2004, she met with her counsel to engage the
latter's legal services. During said meeting, counsel asked petitioner about the date of
receipt of the assailed CA Resolution. Petitioner replied that she received her copy
on July 12, 2004. On July 20, 2004, counsel filed an Entry of Appearance with the
CA.[30] OnJuly 23, 2004, petitioner through counsel filed the Motion for Extension of
Time to File Petition for Review. On August 11, 2004, petitioner received a copy of
respondents' Opposition to the Motion. Thereafter, upon verification, petitioner
admitted that she received the copy of the CA Resolution on July 7, 2004. Thus, her
Motion was admittedly filed one day late. Petitioner begs the indulgence of this Court
for her oversight and mistake, attributing the same to her lack of education and old age.
Rules of procedure are merely tools designed to facilitate the attainment of
justice. If the application of the Rules would tend to frustrate rather than to promote
justice, it is always within our power to suspend the rules or except a particular case
from their operation. Law and jurisprudence grant to courts the prerogative to relax
compliance with the procedural rules, even the most mandatory in character, mindful of
the duty to reconcile the need to put an end to litigation speedily and the parties' right to
an opportunity to be heard.[31]
Our recent ruling in Tanenglian v. Lorenzo[32] is instructive:
We have not been oblivious to or unmindful of the extraordinary
situations that merit liberal application of the Rules, allowing us,
depending on the circumstances, to set aside technical infirmities and
give due course to the appeal. In cases where we dispense with the
technicalities, we do not mean to undermine the force and effectivity
of the periods set by law. In those rare cases where we did not
stringently apply the procedural rules, there always existed a clear
need to prevent the commission of a grave injustice. Our judicial
system and the courts have always tried to maintain a healthy balance
between the strict enforcement of procedural laws and the guarantee
that every litigant be given the full opportunity for the just and proper
disposition of his cause.
In this case, petitioner was one day late in filing her Motion for Extension. To
deny the Petition on this ground alone is too harsh a penalty for a days delay, taking
into consideration the time, resources and effort spent by petitioner and even by the
respondents, in order to pursue this case all the way to this Court. Thus, we dispense
with the apparent procedural defect and resolve this case on the merits. The ends of
justice are better served when cases are determined on the merits with all parties given
full opportunity to ventilate their causes and defenses rather than on technicality or
[33]
some procedural imperfections.
The Petition is impressed with merit.
In sum, there are two (2) ultimate issues that require resolution in this case:
1) Whether the CA erred in ruling that the subject land had already become
residential, commercial and/or industrial, thus, excluded from the coverage of
our laws on agrarian reform; and
2) Whether the petitioner, as an agricultural tenant, failed to pay her lease rentals
when the same fell due as to warrant her dispossession of the subject
land.
On the first issue, we rule in the affirmative.
To recapitulate, the instant case sprang from a Complaint for Ejectment based
on Non-Payment of lease rentals. Though an allegation was made by the respondents
that the land had been declared, upon the recommendation of the Human Settlements
Committee, suitable for commercial and industrial purposes, per Zoning Ordinance of
1981 of the Municipality of Sta. Rosa, no argument was advanced by respondents to
support such allegation, in the same way that no prayer for the ejectment of the tenants
was raised based on that allegation. The PARAD held that petitioner should be ejected
for non-payment of lease rentals. It also ruled that the subject land is not covered by
P.D. No. 27, R.A. No. 6657, and E.O. No. 228, not on the basis of the allegation in the
complaint, but on the respondents' right of retention.
On appeal, the DARAB concentrated on the issue of petitioners failure to pay
lease rentals. When the DARAB ruled that petitioner and Marciano did not deliberately
fail to pay said rentals, respondents raised a new issue in their Omnibus Motion that the
transaction between Adoracion and petitioner was void in violation of P.D. No. 27,
despite the conformity of Leon. This issue was not resolved by the DARAB.
Finally, when the case reached the CA, the appellate court affirmed the
findings of the PARAD that petitioner and Marciano deliberately and in bad faith did
not pay the lease rentals. The CA, however, also held that the subject land had already
become a residential, commercial and industrial area based on the vicinity map showing
that the land was surrounded by commercial and industrial establishments.
Without doubt, the PARAD acted without jurisdiction when it held that the
subject land was no longer covered by our agrarian laws because of the retention rights
of the respondents. The CA likewise acted without jurisdiction when it ruled that the
land had become non-agricultural based on a zoning ordinance of 1981 on the strength
of a mere vicinity map. These rulings violated the doctrine of primary jurisdiction.
The doctrine of primary jurisdiction precludes the courts from resolving a controversy
over which jurisdiction has initially been lodged in an administrative body of special
competence. For agrarian reform cases, jurisdiction is vested in the Department of
Agrarian Reform (DAR); more specifically, in the Department of Agrarian Reform
Adjudication Board (DARAB). Executive Order 229 vested the DAR with (1) quasi-
judicial powers to determine and adjudicate agrarian reform matters; and (2)
jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive original jurisdiction of the Department of Agriculture
and the Department of Environment and Natural Resources.[34]
In Department of Agrarian Reform v. Abdulwahid,[35] we held:
As held by this Court in Centeno v. Centeno [343 SCRA 153], "the
DAR is vested with the primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have the exclusive
jurisdiction over all matters involving the implementation of the
agrarian reform program." The DARAB has primary, original and
appellate jurisdiction "to determine and adjudicate all agrarian
disputes, cases, controversies, and matters or incidents involving the
implementation of the Comprehensive Agrarian Reform Program
under R.A. No. 6657, E.O. Nos. 229, 228 and 129-A, R.A. No. 3844
as amended by R.A. No. 6389, P.D. No. 27 and other agrarian laws
and their implementing rules and regulations."
Under Section 3 (d) of R.A. No. 6657 (CARP Law), "agrarian
dispute" is defined to include "(d) . . . any controversy relating to
tenurial arrangements, whether leasehold, tenancy, stewardship or
otherwise over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms
or conditions of such tenurial arrangements. It includes any
 controversy relating to compensation of lands acquired under this Act
and other terms and conditions of transfer of ownership from
landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation
of farm operator and beneficiary, landowner and tenant, or lessor and
lessee."
Simply put, agrarian disputes, as defined by law and settled in jurisprudence,
are within the primary and exclusive original jurisdiction of the PARAD and the
DARAB, while issues of retention and non-coverage of a land under agrarian reform,
among others, are within the domain of the DAR Secretary.
Thus, Section 3, Rule II of the 2003 DARAB Rules of Procedure provides:
SECTION 3. Agrarian Law Implementation Cases. The
Adjudicator or the Board shall have no jurisdiction over matters
involving the administrative implementation of RA No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law
(CARL) of 1988 and other agrarian laws as enunciated by pertinent
rules and administrative orders, which shall be under the exclusive
prerogative of and cognizable by the Office of the Secretary of the
DAR in accordance with his issuances, to wit:
3.1 Classification and identification of landholdings for
coverage under the agrarian reform program and
the initial issuance of CLOAs and EPs, including
protests or oppositions thereto and petitions for
lifting of such coverage;
3.2 Classification, identification, inclusion, exclusion,
qualification, or disqualification of potential/actual
farmer-beneficiaries;
3.3 Subdivision surveys of land under CARP;
3.4 Recall, or cancellation of provisional lease rentals,
Certificates of Land Transfers (CLTs) and CARP
Beneficiary Certificates (CBCs) in cases outside the
purview of Presidential Decree (PD) No. 816,
including the issuance, recall, or cancellation of
EPs or CLOAs not yet registered with the Register
of Deeds;
3.5 Exercise of the right of retention by the landowner;
3.6 Application for exemption from coverage under Section
10 of RA 6657;
3.7 Application for exemption pursuant to Department of
Justice (DOJ) Opinion No. 44 (1990);
3.8 Exclusion from CARP coverage of agricultural land used
for livestock, swine, and poultry raising;
3.9 Cases of exemption/exclusion of fish pond and prawn
farms from the coverage of CARP pursuant to RA
7881;
3.10 Issuance of Certificate of Exemption for land subject of
Voluntary Offer to Sell (VOS) and Compulsory
Acquisition (CA) found unsuitable for agricultural
purposes;
3.11 Application for conversion of agricultural land to
residential, commercial, industrial, or other non-
agricultural uses and purposes including protests or
oppositions thereto;
3.12 Determination of the rights of agrarian reform
beneficiaries to homelots;
3.13 Disposition of excess area of the tenants/farmer-
beneficiary's landholdings;
3.14 Increase in area of tillage of a tenant/farmer-
beneficiary;
3.15 Conflict of claims in landed estates administered by
DAR and its predecessors; or
3.16 Such other agrarian cases, disputes, matters or concerns
referred to it by the Secretary of the DAR.
Verily, there is an established tenancy relationship between petitioner and
respondents in this case. An action for Ejectment for Non-Payment of lease rentals is
clearly anagrarian dispute, cognizable at the initial stage by
the PARAD and thereafter by the DARAB.[36] But issues with respect to the retention
rights of the respondents as landowners and the exclusion/exemption of the subject land
from the coverage of agrarian reform are issues not cognizable by the PARAD and the
DARAB, but by the DAR Secretary because, as aforementioned, the same are Agrarian
Law Implementation (ALI) Cases.
It has not escaped our notice that, as this case progressed and reached a higher
level in the hierarchy of tribunals, the respondents would, invariably, proffer an
additional theory or defense, in order to effect petitioners eviction from the land. As a
consequence, the simple issue of ejectment based on non-payment of rentals has been
muddled.
 Proof necessary for the resolution of the issue of the land being covered by, or
excluded/exempted from, P.D. No. 27, R.A. No. 6657, and other pertinent agrarian
laws, as well as of the issue of the right of retention of the respondents, was not offered
in evidence. Worse, the PARAD resolved the issue of retention even if it was not raised
by the respondents at that level, and even if the PARAD had no jurisdiction over the
same.
Likewise, the CA ruled that the land had ceased being agricultural on the basis
of a mere vicinity map, in open disregard of the Doctrine of Primary Jurisdiction, since
the issue was within the province of the Secretary of DAR.
We take this opportunity to remind the PARAD and the CA that courts of
justice have no power to decide a question not in issue. A judgment that goes beyond
the issues, and purports to adjudicate something on which the parties were not heard, is
extra-judicial, irregular and invalid. This norm applies not only to courts of
justice, but also to quasi-judicial
bodies such as the PARAD. Accordingly, premature and irregular were the PARAD
ruling on the retention rights of the respondents, and the CA decision on the non-
agricultural character of the land subject of this controversy -- these issues not having
passed the scrutiny of the DAR Secretary -- are premature and irregular.[37]
Thus, we cannot allow ourselves to fall into the same error as that committed
by the PARAD and the CA, and resolve the issue of the non-agricultural nature of the
subject land by receiving, at this stage, pieces of evidence and evaluating the same,
without the respondents having first introduced them in the proper forum. The Office of
the DAR Secretary is in a better position to resolve the issues on retention and
exclusion/exemption from agrarian reform coverage, being the agency lodged with such
authority inasmuch it possesses the necessary expertise on the matter. [38]
Likewise, we refrain from entertaining the issue raised by respondents that
petitioner and her family are not landless tenants and are therefore not deserving of any
protection under our laws on agrarian reform, because fairness and due process dictate
that issues not raised in the proceedings below should not be raised for the first time on
appeal.[39]
On the second issue, we rule in the negative.
Under Section 37 of Republic Act No. 3844, [40] as amended, coupled with the fact that
the respondents are the complainants themselves, the burden of proof to
show theexistence of a lawful cause for the ejectment
of the petitioner as an agricultural lessee rests upon the respondents as
agricultural lessors.[41] This proceeds from the principle that a tenancy relationship,
once established, entitles the tenant to security of tenure. Petitioner can only be ejected
from the agricultural landholding on grounds provided by law. [42] Section 36 of the
same law pertinently provides:
Sec. 36. Possession of Landholding; Exceptions. Notwithstanding
any agreement as to the period or future surrender, of the land, an
agricultural lessee shall continue in the enjoyment and possession of
his landholding except when his dispossession has been authorized
by the Court in a judgment that is final and executory if after due
hearing it is shown that:
xxxx
(6) The agricultural lessee does not pay the lease rental when it falls
due: Provided, That if the non-payment of the rental shall be due to
crop failure to the extent of seventy-five per centum as a result of a
fortuitous event, the non-payment shall not be a ground for
dispossession, although the obligation to pay the rental due that
particular crop is not thereby extinguished;
xxxx
Respondents failed to discharge such burden. The agricultural tenant's failure
to pay the lease rentals must be willful and deliberate in order to warrant his
dispossession of the land that he tills.
 Petitioner's counsel opines that there appears to be no decision by this Court
on the matter; he thus submits that we should use the CA decision in Cabero v.
Caturna. This is not correct. In an En Banc Decision by this Court in Roxas y Cia v.
[43]
Cabatuando, et al., we held that under our law and jurisprudence, mere failure of a
tenant to pay the landholder's share does not necessarily give the latter the right to eject
the former when there is lack of deliberate intent on the part of the tenant to pay. This
ruling has not been overturned.
The term deliberate is characterized by or results from slow, careful, thorough
calculation and consideration of effects and consequences. [44] The term willful, on the
other hand, is defined as one governed by will without yielding to reason or without
regard to reason.[45]
We agree with the findings of the DARAB that it was not the fault of
petitioner that the lease rentals did not reach the respondents because the latter chose to
ignore the notices sent to them. To note, as early as November 10, 1986, Marciano
executed an Affidavit[46] stating that Leon refused to receive the respective lease rentals
consisting of 37 cavans for November 1985 and July 1986. For 1987, Marciano
wrote Leon two letters[47] informing him of the availability of the lease rentals for April
and October of the same year. On April 27, 1988, Marciano sought DAR intervention
and mediation with respect to the execution of a leasehold contract and the fixing of the
leasehold rentals.[48]Meetings were set but respondents failed to attend. [49] The dispute
was referred to the barangay but the parties failed to amicably settle.[50]
These factual circumstances negate the PARAD findings of Marcianos and
petitioner's deliberate and willful intent not to pay lease rentals. Good faith was clearly
demonstrated by Marciano and petitioner when, because respondents refused to accept
the proffered payment, they even went to the point of seeking government intervention
in order to address their problems with respondents. Absent such deliberate and willful
refusal to pay lease rentals, petitioner's ejectment from the subject land is not justified.
WHEREFORE, the instant Petition is GRANTED. The assailed Decision of
the Court of Appeals in CA-G.R. SP No. 60640 is hereby REVERSED and SET
ASIDE. The Decision of the Department of Agrarian Reform Adjudication Board
(DARAB) dated June 24, 1998 in DARAB Case No. 2203 is REINSTATED without
prejudice to the rights of respondent-spouses Leon and Aurora Carpo to seek recourse
from the Office of the Department of Agrarian Reform (DAR) Secretary on the other
issues they raised. No costs.
G.R. No. 179643 June 3, 2013
ERNESTO L. NATIVIDAD, Petitioner,
vs.
FERNANDO MARIANO, ANDRES MARIANO and DOROTEO
GARCIA, Respondents.
DECISION
BRION, J.:
We resolve in this Rule 45 petition for review on certiorari 1 the challenge to the
November 28, 2006 decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 89365.
The assailed decision affirmed the February 21, 2005 decision3 of the Department of
Agrarian Reform Adjudication Board (DARAB) in DARAB Case No. 10051. The
DARAB ruling, in turn, reversed the decision4 dated October 27, 1999 of the Provincial
Agrarian Reform Adjudication (PARAD) of Nueva Ecija granting the petition for
ejectment and collection of back lease rentals filed by petitioner Ernesto L. Natividad
against respondents Fernando Mariano, Andres Mariano and Doroteo Garcia.
The Factual Antecedents
At the core of the dispute in this case is a 66,997 square meter parcel of agricultural
land (subject property) situated in Sitio Balanti, Gapan, Nueva Ecija, owned and
registered in the name of Esperanza Yuzon under Transfer Certificate of Title No. NT-
15747. The respondents are the tenants of the subject property. 5
On December 23, 1998, Ernesto filed with the PARAD a petition6 for ejectment and
collection of back lease rentals against the respondents. In his petition, Ernesto alleged
that he purchased the subject property in a public auction held on July 17, 1988.
Immediately after the purchase, he verbally demanded that the respondents pay the
lease rentals. Despite his repeated demands, the respondents refused to pay, prompting
him to orally request the respondents to vacate the subject property. He filed the
petition when the respondents refused his demand to vacate.
Although duly served with summons, the respondents failed to answer Ernesto’s
petition and were deemed to have waived their right to present evidence. The PARAD
allowed the case to proceed ex parte.
The PARAD granted Ernesto’s petition in its October 27, 1999 decision, and ordered
the respondents to vacate the subject property and to pay the lease rentals in arrears.
The PARAD found merit in Ernesto’s unrebutted allegations.
The respondents did not appeal the decision despite due notice. 7 Thus, the PARAD’s
decision became final and executory, and on April 6, 2000, the PARAD granted
Ernesto’s motion for the issuance of a writ of execution. 8
On May 4, 2000, the respondents, through a private law firm, filed an Appearance and
Petition for Relief from Judgment9 (first petition) on the ground of excusable
negligence. The respondents claimed that their inexperience and lack of knowledge of
agrarian reform laws and the DARAB Rules of Procedure prevented them from
appearing before the PARAD in due course; these also led to their belated discovery of
the approved Barangay Committee for Land Production (BCLP) valuation. They cited
these reasons as their excusable negligence justifying the grant of the relief from
judgment prayed for.
In answer to Ernesto’s allegations, the respondents denied knowledge of Ernesto’s
purchase of the subject property and, alternatively, disputed the validity of the
purchase. They averred that they had been paying lease rentals to the landowner. In
support of their position, the respondents attached copies of rental payment
receipts10 for the crop years 1988-1998 issued by Corazon Quiambao and Laureano
Quiambao, the authorized representatives of Aurora Yuzon. 11 They added that Diego
Mariano, the father of respondents Andres and Fernando, and respondent Doroteo were
issued Certificates of Land Transfer (CLTs) on July 28, 1973. 12 Andres and Fernando
added that, as heirs of Diego, they are now the new beneficiaries or allocatees of the
lots covered by Diego’s CLT.13 Finally, the respondents pointed out that as of the year
2000, they have an approved valuation report issued by the BCLP.
On June 7, 2000, the PARAD denied the respondents’ first petition, finding no
sufficient basis for its grant.14 The PARAD declared that none of the grounds for the
grant of a petition for relief exists and can be invoked against its October 27, 1999
decision, or could have prevented the respondents from taking an appeal. The records
show that the respondents were duly notified of the scheduled hearing date and of the
issuance of its decision; despite due notices, the respondents failed to appear and to
appeal, for which reasons the decision became final. Lastly, the PARAD considered
that the respondents’ petition had been filed out of time. On July 13, 2000, the PARAD
denied15 the respondents’ motion for reconsideration of the June 7, 2000 order. 16
On June 23, 2000, the respondents, this time represented by the Agrarian Legal
Assistance, Litigation Division of the Department of Agrarian Reform (DAR), filed a
second Petition for Relief from Judgment (second petition). 17The respondents repeated
the allegations in their first petition, but added lack of sufficient financial means as the
reason that prevented them from seeking appropriate legal assistance.
On July 20, 2000, the PARAD denied the respondents’ second petition based on
technical grounds. When the PARAD denied their subsequent motion for
reconsideration,18 the respondents appealed to the DARAB.19
The Ruling of the DARAB
On February 21, 2005, the DARAB granted the respondents’ appeal and reversed the
PARAD’s October 27, 1999 decision.20 The DARAB ordered Ernesto to maintain the
respondents in the peaceful possession and cultivation of the subject property, and at
the same time ordered the respondents to pay the rentals in arrears as computed by the
Municipal Agrarian Reform Officer (MARO). Unlike the PARAD, the DARAB found
the evidence insufficient to support Ernesto’s allegation that the respondents did not
pay the lease rentals. The respondents’ respective receipts of payment, the DARAB
noted, controverted Ernesto’s claim.
Ernesto appealed the February 21, 2005 DARAB decision to the CA via a petition for
review under Rule 43 of the Rules of Court.21
The Ruling of the CA
In its November 28, 2006 decision, the CA denied Ernesto’s petition for review for lack
of merit.22 The CA declared that Ernesto failed to prove by clear, positive and
convincing evidence the respondents’ failure to pay the lease rentals and, in fact, never
repudiated the authority of Corazon and Laureano to receive rental payments from the
respondents. The CA ruled that under Section 7 of Republic Act (R.A.) No. 3844, once
a leasehold relationship is established, the landowner-lessor is prohibited from ejecting
a tenant-lessee unless authorized by the court for causes provided by law. While non-
payment of lease rentals is one of the enumerated causes, the landowner (Ernesto) bears
the burden of proving that: (1) the tenant did not pay the rentals; and (2) the tenant did
not suffer crop failure pursuant to Section 36 of R.A. No. 3844. As Ernesto failed to
prove these elements, no lawful cause existed for the ejectment of the respondents as
tenants.
The CA also declared that the DARAB did not err in taking cognizance of the
respondents’ appeal and in admitting mere photocopies of the respondents’ receipts of
their rental payments. The CA held that the DARAB Rules of Procedure and the
provisions of R. A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988)
specifically authorize the DARAB to ascertain the facts of every case and to decide on
the merits without regard to the law’s technicalities. The CA added that the attendant
facts and the respondents’ substantive right to security of tenure except the case from
the application of the doctrine of immutability of judgments.
Finally, the CA noted that the issues Ernesto raised were factual in nature. It was bound
by these findings since the findings of the DARAB were supported by substantial
evidence.
Ernesto filed the present petition after the CA denied his motion for reconsideration 23 in
its August 10, 2007 resolution.24
The Petition
Ernesto imputes on the CA the following reversible errors: first, the finding that he
authorized Corazon and Laureano to receive the respondents’ lease rentals on his
behalf; second, the conclusion that the respondents cannot be ejected since they were
excused from paying lease rentals to him for lack of knowledge of the legality of the
latter’s acquisition of the subject property; and third, the ruling that the final and fully
executed decision of the PARAD could still be reopened or modified.
Ernesto argues that the respondents’ admission in their pleadings and the rental
receipts, which they submitted to prove payment, evidently show that the respondents
paid the lease rentals to Corazon and Laureano as representatives of Esperanza and not
as his representatives.25
Ernesto further insists that the respondents cannot deny knowledge of the legality of his
acquisition of the subject property and are, therefore, not excused from paying the lease
rentals to him. He claims that the respondents had long since known that he is the new
owner of the subject property when the petition for the annulment of the levy and
execution sale, which the respondents filed against him, was decided in his favor. 26
Finally, Ernesto claims that the CA erred in disregarding the doctrine of immutability of
final judgments simply on the respondents’ feigned ignorance of the rules of procedure
and of the free legal assistance offered by the DARAB. Ernesto maintains that despite
due receipt of their respective copies of the PARAD’s decision, the respondents
nevertheless still failed to seek reconsideration of or to appeal the PARAD’s decision.
Ernesto concludes that the respondents’ inaction rendered the PARAD’s decision final
and fully executed, barring its reopening or modification. 27
The Case for the Respondents
In their comment,28 the respondents maintain that Ernesto’s purchase of the subject
property is null and void. The respondents contend that both Diego and Doroteo
acquired rights over the subject property when they were granted a CLT in
1973.29 Ernesto’s subsequent purchase of the subject property via the execution sale
cannot work to defeat such rights as any sale of property covered by a CLT violates the
clear and express mandate of Presidential Decree (P.D.) No. 27, i.e., that title to land
acquired pursuant to the Act is not transferable.30 In fact, when - through the PARAD’s
final decision - he ejected the respondents from the subject property, Ernesto also
violated R.A. No. 6657.31
The respondents further contend that the doctrine of immutability of judgments does
not apply where substantive rights conferred by law are impaired, such as the situation
obtaining in this case. The courts’ power to suspend or disregard rules justified the
action taken by the DARAB (as well as the CA in affirming the former) in altering the
decision of the PARAD although it had been declared final. 32
Lastly, the respondents posit that the CA did not err in upholding the DARAB’s ruling
since the findings of facts of quasi-judicial bodies, when supported by substantial
evidence, as in this case, bind the CA.33
The Issue
The case presents to us the core issue of whether Ernesto had sufficient cause to eject
the respondents from the subject property.
The Court’s Ruling
We DENY the petition.
Preliminary considerations
As a preliminary matter, we reiterate the rule that a petition for review on certiorari
under Rule 45 of the Rules of Court shall raise only questions of law. 34 A question that
invites a review of the factual findings of the lower tribunals or bodies is beyond the
scope of this Court’s power of review35 and generally justifies the dismissal of the
petition.
The Court, as a rule, observes this Rule 45 proscription as this Court is not a trier of
facts.36 The resolution of factual issues is the function of the lower tribunals or bodies
whose findings, when duly supported by substantial evidence and affirmed by the CA,
bind this Court.37
The reviewable question sanctioned by a Rule 45 petition is one that lies solely on what
the law provides on the given set of circumstances.38 In the present petition, Ernesto
essentially argues that the CA erred in ruling that he failed to sufficiently prove any
cause to eject the respondents from the subject property. In effect, Ernesto asks this
Court to re-examine and reevaluate the probative weight of the evidence on record.
These are factual inquiries beyond the reach of this petition. 39
Under exceptional circumstances, however, we have deviated from the above rules. In
the present case, the PARAD gave credit to Ernesto’s claim that the respondents did not
pay the lease rentals. The DARAB, in contrast, found Ernesto’s claim unsubstantiated.
This conflict in the factual conclusions of the PARAD and the DARAB on the alleged
non-payment by the respondents of the lease rentals is one such exception to the rule
that only questions of law are to be resolved in a Rule 45 petition. 40 Thus, we set aside
the above rules under the circumstances of this case, and resolve it on the merits.
On the issue of the DARAB’s grant of the respondents’ appeal;
Doctrine of immutability of judgments
We cannot blame Ernesto for insisting that the PARAD decision can no longer be
altered. The doctrine of immutability of final judgments, grounded on the fundamental
principle of public policy and sound practice, is well settled. Indeed, once a decision
has attained finality, it becomes immutable and unalterable and may no longer be
modified in any respect,41 whether the modification is to be made by the court that
rendered it or by the highest court of the land.42 The doctrine holds true even if the
modification is meant to correct erroneous conclusions of fact and law.43 The judgment
of courts and the award of quasi-judicial agencies must, on some definite date fixed by
law, become final even at the risk of occasional errors.44 The only accepted exceptions
to this general rule are the correction of clerical errors, the so-called nunc pro tunc
entries which cause no prejudice to any party, void judgments, and whenever
circumstances transpire after the finality of the decision which render its execution
unjust and inequitable.45
This doctrine of immutability of judgments notwithstanding, we are not persuaded that
the DARAB and the CA erred in reopening, and ruling on the merits of the case. The
broader interests of justice and equity demand that we set aside procedural rules as they
are, after all, intended to promote rather than defeat substantial justice. 46 If the rigid and
pedantic application of procedural norms would frustrate rather than promote justice,
the Court always has the power to suspend the rules or except a particular case from its
operation,47 particularly if defects of jurisdiction appear to be present. This is the
precise situation that we presently find before this Court.
In the present petition, the DARAB granted the respondents’ appeal, despite the lapse
of ten months from the respondents’ notice of the PARAD’s decision, because the
PARAD denied the respondents’ petition for relief from judgment simply on a
sweeping declaration that none of the grounds for the grant of the petition exists and
that the petition had been filed out of time. The records, however, sufficiently
contradict the PARAD’s reasons for denying the respondents’ petition for relief; not
only do we find justifiable grounds for its grant, we also find that the respondents filed
their petition well within the prescriptive period. Thus, the PARAD effectively and
gravely abused its discretion and acted without jurisdiction in denying the petition for
relief from judgment.
A petition for relief from the judgment of the PARAD is governed by Section 4, Rule
IX of the 1994 DARAB Rules of Procedure48 (the governing DARAB rules at the time
Ernesto filed his complaint). It reads in part:
SECTION 4. Relief from Judgment. A petition for relief from judgment must be
verified and must be based on grounds of fraud, accident, mistake and excusable
neglect x x x; Provided, that the petition is filed with the Adjudicator a quo within three
(3) months from the time the fraud, accident, mistake or excusable neglect was
discovered and six (6) months from notice of order, resolution or decision from which
relief is sought. [italics supplied; emphasis ours]
A reading of Section 4 shows that four grounds justify the grant of the petition for relief
from judgment, namely: fraud, accident, mistake and excusable negligence. The same
provision also presents two periods that must be observed for such grant – 90 days and
six months.
In their first and second petitions, the respondents invoked the ground of excusable
negligence. They alleged that they failed to appear before the PARAD due to their
inexperience and ignorance of agrarian reform laws and of the DARAB Rules of
Procedure, as well as indigence. These circumstances – their averred ignorance coupled
with financial constraints if not outright poverty - taken altogether sufficiently convince
us that the respondents’ negligence is more than excusable and constitutes a justifiable
ground for the grant of their petition for relief.
We are also convinced that the respondents complied with the twin period requirement
set by Section 4, Rule IX of the 1994 DARAB Rules of Procedure. First, the records
show that the respondents received a copy of the PARAD’s October 27, 1999 decision
on December 10, 1999, at the earliest; they filed their first petition on May 4, 2000 or
five months after. Second, following our above discussion that the respondents had
sufficiently shown grounds for the grant of their petition, we perforce count the 90-day
period from the respondents’ discovery of their excusable negligence. We construe this
date as the time when the respondents discovered the adverse consequence of their
failure to answer, seek reconsideration or appeal the PARAD’s decision, which was
when they were evicted from the subject property on June 9, 200049 or 35 days before
they filed their first petition. Clearly, the respondents filed their petition well within 6
months from their notice of the PARAD’s decision and within 90 days from the
discovery of their excusable negligence.
Based on these considerations, we are convinced that the DARAB did not err in
granting the respondents’ appeal despite the procedural lapses. Under Section 3, Rule I
of the 1994 DARAB Rules of Procedure,50 the DARAB and its adjudicators "shall not
be bound by technical rules of procedure and evidence as prescribed in the Rules of
Court, but shall proceed to hear and decide all agrarian cases, disputes or controversies
in a most expeditious manner, employing all reasonable means to ascertain the facts of
every case in accordance with justice and equity." The same provision is essentially
embodied in R.A. No. 3844 upon which Ernesto heavily relied. In our view,
considerations of equity, justice and jurisdiction surround this case, justifying the
relaxation of the rules and the DARAB’s grant of the respondents’ appeal.
In sum, we rule that the DARAB correctly allowed the respondents’ appeal despite the
lapse of the reglementary period. Accordingly, we cannot impute error on the CA in not
reversing the DARAB’s decision simply under the doctrine of immutability of
judgments.
Non-payment of lease rentals as ground for eviction of tenants;
Landowner with burden to prove sufficient cause for eviction
Section 7 of R.A. No. 3844 ordains that once the tenancy relationship is established, a
tenant or agricultural lessee is entitled to security of tenure.51 Section 36 of R.A. No.
3844 strengthens this right by providing that the agricultural lessee has the right to
continue the enjoyment and possession of the landholding and shall not be disturbed in
such possession except only upon court authority in a final and executory judgment,
after due notice and hearing, and only for the specifically enumerated causes. 52 The
subsequent R.A. No. 6657 further reiterates, under its Section 6, that the security of
tenure previously acquired shall be respected. Finally, in order to protect this right,
Section 37 of R.A. No. 3844 rests the burden of proving the existence of a lawful cause
for the ejectment of the agricultural lessee on the agricultural lessor. 53
Ernesto’s petition for ejectment against the respondents was anchored precisely on the
latter’s alleged non-payment of the lease rentals beginning 1988 until 1998 despite his
repeated verbal demands. When confronted with the respondents’ defense of due
payment with supporting documentary evidence of it, Ernesto countered that their
payments should not be considered as he did not authorize Corazon and Laureano to
receive the payments on his behalf.
These allegations pose to us three essential points that we need to address. First,
whether Ernesto indeed made demands on the respondents for the payment of the lease
rentals; second, assuming that Ernesto made such demands, whether the respondents
deliberately failed or continuously refuse to pay the lease rentals; and third, whether the
lease rentals paid by the respondents to Corazon and Laureano are valid.
We rule in the NEGATIVE on the first point.
Our review of the records shows that Ernesto did not present any evidence, such as the
affidavit of the person or persons present at that time, to prove that he demanded from
the respondents the payment of the lease rentals. We, therefore, cannot accord any merit
to his claim that he made such demands. His allegation, absent any supporting
evidence, is nothing more than a hollow claim under the rule that he who alleges a fact
has the burden of proving it as mere allegation is not evidence. 54 Thus, Ernesto should
be deemed to have made his demand only at the time he filed the petition for ejectment
before the PARAD. At this point, the respondents were not yet in delay55 and could not
be deemed to have failed in the payment of their lease rentals.
We again rule in the NEGATIVE on the second point.
Non-payment of the lease rentals whenever they fall due is a ground for the ejectment
of an agricultural lessee under paragraph 6, Section 36 of R.A. No. 3844.56 In relation
to Section 2 of Presidential Decree (P.D.) No. 816, 57 deliberate refusal or continued
refusal to pay the lease rentals by the agricultural lessee for a period of two (2) years
shall, upon hearing and final judgment, result in the cancellation of the CLT issued in
the agricultural lessee’s favor.
The agricultural lessee's failure to pay the lease rentals, in order to warrant his
dispossession of the landholding, must be willful and deliberate and must have lasted
for at least two (2) years. The term "deliberate" is characterized by or results from slow,
careful, thorough calculation and consideration of effects and consequences, while the
term "willful" is defined, as one governed by will without yielding to reason or without
regard to reason.58 Mere failure of an agricultural lessee to pay the agricultural lessor's
share does not necessarily give the latter the right to eject the former absent a deliberate
intent on the part of the agricultural lessee to pay.59
In the present petition, we do not find the respondents’ alleged non-payment of the
lease rentals sufficient to warrant their dispossession of the subject property. The
respondents’ alleged non-payment did not last for the required two-year period. To
reiterate our discussion above, the respondents’ rental payments were not yet due and
the respondents were not in default at the time Ernesto filed the petition for ejectment
as Ernesto failed to prove his alleged prior verbal demands. Additionally, assuming
arguendo that the respondents failed to pay the lease rentals, we do not consider the
failure to be deliberate or willful. The receipts on record show that the respondents had
paid the lease rentals for the years 1988-1998. To be deliberate or willful, the non-
payment of lease rentals must be absolute, i.e., marked by complete absence of any
payment. This cannot be said of the respondents’ case. Hence, without any deliberate
and willful refusal to pay lease rentals for two years, the respondents’ ejectment from
the subject property, based on this ground, is baseless and unjustified.
Finally, we rule in the AFFIRMATIVE on the third point.
Ernesto purchased the subject property in 1988. However, he only demanded the
payment of the lease rentals in 1998. All the while, the respondents had been paying the
lease rentals to Corazon and Laureano. With no demand coming from Ernesto for the
payment of the lease rentals for ten years, beginning from the time he purchased the
subject property, the respondents thus cannot be faulted for continuously paying the
lease rentals to Corazon and Laureano. Ernesto should have demanded from the
respondents the payment of the lease rental soon after he purchased the subject
property. His prolonged inaction, whether by intention or negligence, in demanding the
payment of the lease rentals or asserting his right to receive such rentals, at the very
least, led the respondents to consider Corazon and Laureano to still be the authorized
payees of the lease rentals, given the absence of any objection on his part.
Import of the respondents’ CLT
Diego and respondent Doroteo were undoubtedly awarded CLTs over the subject
property pursuant to P.D. No. 27. Thus, we agree with their position that they have
acquired rights over the subject property and are in fact deemed owners of it.
A CLT is a document that evidences an agricultural lessee’s inchoate ownership of an
agricultural land primarily devoted to rice and corn production. 60 It is the provisional
title of ownership61 issued to facilitate the agricultural lessee’s acquisition of ownership
over the landholding. The transfer of the landholding to the agricultural lessee under
P.D. No. 27 is accomplished in two stages: (1) issuance of a CLT to a farmer-
beneficiary as soon as the DAR transfers the landholding to the farmer-beneficiary in
recognition that said person is a "deemed owner"; and (2) issuance of an Emancipation
Patent as proof of full ownership of the landholding upon full payment of the annual
amortizations or lease rentals by the farmer-beneficiary.62
The CLTs of Diego and of respondent Doroteo were issued in 1973. Thus, as of 1973,
Diego and respondent Doroteo were deemed the owners of the subject property
pursuant to P.D. No. 27, but subject to the compliance with certain conditions and
requirements, one of which was the full payment of the monthly amortization or lease
rentals to acquire absolute ownership.63
In the event the tenant-farmer defaults in the payment of the amortization, P.D. No. 27
ordains that the amortization due shall be paid by the farmer’s cooperative where the
defaulting tenant-farmer is a member, with the cooperative having a right of recourse
against the farmer. Thus, if the tenant-farmer defaults, the landowner is assured of
payment since the farmers’ cooperative will assume the obligation. In the present
petition, the records show that the respondents were members of a Samahang Nayon.
Pursuant to P.D. No. 27, Ernesto should have claimed the unpaid lease rentals or
amortizations from the respondents’ Samahang Nayon.
Executive Order (E.O.) No. 228, issued on July 17, 1987, modified P.D. No. 27 on the
manner of payment and provided for different modes of payment of the value of the
land to the landowner. The pertinent portion reads:
SECTION 3. Compensation shall be paid to the landowners in any of the following
modes, at the option of the landowners:
(a) Bond payment over ten (10) years, with ten percent (10%) of the value of
the land payable immediately in cash, and the balance in the form of LBP
bonds;
(b) Direct payment in cash or in kind by the farmer-beneficiaries with the
terms to be mutually agreed upon by the beneficiaries and landowners and
subject to the approval of the Department of Agrarian Reform; and
(c) Other modes of payment as may be prescribed or approved by the
Presidential Agrarian Reform Council. [emphases supplied]
In the event a dispute arises between the landowner and the tenant-farmer on the
amount of the lease rentals, Section 2 of E.O. No. 228 provides that the DAR and the
concerned BCLP shall resolve the dispute. In any case, the Land Bank of the
Philippines shall still process the payment of the landowner’s compensation claim,
which it shall hold in trust for the landowner, pending resolution of the dispute. Thus,
under this scheme, as with P.D. No. 27, the landowner is assured of payment of the full
value of the land under E.O. No. 228.
With the enactment of R.A. No. 6657 on June 10, 1988, the manner and the mode of
payment were further modified with the options available to the landowner, provided as
follows:
"SECTION 18. Valuation and Mode of Compensation. — x x x
xxxx
(1) Cash payment, x x x;
(2) Shares of stock in government-owned or controlled corporations, LBP preferred
shares, physical assets or other qualified investments in accordance with guidelines set
by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds." (emphases ours; italics supplied)
Following these guarantees to the landowner under P.D. No. 27 and E.O No. 228, as
well as R.A. No. 6657, the clear rule is that notwithstanding the non-payment of the
amortization to the landowner, the tenant-farmer retains possession of the
landholding.64 In addition, we point out that under P.D. No. 27 and R.A. No. 6657, the
transfer or waiver of the landholding acquired by virtue of P.D. No. 27 is prohibited,
save only by hereditary succession or to the Government; effectively, reversion of the
landholding to the landholder is absolutely proscribed. In light of this decree, we hold
that the DARAB correctly reversed the decision of the PARAD, which ordered the
respondents to surrender the possession of the subject property to Ernesto as this was in
clear contravention of the objectives of the agrarian reform laws.
Nevertheless, we cannot agree with the DARAB’s ruling that the MARO should assist
the parties in executing a new leasehold contract. To recall, Diego and respondent
Doroteo are valid holders of CLTs. Also, as of the year 2000, the concerned BCLP has
already issued an approved valuation for the subject property. Under these
circumstances, the proper procedure is for Ernesto and the DAR to agree on the manner
of processing the compensation payment for the subject property. Hence, pursuant to
R.A. No. 6657, E.O. No. 228, in relation to Department Memorandum Circular No. 26,
series of 1973, and the related issuances and regulation of the DAR, we must remand
the case to the DAR for the proper determination of the manner and mode of payment
of the full value of the subject property to Ernesto.1âwphi1
As a final note, we observe that on April 11, 1988, Diego waived his right over the 3-
hectare.lot covered by his CLT (which formed part of the subject property) in favor of
his two sons, Andres and Fernando, with each obtaining an equal half interest. This
arrangement directly contravenes Ministry Memorandum Circular Nd. -19, series of
1978. This memorandum circular specifically proscribes the partition of the
landholding; should the farmer-beneficiary have several heirs, as in this case, the
ownership and cultivation of the landholding must ultimately be consolidated in one
heir who possesses the requisite qualifications.65 Thus, under paragraph 2 of the
memorandum circular, Andres and Fernando must agree on one of them to be the sole
owner and cultivator of the lot covered by Diego's CLT.
WHEREFORE, in view of these considerations, we AFFIRM with MODIFICATION
the decision dated November 28, 2006 and the resolution dated August 10, 2007 of the
Court of Appeals in CA-G.R. Sp No. 89365. Petitioner Ernesto L. Natividad is
ORDERED to immediately surrender possession of the subject property to the
respondents, and the DARAB is directed to ensure the immediate restoration of
possession of the subject property to the respondents. We REMAND the case to the
Department of Agrarian Reform for the: (1) proper determination of the manner and
mode of payment of the full value of the land to petitioner Emesto L. Natividad in
accordance with R.A. No. 6657, Executive Order No. 228, Department Memorandum
Circular No. 26, series of 1973, and other related issuances and regulation of the
Department of Agrarian Reform; and (2) proper determination of the successor-in-
interest of Diego Mariano as the farmer-beneficiary to the landholding covered by his
CLT, in accordance with the provisions of Ministry Memorandum Circular No. 19,
series of 1978. No costs.
SO ORDERED.
SUSAN GO AND MUTIA vs. DAMPAL
On December 19, 1984, two farm lots located in Manolo Fortich, Bukidnon
which were covered by OCT No. P-4146 and OCT No. 4147, with an approximate area
of 2.5773 and 2.0651 hectares, respectively, were mortgaged for P33,000.00 by the
spouses Florencio and Ester Causin, through their attorney-in-fact Manuel Causin, to
the now-defunct Rural Bank of Tagoloan, Inc.
For failure to pay the obligation, the bank foreclosed the mortgage and sold the
lots at public auction on July 8, 1992 to petitioner Susan G. Po (Susan) who was the
highest bidder. OCT No. P-4146 and OCT No. 4147 were subsequently cancelled and
TCT No. T-39280 and TCT No. 39281 were, in their stead, issued in Susans favor,
following the spouses Causins failure to redeem the property.
On September 13, 1993, Susan sold the lot covered by TCT No. 39281 to her
herein co-petitioner Lilia G. Mutia (Lilia) who was issued TCT No. T-40193.
On September 29, 1994, the spouses Causin and their tenant-herein respondent
Omero Dampal (Dampal) filed with the Regional Trial Court of Manolo Fortich a
complaint against the bank for Annulment of the Real Estate Mortgage and Sale,
docketed as Civil Case No. 94-280 (the civil case).
While the civil case was pending or on June 16, 1997, Dampal filed a complaint
against Susan and Lilia before the Department of Agrarian Reform Adjudication Board
(DARAB) Region X, for Legal Redemption with Preliminary Mandatory Injunction,
docketed as DARAB Case No. X-05-361.
By Decision[1] of September 16, 1997, the Regional Adjudicator of DARAB
Region X disallowed the redemption prayed for on the ground of prescription, albeit he
declared that Dampal is entitled to security of tenure as a tenant; and that although
Dampal was not given notice in writing of the public auction sale, he was deemed to
have knowledge thereof because of the civil case for annulment, hence, there was
substantial compliance with the rules.
Dampals motion for reconsideration having been denied by Order [2] dated
October 28, 1997, he appealed to the DARAB Central Office where it was docketed as
DARAB Case No. 7315.
By Decision[3] of October 19, 2004, the DARAB Central Office reversed the
Adjudicators ruling. It held that Dampal, as a tenant, had the right to redeem the
mortgage in the amount of P40,000.00 plus interest; and that the right had not
prescribed, owing to the lack of written notice to him and to the DAR of the sale. It
accordingly ordered the cancellation of the title issued in favor of Susan and that of 1.3 paying an appeal fee of Seven Hundred Pesos
(Php700.00) to the DAR Cashier where the Office
Lilia and the issuance of new ones in Dampals favor, upon his payment of the of the Adjudicator is situated or through postal
redemption amount. Susan and Lilias motion for reconsideration of the said Decision money order, payable to the DAR Cashier
where the Office of the Adjudicator is situated, at
was denied by Resolution[4] of July 7, 2005, hence, they appealed via certiorari to the the option of the appellant.
Court of Appeals.
A pauper litigant shall be exempt from the
[5] payment of the appeal fee.
By Resolution of October 19, 2005, the appellate court, holding that
petitioners should have appealed the DARAB Decision via Rule 43, instead of Rule 65, Proof of service of Notice of Appeal to the affected
dismissed petitioners petition for certiorari. parties and to the Board and payment of appeal fee
shall be filed, within the reglementary period, with
the Adjudicator a quo and shall form part of the
Petitioners thereupon filed before the appellate court a Motion for Leave to records of the case.
Amend Petition and for Admission of Amended Petition, which motion was denied by
Non-compliance with the foregoing shall be a
Resolution[6] of March 28, 2006. In denying the motion, the appellate court held that ground for dismissal of the appeal. (underscoring
dismissal due to error in the mode of appeal cannot be reconsidered by the mere supplied)
expediency of filing an amended petition. Moreover, it noted that it was filed out of
time.
By Resolution[7] of May 22, 2006, the appellate court denied the motion for
reconsideration, holding that nothing in the above-quoted Sec. 1 of Rule XIV states that
the remedy of an aggrieved party from an adverse decision of the DARAB is by
certiorari, and that the applicable rule is Sec. 1, Rule XV of the 2003 DARAB Revised
Petitioners moved for reconsideration of the appellate courts March 28, 2006
Rules of Procedure.
Resolution, alleging that their error in the choice of remedy was excusable as they
On petitioners attribution of the faux pas to their counsel, the appellate court
relied on Sec. 1, Rule XIV of the DARAB Revised Rules of Procedure, reading:
held that they are bound thereby. Hence, this petition.

Sec. 1. Appeal to the Board. An appeal may be taken to the Board

Petitioners assert that the appellate court, in dismissing their petition due to
from a resolution, decision or final order of the Adjudicator that
completely disposes of the case by either or both of the parties within technicality, denied them the opportunity to establish the merits of their case. They
a period of fifteen (15) days from receipt of the maintain that Dampals right of redemption has prescribed, he having admitted Susans
resolution/decision/final order appealed from or of the denial of the
movants motion for reconsideration in accordance with section 12, acquisition of title to the property as early as 1993 but that it was only in 1997 that he
Rule X by: filed the action for redemption before the DARAB. They thus conclude that the need
for sending him notice in writing could be dispensed with; and that Dampals inaction
1.1 filing a Notice of Appeal with the Adjudicator estopped him from asserting his right as a tenant.
who rendered the decision or final order appealed
The petition is bereft of merit.
from;
1.2 furnishing copies of said Notice of Appeal to all
parties and the Board; and
 The earlier-quoted Sec. 1 of Rule XIV of the DARAB Revised Rules of Procedure
dwells on how appeals to the DARAB Board from the decisions, resolutions or final
orders of the Adjudicator are to be taken. How petitioners could have been misled to
file their appeal from the DARABs Decision to the Court of Appeals via certiorari
escapes comprehension.
Under Rule 43 of the Rules of Court, appeals from the decisions of the DARAB should
be filed with the Court of Appeals by verified petition for review. Thus, Sec. 1 of Rule
43 provides:
SECTION 1. Scope. This Rule shall apply to appeals from judgments
or final orders of the Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or authorized by any quasi-
judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the Civil Service Commission, Central Board of
Assessment Appeals, Securities and Exchange Commission, Office of
the President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian
Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission,
Agricultural Inventions Board, Insurance Commission, Philippine
Atomic Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators
authorized by law.
SECTION 2. Where to appeal. An appeal under this Rule may be
taken to the Court of Appeals within the period and in the manner
herein provided, whether the appeal involves questions of fact, of
law, or mixed questions of fact and law.
SECTION 3. How appeal taken. Appeal shall be taken by filing
a verified petition for review x x x (emphasis and underscoring
supplied)
Sec. 1, Rule XV of the 2003 DARAB Revised Rules of Procedure provides:
Section 1. Appeal to the Court of Appeals. - Any decision, order,
resolution, award or ruling of the Board on any agrarian dispute or
any matter pertaining to the application, implementation,
enforcement, interpretation of agrarian reform laws or rules and
regulations promulgated thereunder, may be brought on appeal within
fifteen (15) days from receipt of a copy thereof, to the Court of
Appeals in accordance with the Rules of Court. (underscoring
supplied)
While a petition for certiorari, when availed of as a wrong remedy, is
dismissible, there are exceptions thereto, viz: (a) when public welfare and the
advancement of public policy dictates; (b) when the broader interest of justice so
requires; (c) when the writs issued are null and void; or (d) when the questioned order
amounts to an oppressive exercise of judicial authority. [8] None of these circumstances
is present in the case at bar, however.
The denial[9] by the appellate court of petitioners MOTION FOR LEAVE TO
AMEND PETITION AND FOR ADMISSION OF AMENDED PETITION filed on
October 28, 2005 is thus in order. For the records show that petitioners filed the petition
for certiorari on the last day of the 15-day period to appeal or on October 5, 2005.
The belated filing of the Amended Petition is inexcusable.
Time and again, we held that rules of procedure
exist for a noble purpose, and to disregard such
rules, in the guise of liberal construction, would be
to defeat such purpose.Procedural rules are not to
be disdained as mere technicalities. They may
not be ignored to suit the convenience of a party.
Adjective law ensures the effective enforcement of
substantive rights through the orderly and speedy
administration of justice. Rules are not intended
to hamper litigants or complicate litigation; they
help provide a vital system of justice where
suitors may be heard following judicial
procedure and in the correct forum. Public
order and our system of justice are well served
by a conscientious observance by the parties of
the procedural rules.[10] (emphasis supplied)
 Technicality aside, on the merits, petitioners failed to establish that in deciding
the case, the DARAB committed grave abuse of discretion.
In its disquisition, the DARAB held that absence of written notice to the tenant
of the sale, as well as to the DAR, is indispensable, particularly in view of Sec. 12 of
Republic Act No. 3844, as amended by Republic Act No. 6389, which mandates that
the 180-day period must be reckoned from the notice in writing upon registration of the
sale.
Sec. 12 of Republic Act No. 3844 or the Agricultural Land Reform Code of
1963, as amended by Republic Act No. 6389, otherwise known as the Code of Agrarian
Reforms of the Philippines, provides:
Sec. 12. Lessees right of redemption. In case the landholding is sold
to a third person without the knowledge of the agricultural lessee,
the latter shall have the right to redeem the same at a reasonable
price and consideration: Provided, That where there are two or more
agricultural lessees, each shall be entitled to said right of redemption
only to the extent of the area actually cultivated by him.The right of
redemption under this Section may be exercised within one
hundred eighty days from notice in writing which shall be served
by the vendee on all lessees affected and the Department of
Agrarian Reform upon the registration of the sale, and shall have
priority over any other right of legal redemption. The redemption
price shall be the reasonable price of the land at the time of the sale.
(emphasis supplied)
The admitted lack of written notice on Dampal and the DAR thus tolled the running of
the prescriptive period. Petitioners contention that Dampal must be considered to have
had constructive knowledge thereof fails in light of the express requirement for notice
to be in writing.
WHEREFORE, the petition is DENIED.
LUZ FARMS, petitioner, vs. THE HONORABLE SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, respondent.
Enrique M. Belo for petitioner.
DECISION
PARAS, J p:
This is a petition for prohibition with prayer for restraining order and/or
preliminary and permanent injunction against the Honorable Secretary of the
Department of Agrarian Reform for acting without jurisdiction in enforcing the assailed
provisions of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1988 and in promulgating the Guidelines and Procedure Implementing
Production and Profit Sharing under R.A. No. 6657, insofar as the same apply to herein
petitioner, and further from performing an act in violation of the constitutional rights of
the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which
includes the raising of livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines
and Procedures Implementing Production and Profit Sharing as embodied in Sections
13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and
Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p.
81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and
poultry business and together with others in the same business allegedly stands to be
adversely affected by the enforcement of Section 3(b), Section 11, Section 13, Section
16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive
Agrarian Reform Law and of the Guidelines and Procedures Implementing Production
and Profit Sharing under R.A. No. 6657 promulgated on January 2, 1989 and the Rules
and Regulations Implementing Section 11 thereof as promulgated by the DAR on
January 9, 1989 (Rollo, pp. 2-36).
Hence, this petition praying that aforesaid laws, guidelines and rules be declared
unconstitutional. Meanwhile, it is also prayed that a writ of preliminary injunction or
restraining order be issued enjoining public respondents from enforcing the same,
insofar as they are made to apply to Luz Farms and other livestock and poultry raisers.
 This Court in its Resolution dated July 4, 1939 resolved to deny, among others,
Luz Farms' prayer for the issuance of a preliminary injunction in its Manifestation dated
May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to
grant said Motion for Reconsideration regarding the injunctive relief, after the filing
and approval by this Court of an injunction bond in the amount of P100,000.00. This
Court also gave due course to the petition and required the parties to file their
respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition
as his Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are
made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the
definition of "Agricultural, Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands
devoted to commercial, livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the
authority to summarily determine the just compensation to be paid for lands covered by
the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13
— entirety. In fact, it acknowledges the correctness of the decision of this Court in the case
". . . (W)hereby three percent (3%) of the gross sales from
the production of such lands are distributed within sixty (60) days
of the end of the fiscal year as compensation to regular and other
farmworkers in such lands over and above the compensation they
currently receive: Provided, That these individuals or entities
realize gross sales in excess of five million pesos per annum unless
the DAR, upon proper application, determine a lower ceiling.
In the event that the individual or entity realizes a profit,
an additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety (90)
days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and
32 of R.A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988), insofar as the
said law includes the raising of livestock, poultry and swine in its coverage as well as
the Implementing Rules and Guidelines promulgated in accordance therewith.
The constitutional provision under consideration reads as follows:
ARTICLE XIII
xxx xxx xxx
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities and reasonable retention
limits as the Congress may prescribe, taking into account ecological, developmental, or
equity considerations, and subject to the payment of just compensation. In determining
retention limits, the State shall respect the rights of small landowners. The State shall
further provide incentives for voluntary land-sharing.
xxx xxx xxx"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its
of the Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the Constitution, in including land devoted
to the raising of livestock, poultry and swine in its coverage (Rollo, p. 131). Livestock
or poultry raising is not similar to crop or tree farming. Land is not the primary resource
in this undertaking and represents no more than five percent (5%) of the total
investment of commercial livestock and poultry raisers. Indeed, there are many owners
of residential lands all over the country who use available space in their residence for
commercial livestock and raising purposes, under "contract-growing arrangements,"
whereby processing corporations and other commercial livestock and poultry raisers
(Rollo, p. 10). Lands support the buildings and other amenities attendant to the raising
of animals and birds. The use of land is incidental to but not the principal factor or
consideration in productivity in this industry. Including backyard raisers, about 80% of
those in commercial livestock and poultry production occupy five hectares or less. The
remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising
is embraced in the term "agriculture" and the inclusion of such enterprise under Section
3(b) of R.A. 6657 is proper. He cited that Webster's International Dictionary, Second
Edition (1954), defines the following words:
"Agriculture — the art or science of cultivating the ground and raising and harvesting
crops, often, including also, feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock — domestic animals used or raised on a farm, especially for profit.
Farm — a plot or tract of land devoted to the raising of domestic or other animals."
(Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in
constitutional construction is to ascertain and thereafter assure the realization of the
purpose of the framers in the adoption of the Constitution (J.M. Tuazon & Co. vs. Land
Tenure Administration, 31 SCRA 413 [1970]).
Ascertainment of the meaning of the provision of Constitution begins with the
language of the document itself. The words used in the Constitution are to be given
their ordinary meaning except where technical terms are employed in which case the
significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are
ambiguous or of doubtful meaning, the courts may consider the debates in the
constitutional convention as throwing light on the intent of the framers of the
Constitution. It is true that the intent of the convention is not controlling by itself, but as
its proceeding was preliminary to the adoption by the people of the Constitution the
understanding of the convention as to what was meant by the terms of the constitutional
provision which was the subject of the deliberation, goes a long way toward explaining
the understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA
183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on
the meaning of the word "agricultural," clearly show that it was never the intention of
the framers of the Constitution to include livestock and poultry industry in the coverage
of the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under
Section 166 of R.A. 3844, as laud devoted to any growth, including but not limited to
crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM, August 7,
1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word
"agriculture." Commissioner Jamir proposed to insert the word "ARABLE" to
distinguish this kind of agricultural land from such lands as commercial and industrial
lands and residential properties because all of them fall under the general classification
of the word "agricultural". This proposal, however, was not considered because the
Committee contemplated that agricultural lands are limited to arable and suitable
agricultural lands and therefore, do not include commercial, industrial and residential
lands (Record, CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice),
posed several questions, among others, quoted as follows:
xxx xxx xxx
"Line 19 refers to genuine reform program founded on the primary right of farmers and
farmworkers. I wonder if it means that leasehold tenancy is thereby proscribed under
this provision because it speaks of the primary right of farmers and farmworkers to own
directly or collectively the lands they till. As also mentioned by Commissioner Tadeo,
farmworkers include those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a
piggery or a poultry project and for that purpose hires farmworkers therein, these
farmworkers will automatically have the right to own eventually, directly or ultimately
or collectively, the land on which the piggeries and poultry projects were constructed.
(Record, CONCOM, August 2, 1986, p. 618).
xxx xxx xxx
 The questions were answered and explained in the statement of then
Commissioner Tadeo, quoted as follows:
xxx xxx xxx
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan.
Ipinaaalam ko kay Commissioner Regalado na hindi namin inilagay ang agricultural
worker sa kadahilanang kasama rito ang piggery, poultry at livestock workers. Ang
inilagay namin dito ay farm worker kaya hindi kasama ang piggery, poultry at livestock
workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which
includes "private agricultural lands devoted to commercial livestock, poultry and swine
raising" in the definition of "commercial farms" is invalid, to the extent that the
aforecited agro-industrial activities are made to be covered by the agrarian reform
program of the State. There is simply no reason to include livestock and poultry lands
in the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13
and 32 of R.A. 6657 directing "corporate farms" which include livestock and poultry
raisers to execute and implement "production-sharing plans" (pending final
redistribution of their landholdings) whereby they are called upon to distribute from
three percent (3%) of their gross sales and ten percent (10%) of their net profits to their
workers as additional compensation is unreasonable for being confiscatory, and
therefore violative of due process (Rollo, p. 21).
It has been established that this Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a judicial inquiry into such a
question are first satisfied. Thus, there must be an actual case or controversy involving
a conflict of legal rights susceptible of judicial determination, the constitutional
question must have been opportunely raised by the proper party, and the resolution of
the question is unavoidably necessary to the decision of the case itself (Association of
Small Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico,
G.R. 79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with
constitutional issues, it will not hesitate to declare a law or act invalid when it is
convinced that this must be done. In arriving at this conclusion, its only criterion will be
the Constitution and God as its conscience gives it in the light to probe its meaning and
discover its purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decisions. Blandishment is as ineffectual as intimidation, for all the
awesome power of the Congress and Executive, the Court will not hesitate "to make the
hammer fall heavily," where the acts of these departments, or of any official, betray the
people's will as expressed in the Constitution (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R.
79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional
powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do, as void. This is the essence of judicial power conferred
by the Constitution "(I)n one Supreme Court and in such lower courts as may be
established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I
of the 1973 Constitution and which was adopted as part of the Freedom Constitution,
and Article VIII, Section 1 of the 1987 Constitution) and which power this Court has
exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections
3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock,
poultry and swine in its coverage as well as the Implementing Rules and Guidelines
promulgated in accordance therewith, are hereby DECLARED null and void for being
unconstitutional and the writ of preliminary injunction issued is hereby MADE
permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco,
Padilla, Bidin, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave..
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,
vs.
BENITO H. LOPEZ, defendant-appellee.
Office of the Solicitor General for plaintiff-appellant.
Rodolfo F. Baluyot for defendant-appellee.
REYES, J.B.L., J.:
This is an appeal interposed by the government from the order of 2 November 1960 of
the Court of First Instance of Baguio (Judge Jesus de Veyra, presiding) dismissing the
complaint in a resolution, as follows:
 A motion to dismiss has been filed on the ground that the action has already
prescribed. Defendant has attached to his motion a copy of his "Waiver of the
Statute of Limitations" (Annex "9") wherein he waives the running of the
statutory period for assessment and collection but not beyond December 31,
1957. It is admitted that this case refers to an assessment made in 1950. Under
Section 332 of the National Internal Revenue Code, the government had until
December 31, 1957 within which to make its assessment and collection. It is
admitted that this assessment was made only on March 23, 1960 — too late.
The government assails this "Waiver" on the ground that it is null and void.
The government is in estoppel to attack this "Waiver" and as this "Waiver"
was made on a form prepared by the Bureau of Internal Revenue and filed on
demand of this same bureau.
That action having prescribed, this case is hereby dismissed without
pronouncement as to costs.
No brief was filed for appellee.
The record reveals that on 6 December 1950 Benito H. Lopez filed his income tax
return for 1950, for which an assessment was issued by the Bureau of Internal Revenue
on 13 November 1952 demanding payment of P245,100.29 as deficiency income tax.
Lopez, through counsel, in a communication dated 30 November 1952, requested for
reconsideration. This was denied in plaintiff's letter of 14 July 1953. Appellee reiterated
his petition through counsel's letters of 14 November and 11 December 1953. This was
given due course, and resulted in the reduction of the assessment to P20,346.14 on 29
May 1954. Apparently satisfied, defendant manifested in his letter of 1 July 1954 that
he will settle the obligation by the end of the month. Without complying thereto, on 9
July 1955, Lopez pleaded for another reinvestigation, which was granted by the BIR.
As a result thereof, an assessment was issued demanding payment of P6,019.00 as
additional deficiency income tax for 1950, the total (P26,365.14) of which he did not
pay, notwithstanding repeated demands.
On 16 January and 11 February 1956, appellee prayed for a third reinvestigation,
which, strangely enough, was acceded to by the BIR in its letter of 25 February 1956,
provided he waives the statute of limitations. Ironically, however, instead of executing
an unconditional waiver, defendant imposed a deadline of 31 December 1957 within
which the government should finish the third reinvestigation. Ignoring the same, on 23
March 1960, the BIR issued an assessment demanding the same amount of P26,365.14
as deficiency income tax for 1950. For non-payment, a collection suit was filed with the
court a quo on 13 August 1960. On 30 September 1960, defendant-appellee filed a
motion to dismiss the complaint, which, as has already been stated, was sustained.
Obviously, the first issue is: Would the time limit of 31 December 1957, enjoined by
appellee in the contemplated "Waiver of the Statute of Limitations", be binding and
operative? We believe, and hold, that it is not, on several grounds.
It is now a settled rule in our jurisdiction that (1) the five-year prescriptive period fixed
by section 332 (c) of the Internal Revenue Code within which the Government may sue
to collect an assessed tax is to be counted from the last revised assessment resulting
from a reinvestigation asked for by the taxpayer; 1 and (2) that where a taxpayer
demands a reinvestigation, the time employed in reinvestigation should be deducted
from the total period of limitation.2
An application of these rules will show that when action was brought by the Republic,
the prescriptive period of 5 years had not elapsed from the revision of 1954. If from the
period that intervened between the first revised assessment (29 May 1954) and the
filing of the complaint (13 August 1960) is deducted the time consumed in considering
and deciding the taxpayer's subsequent petition for reconsideration and reinvestigation
(from 16 January 1956 to 22 April 1960), it will be seen that less than 5 years can be
counted against the Government.
The first reinvestigation was granted, and a reduced assessment issued, on 29 May
1954, from which date the Government had five years for bringing an action to collect.
The second reinvestigation was asked on 16 January 1956, and lasted until it was
decided on 22 April 1960, or a period of 4 years, 3 months, and 6 days, during which
the limitation period was interrupted.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1äwphï1.ñët
Deducting this interval from the period intervening between the first revised (and
executory) assessment to the filing of the complaint [i.e., from 29 May 1954 to 13
August 1960, which is a total of six (6) years, two (2) months, and fifteen (15) days]
leaves only one (1) year, three (3) months, and six (6) days counted against the
government.
The fixing by the taxpayer of a prescriptive period "not beyond December 31, 1957"
operates to reduce the time available to the government for the collection of the tax
from 29 May 1954 to 31 December 1957 only, which is much less than the 5 years
prescribed by law [Revenue Code sec. 332 (c)]. Even though we disregard the lack of
written conformity thereto by the Collector of Internal Revenue, it is seriously to be
doubted that the said official could validly agree to reduce the prescriptive period to
less than that granted by law to the detriment of the state, since it diminishes the
opportunities of collecting taxes due to the Republic.
Even if we consider that, because of the date fixed by the taxpayer, the second
reinvestigation asked on 16 January 1956 should have been decided on 31 December
1957, and that the interruption due to the second reinvestigation was, therefore, only
one (1) year, eleven (11) months, and sixteen (16) days, still it would appear that the
government brought suit after only four (4) years, nine (9) months, and one (1) day,
and, therefore, well within the prescriptive 5-year period.
Another ground for reversing the dismissal of the complaint is that the proper remedy
of the taxpayer against the assessment complained of was to appeal the ruling of the
Collector to the Court of Tax Appeals. Section 7, paragraph 1, and section 11, first
paragraph, of Republic Act No. 1125 (effective since 1954) expressly provide:
SEC. 7. Jurisdiction. — The Court of Tax Appeals shall exercise exclusive
appellate jurisdiction to review by appeal, as herein provided —
(1) Decisions of the Collector of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties
imposed in relation thereto, or other matters arising under the National Internal
Revenue Code or other law or part of law administered by the Bureau of
Internal Revenue.
SEC. 11. Who may appeal; effect of append.— Any person, association or
corporation adversely affected by a decision or ruling of the Collector of
Internal Revenue, the Collector of Customs or any provincial or city Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within
thirty days after the receipt of such decision or ruling.
The failure to appeal the Collector's ruling is a waiver of the defenses against it, and
estops the taxpayer from subsequently raising those objections thereafter. Otherwise,
the period of thirty days for appeal to the Tax Court would make title sense (Republic
vs. Del Rosario, L-10460, 11 March 1959; Uy Ham vs. Republic, L-13809, 20 Oct.
1959).
However, we feel it our duty to call attention to the extraordinary reduction by the
revenue authorities of the taxes due in this case from the original P245,100.29 to less
than one tenth of it (P20,346.14) upon reinvestigation. Such a result is ample evidence
that the first assessment was carelessly made, without regard to the true facts, and it
strongly reflects upon the efficiency of the revenue examiner who made the grossly
excessive assessment. Equally anomalous is the fact that after the taxpayer had
promised to pay the computed tax, and after he had failed to keep his promise, the tax
authorities should still agree to a further revision of the assessment. Irregularities of this
kind inevitably provoke suspicion over the competency and honesty of the tax
collecting operations, and it is expected that the competent authorities will take
immediate and drastic steps to stop such deplorable practices.
PREMISES CONSIDERED, the order of dismissal appealed from is revoked and set
aside, and the records are ordered remanded to the court of origin for further
proceedings conformable to this opinion.
ALANGILAN REALTY & DEVELOPMENT CORPORATION, petitioner, vs.
OFFICE OF THE PRESIDENT, represented by ALBERTO ROMULO, as
Executive Secretary, and ARTHUR P. AUTEA, as Deputy Secretary; and
DEPARTMENT OF AGRARIAN REFORM, respondents.
DECISION
NACHURA, J p:
At bar is a petition for review on certiorari under Rule 45 of the Rules of Court
filed by Alangilan Realty & Development Corporation (petitioner), challenging the
August 28, 2007 Decision 1 and the November 12, 2007 Resolution 2 of the Court of
Appeals (CA) in CA-G.R. SP No. 76525.
Petitioner is the owner/developer of a 17.4892-hectare land
in Barangays Alangilan and Patay in Batangas City (Alangilan landholding). On
August 7, 1996, petitioner filed anApplication and/or Petition for Exclusion/Exemption
from Comprehensive Agrarian Reform Program (CARP) Coverage 3 of the Alangilan
landholding with the Municipal Agrarian Reform Office (MARO) of the Department of
Agrarian Reform (DAR). It averred that, in 1982, the Sangguniang Bayan of Batangas
City classified the subject landholding asreserved for residential under a zoning
ordinance (1982 Ordinance), which was approved by the Human Settlement Regulatory
Commission. It further alleged that, on May 17, 1994, the Sangguniang Panglungsod of
Batangas City approved the City Zoning Map and Batangas Comprehensive Zoning and
Land Use Ordinance (1994 Ordinance), reclassifying the landholding as residential-1.
Petitioner thus claimed exemption of its landholding from the coverage of the CARP. In
support of its application, petitioner submitted a certification 4dated October 31, 1995
of Zoning Administrator Delia O. Malaluan.
On May 6, 1997, then DAR Secretary Ernesto Garilao issued an Order 5 denying
petitioner's application for exemption. The DAR Secretary noted that, as of February
15, 1993, the Alangilan landholding remained agricultural, reserved for residential. It
was classified as residential-1 only on December 12, 1994 under Sangguniang
PanlalawiganResolution No. 709, series of 1994. Clearly, the subject landholding was
still agricultural at the time of the effectivity of Republic Act No. 6657, or the
Comprehensive Agrarian Reform Law (CARL), on June 15, 1988. The qualifying
phrase reserved for residential means that the property is still classified as agricultural,
and is covered by the CARP.
 The DAR Secretary disposed thus:
WHEREFORE, premises considered, the herein application for exemption
involving seventeen (17) parcels of land with an aggregate area of 23.9258
hectares located [in] Calicanto, Alangilan and Patay, Batangas City is hereby
GRANTED insofar as the 4.9123 hectares [of] Calicanto landholdings are
concerned and DENIED with respect to the 17.4892 Alangilan properties,
subject to the payment of disturbance compensation to qualified tenants, if any
there be.
SO ORDERED. 6
Petitioner moved for reconsideration of the Order, arguing that the Alangilan
landholding was already reserved for residential use as early as October 6, 1982.
Invoking this Court's ruling in Natalia Realty, Inc. v. Department of Agrarian
Reform, 7 petitioner insisted that the subject landholding was outside the coverage of the
CARP. Petitioner also submitted a Supplemental to Motion for
Reconsideration, 8 arguing that the landholding had already been reclassified
as reserved for residential and had been earmarked for residential use even before the
effectivity of the CARL. Accordingly, its non-development into a subdivision did not
remove the landholding's zoning classification as reserved for residential.
On July 8, 1997, petitioner submitted an Addendum to Supplemental to Motion for
Reconsideration, 9 attaching another certification stating that the Alangilan landholding
was zoned as reserved for residential in 1982, and became residential-1 in 1994. In
a 2nd Addendum to Supplemental to Motion for Reconsideration, 10 petitioner submitted
another certification whereby the zoning administrator withdrew her first certification
and clarified that the phrase agricultural, reserved for residential spoke of two
classifications, namely,agricultural (coded brown in the map) and reserved for
residential (coded brown with diagonal lines), stating further that the Alangilan
landholding was reserved for residential.
However, the DAR Secretary was not at all persuaded, and denied petitioner's
motion for reconsideration on December 21, 1998, viz.:
After a careful review and evaluation of the case, this Office finds no cogent
reason to reverse its Order, dated 6 May 1997.
Administrative Order No. 6, series of 1994 provides that "lands that are
classified as commercial, industrial or residential before 15 June 1988 no longer
need any conversion clearance"; as such, they are exempt from the coverage of
R.A. [No.] 6657. HCEcAa
The phrase "Reserved for Residential" is not a zoning classification
contemplated in the aforestated A.O. as to exempt a particular land from the
coverage of R.A. 6657. Moreso in this case, because the phrase was attached to
the word "Agricultural"; in fact, we can say that it merely qualified the term
"Agricultural." We believe that the correct interpretation of the zoning should be
that the land is agricultural, but it may be classified and used for residential
purposes in some future time, precisely, because it has been reserved for
residential use. This interpretation is supported by the fact that the zoning of the
land became Residential only in 1994, per Ordinance No. 3, series of 1994,
which established a Comprehensive Zoning Regulation and Land Use for
Batangas City. To reiterate, the Sanggunian Members of Batangas City would
have expressly, unequivocably, and unqualifiedly zoned the area as "residential"
if they had intended it to be zoned as such in 1982. They never did until the
issuance of Ordinance No. 3 in 1994.
It is also important to note, that the legend used in the Zoning Map of Batangas
City approved by HSRC (now HLURB) per Resolution No. 92, dated 6 October
1982, indicated a certain kind of arrangement which put in sequential order those
that were similarly zoned, but with different qualifications and/or characteristics.
Thus, "residential-1," "residential-2," and "residential-3" were placed on top of
the list one after the other, while "Agricultural, reserved for residential" and
mining agricultural were put at the bottom, but also enumerated one after the
other. If the subject properties were classified more of residential than
agricultural, it should have been placed in the legend right after "residential-3",
and the color that should have been used was not brown but a shade of white
with diagonal lines to reflect its dominant residential character.
Even the Applicant was aware that the classification of the area was agricultural.
In his letter to the MARO of Batangas City, dated 24 October 1995, the
Applicant categorically admitted that the Alangilan Landholding was classified
as agricultural. The said letter stated as follows:
At present, the subject properties are classified as agricultural. However,
Barangay Alangilan where these properties are located have been declared by an
ordinance of the Municipal Council of Batangas City as commercial, industrial
and/or residential.
As to what ordinance the Applicant was referring to was not specified. However,
it seems obvious that he was referring to the 1994 Comprehensive Zoning
Regulations and Land Use for Batangas City (Ordinance No. 3, series of 1994).
The previous zoning ordinance, i.e. the Batangas City Zoning Ordinance
 approved under HSRC Resolution No. R-92, series of 1982, dated 6 October
1982, classified the said landholding as "Agricultural, Reserved for Residential."
It was Ordinance No. 3, series of 1994 that explicitly classified the area as
"Residential-1." HcSCED
This Office, therefore, is convinced that the zoning classification of the
Alangilan Landholding prior to 15 June 1988 was Agricultural, although with the
qualification that it had been reserved for residential use. The ocular inspection
conducted in 1996 by the representatives of the MARO, PARO and RARO
confirmed that the Alangilan Landholding was still used for agricultural
purposes. The area was planted with mangoes and coconuts.
We could not give credence to the 3rd Certification, dated 9 December 1997, of
Zoning Administrator Delia Malaluan-Licarte, because it does not conform to
the Batangas City Zoning Ordinance and Map approved under HSRC Resolution
No. R-92, series of 1982, dated 6 October 1982. In the first place, what is asked
from Zoning Administrators is merely to state the kind of classification/zoning
where a certain area falls as provided in the approved Zoning Ordinance. In the
case at bar, the Zoning Administrator went beyond her authority. In effect, she
reclassified the area from "Agricultural, Reserved for Residential" to "Reserved
for Residential" by claiming that there were actually two zones provided by the
Sanggunian Members. It was actually a modification of the zoning ordinance
which, to us, is clearly unwarranted.
Moreover, even assuming the Zoning Administrator is correct, the classification
"Reserved for Residential" is not within the contemplation of A.O. No. 6, series
of 1994. The said A.O. talks about lands that were classified as residential before
15 June 1988. Alangilan Landholding was merely reserved for Residential. It
connotes something in the future, which is, that the land may be classified as
residential in some future time. It was identified as an expansion area, nothing
else. The fact remains that in 1982, the landholding was still Agricultural, and
this fact is not changed by the re-interpretation made by Zoning Administrator
Delia Malaluan-Licarte. 11
On appeal, the Office of the President (OP) affirmed the decision of the DAR
Secretary:
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED
and the appealed Order dated 21 December 1998 of the Department of Agrarian
Reform [is] AFFIRMED in toto.
Parties are required to INFORM this Office, within five (5) days from notice, of
the dates of their receipt of this Decision.
SO ORDERED. 12
A motion for reconsideration was filed, but the motion also suffered the same fate,
as the OP denied it on March 20, 2003. 13
Petitioner went up to the CA via a petition for review on certiorari, assailing the
OP decision. On August 28, 2007, the CA dismissed the petition. The CA noted the
report of MARO, Provincial Agrarian Reform Office (PARO), and Regional Agrarian
Reform Office (RARO) that the Alangilan landholding was devoted to agricultural
activities prior to the effectivity of the CARP on June 15, 1988 and even thereafter.
Likewise, there was no showing that it was classified as commercial, industrial, or
residential in town plans and zoning ordinances of the Housing and Land Use
Regulatory Board. Accordingly, the Alangilan property did not cease to be agricultural.
The 1994 Ordinance classifying the property as residential-1 did not convert or
reclassify the Alangilan landholding as residential because there was no proof that a
conversion clearance from the DAR was obtained. Thus, despite its reclassification in
1994 by the City Government of Batangas, the Alangilan landholding remained under
CARP coverage. Petitioner filed a motion for reconsideration, but the CA denied it on
November 12, 2007.
Hence, this appeal by petitioner, arguing that:
THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT
PETITIONER'S ALANGILAN LANDHOLDING IS SUBJECT TO THE
COVERAGE OF THE COMPREHENSIVE AGRARIAN REFORM LAW,
NOTWITHSTANDING THAT THE PROPERTY HAS BEEN CONVERTED
TO NON-AGRICULTURAL USES BY THE ZONING ORDINANCE OF THE
CITY OF BATANGAS PRIOR TO THE LAW. 14
Petitioner insists on exemption of the Alangilan landholding from CARP
coverage. It argues that the subject landholding had already been converted into non-
agricultural use long before the advent of the CARP. The passage of the 1982
Ordinance, classifying the property as reserved for residential, it asserts, effectively
transformed the land into non-agricultural use, and thus, outside the ambit of the
CARL. It cites Natalia, wherein it was ruled that lands intended for residential use are
outside the coverage of the CARL.
Indeed, lands devoted to non-agricultural activity are outside the coverage of
CARL. These include lands previously converted into non-agricultural uses prior to the
effectivity of the CARL on June 15, 1988. Unfortunately, petitioner failed to convince
us that the Alangilan landholding ceased to be agricultural at the time of the effectivity
of the CARL.
It is beyond cavil that the Alangilan landholding was classified as agricultural,
reserved for residential in 1982, and was reclassified as residential-1 in 1994.
However, contrary to petitioner's assertion, the term reserved for residential does not
change the nature of the land from agricultural to non-agricultural. As aptly explained
by the DAR Secretary, the term reserved for residential simply reflects the intended
land use. It does not denote that the property has already been reclassified
as residential, because the phrasereserved for residential is not a land classification
category.
Indubitably, at the time of the effectivity of the CARL in 1988, the subject
landholding was still agricultural. This was bolstered by the fact that the Sangguniang
Panlalawigan had to pass an Ordinance in 1994, reclassifying the landholding
as residential-1. If, indeed, the landholding had already been earmarked for residential
use in 1982, as petitioner claims, then there would have been no necessity for the
passage of the 1994 Ordinance.
Petitioner cannot take refuge in our ruling in Natalia. The case is not on all fours
with the instant case. In Natalia, the entire property was converted into residential use
in 1979 and was developed into a low-cost housing subdivision in 1982. Thus, the
property was no longer devoted to agricultural use at the time of the effectivity of the
CARL.
In this case, however, petitioner failed to establish that the subject landholding had
already been converted into residential use prior to June 15, 1988. We also note that the
subject landholding was still being utilized for agricultural activities at the time of the
filing of the application for exemption. The ocular inspection, jointly conducted by the
MARO, PARO and RARO, disclosed that the landholding was planted with mangoes
and coconuts. 15
In Department of Agrarian Reform v. Oroville Development Corporation, 16 we
held:
[i]n order to be exempt from CARP coverage, the subject property must have
been classified as industrial/residential before June 15, 1988. In this case, the
DAR's examination of the zoning ordinances and certifications pertaining to the
subject property, as well as its field investigation, disclosed that the same
remains to be agricultural. The Zoning Certifications to the effect that the land is
within the city's potential growth area for urban expansion are inconsequential as
they do not reflect the present classification of the land but merely its intended
land use.
Not having been converted into, or classified as, residential before June 15, 1988,
the Alangilan landholding is, therefore, covered by the CARP. The subsequent
reclassification of the landholding as residential-1 in 1994 cannot place the property
outside the ambit of the CARP, because there is no showing that the DAR Secretary
approved the reclassification.
In a last-ditch effort to secure a favorable decision, petitioner assails the authority
of the DAR Secretary to determine the classification of lands. It asserts that the power
to classify lands is essentially a legislative function that exclusively lies with the
legislative authorities, and thus, when the Sangguniang Bayan of Batangas City
declared the Alangilan landholding as residential in its 1994 Ordinance, its
determination was conclusive and cannot be overruled by the DAR Secretary.
The argument is specious.
The exclusive jurisdiction to classify and identify landholdings for coverage under
the CARP is reposed in the DAR Secretary. The matter of CARP coverage, like the
instant case for application for exemption, is strictly part of the administrative
implementation of the CARP, a matter well within the competence of the DAR
Secretary. 17 As we explained inLeonardo Tarona, et al. v. Court of Appeals (Ninth
Division), et al.: 18
The power to determine whether a property is subject to CARP coverage lies
with the DAR Secretary pursuant to Section 50 of R.A. No. 6657. Verily, it is
explicitly provided under Section 1, Rule II of the DARAB Revised Rules that
matters involving strictly the administrative implementation of the CARP and
other agrarian laws and regulations, shall be the exclusive prerogative of and
cognizable by the Secretary of the DAR.
Finally, it is well settled that factual findings of administrative agencies are
generally accorded respect and even finality by this Court, if such findings are
supported by substantial evidence. The factual findings of the DAR Secretary, who, by
reason of his official position, has acquired expertise in specific matters within his
jurisdiction, deserve full respect and, without justifiable reason, ought not to be altered,
modified, or reversed. 19 In this case, petitioner utterly failed to show justifiable reason
to warrant the reversal of the decision of the DAR Secretary, as affirmed by the OP and
the CA.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 76525 are AFFIRMED.
 G.R. No. L-105586 December 15, 1993
REMIGIO ISIDRO, petitioner,
vs.
THE HON. COURT OF APPEALS (SEVENTH DIVISION) AND NATIVIDAD
GUTIERREZ, respondents.
Joventino A. Cornista for petitioner.
Yolanda Quisumbing-Javellana & Associates for private respondent.
PADILLA, J.:
This is a petition for review on certiorari of the decision * of the respondent Court of
Appeals dated 27 February 1992 in CA-G.R. SP No. 26671 ordering petitioner to
vacate the land in question and surrender possession thereof to the private respondent;
and its 21 May 1992 resolution denying petitioner's motion for reconsideration for lack
of merit.
The facts which gave rise to this petition are as follows:
Private respondent Natividad Gutierrez is the owner of a parcel of land with an area of
4.5 hectares located in Barrio Sta. Cruz, Gapan, Nueva Ecija. In 1985, Aniceta Garcia,
sister of private respondent and also the overseer of the latter, allowed petitioner
Remigio Isidro to occupy the swampy portion of the abovementioned land, consisting
of one (1) hectare, in order to augment his (petitioner's) income to meet his family's
needs. The occupancy of a portion of said land was subject top the condition that
petitioner would vacate the land upon demand. Petitioner occupied the land without
paying any rental and converted the same into a fishpond.
In 1990, private respondent through the overseer demanded from petitioner the return
of the land, but the latter refused to vacate and return possession of said land, claiming
that he had spent effort and invested capital in converting the same into a fishpond.
A complaint for unlawful detainer was filed by private respondent against petitioner
before the Municipal Trial Court (MTC) of Gapan, Nueva Ecija which was docketed as
Civil Case No. 4120. Petitioner set up the following defenses: (a) that the complaint
was triggered by his refusal to increase his lease rental; (b) the subject land is a
fishpond and therefore is agricultural land; and (c) that lack of formal demand to vacate
exposes the complaint to dismissal for insufficiency of cause of action. 1
Based on an ocular inspection of the subject land, the trial court found that the land in
question is a fishpond 2and, thus, in a decision dated 30 May 1991, the said trial court
dismissed the complaint, ruling that the land is agricultural and therefore the dispute
over it is agrarian which is under the original and exclusive jurisdiction of the courts of
agrarian relations as provided in Sec. 12(a) of Republic Act No. 946 (now embodied in
the Revised Rules of Procedure of the Department of Agrarian Reform Adjudication
Board). 3
An appeal was filed by private respondent before the Regional Trial Court (RTC) of
Gapan, Nueva Ecija, docketed as Civil Case No. 889. In due course, the RTC rendered
a decision on 5 November 1991 concurring with the findings of the MTC and
affirming in toto the trial court's decision.
The RTC decision held that:
Even conceding for the sake of argument that the defendant-appellee
was allowed by the plaintiff-appellant, through her sister Aniceta
Garcia (her administratrix over the land in question) to occupy and
use the landholding in question on condition that the defendant would
vacate the same upon demand of the owner or plaintiff herein,
without paying any rental either in cash or produce, under these facts
there was a tenurial arrangement, within the meaning of Sec. 3(d) of
RA 6657, thereby placing the dispute involved in this case within the
jurisdiction of the DARAB. Perhaps, it would be different if the
defendant was merely a trespasser, without any right whatsoever,
when he entered and occupied the subject landholding. The
defendant, as a matter of fact, was a legal possessor of the land in
question and therefore to determine his rights and obligations over the
said property, the DARAB is the proper forum for such issue. 4
Not satisfied with the decision of the RTC, private respondent appealed to the
respondent Court of Appeals and the appeal was docketed as CA-G.R. SP No. 26671.
On 27 February 1992, as earlier stated, the respondent Court of Appeals reversed and
set aside the decision of the RTC, ordering petitioner to vacate the parcel of land in
question and surrender possession thereof to private respondent, and to pay private
respondent the sum of P5,000.00 as and for attorney's fees and expenses of litigation. 5
The respondent Court of Appeals ruled that:
The agrarian dispute over which the DAR may have jurisdiction by
virtue of its quasi-judicial power is that which involves tenurial
arrangements, whether leasehold, tenancy, stewardship or otherwise,
over lands devoted to agriculture. Tenurial arrangement is concerned
with the act or manner of putting into proper order the rights of
 holding a piece of agricultural land between the landowner and the
farmer or farmworker.
In the case at bar, there can be no dispute that between the parties
herein there is no tenurial arrangement, whether leasehold, tenancy,
stewardship or otherwise, over the land in dispute. Other than his bare
allegation in the Answer with Counterclaim, and his affidavit, private
respondent has not shown prima facie that he is a tenant of the
petitioner. The affidavits of his witnesses Antonio Samin and Daniel
Villareal attest to the fact that they acted as mediators in the dispute
between the parties herein sometime in October 1990, but no
settlement was arrived at, and that the subject land is a fishpond. To
the same effect is the affidavit of Feliciano Garcia. Absent any prima
facie proof that private respondent has a tenancy relationship with
petitioner, the established fact is that private respondent is possessing
the property in dispute by mere tolerance, and when such possession
ceased as such upon demand to vacate by the petitioner, private
respondent became a squatter in said land. We hold that the
Municipal Trial Court of Gapan, Nueva Ecija has jurisdiction over the
unlawful detainer case. 6
Petitioner moved for reconsideration of the foregoing decision, but, also as earlier
stated, it was denied in a resolution dated 21 May 1992 7 for lack of merit.
Hence, this petition for review under Rule 45 of the Rules of Court.
Petitioner raises the following issue:
WHETHER OR NOT THE MUNICIPAL COURT HAS THE
JURISDICTION IN THIS CASE AND WHETHER THE PUBLIC
RESPONDENT COULD LEGALLY EJECT THE PETITIONER
CONSIDERING THE FOLLOWING:
1. THAT THE SUBJECT IS A FISHPOND AND UNDER THE
LAW AND JURISPRUDENCE FISHPONDS ARE CLASSIFIED
AS AGRICULTURAL LANDS;
2. THAT BEING AN AGRICULTURAL LAND THE SAME IS
GOVERNED BY OUR TENANCY LAWS WHERE RULE 70 OF
THE RULES OF COURT CANNOT BE SIMPLY APPLIED; AND
3. THAT UNDER THE RULES OF THE DEPARTMENT OF
AGRARIAN REFORM ADJUDICATION BOARD, THE
DETERMINATION OF WHETHER A PERSON WORKING ON A
FISHPOND IS A TENANT OR NOT IS CLEARLY WITHIN THE
EXCLUSIVE JURISDICTION OF THE DARAB. 8
The petition is devoid of merit. We hold for the private respondent.
It is basic whether or not a court has jurisdiction over the subject matter of an action is
determined from the allegations of the complaint. As held in Multinational Village
Homeowners' Association, Inc., vs. Court of Appeals, et al.: 9
Jurisdiction over the subject-matter is determined upon the
allegations made in the complaint, irrespective of whether the
plaintiff is entitled to recover upon the claim asserted therein — a
matter resolved only after and as a result of the trial. Neither can the
jurisdiction of the court be made to depend upon the defenses made
by the defendant in his answer or motion to dismiss. If such were the
rule, the question of jurisdiction would depend almost entirely upon
the defendant.
In her complaint before the court a quo, private respondent stated that she is the owner
of a parcel of land situated in Barrio Sta. Cruz, Gapan, Nueva Ecija, which petitioner is
illegally occupying; that petitioner has taken advantage of the tolerance of her (private
respondent's) sister in allowing him to occupy the land on the condition that he
(petitioner) would vacate the land upon demand. Because of petitioner's refusal to
vacate the land, private respondent's remedy, as owner of said land, was to file an action
for unlawful detainer with the Municipal Trial Court.
In his answer to the complainant, petitioner alleged that the land involved in the dispute
is an agricultural land and hence, the case must be filed with the Court of Agrarian
Relations (not the MTC). Moreover, petitioner contended that it was his refusal to
increase his lease rental (implying tenancy) that prompted the private respondent to sue
him in court. 10
It is well settled jurisprudence that a court does not lose its jurisdiction over an
unlawful detainer case by the simple expedient of a party raising as a defense therein
the alleged existence of a tenancy relationship between the parties. 11 The court
continues to have the authority to hear the evidence for the purpose precisely of
determining whether or not it has jurisdiction. And upon such hearing, if tenancy is
shown to be the real issue, the court should dismiss the case for lack of jurisdiction. 12
The MTC dismissed the unlawful detainer complaint primarily on the ground that the
subject land is agricultural and therefore the question at issue is agrarian. In this
connection, it is well to recall that Section 1, Rule II of the Revised Rules of
Procedure, 13 provides that the Agrarian Reform Adjudication Board shall have primary
jurisdiction, both original and appellate, to determine and adjudicate all agrarian
disputes, cases, controversies, and matters or incidents involving the implementation of
the Comprehensive Agrarian Reform Program under Republic Act No. 6657, Executive
Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as amended by Republic Act
No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing
rules and regulations.
An agrarian dispute refers to any controversy relating to tenurial arrangements, whether
leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture,
including disputes concerning farmworkers associations or representation of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms and conditions of
such tenurial arrangements. It includes any controversy relating to compensation of
lands acquired under Republic Act No. 6657 and other terms and conditions of transfer
of ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator
and beneficiary, landowner and tenant, or lessor or lessee. 14
It is irrefutable in the case at bar that the subject land which used to be an idle, swampy
land was converted by the petitioner into a fishpond. And it is settled that a fishpond is
an agricultural land. An agricultural land refers to the land devoted to agricultural
activity as defined in Republic Act No. 6657 15 and not classified as mineral, forest,
residential, commercial or industrial land. 16 Republic Act No. 6657 defines agricultural
activity as the cultivation of the soil, planting of crops, growing of fruit trees, raising of
livestock, poultry or fish, including the harvesting of such farm products, and other
farm activities, and practices performed by a farmer in conjunction with such farming
operations done by persons whether natural or judicial. 17
But a case involving an agricultural land does not automatically make such case an
agrarian dispute upon which the DARAB has jurisdiction. The mere fact that the land is
agricultural does not ipso facto make the possessor an agricultural lessee of tenant. The
law provides for conditions or requisites before he can qualify as one and the land being
agricultural is only one of
them. 18 The law states that an agrarian dispute must be a controversy relating to a
tenurial arrangement over lands devoted to agriculture. And as previously mentioned,
such arrangement may be leasehold, tenancy or stewardship.
Tenancy is not a purely factual relationship dependent on what the alleged tenant does
upon the land. It is also a legal relationship. The intent of the parties, the understanding
when the farmer is installed, and their written agreements, provided these are complied
with and are not contrary to law, are even more important. 19
The essential requisites of a tenancy relationship are: (1) the parties are the landowner
and the tenant; (2) the subject matter is agricultural land; (3) there is consent; (4) the
purpose is agricultural production; (5) there is personal cultivation by the tenant; and
(6) there is a sharing of harvests between the parties. All these requisites must concur
in order to create a tenancy relationship between the parties. The absence of one does
not make an occupant of a parcel of land, or a cultivator thereof, or a planter thereon,
a de jure tenant. Unless a person establishes his status as a de jure tenant, he is not
entitled to security of tenure nor is he covered by the Land Reform Program of the
government under existing tenancy laws (Caballes v. DAR, et al., G.R. No. 78214,
December 5, 1988). 20
Furthermore, an agricultural lessee as defined in Sec. 116(2) of Republic Act No. 3844,
is a person who, by himself and with the aid available from within his immediate farm
household, cultivates the land belonging to, or possessed by, another with the latter's
consent for purposes of production, for a price certain in money or in produce or both.
An agricultural lessor, on the other hand, is a natural or judicial person who, either as
owner, civil law lessee, usufructuary, or legal possessor lets or grants to another the
cultivation and use of his land for a price certain. 21
Based on the statutory definitions of a tenant or a lessee, it is clear that there is no
tenancy or agricultural/leasehold relationship existing between the petitioner and the
private respondent. There was no contract or agreement entered into by the petitioner
with the private respondent nor with the overseer of the private respondent, for
petitioner to cultivate the land for a price certain or to share his harvests. Petitioner has
failed to substantiate his claim that he was paying rent for the use of the land.
Whether or not private respondent knew of the conversion by petitioner of the idle,
swampy land into a fishpond is immaterial in this case. The fact remains that the
existence of all the requisites of a tenancy relationship was not proven by the petitioner.
And in the absence of a tenancy relationship, the complaint for unlawful detainer is
properly within the jurisdiction of the Municipal Trial Court, as provided in Sec. 33 of
Batas Pambansa Blg. 129.
Having established that the occupancy and possession by petitioner of the land in
question is by mere tolerance, private respondent had the legal right to demand upon
petitioner to vacate the land. And as correctly ruled by the respondent appellate court:
. . . . His (petitioner's) lawful possession became illegal when the
petitioner (now private respondent) through her sister made a demand
on him to vacate and he refused to comply with such demand. Such is
the ruling in Pangilinan vs. Aguilar, 43 SCRA 136, 144, wherein it
was held:
While in possession by tolerance is lawful, such
possession becomes illegal upon demand to vacate
is made by the owner and the possessor by
tolerance refuses to comply with such demand
(Prieto vs. Reyes, 14 SCRA 432; Yu vs. De Lara, 6
SCRA 786, 788; Amis vs. Aragon, L-4684, April
28, 1957). A person who occupies the land of
another at the latter's tolerance or permission,
 without any contract between them, is necessarily
bound by an implied promise that he will vacate
upon demand, failing which a summary action for
ejectment is the proper remedy against him (Yu vs.
De Lara,supra)." 22
The present case should be distinguished from the recent case of Bernas vs. The
Honorable Court of Appeals. 23In the Bernas case, the land occupant (Bernas) had a
production-sharing agreement with the legal possessor (Benigno Bito-on) while the
records in this case fail to show that herein petitioner (Isidro) was sharing the harvest or
paying rent for his use of the land. Moreover, the agreement between the overseer
(Garcia) and herein petitioner was for petitioner to occupy and use the land by mere
tolerance of the owner. Petitioner Isidro failed to refute that Garcia allowed him to use
the land subject to the condition that petitioner would vacate it upon demand. In
the Bernas case, the petitioner (Bernas) was able to establish the existence of an
agricultural tenancy or leasehold relationship between him and the legal possessor. The
evidence in this case, on the other hand, fails to prove that petitioner Isidro, was an
agricultural tenant or lessee.
WHEREFORE, the petition is DENIED. The questioned decision and resolution of the
Court of Appeals are hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.
REYNALDO BEJASA AND ERLINDA BEJASA, petitioners, vs. THE
HONORABLE COURT OF APPEALS, Special Sixteenth Division, ISABEL
CANDELARIA and JAMIE DINGLASAN, respondents.
DECISION
PARDO, J.:
This is a petition[1] assailing the decision of the Court of Appeals[2] reversing the
decision of the Regional Trial Court, Calapan, Oriental Mindoro [3] and ordering
petitioners Reynaldo and Erlinda Bejasa (hereinafter referred to as "the Bejasas") to
surrender the possession of the disputed landholdings to respondent Isabel Candelaria
("hereinafter referred to as Candelaria") and to pay her annual rental from 1986,
attorneys fees, litigation expenses and costs.[4]
Inescapably, the appeal involves the determination of a factual issue. Whether a person
is a tenant is a factual question.[5] The factual conclusions of the trial court and the
Court of Appeals are contradictory and we are constrained to review the same.[6]
We state the undisputed incidents.
This case involves two (2) parcels of land covered by TCT No. T-58191[7] and TCT No.
T-59172,[8] measuring 16 hectares and 6 hectares more or less, situated in Barangay Del
Pilar, Naujan, Oriental Mindoro. The parcels of land are indisputably owned by Isabel
Candelaria.
On October 20, 1974, Candelaria entered into a three-year lease agreement over the
land with Pio Malabanan (hereinafter referred to as "Malabanan"). In the contract,
Malabanan agreed among other things: "to clear, clean and cultivate the land, to
purchase or procure calamansi, citrus and rambutan seeds or seedlings, to attend and
care for whatever plants are thereon existing, to make the necessary harvest of fruits,
etc."[9]
Sometime in 1973, Malabanan hired the Bejasas to plant on the land and to clear it. The
Bejasas claim that they planted citrus, calamansi, rambutan and banana trees on the
land and shouldered all expenses of production.
On May 3, 1977, Candelaria gave Malabanan a six-year usufruct over the land,
modifying their first agreement. As per the agreement, Malabanan was under no
obligation to share the harvests with Candelaria.[10]
Sometime in 1983, Malabanan died.
On September 21, 1984, Candelaria constituted respondent Jaime Dinglasan
(hereinafter referred to as "Jaime) as her attorney-in-fact, having powers of
administration over the disputed land.[11]
On October 26, 1984, Candelaria entered into a new lease contract over the land with
Victoria Dinglasan, Jaimes wife (hereinafter referred to as "Victoria"). The contract had
a term of one year.[12]
On December 30, 1984, the Bejasas agreed to pay Victoria rent of P15,000.00 in
consideration of an "aryenduhan" or "pakyaw na bunga"[13] agreement, with a term of
one year. The agreement is below quoted:[14]
"Ako si Victoria Dinglasan bilang tagapamahala ni Isabel
Candelaria ay ipinaaryendo kay Reynaldo Bejasa ang lupang dating
aryendo ni Pio Malabanan sa nasabing Ginang Buhat sa ika-30 ng
Disyembre 1984 hanggang Ika-30 ng Disyembre 1985. Ako ay
tumanggap sa kanya ng pitong libong piso at ito ay daragdagan pa
niya ng walong libong piso (P8,000) dito sa katapusan ng buwan ng
Disyembre 1984.
(signed) (signed)
Reynaldo Bejasa Victoria Dinglasan
 "Witness
"(unintelligible)
"(unintelligible)"
During the first week of December 1984, the Bejasas paid Victoria P7,000.00 as
agreed. The balance of P8,000.00 was not fully paid. Only the amount of P4,000.00 was
paid on January 11, 1985.[15]
After the aryenduhan expired, despite Victorias demand to vacate the land, the Bejasas
continued to stay on the land and did not give any consideration for its use, be it in the
form of rent or a shared harvest.[16]
On April 7, 1987, Candelaria and the Dinglasans again entered into a three-year lease
agreement over the land.[17] The special power of attorney in favor of Jaime was also
renewed by Candelaria on the same date.[18]
On April 30, 1987, Jaime filed a complaint before the Commission on the Settlement of
Land Problems ("COSLAP"), Calapan, Oriental Mindoro seeking ejectment of the
Bejasas.
On May 26, 1987, COSLAP dismissed the complaint.
Sometime in June 1987, Jaime filed a complaint with the Regional Trial Court, Calapan
Oriental, Mindoro[19] against the Bejasas for "Recovery of possession with preliminary
mandatory injunction and damages." The case was referred to the Department of
Agrarian Reform ("DAR").
On December 28, 1987, the DAR certified that the case was not proper for trial before
the civil courts.[20]
The trial court dismissed Jaimes complaint, including the Bejasas counterclaim for
leasehold, home lot and damages.
On February 15, 1988, the Bejasas filed with the Regional Trial Court of Calapan,
Oriental Mindoro a complaint for "confirmation of leasehold and home lot with
recovery of damages."[21] against Isabel Candelaria and Jaime Dinglasan.[22]
On February 20, 1991, after trial, the trial court ruled in favor of the Bejasas. [23] First,
they reasoned that a tenancy relationship was established.[24] This relationship can be
created by and between a "person who furnishes the landholding as owner, civil law
lessee, usufructuary, or legal possessor and the person who personally cultivates the
same."[25]Second, as bona-fide tenant-tillers, the Bejasas have security of tenure.[26] The
lower court ruled:[27]
"ACCORDINGLY, judgment is hereby rendered in favor of the
plaintiffs and against the defendants, as follows:
"(1) Ordering the defendants to maintain plaintiffs in the peaceful
possession and cultivation of the lands in question and to respect
plaintiffs security of tenure on the landholdings of Isabel Candelaria
and the home lot presently occupied by them;
"(2) Confirming the leasehold tenancy system between the plaintiffs
as the lawful tenant-tillers and the landholder, Isabel Candelaria, with
the same lease rental of P20,000.00 per calendar year for the use of
the lands in question and thereafter, same landholdings be placed
under the operation land transfer pursuant to Republic Act No. 6657;
"(3) Ordering the defendants to pay jointly and severally the plaintiffs
the amount of P115,500.00 representing the sale of calamansi which
were unlawfully gathered by Jaime Dinglasan and his men for the
period July to December, 1987 and which were supported by receipts
and duly proven, with formal written accounting, plus the sum of
P346,500.00 representing the would-be harvests on citrus, calamansi,
rambutan and bananas for the years 1988, 1989 and 1990, with legal
rate of interest thereon from the date of the filing of the instant
complaint until fully paid;
"(4) Ordering the defendants to pay plaintiffs jointly and severally the
amount of P30,000.00 as attorneys fee and expenses of litigation; and
"(5) Authorizing the plaintiffs as tenant-farmers to litigate as pauper
not only in this Court but up to the appellate courts in accordance
with Section 16 of P. D. No. 946.
"SO ORDERED."
On February 20, 1991, respondents filed their notice of appeal. [28]
On February 9, 1993, the Court of Appeals promulgated a decision reversing the trial
courts ruling.[29] Reasoning: First, not all requisites necessary for a leasehold tenancy
relationship were met.[30] There was no consent given by the landowner. The consent of
former civil law lessee, Malabanan, was not enough to create a tenancy
relationship.[31]Second, when Malabanan engaged the services of the Bejasas, he only
constituted them as mere overseers and did not make them "permanent tenants". Verily,
even Malabanan knew that his contract with Candelaria prohibited sublease. [32] Third,
the contract ("aryenduhan") between the Bejasas and Victoria, by its very terms,
expired after one year. The contract did not provide for sharing of harvests, means of
production, personal cultivation and the like.[33] Fourth, sharing of harvest was not
proven. The testimony of Reynaldo Bejasa on this point is self-serving. Fifth, the
element of personal cultivation was not proven. Reynaldo Bejasa himself admitted that
he hired laborers to clear and cultivate the land.[34] The Court of Appeals disposed of
the case, thus:[35]
"WHEREFORE, premises considered, the judgment appealed from is
hereby REVERSED and SET ASIDE. The interlocutory order issued
on September 5, 1988 is DISSOLVED and the appellees are hereby
ordered to surrender possession of the disputed landholdings to
appellant Isabel Candelaria and pay her the amount of P15,000.00 in
annual rents commencing from 1986 plus attorneys fees and litigation
expenses of P35,000.00 and costs.
"SO ORDERED."
Hence, this appeal filed on March 3, 1993.[36]
The issue raised is whether there is a tenancy relationship in favor of the Bejasas.
The elements of a tenancy relationship are:[37]
(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 harvests.
After examining the three relevant relationships in this case, we find that there is no
tenancy relationship between the parties.
Malabanan and the Bejasas. True, Malabanan (as Candelarias usufructuary) allowed the
Bejasas to stay on and cultivate the land.
However, even if we assume that he had the authority to give consent to the creation of
a tenancy relation, still, no such relation existed.
There was no proof that they shared the harvests.
Reynaldo Bejasa testified that as consideration for the possession of the land, he agreed
to deliver the landowners share (1/5 of the harvest) to Malabanan. [38] Only Reynaldo
Bejasas word was presented to prove this. Even this is cast into suspicion. At one time
Reynaldo categorically stated that 25% of the harvest went to him, that 25% was for
Malabanan and 50% went to the landowner, Candelaria.[39] Later on he stated that the
landowners share was merely one fifth.[40]
In Chico v. Court of Appeals,[41] we faulted private respondents for failing to prove
sharing of harvests since "no receipt, or any other evidence was presented."[42] We
added that "Self serving statements ... are inadequate; proof must be adduced." [43]
Candelaria and the Bejasas. Between them, there is no tenancy relationship. Candelaria
as landowner never gave her consent.
The Bejasas admit that prior to 1984, they had no contact with Candelaria. [44] They
acknowledge that Candelaria could argue that she did not know of Malabanans
arrangement with them.[45] True enough Candelaria disavowed any knowledge that the
Bejasas during Malabanans lease possessed the land.[46] However, the Bejasas claim
that this defect was cured when Candelaria agreed to lease the land to the Bejasas for
P20,000.00 per annum, when Malabanan died in 1983. [47] We do not agree. In a tenancy
agreement, consideration should be in the form of harvest sharing. Even assuming that
Candelaria agreed to lease it out to the Bejasas for P20,000 per year, [48] such agreement
did not create a tenancy relationship, but a mere civil law lease.
Dinglasan and the Bejasas. Even assuming that the Dinglasans had the authority as civil
law lessees of the land to bind it in a tenancy agreement, there is no proof that they did.
Again, there was no agreement as to harvest sharing. The only agreement between them
is the "aryenduhan",[49] which states in no uncertain terms the monetary consideration
to be paid, and the term of the contract.
Not all the elements of tenancy being met, we deny the petition.
WHEREFORE, we AFFIRM the decision of the Court of Appeals of February 9,
1993, in toto.
RODRIGO ALMUETE and ANA ALMUETE, petitioners, vs. MARCELO
ANDRES and THE COURT OF APPEALS, respondents.
 DECISION
YNARES-SANTIAGO, J.:
The subject of this controversy is a parcel of agricultural land identified as Lot
8449 Pls-967, located at San Vicente, Angadanan, Isabela, measuring approximately
72,587 square meters. Way back on March 25, 1957, this parcel was awarded by the
then National Resettlement and Rehabilitation Administration (NARRA) to petitioner
Rodrigo Almuete. Since then, Rodrigo Almuete exercised exclusive possession of the
property, cultivating it and planting thereon narra, fruit trees, rice, corn and
legumes. For some twenty-two (22) years, Rodrigo Almuete and his family farmed the
subject property peacefully and exclusively.
However, unknown to Rodrigo Almuete, on August 17, 1979, an Agrarian Reform
Technologist by the name of Leticia Gragasin filed a field investigation and inspection
report stating, among others, that the whereabouts of the original awardee of the subject
property, Rodrigo Almuete, was unknown and that he had waived all his rights as a
NARRA settler due to his poor health beyond his control and financial
hardship. Gragasin also stated therein that the actual occupant of the land is Marcelo
Andres since April 1967 to date. She recommended to the Director of the Ministry of
Agrarian Reform (MAR) in Tuguegarao, Cagayan that the award in favor of Rodrigo
Almuete be cancelled and that the land be awarded to respondent Marcelo
Andres.Consequently, Marcelo Andres was allowed to file his homestead
application. To further support his application, Marcelo Andres represented to the MAR
(now DAR) officials that sometime in 1965, Rodrigo Almuete sold the subject property
to one Victor Masiglat, who gave the former a radiophono set as consideration
therefor. Since Victor Masiglat was disqualified from acquiring the subject property
owing to his also being a NARRA awardee, he transferred the said property to Marcelo
Andres in exchange for one (1) carabao and the sum of Six Hundred Pesos
(P600.00).These successive transfers were not covered by written contracts between the
parties.
On the strength of the MAR Regional Directors recommendation and Marcelo
Andres representations, the latter was granted and issued a homestead patent.
In the meantime, unaware that the NARRA award in his favor had been cancelled
and that a homestead patent had been issued to Marcelo Andres, Rodrigo Almuete and
his family, particularly his daughter Ana Almuete, continued to cultivate and farm the
subject property. In 1982, Rodrigo Almuete built a house in Barangay Fortune, Alicia,
Isabela, where he resided while working as a driver for a rice mill. From time to time,
he would visit the farm to deliver supplies and pay wages to the laborers who worked
therein.
In 1988, the DAR Regional Director recommended the transfer of ownership over
the subject property to Marcelo Andres. On July 7, 1988, the DAR issued Original
Certificate of Title (OCT) No. P-52521 in the name of Marcelo Andres, which
certificate was registered in the Registry of Deeds of Isabela on January 26, 1989.
Shortly thereafter, Marcelo Andres, accompanied by ten (10) other persons armed
with bolos and other bladed implements, entered the subject property, claiming
exclusive right of ownership and possession. They felled the narra trees, converting the
same to lumber, and destroyed the mongos planted by the Almuetes. Marcelo Andres
gained control, and took possession, of approximately half of the subject property.
Rodrigo Almuete wasted no time in complaining to the DAR authorities of
Marcelo Andres encroachment into and occupation of the subject property. It was only
then that he learned that the subject property had been titled in the name of Marcelo
Andres and that the award in his favor had been cancelled because he had allegedly
abandoned the subject property. Upon Rodrigo Almuetes inquiry, the records of the
local office of the Department of Environment and Natural Resources (DENR) showed
that he was still the listed owner of the subject property.
Consequently, Rodrigo Almuete and his daughter, Ana Almuete, filed an action
for reconveyance and recovery of possession against Marcelo Andres with the Regional
Trial Court of Cauayan, Isabela, Branch 20, docketed as Civil Case No. Br-20-530.
On November 26, 1993, the trial court rendered judgment as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendant Marcelo Andres:
(1) declaring plaintiff Rodrigo Almuete owner of the land in question, now covered by
Original Certificate of Title No. P-52521 in the name of the defendant Marcelo Andres;
(2) ordering the defendant Marcelo Andres and/or his representatives to vacate the land
in question and deliver the peaceful possession thereof to the plaintiffs;
(3) ordering the defendant Marcelo Andres to reconvey at his expense, the title, OCT
No. P-52521, to the plaintiff Rodrigo Almuete; and
(4) ordering the defendant Marcelo Andres to pay to the plaintiffs P13,000.00 by way
of attorneys fees.
Costs against the defendant.
SO ORDERED.[1]
The trial court found that Marcelo Andres did not acquire any right over the
subject property when he supposedly bought it from Victor Masiglat because the latter
never acquired ownership from the original owner, Rodrigo Almuete. Besides,
defendant Marcelo Andres could not present any valid document to prove his
acquisition of the said property. It also found that Rodrigo Almuete did not abandon the
subject property. Rather, Leticia Gragasin of the MAR made obviously false assertions
in her report, knowingly misleading the Regional Director into cancelling the name of
Rodrigo Almuete as an awardee and issuing the homestead patent in the name of
Marcelo Andres.Hence, the cancellation of Rodrigo Almuetes award and the issuance
of the homestead patent in favor of Marcelo Andres were perpetrated through fraud.
Marcelo Andres failed to appeal; thus, the trial courts decision became final and
executory. On February 15, 1994, a writ of execution was issued. Marcelo Andres filed
a motion to quash the writ of execution, but the trial court did not act on it on the
ground that it had no more jurisdiction over the case. [2]
Marcelo Andres filed a petition for certiorari before the Court of Appeals, stating
at the outset that his counsel had failed to file a timely motion for reconsideration of the
decision or an appeal due to sheer ignorance of the law.[3] In his petition, Andres
assailed the trial courts jurisdiction over the nature as well as the subject matter of the
case. He argued that since the subject property was agricultural land covered by a
homestead patent, exclusive jurisdiction was with the Department of Agrarian Reform
Adjudication Board (or DARAB), not with the regular courts. Respondent Andres also
stressed that the original action was for ejectment, which was cognizable by the
municipal trial courts, not by the Regional Trial Courts. Consequently, for want of
jurisdiction, the trial courts decision was null and void; and cannot be enforced by writ
of execution or any other legal means.
On August 9, 1995, the Court of Appeals rendered the impugned Decision,
disposing as follows:
WHEREFORE, finding the petition meritorious, the writ of certiorari prayed for is
GRANTED.Judgment is rendered DISMISSING Civil Case No. Br. 20-530 of the
Regional Trial Court, Branch 20, Cauayan, Isabela and declaring the decision rendered
therein, the order granting the motion for execution and the writ of execution issued
NULL and VOID. In the event the writ of execution has been carried out, respondent
Court is ordered to restore petitioner in possession of the land, to cancel whatever new
title may have been issued to private respondents, to reinstate petitioners OCT P-52521,
and the restitution of whatever sums collected from petitioner as expenses of
reconveyance or attorneys fees. Respondent Court is ordered to restore the status
quo before the complaint, the decision and the writ of execution.
SO ORDERED.[4]
Petitioners moved for the reconsideration of the decision. On October 6, 1995, the
Court of Appeals issued the assailed Resolution,[5] denying the motion for
reconsideration.
Hence, the instant petition for review, ascribing to the Court of Appeals grave
abuse of discretion amounting to lack or excess of jurisdiction when:
I. it gave due course to the Petition for Certiorari of the respondent Marcelo
Andres, dated June 10, 1994, questioning the Decision of the Regional
Trial Court, Branch 20, Cauayan, Isabela,dated November 26, 1993,
clearly seven (7) months after the decision of the Regional Trial Court;
II. it did not consider and give weight to the contention of petitioners that
this case is not as Agrarian Dispute, hence, it does not fall within the
exclusive jurisdiction of the Department of Agrarian Reform
Adjudication Board, but to the Regional Trial Court;
III. it did not consider and give weight to the fact that private respondent
Marcelo Andres entered into the land allocated to the petitioners by the
National Resettlement and Rehabilitation Administration (NARRA), by
the use of guns and boloes;
IV. in not awarding, recognizing and honoring the vested interest of the
petitioners on that parcel of land identified as Lot 8449, Pls-967-D
(identical with Lot 196, Pls-81 of the NARRA) with an area of 72,587
square meters, awarded to them by the government thru the NARRA. [6]
The petition is impressed with merit.
The action filed by petitioners before the trial court was for recovery of possession
and reconveyance of title. The issue to be resolved was who between petitioner Rodrigo
Almuete and respondent Marcelo Andres has a better right to the subject property
considering that both of them are awardees of the same property. It was thus a
controversy relating to ownership of the farmland, which is beyond the ambit of the
phrase agrarian dispute. No juridical tie of landowner and tenant was alleged between
petitioners and respondent, let alone that which would so characterize the relationship
as an agrarian dispute.[7] In fact, petitioner and respondent were contending parties for
the ownership of the same parcel of land.[8]
Rule II, Section 1 of the Revised Rules of Procedure of the DARAB, provides:
Section 1. Primary, Original and Appellate Jurisdiction. --- The Agrarian Reform
Adjudication Board shall have primary jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes, cases, controversies, and matters or
incidents involving the implementation of the Comprehensive Agrarian Reform
Program under Republic Act No. 6657, Executive Order Nos. 229, 228 and 129-A,
Republic Act No. 3844 as amended by Republic Act No. 6389, P.D. No. 27 and other
agrarian laws and their implementing rules and regulations.
Agrarian dispute is defined under Section 3(d) of Republic Act No. 6657, as:
(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture,
including disputes concerning farmworkers associations or representation of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of
such tenurial arrangements.
It includes any controversy relating to compensation of lands acquired under this Act
and other terms and conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants as a substitute for the lost remedy of appeal. Respondent lost that remedy by his failure
stand in the proximate relation of farm operator and beneficiary, landowner and tenant, to appeal.[12]
or lessor and lessee.
WHEREFORE, in view of all the foregoing, the instant petition for review is
GRANTED.The assailed Decision and Resolution of the Court of Appeals in CA-G.R.
From the foregoing, it is clear that the jurisdiction of the DARAB is limited to SP No. 34314 are REVERSED and SET ASIDE.
cases involving a tenancy relationship between the parties. The following elements are
indispensable to establish a tenancy relationship: SO ORDERED.
NICORP VS. DE LEON
(1) The parties are the landowner and the tenant or agricultural lessee;

(2) The subject matter of the relationship is an agricultural land;
(3) There is consent between the parties to the relationship;
(4) The purpose of the relationship is to bring about agricultural production;
(5) There is personal cultivation on the part of the tenant or agricultural lessee; and
(6) The harvest is shared between the landowner and the tenant or agricultural lessee. [9]
These consolidated petitions assail the November 8, 2006 Decision[1] of the Court of
Appeals in CA-G.R. SP No. 92316, finding respondent Leonida de Leon as a bonafide
tenant of the subject property, thereby reversing and setting aside the Decision of the
Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No.
13502[2] which affirmed the Decision[3] of the Regional Adjudicator in DARAB Case
No. 0402-031-03. Also assailed is the March 1, 2007 Resolution[4] denying the motions
for reconsideration.

The Court of Appeals, therefore, gravely erred when it granted the petition for
certiorari and held that the trial court had no jurisdiction over the subject matter of the
action between petitioners and respondent. The action filed by petitioners was On August 26, 2004, respondent filed a complaint before the Office of the Provincial
cognizable by the regular courts. Consequently, the Regional Trial Court of Cauayan, Agrarian Reform Adjudicator (PARAD) of Region IV- Province of Cavite, praying that
Isabela was competent to try and decide Civil Case No. 20-530. Its decision was, thus,
petitioners Salvador R. Lim and/or NICORP Management and Development
valid and can no longer be disturbed, after having attained finality.Nothing more can be
done with the decision except to enforce it. Corporation (NICORP) be ordered to respect her tenancy rights over a parcel of land
Respondents contention that the action below was an ejectment suit is located in Barangay Mambog III, Bacoor, Cavite, registered under TCT No. T-72669 in
untenable. Basic is the rule that in actions for ejectment, the only issue is the name of Leoncia De Leon and Susana De Leon Loppacher (De Leon sisters), who
possession. This is not true as regards the case below, which principally involved the
were likewise impleaded as parties-defendants in the suit.
question of ownership, or more accurately, the validity of the homestead patent
awarded to petitioner vis--vis that awarded to respondent.
It is true that the caption of the Amended Complaint includes ejectment in the
description of the nature of the suit. However, it is not the caption of the pleading but
Respondent alleged that she was the actual tiller and cultivator of the land since time
the allegations therein that determine the nature of the action. [10] A close perusal of the
Amended Complaint filed before the court a quo indubitably shows that petitioners, as immemorial with full knowledge and consent of the owners, who were her sisters-in-
plaintiffs therein, prayed for the cancellation of the certificate of title in the name of law; that sometime in 2004, petitioners circulated rumors that they have purchased the
Marcelo Andres, and that they be declared the absolute owners of the land in dispute. [11]
property from the De Leon sisters; that petitioners ignored respondents requests to show
On a final procedural note, the Court of Appeals erred in giving due course to the
proof of their alleged ownership; that on August 12, 2004, petitioners entered the land
special civil action for certiorari. A basic requisite for such action to lie is that there is
no appeal, nor any plain, speedy and adequate remedy in the ordinary course of and uprooted and destroyed the rice planted on the land and graded portions of the land
law. Certiorari is a remedy of last recourse and is a limited form of review. Its principal with the use of heavy equipment; that the incident was reported to the Municipal
function is to keep inferior tribunals within their jurisdiction. Certiorari cannot be used
Agrarian Reform Office (MARO) which issued a Cease and Desist Order[5] but to no
avail.
Respondent thus prayed that petitioners be ordered to respect her tenancy rights over
the land; restore the land to its original condition and not to convert the same to non-
agricultural use; that any act of disposition of the land to any other person be declared
null and void because as a tenant, she allegedly had a right of pre-emption or
[6]
redemption over the land; and for actual damages and attorneys fees.
Petitioner Lim denied that respondent was a tenant of the subject property under the
Comprehensive Agrarian Reform Program (CARP). He alleged that respondent is a
septuagenarian who is no longer physically capable of tilling the land; that the MARO
issued a certification[7] that the land had no registered tenant; that respondent could not
be regarded as a landless tiller under the CARP because she owns and resides in the
property adjacent to the subject land which she acquired through inheritance; that an
Affidavit of Non-Tenancy[8] was executed by the De Leon sisters when they sold the
property to him.
Moreover, Lim claimed that respondent and her family surreptitiously entered the
subject land and planted a few crops to pass themselves off as cultivators thereof; that
respondent tried to negotiate with petitioner Lim for the sale of the land to her, as the
latter was interested in entering into a joint venture with another residential developer,
which shows that respondent has sufficient resources and cannot be a beneficiary under
the CARP; that the land is no longer classified as agricultural and could not thus be
covered by the CARP. Per certification issued by the Office of the Municipal Planning
and Development Coordinator of Bacoor, Cavite, the land is classified as residential
pursuant to a Comprehensive Land Use Plan approved by the Sangguniang
Panlalawigan.[9]
For its part, petitioner NICORP asserted that it was not a proper party to the suit
because it has not actually acquired ownership of the property as it is still negotiating
with the owners. However, it joined in petitioner Lims assertion that respondent is not a
qualified tenant; and that the subject land could not be covered by the CARP since it is
below the minimum retention area of five hectares allowed under the
[10]
program. Eventually, NICORP purchased the subject property from Lim on October
[11]
19, 2004.
The De Leon sisters did not file a separate answer to respondent's complaint.
Meanwhile, Provincial Adjudicator Teodoro A. Cidro, to whom the case was assigned,
died. Thus, the case was referred to the Office of the Regional Agrarian Reform
Adjudicator (RARAD) for resolution.
In compliance with the directive of the RARAD, respondent submitted as evidence an
Extra-Judicial Settlement of Estate[12] dated February 20, 1989 to prove that, as a result
of her relationship with her sisters-in-law, she was made a tenant of the land; a tax
declaration[13] showing that the land was classified as irrigated riceland; several
affidavits[14] executed by farmers of adjacent lands stating that respondent and her
family were tenants-farmers on the subject land; and several documents and
receipts[15] to prove the agricultural activities of respondent and her family.
Respondent likewise submitted a handwritten letter[16] of Susana De Leon addressed to
respondents daughter Dolores, showing that the former purportedly acknowledged
respondent's son, Rolando, as the legitimate tenant-lessee on the land. However,
Rolando died on September 1, 2003 as evidenced by his death certificate. [17]
On December 6, 2004, the RARAD rendered a Decision dismissing the complaint for
failure of respondent to prove by substantial evidence all the requisites of an
agricultural tenancy relationship.[18] There was no evidence to show that the De Leon
sisters constituted respondent as tenant-lessee on the land; neither was it proved that
there was sharing of harvests with the landowner.
The DARAB affirmed the decision of the RARAD.[19]
On appeal, the Court of Appeals reversed and set aside the findings of the
RARAD/DARAB stating that there was sufficient evidence to prove the elements of an
agricultural tenancy relationship; that the letter of Susana De Leon to Dolores clearly
acknowledged respondents son, Rolando, as a tenant, as well as respondents share in
the proceeds of the sale of the land; and that the sharing of produce was established by
the affidavits of neighboring farmers that were not controverted by petitioners.
The appellate court further held that the reclassification of the land by the Sangguniang
Panlalawigan as residential cannot be given weight because it is only the Department of
Agrarian Reform (DAR) that can reclassify or convert an agricultural land to other uses
or classifications; and that the sale of the land by the De Leon sisters to petitioner Lim
[20]
is void because it violated Section 70 of Republic Act (R.A.) No. 6657 or the
Comprehensive Agrarian Reform Law (CARL).
Petitioners filed a motion for reconsideration but it was denied.[21] Hence, petitioners
Lim and NICORP separately filed petitions under Rule 45 of the Rules of Court, which
were consolidated per resolution of the Court dated June 4, 2007. [22]
Petitioners allege that respondent failed to prove by substantial evidence all the
elements of a tenancy relationship; hence the Court of Appeals erred in finding that
respondent has tenancy rights over the subject land.
The petitions are meritorious.
There is a tenancy relationship if the following essential elements concur: 1) the parties
are the landowner and the tenant or agricultural lessee; 2) the subject matter of the
relationship is an agricultural land; 3) there is consent between the parties to the
relationship; 4) the purpose of the relationship is to bring about agricultural production;
5) there is personal cultivation on the part of the tenant or agricultural lessee; and 6) the
harvest is shared between landowner and tenant or agricultural lessee. [23] All the
foregoing requisites must be proved by substantial evidence and the absence of one will
not make an alleged tenant a de jure tenant.[24] Unless a person has established his
status as a de jure tenant, he is not entitled to security of tenure or covered by the Land
Reform Program of the Government under existing tenancy laws.[25]
In the instant case, there is no substantial evidence to support the appellate courts
conclusion that respondent is a bona fide tenant on the subject property. Respondent
failed to prove the third and sixth elements cited above. It was not shown that the De
Leon sisters consented to a tenancy relationship with respondent who was their sister-
in-law; or that the De Leon sisters received any share in the harvests of the land from
respondent or that the latter delivered a proportionate share of the harvest to the
landowners pursuant to a tenancy relationship.
The letter of Susana De Leon to Dolores, which allegedly proved consent of the De
Leon sisters to the tenancy arrangement, partially reads:
Nuong ako ay nandiyan, hindi nagkaayos ang bukid kasi ang iyong
Kuya Roly ay ayaw na si Noli ang ahente. Pero bago ako umalis ay
nagkasundo kami ni Buddy Lim (Salvador) na aayusin niya at
itutuloy ang bilihan at siya ang bahala sa Kuya Roly mo.
Kaya nagkatapos kami at ang kasama ng Kuya mo ngayon ay si
Buddy Lim. Ang pera na para sa kasama ay na kay Buddy Lim. Ang
kaparte ng Nanay Onching (Leoncia) mo ay nasa akin ang karamihan
at ako na ang mag-aasikaso.
The Court cannot agree with the appellate courts conclusion that from the tenor of the
letter, it is clear that Susana acknowledged respondent's deceased son as kasama or
tenant, and recognized as well respondents share in the proceeds of the sale, thus
proving the existence of an implied leasehold relations between the De Leon sisters and
respondent.[26] The word kasama could be taken in varying contexts and not necessarily
in relation to an agricultural leasehold agreement. It is also unclear whether the term
kasama referred to respondent's deceased son, Rolando, or some other person. In the
first sentence of the second paragraph, the word kasama referred to petitioner Lim
while the second sentence of the same paragraph, did not refer by name to Rolando as
kasama.

Likewise, Nanay Onching, as mentioned in the letter, referred to Leoncia, one of the De
Leon sisters, on whose behalf Susana kept part of the proceeds of the sale, and not
herein respondent as understood by the Court of Appeals, who had no right to such
share. It is Leoncia who co-owned the property with Susana and who is therefore
entitled to a part of the sale proceeds.
Significantly, respondent was not mentioned at all in Susanas letter, but only her son,
Rolando. However, even if we construe the term kasama as pertaining to Rolando as a
tenant of the De Leon sisters, respondent will not necessarily be conferred the same
status as tenant upon her sons death. A direct ascendant or parent is not among those
listed in Section 9 of Republic Act No. 3844 which specifically enumerates the order of
succession to the leasehold rights of a deceased or incapacitated agricultural tenant, to
wit:
In case of death or permanent incapacity of the agricultural lessee to
work his landholding, the leasehold shall continue between the
agricultural lessor and the person who can cultivate the landholding
personally, chosen by agricultural lessor within one month from such
death or permanent incapacity, from among the following: a) the
surviving spouse; b) the eldest direct descendant by consanguinity; or
(c) the next eldest descendant or descendants in the order of their age.
x x xProvided, further that in the event that the agricultural lessor
fails to exercise his choice within the period herein provided, the
priority shall be in accordance with the order herein established.
There is no evidence that the De Leon sisters consented to constitute respondent as their
tenant on the subject land. As correctly found by the RARAD/DARAB, even the Extra-
Judicial Settlement of Estate that respondent offered in evidence to prove the alleged
consent does not contain any statement from which such consent can be
inferred.[27] Absent any other evidence to prove that the De Leon sisters consented to
the tenurial arrangement, respondents cultivation of the land was by mere tolerance of
her sisters-in-law.
The appellate court found that the element of sharing in the produce of the land was
established by the affidavits of neighboring farmers attesting to the fact that respondent
cultivated the land since time immemorial.[28] However, perusal of the said affidavits
reveals that there is nothing therein that would indicate a sharing of produce between
the De Leon sisters and respondent. The affidavits did not mention at all that the De
Leon sisters received a portion of the harvests or that respondent delivered the same to
her sisters-in-law. The affidavits failed to disclose the circumstances or details of the
alleged harvest sharing; it merely stated that the affiants have known respondent to be
the cultivator of the land since time immemorial. It cannot therefore be deemed as
evidence of harvest sharing.
The other pieces of evidence submitted by respondent likewise do not prove the alleged
tenancy relationship. The summary report of the Philippine Crop Insurance
Corporation, the official receipts issued by the National Food Authority and the
certificate of membership in Bacoor Agricultural Multi-Purpose Cooperative,[29]only
prove that respondent and her family engaged in agricultural activities but not
necessarily her alleged status as tenant of the De Leon sisters. Besides, these documents
are not even in the name of respondent but were issued in favor of her daughter
Dolores.
That respondent was allowed to cultivate the property without opposition, does not
mean that the De Leon sisters impliedly recognized the existence of a leasehold relation
with respondent. Occupancy and continued possession of the land will notipso
facto make one a de jure tenant.[30] The principal factor in determining whether a
tenancy relationship exists is intent. Tenancy is not a purely factual relationship
dependent on what the alleged tenant does upon the land but is, moreso, a legal
relationship.[31] Thus, the intent of the parties, the understanding when the farmer is
installed, and their written agreements, provided these are complied with and are not
contrary to law, are more important.[32]
Finally, the sale of the subject land to petitioners did not violate Sections 65 [33] and
73[34] (c) of R.A. No. 6657. There was no illegal conversion of the land because Sec. 65
applies only to lands which were covered by the CARP, i.e. those lands beyond the
five-hectare retention limit allowed to landowners under the law, which were
distributed to farmers-beneficiaries. In the instant case, it was not shown that the
subject land was covered by the CARP. Neither was it shown that the sale was made to
circumvent the application of R.A. 6657 or aimed at dispossessing tenants of the land
that they till.
The sale of the land to petitioners likewise did not violate R.A. No. 3844 or the
Agricultural Tenancy Act. Considering that respondent has failed to establish her status
as de jure tenant, she has no right of pre-emption or redemption under Sections
11[35] and 12[36] of the said law. Even assuming that respondents son Rolando was a
tenant of the De Leon sisters, his death extinguished any leasehold on the subject
land. Section 8[37] of R.A. 3844 specifically provides for the extinction of an
agricultural leasehold relation, in the absence of persons enumerated under Section 9 of
the law who are qualified to succeed the deceased tenant.
WHEREFORE, the petitions are GRANTED. The Decision of the Court of Appeals
in CA-G.R. SP No. 92316 and the Resolution denying the motions for reconsideration
are REVERSED and SET ASIDE. The Decision of the Department of Agrarian
Reform Adjudication Board in DARAB Case No. 13502, which affirmedin toto the
Decision of the Regional Adjudicator in DARAB Case No. 0402-031-03,dismissing the
complaint of respondent Leonida De Leon for lack of merit,
isREINSTATED and AFFIRMED.
G.R. No. 184369 October 23, 2013
HEIRS OF FLORENTINO QUILO, NAMELY: BENJAMIN V. QUILO, JAIME
V. QUILO, CELEDONA Q. RAMIREZ, IMELDA Q. ANCLOTE, ZENAIDA Q.
BAITA, ORLANDO V. QUILO, EVANGELINE Q. PALAGANAS, ARTURO V.
QUILO and LOLITA Q. SEISMUNDO, Petitioners,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES-DAGUPAN BRANCH and
SPOUSES ROBERTO DEL MINDO and CARLINA DEL MINDO, Respondents.
DECISION
SERENO, CJ:
This is a Petition for Review on Certiorari of the Decision1 dated 17 June 2008 of the
Court of Appeals (CA) in CA-G.R. SP No. 100542, which reversed and set aside the
Decision2 dated 30 September 2002 of the Regional Agrarian Reform Adjudication
Board (RARAB) of Urdaneta City, Pangasinan and the Decision3 dated 19 December
2006 of the Department of Agrarian Reform Adjudication Board (DARAB).
In reversing the RARAB and DARAB Decisions, the CA found that petitioners had
failed to prove that their predecessor-in-interest was a bona fide tenant of the
predecessor-in-interest of respondents; hence, petitioners cannot claim any right of
redemption under Section 12 of Republic Act No. 3844, otherwise known as the
Agricultural Land Reform Code.4 The provision gives agricultural tenants the right to
redeem the landholdings they are cultivating when these are sold to a third person
without their knowledge.
The facts, culled from the records, are as follows:
The spouses Emilio Oliveros and Erlinda de Guzman (spouses Oliveros) owned four
parcels of land.5 In 1966, Florentino Quilo (Quilo) started planting vegetables
thereon.6 Sometime in 1975, Quilo filed with the Department of Agrarian Reform
(DAR) a Complaint against the spouses Oliveros regarding unspecified issues in their
alleged agrarian relations.7 Hence, on 12 September 1975, a Notice of Conference was
sent to the spouses by a DAR Team Leader.8 However, the Complaint did not prosper.
The spouses Oliveros later on mortgaged the parcels of land to the Development Bank
of the Philippines, Dagupan City Branch (respondent bank) to secure a loan, for which
they executed an Affidavit of Non-Tenancy.9Since they were unable to pay the loan, the
mortgage was foreclosed, and the title to the landholding consolidated with respondent
bank.10
On 15 April 1983, respondent bank sold the parcels of land to the spouses Roberto and
Carlina del Mindo (respondent spouses) for P34,000.11 Respondent spouses began to
fence the subject landholding shortly after.12
Upon learning about the sale, Quilo filed a Complaint for Redemption with Damages
against respondents with the Regional Trial Court, Branch 46, Urdaneta, Pangasinan
(RTC). He alleged that as an agricultural tenant of the land, he had the preference and
the priority to buy it.13 He further said that he was ready to repurchase it, and that he
had deposited with the Clerk of Court the amount of P34,000 and other necessary
expenses as redemption price.14
However, on 6 May 1991, the RTC dismissed the case for lack of jurisdiction in view
of the passage of Republic Act No. 6657,15 which created the DARAB and gave the
latter jurisdiction over agrarian disputes.16 The RTC further directed the parties to
litigate their case before the DARAB through the RARAB. 17 On 22 August 1992, Quilo
died.18 Hence, his heirs (petitioners) substituted for him in the pending case before the
RARAB.19 The RARAB dismissed the case "for lack of interest of the parties to
proceed with the case,"20 after which Quilo’s heirs filed an appeal with the DARAB.21
On 29 April 1996, the DARAB promulgated a Decision granting the appeal and
remanding the records of the case to the RARAB for its resolution on the merits. 22
In the course of the trial before the RARAB, petitioners presented the records of
Quilo’s testimony, which was corroborated by former Barangay (Brgy.) Captain
Norberto Taaca (Taaca), incumbent Brgy. Captain Hermogenes delos Santos (Delos
Santos), Rufino Bulatao (Bulatao), and Gerardo Obillo (Obillo). 23 Taaca and Delos
Santos confirmed that the parcels of land in question had been tilled by Quilo and
owned by the spouses Oliveros. They further swore that Quilo had delivered a share of
the produce to the said spouses.24 Bulatao and Obillo, neighbors of Quilo, testified that
he had planted on the land.25 In addition to the testimonies, the DAR Notice of
Conference dated 12 September 1975 was offered as evidence. 26
On the other hand, respondent spouses and respondent bank averred that Quilo was not
a tenant, but a squatter on the land; thus, he was not entitled to redeem the
property.27 To support their claim, they presented the Affidavit of Non-Tenancy
executed by the spouses Oliveros and the records of the Agrarian Reform Team. These
records certified that Quilo was not an agricultural lessee of the properties, nor was the
subject landholding within the scope of a leasehold or of Operation Land Transfer
(OLT).28
The RARAB ruled for petitioners.29 It said that Quilo was a bonafide tenant based on
his testimony that he had been in possession of the land and had been cultivating it
since 1975, a claim corroborated by other witnesses.30It also gave no weight to the
Affidavit of Non-Tenancy issued by the spouses Oliveros, since it was common
knowledge that landowners routinely execute such affidavits to enable them to
mortgage their lands to banks. 31Furthermore, the Certification that the subject
landholding was not within the scope of an OLT was not final, because not every
tenancy relationship was registered.32 The dispositive portion of the Decision33 dated 30
September 2002 reads:
WHEREFORE, premises considered, judgment is hereby issued as follows:
1. DECLARING the deceased complainant Florentino Quilo as the bonafide
tenant of the subject landholding, hence, his heirs are entitled to the right of
redemption on said land;
2. DECLARING that the reasonable redemption price of the said landholding
is Thirty [sic] Four Thousand (P34,000.00) pesos as appearing in the Deed of
Absolute Sale;
3. ORDERING the spouses-respondents Roberto and Carlina del Mindo to
execute a Deed of Reconveyance or Deed of Sale of subject landholding in
favor of the Heirs of Florentino Quilo, the complainant.
4. DISMISSING the complaint with regard to respondent DBP; and
5. DISMISSING the ancillary claims of complainants and the counterclaims of
respondents for lack of evidence and merit. SO ORDERED. 34
Dissatisfied, respondents appealed to the DARAB, which upheld the RARAB
ruling.35 The DARAB ruled that Quilo was a tenant, because the records showed that he
had been cultivating the subject landholding as early as 1975.36 The tenancy was further
bolstered by the Notice of Conference sent by DAR to the spouses Oliveros, informing
them that Quilo had sought the assistance of the office regarding aspects of their
agrarian relations.37Lastly, the DARAB said that the element of sharing was
established, because Quilo had been depositing his lease rentals with the RTC Clerk of
Court, and there were withdrawals of the deposits by respondent spouses. 38
Undaunted, respondents filed a Rule 43 Petition for Review39 with the CA, questioning
the basis of both the RARAB and the DARAB rulings in fact and in law. 40
The CA in its Decision41 dated 17 June 2008 held that the RARAB and the DARAB
were mistaken in finding the existence of a tenancy relationship, as the quantum of
proof required for tenancy – substantial evidence – had not been successfully met.42 It
said that there was no evidence that the spouses Oliveros had given their consent to the
tenancy relationship; and that although the corroborating witnesses testified that Quilo
was cultivating the land, this did not necessarily mean that he was doing so as a
tenant.43 In addition, the element of sharing was not proven, because the DARAB’s
finding that Quilo had been depositing his lease rentals and that there had been
withdrawals therefrom had no basis on the records.44 Petitioners then filed a Motion for
Reconsideration,45 which was denied by the CA.46
Hence, the instant Petition47 in which petitioners contend that a factual review by this
Court is proper, because the findings of the CA are contrary to those of the DARAB
and the RARAB.48 We asked respondents to file a Comment, 49 and petitioners a
Consolidated Reply50 – requirements they both complied with.51 The parties also filed
their respective Memoranda in compliance with the Court’s Resolution dated 8 July
2009.52
Petitioners, in their Memorandum,53 reiterated the arguments in the earlier Petition they
had filed. On the other hand, respondent bank and respondent spouses said in their
respective Memoranda54 that petitioners only raised factual issues, which were
improper in a Rule 45 Petition.55 Also, the CA’s findings did not warrant a factual
review as an exception to the general rule for Rule 45 Petitions. 56 According to
respondents, the CA never deviated from the facts gathered and narrated by the
DARAB. It merely exercised its sound judicial discretion in appreciating the facts
based on existing laws and jurisprudence.57
The main issue before us is whether a tenancy relationship existed between Quilo and
the spouses Oliveros.
We DENY the Petition.
Propriety of a Factual Review
As respondents question the propriety of a factual review of the case, the Court shall
resolve this matter first.
The determination of whether a person is an agricultural tenant is basically a question
of fact.58 As a general rule, questions of fact are not proper in a petition filed under Rule
45. Corollary to this rule, findings of fact of the CA are final, conclusive, and cannot be
reviewed on appeal, provided that they are borne out by the records or based on
substantial evidence.59 However, as we held in Adriano v. Tanco,60 when the findings
of facts of the DARAB and the CA contradict each other, it is crucial to go through the
evidence and documents on record as an exception61 to the rule.
We now rule on the main issue.
Failure to Establish the Tenancy Relationship
A tenancy relationship is a juridical tie that arises between a landowner and a tenant
once they agree, expressly or impliedly, to undertake jointly the cultivation of a land
belonging to the landowner, as a result of which relationship the tenant acquires the
right to continue working on and cultivating the land. 62 The relationship cannot be
presumed.63 All the requisite conditions for its existence must be proven, to wit:
(1) The parties are the landowner and the tenant.
(2) The subject is agricultural land.
(3) There is consent by the landowner.
(4) The purpose is agricultural production.
(5) There is personal cultivation.
(6) There is a sharing of harvests.64
We stress that petitioners have the burden of proving their affirmative allegation of
tenancy.65 Indeed, it is elementary that one who alleges the affirmative of the issue has
the burden of proof.66 Petitioners in the instant case failed to prove the elements of
consent and sharing of harvests.
There is no evidence that the spouses Oliveros consented to a tenancy relationship with
Quilo.
There is no evidence that the spouses Oliveros agreed to enter into a tenancy
relationship with Quilo.1âwphi1 His self-serving statement that he was a tenant was not
sufficient to prove consent.67 Precisely, proof of consent is needed to establish tenancy.
Independent and concrete evidence is needed to prove consent of the
landowner.68 Although petitioners presented the Affidavits of Obillo and Bulatao, as
well as the DAR Notice of Conference69 dated 12 September 1975, these documents
merely established that Quilo occupied and cultivated the land. 70 Specifically, the
Notice of Conference and the affidavits only showed that first, Quilo filed a Complaint
against the spouses Oliveros regarding the land he was cultivating; and second, the
affidavits confirmed merely that Quilo had been planting on the land. These documents
in no way confirm that his presence on the land was based on a tenancy relationship
that the spouses Oliveros had agreed to.
Mere occupation or cultivation of an agricultural land does not automatically convert
the tiller into an agricultural tenant recognized under agrarian laws.71 Despite this
jurisprudential rule, the DARAB chose to uphold the finding of the RARAB that there
was a tenancy relationship between Quilo and the spouses Oliveros. Hence, the CA
committed no error in reversing the DARAB Decision.
On the matter of the existence of a sharing agreement between the parties, the pieces of
evidence presented by petitioners to show the sharing agreement were limited to
Quilo’s self-serving statement and the Affidavit of Bulatao. Bulatao was Quilo’s
neighbor who stated that the latter had given his share of the harvest to the spouses
Oliveros.72 These are not sufficient to prove the existence of a sharing agreement, as we
have held in Rodriguez v. Salvador:73
The affidavits of petitioners’ neighbors declaring that respondent and her predecessors-
in-interest received their share in the harvest are not sufficient. Petitioners should have
presented receipts or any other evidence to show that there was sharing of harvest and
that there was an agreed system of sharing between them and the landowners.
The CA was also on point when it said that nothing in the records supported the
DARAB finding that a sharing agreement existed because of Quilo’s deposited rentals
with the Clerk of Court of the RTC of Urdaneta, Pangasinan, Branch 46. 74 Firstly, we
do not see how that deposit can prove the existence of a sharing agreement between
him and the spouses Oliveros. Secondly, a perusal of the findings of fact of the
RARAB, as affirmed by the DARAB, reveals that there was never any allegation from
any of the parties, or any finding by the RARAB, that Quilo had deposited his rentals
with the branch Clerk of Court, much less, that there were withdrawals therefrom. The
only mention of a deposit of any kind can be found in the RARAB Decision and
Quilo’s Complaint where it was merely claimed that Quilo was willing and able to pay
the redemption price of P34,000, and that he had deposited the amount with the branch
Clerk of Court.75
WHEREFORE, In view of the foregoing, we AFFIRM in toto the Decision 76 dated 17
June 2008 of the Court of Appeals in CA-G.R. SP No. 100542.
SO ORDERED.
G.R. No. 200713 December 11, 2013
MARIO REYES, Petitioner,
vs.
HEIRS OF PABLO FLORO, Respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review on certiorari1 assailing the Decision2 dated 21
December 2010 and Resolution3dated 13 February 2012 of the Court of Appeals in CA-
G.R. SP No. 100857, which affirmed the Resolution4 dated 16 May 2007 of the
Department of Agrarian Reform Adjudication Board in DARAB Case No. 14369
declaring petitioner was not a tenant and ordering him to vacate the property.
The Facts
The subject of the litigation involves a parcel of land identified as Lot 5 of the
Consolidated Subdivision Plan (LRC) Pcs-25816 covered by Transfer Certificate of
Title (TCT) No. 279800.5 The land, primarily devoted to rice production and consisting
of 62,186 square meters, is located in Longos, Malolos, Bulacan.
On 3 May 2004, petitioner Mario Reyes (Reyes) filed with the Provincial Agrarian
Reform Adjudicator (PARAD) of Malolos City, Bulacan, a Complaint 6 for Pre-Emption
and Redemption, Maintenance of Peaceful Possession, Occupation and Cultivation with
prayer for the issuance of Restraining Order/Injunction against Zenaida Reyes
(Zenaida); Sun Industrial Corporation (Sun Industrial); the Register of Deeds of
Tabang, Guiginto, Bulacan; and respondents, heirs of Pablo Floro, namely: Elena F.
Vichico, Valeriano L. Floro, Ernesto L. Floro, Victoria Floro-Basilio, Avelina C. Floro,
Elsie C. Floro, Samuel C. Floro, Josephine C. Floro, Jerome C. Floro, and Pablito
Floro.
In the Complaint, Reyes alleged that the land was formerly owned by Carmen T.
Bautista (Bautista) under one lot title, TCT No. T-264134. On 16 September 1983,
Bautista allegedly sold the land to Zenaida as evidenced by a Deed of Absolute Sale
with Agricultural Tenants Conformity.7 Before Bautista sold the land, Reyes was
allegedly one of her tenant-lessees.
A day after the alleged sale, Bautista supposedly executed a document
entitled Pagpapatunay8 dated 17 September 1983 claiming that she was the original
owner of the land and acknowledging Reyes as her tenant, even though not registered
with the Department of Agrarian Reform. In the same document, Bautista attested that
Reyes did not sign the deed of sale since he did not want to give up his tenancy rights.
Thereafter, Zenaida registered the land in her name under TCT No. 279800. On 19
December 1983, Zenaida executed an Agricultural Leasehold Contract9 with Reyes, her
brother.
Reyes then recounted that sometime in January 2004, three unknown persons
introduced themselves as brokers and claimed that the heirs of Floro and Sun Industrial
were selling the land, which had already been transferred to their names, and demanded
that Reyes vacate the premises or else they would be forced to evict him. Reyes stated
that he was the agricultural lessee of Zenaida based on a Certification10 dated 4 May
1995 issued by the Municipal Agrarian Reform Officer (MARO) of Sto. Rosario,
Malolos, Bulacan. However, without Reyes’ knowledge and consent, Zenaida conveyed
and transferred ownership of the land in favor of the late Pablo Floro and executed a
deed of assignment with waiver of rights in favor of Sun Industrial.
Reyes stated in the Complaint that as an agricultural lessee, he wanted to acquire the
land according to the approved Barangay Committee on Land Production (BCLP) in
the locality, by way of pre-emption and redemption, under Sections 1111 and 1212 of
Republic Act No. (RA) 3844, as amended by RA 6389, 13 or otherwise known as the
Agricultural Land Reform Code.14 Thus, Reyes implored that a restraining order be
issued against defendants upon receipt of the Complaint and, after hearing, prayed for
the following: (1) to make the restraining order/injunction permanent; (2) to declare the
documents on the transfer of ownership of the land in the names of the respondent heirs
and Sun Industrial null and void ab initio; (3) to pay the amount of the redemption price
based on the approved BCLP in the locality under Section 12 of RA 3844; and (4) to
order the Registry of Deeds of Tabang, Guiginto, Bulacan to cancel all existing TCTs
issued in the name of the respondent heirs and Sun Industrial and to issue new TCTs in
his favor by virtue of Sections 11 and 12 of RA 3844. 15
On 28 May 2004, Zenaida filed her Answer with Counterclaim. 16 She alleged that since
1983 Reyes was the actual occupant, cultivator and agricultural tenant-lessee over the
subject land. Zenaida also stated that: (1) she timely received Reyes’ rental payments as
agricultural tenant-lessee and he complied with the terms and conditions of the
agricultural leasehold contract which they have entered into; (2) as registered owner of
the land, she had all the legal rights to dispose of the land without Reyes’ consent; (3)
she had no knowledge that Reyes wanted to acquire the land and/or exercise his rights
of pre-emption and redemption; and (4) she never tried to eject Reyes from the land;
thus, the issuance of a temporary restraining order was unnecessary. As counterclaim,
Zenaida asked for moral and exemplary damages.
On 17 November 2004, Sun Industrial filed its Answer denying the material allegations
in the Complaint. Sun Industrial raised the defense that it was an innocent assignee and
purchaser for value in good faith. Sun Industrial alleged that the subject land, now
covered by TCT No. T-1188 in its name, has no tenant or agricultural lessee.
Otherwise, such fact would have been annotated at the back of its title. Sun Industrial
pointed out that the two previous titles of the land showed that it was not covered by
Operation Land Transfer. Sun Industrial declared that it became the registered owner of
the land on 11 September 1989 or several years before the alleged issuance of the
MARO Certification dated 4 May 1995. Thus, since Zenaida ceased to be the owner of
the land in 1995, she could no longer institute Reyes as tenant. Sun Industrial filed a
counterclaim and prayed for the dismissal of the complaint and payment of attorney’s
fees and costs of suit.
On 6 December 2004, respondent heirs filed their Answer with special and affirmative
defenses and damages. Respondent heirs maintained that they are the lawful owners of
several parcels of land covered by TCT Nos. 51068, 85587, 85588, 51062, 51066,
51065 and 51069 registered with the Registry of Deeds of Bulacan. Respondent heirs
asserted that before Sections 11 and 12 of RA 3844 may be applied, it must first be
established that a tenancy or leasehold relationship existed between Reyes and Pablo
Floro and/or his heirs. They added that while Zenaida is the alleged registered owner of
the land in the Complaint, the same is not valid since she never acquired a valid and
defensible title to the land. They averred that Zenaida was convicted of falsification of
public documents by the Regional Trial Court (RTC) of Bulacan, Branch 22, in
Criminal Case No. 9252-M. Since Zenaida falsified and forged the signature of Pablo
Floro to transfer the subject land under her name, she could not validly enter into any
voluntary dealings with anybody including Reyes and neither could they suffer for the
misdeeds of Zenaida since they were also victims of an illegal transfer of ownership.
Further, the respondent heirs alleged that Reyes did not cultivate the land since 1995 as
certified by the Punong Barangay of Longos, Malolos, Bulacan nor did Reyes tender a
reasonable purchase price within 180 days from the transfer of the land. Thus,
respondent heirs prayed for the dismissal of the complaint as well as the payment of
moral and exemplary damages plus attorney’s fees, litigation expenses and costs of suit.
In a Decision17 dated 29 November 2005, the PARAD decided the case in favor of
Reyes, as a tenant-lessee entitled to redemption. The PARAD added that Zenaida’s
conviction in a criminal case will not sever Reyes’ tenancy relations, having been
instituted by the previous owner, and thus entitled to security of tenure as guaranteed by
law. The dispositive portion of the Decision states:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against defendants, and Order is hereby issued as follows:
1. FINDING the plaintiff a legitimate tenant-lessee of the subject landholding;
2. GRANTING the right of the plaintiff to redeem the subject property from
the defendant FLOROs and Sun Industrial Corporation;
3. Directing the plaintiff to pay the defendants the reasonable redemption price
as follows:
a) Valeriano Floro is entitled to Php.10,821.00 over his two lots with
an aggregate area of 14,967 sq.m. under TCT Nos. T-51062 and T-
51066;
b) Avelina Floro, et al. are entitled to Php.10,821.00 over their two
lots under TCT Nos. T-85588 and T-85587 with an aggregate area of
14,967 sq.m.;
c) Elena Vichico is entitled to Php.10,907.90 over her two titles under
TCT Nos. T-51065 and T-51069 with an aggregate area of 15,087
sq.m.;
d) Victoria Floro-Basilio is entitled to Php.5,210.20 over her title
covered by TCT No. T-51068 with an area of 7,288 sq.m.;
 e) Sun Industrial Corporation is entitled to Php.5,411.65 for its 7,485
sq.m. embraced by TCT No. T-1188;
4. Directing the Registry of Deeds of Bulacan to cancel TCT Nos. T-51062, T-
51066, T-85588, T-85587, T-51065, T-51069, T-51068, and T-1188 issued in
favor of the defendant FLOROs and Sun Industrial Corporation and issue a
new title in the name of Mario Reyes after payment of the required legal fees
pursuant to existing rules and regulations of the Land Registration Authority.
Claims and counterclaims are dismissed for lack of merit.
SO ORDERED.18
Respondent heirs filed an appeal19 with the Department of Agrarian Reform
Adjudication Board (DARAB). In a Decision20 dated 11 December 2006, the DARAB
affirmed the decision of the PARAD and denied the appeal for lack of merit.
Respondent heirs filed a Motion for Reconsideration. In a Resolution21 dated 16 May
2007, the DARAB reconsidered and set aside its Decision dated 11 December 2006.
The resolution declared that Reyes was not a tenant and ordered him to vacate the
property.
The DARAB found that the PARAD failed to consider the following evidence
submitted by respondent heirs to prove that they were the owners of the subject land:
(1) the Deed of Reconveyance of Four (4) Parcels of Land dated 31 March 1986
executed by Zenaida in favor of Pablo Floro which provides:
WHEREAS, FIRST PARTY (defendant-appellee Zenaida Reyes) by means of false
pretenses, strategy and stealth succeeded to take hold of SECOND PARTY’S owner’s
duplicate original copy of said Transfer Certificate of Title Annexes "A", "B", "C" and
"D" hereof and on or about July 23, 1985 FIRST PARTY made it appear that SECOND
PARTY (Pablo Floro) executed a certain "DEED OF ABSOLUTE SALE OF FOUR
(4) PARCELS OF LAND" over the said above described Four (4) parcels of land
covered by said Transfer Certificates of Title Annexes "A", "B", "C" and "D" hereof,
purportedly in her favor for an alleged consideration of P35,000 and forged and
falsified on said deed SECOND PARTY’S signature as vendor, a copy of said deed to
the foregoing effect is hereto attached and marked as Annex "E" to form an integral part
hereof.22
(2) the Decision dated 1 June 2001 of the RTC of Malolos, Bulacan, Branch 22 in
Criminal Case No. 9252-M entitled "People of the Philippines v. Zenaida Reyes" for
falsification of public documents, the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, it can be deduced that the 62,000 square
meters or the nine (9) titles originally belong to Pablo Floro and the accused somehow
got hold of the four (4) land titles from Pablo Floro and transferred it to her name by
signing the signature of Pablo Floro in the Deed of Absolute Sale dated July 23, 1985
(Exh. "C" and "C-1"). Later on in the Deed of Reconveyance of four (4) Parcels of
Land she executed (Exh. "N") she admitted having forged and falsified the signature of
Pablo [Floro] in Exh. "C" and "C-1."
Accused Zenaida Reyes is hereby found guilty beyond reasonable doubt and is hereby
sentenced to suffer the penalty of four (4) months of arresto mayor as minimum to four
(4) years and two (2) months of prision correccional as maximum and to pay a fine of
Five Thousand Pesos (P5,000.00).
SO ORDERED.23
and (3) the Decision dated 29 September 2004 of the Court of Appeals in CA-G.R. CV
No. 68557 entitled "Victoria Floro-Basilio v. Zenaida Reyes and Sun Industrial
Corporation" for annulment of title, where the CA found that there is no dispute on
Pablo Floro’s ownership over the land and declared the titles of Zenaida and Sun
Industrial as void. The CA stated that Zenaida registered the land under her name by
obtaining possession of the duplicate original of TCT No. T-280518 in the name of
Pablo Floro and executing a fictitious deed of absolute sale in her favor by forging the
signature of Pablo Floro. Subsequently, Zenaida executed a deed of assignment and
waiver of rights in favor of Sun Industrial which, despite the affidavit of adverse claim
and notice of lis pendens annotated on the title, foreclosed the mortgage on the property
and secured the issuance of TCT No. T-1188 in its name. The dispositive portion of the
Decision provides:
WHEREFORE, the appeal is granted and the trial court’s Decision dated June 28, 2000
is set aside. TCT No. T-295804 in the name of Zenaida Reyes and the subsequent TCT
No. T-1188 in the name of Sun Industrial Corporation are nullified. Defendant-appellee
Zenaida Reyes is ordered to pay to plaintiff-appellant P50,000.00 as moral
damages, P50,000.00 as exemplary damages and the costs of suit.
SO ORDERED.24
Reyes filed a Motion for Reconsideration on 20 June 2007 and sought the reversal of
the Resolution dated 16 May 2007. In an Order 25 dated 6 September 2007, the DARAB
set aside the resolution and reinstated the PARAD’s Decision dated 29 November 2005.
Respondent heirs then filed a petition for review with the Court of Appeals.
The Ruling of the Court of Appeals
In a Decision26 dated 21 December 2010, the Court of Appeals reversed and set aside
the DARAB’s Decision dated 11 December 2006 and Order dated 6 September 2007.
The appellate court ruled that Zenaida was never the owner of the land; thus, no
tenancy relations existed between her and Reyes. The dispositive portion of the
Decision states:
WHEREFORE, premises considered, the appealed decision dated December 11, 2006
and the order dated September 6, 2007 of the DARAB are REVERSED and SET
ASIDE. Accordingly, the resolution of the DARAB dated May 16, 2007 is
REINSTATED.
SO ORDERED.27
Reyes filed a Motion for Reconsideration. In a Resolution28 dated 25 July 2011, the
appellate court granted Reyes’ motion and affirmed the findings and conclusions of the
PARAD Decision dated 29 November 2005, as sustained on appeal by the DARAB in
its Decision dated 11 December 2006 and Order dated 6 September 2007.
The respondent heirs filed a Motion for Reconsideration. In a Resolution 29 dated 13
February 2012, the appellate court granted the motion. The 25 July 2011 Resolution
was nullified and set aside and the 21 December 2010 Decision was reinstated.
Hence, the instant petition.
The Issue
The main issue for our resolution is whether or not Reyes is a de jure tenant or lessee
who is entitled to redemption, pre-emption, peaceful possession, occupation and
cultivation of the subject land.
The Court’s Ruling
The petition lacks merit.
At the outset, it must be stressed that only questions of law may be reviewed by this
Court in an appeal by certiorari. Findings of fact by the Court of Appeals are final and
conclusive and cannot be reviewed on appeal to this Court. However, this Court may
disregard the factual findings of the CA when the appellate court’s findings of facts
conflict with those of the DARAB, as well as the PARAD, which are administrative
bodies with expertise on matters within its specific and specialized jurisdiction.30
Reyes contends that (1) the Pagpapatunay31 dated 17 September 1983 from Carmen
Bautista, the original owner of the land, stating that Reyes was one of her tenants; and
(2) the Certification32 dated 4 May 1995 from the MARO stating that Reyes is an
agricultural lessee over the land owned by Zenaida, are enough evidence to prove that
he is a tenant. Reyes insists that the consent of the Floros is not necessary since tenancy
relations is not terminated by changes in ownership in case of sale or transfer of legal
possession.
Respondent heirs, on the other hand, maintain that Reyes is not an agricultural lessee
because: (1) there was no valid contract between Reyes and Zenaida nor between Reyes
and Bautista; (2) Reyes has not personally cultivated the parcel of land; (3) Reyes did
not share any harvest with any landowner; and (4) the claim of Reyes is not supported
by substantial evidence.
This Court takes judicial notice of two cases: (1) Zenaida Reyes v. People of the
Philippines, G.R. No. 184728; and (2) Sun Industrial Corporation v. Victoria Floro-
Basilio, G.R. No. 169674.
The first case, originally docketed as Criminal Case No. 9252-M, the RTC of Malolos,
Bulacan, Branch 22, in a Decision dated 1 June 2001, convicted Zenaida of falsification
of public documents as defined and penalized under Article 172 of the Revised Penal
Code. On appeal, the CA, in CA-G.R. CV No. 26058, affirmed the RTC in a Decision
dated 11 June 2008. Elevated to this Court, we issued a Resolution 33 dated 8 December
2008, affirming the decision of the appellate court. The resolution attained finality on 5
May 2009.34
In the second case, Victoria Floro-Basilio, one of the respondents in the present case,
filed a complaint for annulment of title against Zenaida and Sun Industrial with the
RTC of Malolos, Bulacan, Branch 12, docketed as Civil Case No. 352-M-95. The RTC
dismissed the complaint. On appeal, docketed as CA-G.R. CV No. 68557, the CA in a
Decision35 dated 29 September 2004 upheld the title of Pablo Floro and declared the
titles of Zenaida and Sun Industrial as void. The CA stated that since the title of
Zenaida was fraudulently acquired on the basis of a forged deed of sale, her title is null
and void and the subsequent registration of the property in the name of Sun Industrial,
as mortgage creditor of Zenaida, is also void. Sun Industrial appealed the CA’s decision
to this Court, which was denied in a Resolution36 dated 21 November 2005. Likewise,
the Motion for Reconsideration was denied with finality in a Resolution37 dated 6
March 2006.
In determining tenancy relations between the parties, it is a question of whether or not a
party is a de jure tenant. The essential requisites of a tenancy relationship are: (1) the
parties are the landowner and the tenant; (2) the subject is agricultural land; (3) there is
consent; (4) the purpose is agricultural production; (5) there is personal cultivation; and
(6) there is sharing of harvests. All these requisites are necessary to create a tenancy
relationship between the parties. The absence of one does not make an occupant,
cultivator, or a planter, a de jure tenant. Unless a person establishes his status as a de
jure tenant, he is not entitled to security of tenure nor is he covered by the Land Reform
Program of the government under existing tenancy laws.38
In the present case, there is no dispute that the property under litigation is an
agricultural land. The controversy mainly lies on whether the parties are the true and
legitimate landowner and tenant.
Reyes relies on the certifications from the MARO and Bautista, the alleged original
owner, manifesting that he was a tenant of the subject land to prove that a tenancy
relationship exists.
This is untenable.
The MARO certification is merely preliminary and does not bind the courts as
conclusive evidence that Reyes is a lessee who cultivates the land for purposes of
agricultural production. In Bautista v. Araneta,39 we held that certifications issued by
administrative agencies or officers that a certain person is a tenant are merely
provisional and not conclusive on the courts. Here, the certification from Bautista has
little evidentiary value, without any corroborative evidence. The certification was not
notarized and Bautista was not even presented as a witness. Similarly, Reyes was not
included as a legitimate and properly registered agricultural tenant in the supposed
Deed of Absolute Sale with Agricultural Tenants Conformity which Bautista executed
in favor of Zenaida.
Further, the genuineness of the agricultural leasehold contract that Zenaida entered into
with Reyes is doubtful. The records show that respondent heirs submitted two
documentary evidence with the PARAD which the provincial adjudicator disregarded:
(1) a MARO Certification40 dated 9 May 2005 manifesting that there is no copy on file,
with the Municipal Land Reform Office of Malolos, Bulacan, of the supposed leasehold
contract; and (2) aPagpapatunay41 dated 8 June 2004 from the Punong Barangay of
Malolos, Bulacan attesting that since the year 1995 until the date of the affidavit, the
subject land was not being used for farming, cultivation or any agricultural purpose.
These evidence can only mean that the leasehold contract was falsified.
In addition, it should be kept in mind that Zenaida was convicted of falsification of
public documents as affirmed in our Resolution dated 8 December 2008 in G.R. No.
184728. Zenaida registered and transferred to her name four land titles owned by Pablo
Floro by forging the signature of Pablo Floro in a deed of sale. Likewise, in G.R. No.
169674 for annulment of title, we affirmed the ruling of the appellate court in declaring
the titles issued in the name of Zenaida and Sun Industrial as void.
The findings of fact of the RTC of Malolos, Branch 22 in its Decision dated 1 June
2001 in Criminal Case No. 9252-M provide us a better understanding on who among
the parties is the real owner of the subject land. The relevant portions of the decision
provide:
The accused is charged [with] falsification of public documents based on the Deed of
Absolute Sale of four parcels of land dated July 23, 1985 allegedly executed by Pablo
Floro in her (accused) favor.
xxxx
There was no document presented to prove the claim of the accused that she was the
lawful owner of the properties subject matter of this case, particularly the original title
of the 62,186 square meters agricultural land in Longos, Malolos, Bulacan before it was
subdivided into nine (9) residential lots. Since all the records of the Register of Deeds
from 1987 [onwards] were destroyed because of a fire that hit the said office in 1987.
Only a certification dated July 8, 1987 (Exhibit "B") which was signed by Register of
Deeds Elenita Corpuz certifying that the office of the Register of Deeds, Malolos,
Bulacan together with all the titles, documents, office equipment and supplies have
been totally burned during the fire conflagration on March 7, 1987 was presented.
Both counsels did not submit their memorandum despite orders of the court to do so.
Hence, for further clarification of this case, resort is made to the decision rendered by
Judge Crisanto Concepcion (Exhibit "2," "2-a," "2-b" of this case) of Regional Trial
Court of Malolos, Bulacan, Branch 12 in Civil Case No. 352-M-95 dated June 28, 2000
in the case of Victoria Floro Basilio vs. Zenaida Reyes, et al., wherein the issue who
between the late Pablo Floro and defendant Zenaida Reyes was the real owner of the
parcel of land in question [as] to the same property now in litigation here in Criminal
Case No. 9252-M. The following were resolved:
1) If the late Pablo Floro was the owner, it would be hard to believe that
defendant Zenaida Reyes acquired her title from him legally.
2) Defendant Zenaida Reyes has shown how and from whom she originally
acquired the 62,186 square meters agricultural land in Longos, Malolos,
Bulacan as reflected in her Exhibit "1", the Deed of Absolute Sale with
Agricultural Tenants Conformity executed by and between her, as vendee, and
Carmen T. Bautisa, as vendor, before it was subdivided into nine separate
residential lots in accordance with her accommodation to Pablo Floro to use
them as collaterals in his name, so as to secure a much bigger bank loan. The
Registry of Deeds file copy of this Deed of Sale, like all the nine titles
registered in the name of Pablo Floro, as well as those of other registered
related documents, must have been included in those burned and destroyed
during the fire that hit the Registry on March 7, 1987, but there is no strong
reason not to accept its faithfulness.
3) It is a clear history of the origin of the property in question, showing that its
ownership was first transferred by the original owner Carmen T. Bautista to
Zenaida P. Reyes before it was subdivided into nine lots to be used as bank
 loan collaterals in the name of the late Pablo Floro by way of accommodation
only, for his mistress.
4) The facts shown by Zenaida Reyes are also consistent with her contention
that her sale to Pablo Floro for that purpose and Pablo Floro’s subsequent re-
sale to her when they decided not to go on with the projected bank loan were
all simulated. It was only unfortunate that when his heirs discovered his real
property of nine (9) lots in Bulacan in his name, they decided to partition them
among themselves, perhaps thinking that all the while their father had after all
real property in the province, including the first four (4) lots already resold in a
simulated sale by the old man.
5) The Deed of Reconveyance (Exhibit "N" in this case) of the four (4) lots
prepared by the lawyer and Corporate Secretary of the Floros and ostensibly
signed by defendant Reyes who denied and belied it, cannot alter the credence
of her side of the matter, particularly the origin of her ownership of the whole
property before it was subdivided without her actually losing such right, until
she finally gave it up in favor of her codefendant Sun Industrial Corporation.
She seemed to be an experienced businesswoman who would not just
incriminate herself so recklessly in writing that "by means of false pretenses,
strategy, and stealth" she obtained from a more experience[d] known
industrialist, possession of the four land titles, including the title to Lot 5-C.
Her explanation on how she re-obtained them as the true owner is more
reliable that the generalized "means of false pretenses, strategy and stealth."
The facts stated in the aforesaid decision of Judge Crisanto Concepcion (although the
decision is still pending appeal) jibed with the substantive facts stated by accused
Zenaida Reyes in the instant case.
However, the Court notes that Zenaida Reyes’ Exh. "1" – in Civil Case No. 352-M-95
which is the Deed of Absolute Sale with Agricultural Tenant[s] Conformity executed
by and between her (Zenaida Reyes) as Vendee, and Carmen T. Bautista as Vendor,
before it was subdivided into nine (9) separate residential lots in accordance with her
accommodation to Pablo Floro to use them as collateral in his name, so as to secure a
much bigger loan – was not presented as evidence in Court.
Likewise, it does not appear that the original of said Exh. "1" was ever presented in
RTC, Branch 12 in the Civil Case as implied from the decision of RTC, Branch 12 that
"the Registry of Deeds file copy of this Deed of Sale, like all the nine (9) titles
registered in the name of Pablo Floro, as well as those of other related documents, must
have been included in those burned and destroyed during the fire that hit the Registry
on March 7, 1987, but there is no strong reason not to accept its faithfulness."
This Court however is of the belief that there are in fact strong reasons not to
believe its faithfulness since there are other copies of the same which were not
burned that should be presented to prove that there was in fact such a sale from
Carmen T. Bautista to Zenaida Reyes to wit: 1) the Notary Public’s copy; 2) the
copy of the Court (Notary Publics [sic] are supposed to furnish copies of their
notarized document to [the] Court that approved their application for Notary
Public); 3) BIR copy for the payment of the Capital Gains Tax; 4) the copy of the
Archives (National Library). These copies were never presented in this Court or in
the RTC, Branch 12 nor explained as why they were not presented. This is
therefore clearly suppression of evidence which would therefore be adverse if
produced.
Likewise, when the accused testified in Court and admitted that he signed on the space
provided in the Deed of Sale for the seller which is her name and she also signed in
behalf of Don Pablo for the sale of the property to Don Pablo Floro because the bank
requires the borrower to have a paying capacity and the property must be in the name of
the mortgagor (Don Pablo), this Deed of Sale was never presented in Court. (This refers
to the sale of the 62,000 square meters from Reyes to Floro before it was subdivided to
nine (9) titles). Her testimony is not clear on this point.
This claim of the accused is uncorroborated since the Deed of Sale was not presented in
Court nor a copy thereof which normally should be with 1) the Notary Public; 2) the
Court (Notary Publics [sic] are supposed to furnish copies of their notarized document
to the Court [that] approved their commission as notary public); 3) the BIR for the
payment of the Capital Gains Tax; or 4) the Archives (National Library). Likewise, the
subdivision plan and Deed for Partition of the 62,000 sq. meters since it was
subdivided. This would show who really is the registered owner of the 62,000 sq.
meters.
Furthermore, the accused testified that she only transferred four (4) titles back to her
name because she doesn’t have enough money to pay for the Register of Deeds for the
nine (9) titles which she claimed to be her own.1âwphi1 But why should she be the one
to pay for the registration (transfer expenses for the nine (9) titles [from] Floro to her)
according to her she simulatedly transferred those 9 titles to Floro for the latter’s benefit
to get a better loan? Should it not be Floro?
WHEREFORE, in view of all the foregoing, it can be deduced that the 62,000 square
meters or the nine (9) titles originally belong to Pablo Floro and the accused somehow
got hold of the four (4) land titles from Pablo Floro and transferred it to her name by
signing the signature of Pablo Floro in the Deed of Absolute Sale dated July 23, 1985
(Exh. "C" and "C-1"). Later on in the Deed of Reconveyance of four (4) Parcels of
Land she executed (Exh. "N") she admitted having forged and falsified the signature of
Pablo [Floro] in Exh. "C" and "C-1."
Accused Zenaida Reyes is hereby found guilty beyond reasonable doubt and is hereby
sentenced to suffer the penalty of four (4) months of arresto mayor as minimum to four
(4) years and two (2) months of prision correccional as maximum and to pay a fine of
Five Thousand Pesos (P5,000.00).
SO ORDERED.42 (Emphasis supplied; underscoring in the original)
Thus, from the findings of the lower court that Zenaida failed to submit concrete and
reliable evidence to lend credence to her claim of ownership of the subject land, it has
been clearly established that Zenaida is not the true and lawful owner and only
concocted a story unworthy of belief. As a consequence, the agricultural leasehold
contract which Reyes entered into with Zenaida is void.
Next, Reyes failed to submit any proof that he personally cultivated the land for
agricultural production or that he shared the harvests with the landowner. Reyes only
submitted a picture of a hut erected on the land as an incident to his right to cultivate
the land as a tenant. This is not enough to prove that a leasehold relationship exists.
Lastly, Reyes insists that the consent of the Floros is not necessary since tenancy
relations is not terminated by changes in ownership. In Valencia v. Court of
Appeals,43 we held that while it is true that tenancy relations is not terminated by
changes of ownership in case of sale, alienation or transfer of legal possession, as stated
in Section 10 of RA 3844:
Section 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period,
etc. - The agricultural leasehold relation under this Code shall not be extinguished by
mere expiration of the term or period in a leasehold contract nor by the sale, alienation
or transfer of the legal possession of the landholding. In case the agricultural lessor
sells, alienates or transfers the legal possession of the landholding, the purchaser or
transferee thereof shall be subrogated to the rights and substituted to the obligations of
the agricultural lessor.
this provision assumes that a tenancy relationship exists. In this case, no such
relationship was ever created between Reyes and respondent heirs nor between Reyes
and Zenaida because Zenaida is not the true and lawful owner of the agricultural land.
Since Reyes’ claim on his supposed tenancy rights is based on the leasehold contract, as
well as the certifications from Bautista and the MARO, which were found to be
inadequate to prove that an agricultural tenancy relationship exists, then Reyes’
assertions must fail.
In sum, the certifications from Bautista and the MARO declaring Reyes to be a tenant
are not enough evidence to prove that there is a tenancy relationship. One claiming to
be a de jure tenant has the burden to show, by substantial evidence, that all the essential
elements of a tenancy relationship are present. Since Reyes is not a de jure tenant or
lessee, he is not entitled to the benefits of redemption, pre-emption, peaceful
possession, occupation and cultivation of the subject land, as provided under existing
tenancy laws.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 21
December 2010 and Resolution dated 13 February 2012 of the Court of Appeals in CA-
G.R. SP No. 100857.
SO ORDERED.
G.R. No. 174588 December 11, 2013
DAV AO NEW TOWN DEVELOPMENT CORPORATION, Petitioner,
vs.
SPOUSES GLORIA ESPINO SALIGA and CESAR SALIGA, and SPOUSES
DEMETRIO EHARA and ROBERTA SUGUE EHARA, Respondents.
DECISION
BRION, J.:
We pass upon the petition for review on certiorari, 1 under Rule 45 of the Rules of
Court, challenging the March 28, 2006 decision2 and the September 5, 2006
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 79377. This CA ruling
affirmed the January 12, 2001 decision4 of the Department of Agrarian Reform
Adjudication Board(DARAB) in DARAB Case No. 7775. The DARAB set aside the
July 6, 1998 decision5 of the Provincial Agrarian Reform Adjudicator (PARAD) that
ruled in favor of petitioner Davao New Town Development Corporation(DNTDC).
The Factual Antecedents
At the root of the present controversy are two parcels of land –4.9964 hectares6 and
2.5574 hectares7 (subject property) - situated in Catalunan Pequeño, Davao City and
originally registered in the name of Atty. Eugenio Mendiola (deceased).
On February 5, 1998,8 the respondents - spouses Gloria Espino Saliga and Cesar
Saliga (spouses Saliga) and spouses Demetrio Ehara and Roberta Sugue Ehara (spouses
Ehara), (collectively referred to as respondents) - filed before the Office of the PARAD
in Davao City a complaint for injunction, cancellation of titles and damages against
DNTDC. They amended this complaint on February 13, 1998.
In their complaint and amended complaint, the respondents claimed that they and their
parents, from whom they took over the cultivation of the landholding, had been tenants
of the property as early as 1965. On August 12, 1981, the respondents and Eugenio
executed a five-year lease contract.9 While they made stipulations regarding their
respective rights and obligations over the landholding, the respondents claimed that the
instrument was actually a device Eugenio used to evade the land reform law.
The respondents also argued that pursuant to the provisions of Presidential
Decree (P.D.) No. 27, they, as tenants, were deemed owners of the property beginning
October 21, 1972 (the Act’s effectivity date); thus, the subsequent transfer of the
property to DNTDC was not valid. The respondents added that DNTDC could not have
been a buyer in good faith as it did not verify the status of the property – whether
tenanted or not tenanted - prior to its purchase. The respondents submitted, among
others, the pertinent tax declarations showing that the property was agricultural as of
1985.
In its answer, DNTDC alleged in defense that it purchased the property in good faith
from the previous owners (Paz M. Flores and Elizabeth M. Nepumuceno) 10 in 1995. At
that time, the alleged tenancy relationship between the respondents and Eugenio had
already expired following the expiration of their lease contracts in 1986. DNTDC also
claimed that prior to the sale, the Davao City Office of the Zoning Administrator
confirmed that the property was not classified as agricultural; it pointed out that the
affidavit of non-tenancy executed by the vendors affirmed the absence of any
recognized agricultural lessees on the property. DNTDC added that the property had
already been classified to be within an "urban/urbanizing zone" in the "1979-2000
Comprehensive Land Use Plan for Davao City" that was duly adopted by the City
Council of Davao City and approved by the Human Settlement Regulatory
Commission (HSRC) (now the Housing and Land Use Regulatory Board [HLURB]).
In its decision of July 6, 1998, the PARAD ordered the DNTDC to pay the spouses
Saliga the sum of ₱20,000.00 and the spouses Ehara the sum of ₱15,000.00 as
disturbance compensation, and to allocate to each of the respondent spouses a 150-
square meter homelot. While the PARAD conceded that the respondents were tenants
of the property, it nevertheless ruled that the property had already been reclassified
from agricultural to non-agricultural uses prior to June 15, 1988, the date when
Republic Act (R.A.) No. 6657 (the Comprehensive Agrarian Reform Law of 1988) took
effect. Thus, since R.A. No. 6657 covers only agricultural lands, the property fell
outside its coverage.
The respondents appealed the case to the DARAB.
The ejectment case before the MTCC
Pending resolution of the appeal before the DARAB, DNTDC filed before the
Municipal Trial Court in Cities(MTCC) of Davao City a complaint for unlawful
detainer11 against Demetrio Ehara, Jr., Reynaldo Saliga and Liza Saliga, the children of
respondent spouses Ehara and spouses Saliga. DNTDC claimed that it owned the
2.5574-hectare portion of the property which the respondents’ children had been
occupying by its mere tolerance. Despite its repeated demands, the respondents’
children refused to vacate and continued to illegally occupy it.
In their answer, the respondents’ children raised the issue of lack of jurisdiction,
arguing that the case involved an agrarian dispute. They contended that the law
considers them immediate members of the farm household, to whom R.A. No. 3844
and R.A. No. 6657 extend tenurial security. Thus, they claimed that they, as tenants,
were entitled to continue occupying the disputed portion.
On December 20, 2000, the MTCC rendered its decision12 granting the DNTDC’s
complaint and ordering the respondents’ children to vacate the 2.5574-hectare portion
of the property. The MTCC ruled that the respondents’ children were not tenants of the
property because they failed to prove that their stay on the premises was by virtue of a
tenancy agreement and because they had been occupying portions different from their
parents’ landholding. The MTCC also ruled that the 2.5574-hectare portion was no
longer agricultural and was thus removed from the coverage of R.A. No. 6657.
The prohibition case before the RTC
The respondents’ children did not appeal the MTCC decision. Instead, on June 1, 2001,
they filed before the Regional Trial Court (RTC), Branch 17, Davao City a petition for
Prohibition13 against DNTDC to enjoin the execution of the MTCC decision. They
repeated the defenses and allegations in their pleading before the MTCC. The children
of the spouses Saliga – Liza and Reynaldo - however added that Cesar had already
died; hence, they were filing the prohibition case in their own right as heirs/successors-
in-interest of Cesar.
On November 29, 2001, the respondents’ children and DNTDC entered into a
compromise agreement.14 The respondents’ children undertook to voluntarily and
peacefully vacate the 2.5574-hectare portion of the property and to remove and
demolish their respective houses built on its premises, while DNTDC agreed to give
each of them the amount of ₱20,000.00 as financial assistance. The RTC approved the
compromise agreement in its December 7, 2001 decision. 15
The Ruling of the DARAB
In its decision16 of January 12, 2001, the DARAB reversed and set aside the PARAD’s
ruling. The DARAB ordered DNTDC and all persons acting in its behalf to respect and
maintain the respondents in the peaceful possession and cultivation of the property, and
the Municipal Agrarian Reform Officer (MARO) to enjoin the DNTDC from disturbing
and/or molesting the respondents in their peaceful possession and cultivation of it.
As the PARAD did, the DARAB declared that a tenancy relationship existed between
Eugenio and the respondents, which was not extinguished by the expiration of the five-
year term stated in their lease contracts. Thus, when DNTDC purchased the property, it
had been subrogated to the rights and obligations of the previous landowner pursuant to
the provisions of R.A. No. 3844.17
Unlike the PARAD, however, the DARAB was not convinced that the property had
already been reclassified to non-agricultural uses so as to remove it from the coverage
of R.A. No. 6657. With Administrative Order No. 5, series of 1994 as basis, the
DARAB held that the alleged reclassification of the property did not and could not have
divested the respondents of their rights as "deemed owners" under P.D. No. 27. The
DARAB also pointed out that while Davao City Ordinance No. 363, series of 1982
(adopting the Comprehensive Development Plan of Davao City), reclassified the
property to be within the "urban/urbanizing zone," the DNTDC did not submit the
required certifications from the HLURB, adopting the zoning ordinance, and from the
DAR, approving the conversion to make the reclassification valid.
When the DARAB denied the DNTDC’s motion for reconsideration in its August 28,
2003 resolution,18 the DNTDC elevated the case to the CA via a petition for review.19
The Ruling of the CA
In its March 28, 2006 decision,20 the CA affirmed in toto the January 12, 2001 decision
of the DARAB. The CA similarly declared that the tenancy relationship established
between the respondents and Eugenio was not extinguished by the expiration of the
five-year term of their lease contracts or by the subsequent transfer of the property to
DNTDC. The CA noted that both the DARAB and the PARAD arrived at the same
findings and that the DNTDC impliedly admitted in its pleadings the existence of the
tenancy relationship.
The CA was also convinced that the property was still agricultural and was, therefore,
covered by R.A. No. 6657. While the CA conceded that the conversion of the use of
lands that had been reclassified as residential, commercial or industrial, prior to the
effectivity of R.A. No. 6657, no longer requires the DAR’s approval, the CA pointed
out that the landowner must first comply with certain pre-conditions for exemption
and/or conversion. Among other requirements, the landowner must secure an
exemption clearance from the DAR. This exemption clearance shall be issued after the
landowner files the certifications issued by the deputized zoning administrator, stating
that the land had been reclassified, and by the HLURB, stating that it had approved the
pertinent zoning ordinance, with both the reclassification and the approval carried out
prior to June 15, 1988.
In this case, the CA held that DNTDC failed to secure and present any exemption
clearance. The CA also pointed out that: (1) Davao City Ordinance No. 363, series of
1982, adopting the Comprehensive Development Plan of Davao City did not
substantially show that it had reclassified the property from agricultural to non-
agricultural uses; (2) DNTDC failed to submit during the proceedings before the
PARAD and the DARAB the HLURB certification allegedly approving Davao City
Ordinance No. 363, series of 1982; (3) while DNTDC attached to its motion for
reconsideration of the DARAB’s decision a certification from the HLURB stating that
by resolution (Resolution No. R-39-4) dated July 31, 1980, it approved the
Comprehensive Development Plan, yet at the time of the alleged HLURB approval, the
pertinent zoning ordinance - Davao City Ordinance No. 363, series of 1982 - adopting
such plan had not yet been enacted; and (4) the HLURB certification that DNTDC
presented referred to a parcel of land subject of another case.
DNTDC filed the present petition after the CA denied its motion for
reconsideration21 in the CA’s September 5, 2006 resolution.22
The Petition
In its present petition,23 DNTDC argues that the CA seriously erred when it: (1) failed
to consider the fact that the respondents violated the compromise agreement; (2) ruled
that a tenancy relationship exists between it and the respondents; and (3) declared that
the subject property is agricultural.24
Directly addressing the CA’s ruling, DNTDC argues that: first, the respondents, in the
compromise agreement, categorically agreed to voluntarily vacate the property upon
receipt of the stated financial assistance. Since the RTC approved the compromise
agreement and the respondents had already received the agreed financial assistance, the
CA should have considered these incidents that immediately bound the respondents to
comply with their undertaking to vacate.
Second, no tenancy relationship exists between DNTDC and the respondents. DNTDC
maintains that while a tenancy relationship existed between the respondents and
Eugenio, this relationship was terminated when the MTCC ordered the respondents to
vacate the property. It emphasizes that this MTCC decision that ordered the
respondents to vacate the property had already become final and executory upon the
respondents’ failure to seasonably appeal. DNTDC adds that after the respondents’
lease contract with Eugenio expired and the latter simply allowed the former to
continue occupying the property, the respondents became bound by an implied promise
to vacate its premises upon demand. Thus, when, as the new owner, it demanded the
return of the property, the respondents were obligated to comply with their implied
promise to vacate.
Finally, the property is no longer agricultural, contrary to the findings of the DARAB
and the CA. DNTDC points out that the proceedings before the PARAD had
sufficiently addressed this issue, which the CA recognized in the assailed decision.
Thus, DNTDC contends that the findings of the PARAD should prevail over those of
the DARAB.
In its reply25 to the respondents’ comment, DNTDC additionally argues that the MTCC
and the RTC cases are closely intertwined with and relevant to the present case. It
points out that Reynaldo and Liza categorically stated in their petition in the RTC case
that they were suing in their own right as heirs/successors-in-interest of Cesar.
Consequently, the spouses Saliga, as represented and succeeded by Reynaldo and Liza,
are bound by the compromise agreement that the latter signed in the RTC case.
The Case for the Respondents
In their comment,26 the respondents argue that the MTCC and the RTC cases do not
bear any significance to the present controversy. They point out that the parties in the
MTCC and the RTC cases, aside from DNTDC, were Demetrio Ehara, Jr., Reynaldo
and Liza who are undeniably different from them.
Relying on the ruling of the CA, the respondents also argue that a tenancy relationship
exists between them and DNTDC and that the property is still agricultural. The
respondents quoted in toto the CA’s discussions on these issues to support their
position.
The Issues
In sum, the issues for our resolution are: (1) whether the property had been reclassified
from agricultural to non-agricultural uses prior to June 15, 1988 so as to remove it from
the coverage of R.A. No. 6657; (2) whether an agricultural leasehold or tenancy
relationship exists between DNTDC and the respondents; and (3) whether the
compromise agreement signed by the respondents’ children in the RTC case binds the
respondents.
The Court’s Ruling
We resolve to GRANT the petition.
Preliminary considerations
At the outset, we reiterate the settled rule that only questions of law may be raised in a
petition for review oncertiorari under Rule 45 of the Rules of Court.27 Questions of
facts are not allowed in a Rule 45 petition because this Court is not a trier of
facts.28 The Court generally accords respect, if not finality, to the factual findings of
quasi-judicial bodies, among them is the DARAB, as these bodies are deemed experts
in their respective fields.29The question of the existence of a tenancy relationship
intertwined with the question of reclassification requires for its resolution a review of
the factual findings of the agricultural tribunals and of the CA. These are questions we
cannot generally touch in a Rule 45 petition.
Nevertheless, the case also presents a legal question as the issue of tenancy relationship
is both factual and legal. Moreover, the findings of the PARAD conflict with those of
the DARAB. These circumstances impel us to disregard the above general rule and to
address both the presented factual and legal issues in view of their social justice
implications and the duty to do justice that this Court has sworn to uphold.
We now resolve the merits of the petition.
The subject property had been
reclassified as non-agricultural prior
to June 15, 1988; hence, they are no
longer covered by R.A. No. 6657
At the core of the controversy is the questioned reclassification of the property to non-
agricultural uses. This issue is intertwined with and on which depends the resolution of
the issue concerning the claimed agricultural leasehold relationship.
In reversing the PARAD and holding that the property was still agricultural, the
DARAB considered the Comprehensive Development Plan (approved by the HSRC
through Board Resolution R-39-4 dated July 31, 1980) and Davao City Ordinance No.
363, series of 1982 (adopting the Comprehensive Development Plan) as invalid
reclassification measures. It gave as reason the absence of the requisite certification
from the HLURB and the approval of the DAR. In the alternative, and citing P.D. No.
27, in relation with R.A. No. 6657, as basis, the DARAB considered the alleged
reclassification ineffective so as to free the property from the legal effects of P.D. No.
27 that deemed it taken under the government’s operation land transfer (OLT) program
as of October 21, 1972.
We differ from, and cannot accept, the DARAB’s position.
We hold that the property had been reclassified to non-agricultural uses and was,
therefore, already outside the coverage of the Comprehensive Agrarian Reform Law
(CARL) after it took effect on July 15, 1988.
1. Power of the local government units to
reclassify lands from agricultural to nonagricultural
uses; the DAR approval is not
required
Indubitably, the City Council of Davao City has the authority to adopt zoning
resolutions and ordinances. Under Section 3 of R.A. No. 2264 30 (the then governing
Local Government Code), municipal and/or city officials are specifically empowered
to "adopt zoning and subdivision ordinances or regulations in consultation with the
National Planning Commission."31
In Pasong Bayabas Farmers Asso., Inc. v. Court of Appeals,32 the Court held that this
power of the local government units to reclassify or convert lands to non-agricultural
uses is not subject to the approval of the DAR.33 There, the Court affirmed the authority
of the Municipal Council of Carmona to issue a zoning classification and to reclassify
the property in dispute from agricultural to residential through the
Council’s Kapasiyahang Bilang 30, as approved by the HSRC.
In the subsequent case of Junio v. Secretary Garilao,34 this Court clarified, once and for
all, that "with respect to areas classified and identified as zonal areas not for agricultural
uses, like those approved by the HSRC before the effectivity of RA 6657 on June 15,
1988, the DAR’s clearance is no longer necessary for conversion." 35 The Court in that
case declared the disputed landholding as validly reclassified from agricultural to
residential pursuant to Resolution No. 5153-A of the City Council of Bacolod.
Citing the cases of Pasong Bayabas Farmers Asso., Inc. and Junio, this Court arrived at
significantly similar ruling in the case of Agrarian Reform Beneficiaries Association
(ARBA) v. Nicolas.36
Based on these considerations, we hold that the property had been validly reclassified
as non-agricultural land prior to June 15, 1988. We note the following facts established
in the records that support this conclusion: (1) the Davao City Planning and
Development Board prepared the Comprehensive Development Plan for the year 1979-
2000 in order to provide for a comprehensive zoning plan for Davao City; (2) the
HSRC approved this Comprehensive Development Plan through Board Resolution R-
39-4 dated July 31, 1980; (3) the HLURB confirmed the approval per the certification
issued on April 26, 2006;37 (4) the City Council of Davao City adopted the
Comprehensive Development Plan through its Resolution No. 894 and City Ordinance
No. 363, series of 1982;38 (5) the Office of the City Planning and Development
Coordinator, Office of the Zoning Administrator expressly certified on June 15, 1995
that per City Ordinance No. 363, series of 1982 as amended by S.P. Resolution No.
2843, Ordinance No. 561, series of 1992, the property (located in barangay Catalunan
Pequeño) is within an "urban/urbanizing" zone;39 (6) the Office of the City Agriculturist
confirmed the above classification and further stated that the property is not classified
as prime agricultural land and is not irrigated nor covered by an irrigation project as
certified by the National Irrigation Administration, per the certification issued on
December 4, 1998;40 and (7) the HLURB, per certification dated May 2, 1996, 41 quoted
the April 8, 1996 certification issued by the Office of the City Planning and
Development Coordinator stating that "the Mintal District which includes barangay
Catalunan Pequeño, is identified as one of the ‘urbaning [sic] district centers and
priority areas and for development and investments’ in Davao City."
We note that while the DNTDC attached, to its motion for reconsideration of the
DARAB’s decision, the May 2, 1996 certification of the HLURB, both the DARAB
and the CA simply brushed this aside on technicality. The CA reasoned that the
certificate was belatedly presented and that it referred to a parcel of lot subject of
another case, albeit, similarly involving DNTDC, as one of the parties, and property
located within the same district.
We cannot support this position of the CA for the following reasons: first, while,
generally, evidence submitted past the presentation-of-evidence stage is no longer
admissible and should be disregarded for reasons of fairness, strict application of this
general rule may be relaxed. By way of exception, we relax the application of the rules
when, as here, the merits of the case call for, and the governing rules of procedure
explicitly command, a relaxation. Under Section 3, Rule I of the 1994 DARAB New
Rules of Procedure (the governing DARAB rules), the DARAB shall not be bound by
technical rules of procedure and evidence provided under the Rules of Court, which
shall not apply even in a suppletory character, and shall employ all reasonable means to
ascertain facts of every case.
Time and again, this Court has held that "rules of procedure ought not to be applied in a
very rigid, technical sense, for they are adopted to help secure, not override, substantial
justice."42 Thus, while DNTDC, in this case, attached the May 2, 1996 HLURB
certification only in its motion for reconsideration, the DARAB should have considered
it, especially in the light of the various documents that DNTDC presented to support its
position that the property had already been reclassified as non-agricultural land prior to
June 15, 1988.
And second, granting arguendo that the May 2, 1996 HLURB certification was issued
in relation to another case that involved a different parcel of land, it is not without
value. The clear-cut declarations of the HLURB in the certification, which the DARAB
and the CA should have considered and which we find sufficiently convincing, show
that Catalunan Pequeño (where the property lies) is classified as within the urbanizing
district centers of Davao City. Thus, for all intents and purposes, the May 2, 1996
HLURB certification satisfied the purpose of this requirement, which is to establish by
sufficient evidence the property’s reclassification as non-agricultural land prior to June
15, 1988.
Considering that the property is no longer agricultural as of June 15, 1988, it is
removed from the operation of R.A. No. 6657. By express provision, the CARL covers
only those public or private lands devoted or suitable for agriculture, 43 the operative
word being agricultural. Under Section 3(c) of R.A. No. 6657, agricultural lands refer
to lands devoted to agricultural activity and not otherwise classified as mineral, forest,
residential, commercial, or industrial land.44 In its Administrative Order No. 1, series of
1990,45 the DAR further explained the term "agricultural lands" as referring to "those
devoted to agricultural activity as defined in R.A. 6657 and x x x not classified in town
plans and zoning ordinances as approved by the Housing and Land Use Regulatory
Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use." If only to emphasize, we reiterate – only that when the property was reclassified prior to June 15, 1988, it did not fall, by clear
those parcels of land specifically classified as agricultural are covered by the CARL; legal recognition within the coverage of R.A. No. 6657.
any parcel of land otherwise classified is beyond its ambit.
Interestingly, the contract of lease executed between Eugenio and the respondents
2. No vested rights over the shows that the property was primarily planted with coconut and coffee trees and,
secondarily with several fruit-bearing trees. By its explicit terms, P.D. No. 27 applies
property accrued to the only to private agricultural lands primarily devoted to rice and corn production. Thus,
the property could never have been covered by P.D. No. 27 as it was not classified as
rice and corn land.
respondents under P.D. No. 27

For these reasons, we hold that the property is no longer agricultural and that the CA
Under P.D. No. 27, tenant-farmers of rice and corn agricultural lands are "deemed
owners" of the land that they till as of October 21, 1972. Under these terms, vested erred when it affirmed the DARAB’s ruling that the property – notwithstanding the
rights cannot simply be taken away by the expedience of adopting zoning plans and various documents that unquestionably established the contrary – was agricultural .
ordinances reclassifying an agricultural land to an "urban/urbanizing" area.
No tenancy relationship exists between
We need to clarify, however, that while tenant farmers of rice and corn lands are
"deemed owners" as of October 21, 1972 following the provisions of P.D. No. 27, this DNTDC and the respondents; the
policy should not be interpreted as automatically vesting in them absolute ownership
over their respective tillage. The tenant-farmers must still first comply with the tenancy relationship between the
requisite preconditions, i.e., payment of just compensation and perfection of title before
acquisition of full ownership.46 respondents and Eugenio ceased

In Del Castillo v. Orciga,47 the Court explained that land transfer under P.D. No. 27 is when the property was reclassified
effected in two (2) stages:first, the issuance of a certificate of land transfer (CLT);
and second, the issuance of an emancipation patent (EP). The first stage - issuance of
In Solmayor v. Arroyo,50 the Court outlined the essential requisites of a tenancy
the CLT - serves as the government’s recognition of the tenant farmers’ inchoate right relationship, all of which must concur for the relationship to exist, namely:
as "deemed owners" of the land that they till.48 The second stage – issuance of the EP –
perfects the title of the tenant farmers and vests in them absolute ownership upon full
compliance with the prescribed requirements.49As a preliminary step, therefore, the 1. The parties are the landowner and the tenant;
CLT immediately serves as the tangible evidence of the government’s recognition of
the tenant farmers’ inchoate right and of the subjection of the particular landholding to 2. The subject is agricultural land;
the government’s OLT program.
3. There is consent;
In this case, the record does not show that the respondents had been issued CLTs. The
CLT could have been their best evidence of the government’s recognition of their 4. The purpose is agricultural production;
inchoate right as "deemed owners" of the property. Similarly, the record does not show
that the government had placed the property under its OLT program or that the 5. There is personal cultivation; and
government, through the MARO, recognized the respondents as the actual tenants of
the property on the relevant date, thereby sufficiently vesting in them such inchoate
6. There is sharing of harvests.
right.

The absence of any of these requisites does not make an occupant a cultivator, or a
Consequently, this Court can safely conclude that no CLTs had ever been issued to the
planter, a de jure tenant.51Consequently, a person who is not a de jure tenant is not
respondents and that the government never recognized any inchoate right on the part of
entitled to security of tenure nor covered by the land reform program of the government
the respondents as "deemed owners" of the property. In effect, therefore, no vested
under any existing tenancy laws.52
rights under P.D. No. 27, in relation to R.A. No. 6657, accrued to the respondents such
In this case, we hold that no tenancy relationship exists between DNTDC, as the owner
of the property, and the respondents, as the purported tenants; the second essential
requisite as outlined above – the subject is agricultural land – is lacking. To recall, the
property had already been reclassified as non-agricultural land. Accordingly, the
respondents are not de jure tenants and are, therefore, not entitled to the benefits
granted to agricultural lessees under the provisions of P.D. No. 27, in relation to R.A.
No. 6657.
We note that the respondents, through their predecessors-in-interest, had been tenants
of Eugenio as early as 1965. Under Section 7 of R.A. No. 3844, once the leasehold
relation is established, the agricultural lessee is entitled to security of tenure and
acquires the right to continue working on the landholding. Section 10 of this Act further
strengthens such tenurial security by declaring that the mere expiration of the term or
period in a leasehold contract, or the sale, alienation or transfer of the legal possession
of the landholding shall not extinguish the leasehold relation; and in case of sale or
transfer, the purchaser or transferee is subrogated to the rights and obligations of the
landowner/lessor. By the provisions of Section 10, mere expiration of the five-year term
on the respondents’ lease contract could not have caused the termination of any tenancy
relationship that may have existed between the respondents and Eugenio.
Still, however, we cannot agree with the position that the respondents are the tenants of
DNTDC. This is because, despite the guaranty, R.A. No. 3844 also enumerates the
instances that put an end to the lessee’s protected tenurial rights. Under Section 7 of
R.A. No. 3844, the right of the agricultural lessee to continue working on the
landholding ceases when the leasehold relation is extinguished or when the lessee is
lawfully ejected from the landholding. Section 8 53 enumerates the causes that terminate
a relationship, while Section 36 enumerates the grounds for dispossessing the
agricultural lessee of the landholding.54
Notably, under Section 36(1) of R.A. No. 3844, as amended by Section 7 of R.A. No.
6389,55 declaration by the department head, upon recommendation of the National
Planning Commission, to be suited for residential, commercial, industrial or some other
urban purposes, terminates the right of the agricultural lessee to continue in its
possession and enjoyment. The approval of the conversion, however, is not limited to
the authority of the DAR or the courts. In the case of Pasong Bayabas Farmers Asso.,
Inc. v. Court of Appeals,56 and again in Junio v. Secretary Garilao,57 the Court
essentially explained that the reclassification and conversion of agricultural lands to
non-agricultural uses prior to the effectivity of R.A. No. 6657, on June 15, 1988, was a
coordinated effort of several government agencies, such as local government units and
the HSRC.
In effect, therefore, whether the leasehold relationship between the respondents and
Eugenio had been established by virtue of the provisions of R.A. No. 3844 or of the
five-year lease contract executed in 1981, this leasehold relationship had been
terminated with the reclassification of the property as non-agricultural land in 1982.
The expiration the five-year lease contract in 1986 could not have done more than
simply finally terminate any leasehold relationship that may have prevailed under the
terms of that contract.
Consequently, when the DNTDC purchased the property in 1995, there was no longer
any tenancy relationship that could have subrogated the DNTDC to the rights and
obligations of the previous owner. We, therefore, disagree with the findings of the CA,
as it affirmed the DARAB that a tenancy relationship exists between DNTDC and the
respondents.
The respondents are not bound by
the November 29, 2001 compromise
agreement before the RTC
The respondents argue that the compromise agreement of Demetrio Ehara, Jr.,
Reynaldo and Liza – entered into with DNTDC on November 29, 2001 and approved
by the RTC on December 7, 2001 – does not and cannot bind them as they are different
from the former.
We agree for two plain reasons.
First, the respondents’ position on this matter finds support in logic. Indeed, as the
respondents have well pointed out and contrary to DNTDC’s position, this similarity in
their last names or familial relationship cannot automatically bind the respondents to
any undertaking that their children in the RTC case had agreed to. This is because
DNTDC has not shown that the respondents had expressly or impliedly acquiesced to
their children's undertaking; that the respondents had authorized the latter to bind them
in the compromise agreement; or that the respondents' cause of action in the instant case
arose from or depended on those of their children in the cases before the MTCC and the
RTC. Moreover, the respondents' children and DNTDC executed the compromise
agreement in the RTC case with the view of settling the controversy concerning only
the issue of physical possession over the disputed 2.5574-hectare portion subject of the
ejectment case before the MTCC.
And second, the issues involved in the cases before the MTCC and the RTC are
different from the issues involved in the present case. In the ejectment case before the
MTCC, the sole issue was possession de Jure, while in the prohibition case before the
RTC, the issue was the propriety of the execution of the decision of the MTCC in the
ejectment case. In contrast, the issues in the present controversy that originated from
the PARAD boil down to the respondents' averred rights, as tenants of the property.
With these considerations, therefore, whatever decision that the MTCC in the ejectment
case arrived at, which was limited to possession de jure of the disputed 2.5574-hectare
portion of the property, could not have affected any right that the respondents may have
had, as tenants, over the property. Consequently, any agreement that the respondents'
children had entered into in the R TC case could not have bound the respondents in the
present controversy as the respondents' claim over the property and their alleged right
to continue in its possession clearly go beyond mere possession de Jure, whether of the
2.5574-hectare portion of the property that was subject of the ejectment case before the
MTCC or of the entire property in the present case.
WHEREFORE, in view of these considerations, we hereby GRANT the petition, and
accordingly REVERSE andSET ASIDE the decision dated March 28, 2006 and the
resolution dated September 5, 2006 of the Court of Appeals in CA-G.R. SP No. 79377.
We REINSTATE the decision dated July 6, 1998 and the resolution dated September
8, 1998 of the PARAD in DARAB Case No. XI-1418-DC-98.
SO ORDERED.
G.R. No. 100091 October 22, 1992
CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR.
LEONARDO A. CHUA, petitioner,
vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD,
THE COURT OF APPEALS and ALVIN OBRIQUE, REPRESENTING
BUKIDNON FREE FARMERS AGRICULTURAL LABORERS
ORGANIZATION (BUFFALO), respondents.
CAMPOS, JR., J.:
This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to
nullify the proceedings and decision of the Department of Agrarian Reform
Adjudication Board (DARAB for brevity) dated September 4, 1989 and to set aside the
decision the decision * of the Court of Appeals dated August 20, 1990, affirming the
decision of the DARAB which ordered the segregation of 400 hectares of suitable,
compact and contiguous portions of the Central Mindanao University (CMU for
brevity) land and their inclusion in the Comprehensive Agrarian Reform Program
(CARP for brevity) for distribution to qualified beneficiaries, on the ground of lack of
jurisdiction.
This case originated in a complaint filed by complainants calling themselves as the
Bukidnon Free Farmers and Agricultural Laborers Organization (BUFFALO for
brevity) under the leadership of Alvin Obrique and Luis Hermoso against the CMU,
before the Department of Agrarian Reform for Declaration of Status as Tenants, under
the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an
agricultural educational institution owned and run by the state located in the town of
Musuan, Bukidnon province. It started as a farm school at Marilang, Bukidnon in early
1910, in response to the public demand for an agricultural school in Mindanao. It
expanded into the Bukidnon National Agricultural High School and was transferred to
its new site in Managok near Malaybalay, the provincial capital of Bukidnon.
In the early 1960's, it was converted into a college with campus at Musuan, until it
became what is now known as the CMU, but still primarily an agricultural university.
From its beginning, the school was the answer to the crying need for training people in
order to develop the agricultural potential of the island of Mindanao. Those who
planned and established the school had a vision as to the future development of that part
of the Philippines. On January 16, 1958 the President of the Republic of the
Philippines, the late Carlos P. Garcia, "upon the recommendation of the Secretary of
Agriculture and Natural Resources, and pursuant to the provisions of Section 53, of
Commonwealth Act No. 141, as amended", issued Proclamation No. 476, withdrawing
from sale or settlement and reserving for the Mindanao Agricultural College, a site
which would be the future campus of what is now the CMU. A total land area
comprising 3,080 hectares was surveyed and registered and titled in the name of the
petitioner under OCT Nos. 160, 161 and 162. 1
In the course of the cadastral hearing of the school's petition for registration of the
aforementioned grant of agricultural land, several tribes belonging to cultural
communities, opposed the petition claiming ownership of certain ancestral lands
forming part of the tribal reservations. Some of the claims were granted so that what
was titled to the present petitioner school was reduced from 3,401 hectares to 3,080
hectares.
In the early 1960's, the student population of the school was less than 3,000. By 1988,
the student population had expanded to some 13,000 students, so that the school
community has an academic population (student, faculty and non-academic staff) of
almost 15,000. To cope with the increase in its enrollment, it has expanded and
improved its educational facilities partly from government appropriation and partly by
self-help measures.
True to the concept of a land grant college, the school embarked on self-help measures
to carry out its educational objectives, train its students, and maintain various activities
which the government appropriation could not adequately support or sustain. In 1984,
the CMU approved Resolution No. 160, adopting a livelihood program called
"Kilusang Sariling Sikap Program" under which the land resources of the University
were leased to its faculty and employees. This arrangement was covered by a written
contract. Under this program the faculty and staff combine themselves to groups of five
members each, and the CMU provided technical know-how, practical training and all
kinds of assistance, to enable each group to cultivate 4 to 5 hectares of land for the
lowland rice project. Each group pays the CMU a service fee and also a land use
participant's fee. The contract prohibits participants and their hired workers to establish
houses or live in the project area and to use the cultivated land as a collateral for any
kind of loan. It was expressly stipulated that no landlord-tenant relationship existed
between the CMU and the faculty and/or employees. This particular program was
conceived as a multi-disciplinary applied research extension and productivity program
to utilize available land, train people in modern agricultural technology and at the same
time give the faculty and staff opportunities within the confines of the CMU reservation
to earn additional income to augment their salaries. The location of the CMU at
Musuan, Bukidnon, which is quite a distance from the nearest town, was the proper
setting for the adoption of such a program. Among the participants in this program were
Alvin Obrique, Felix Guinanao, Joven Caballero, Nestor Pulao, Danilo Vasquez,
Aronio Pelayo and other complainants. Obrique was a Physics Instructor at the CMU
while the others were employees in the lowland rice project. The other complainants
who were not members of the faculty or non-academic staff CMU, were hired workers
or laborers of the participants in this program. When petitioner Dr. Leonardo Chua
became President of the CMU in July 1986, he discontinued the agri-business project
for the production of rice, corn and sugar cane known as Agri-Business Management
and Training Project, due to losses incurred while carrying on the said project. Some
CMU personnel, among whom were the complainants, were laid-off when this project
was discontinued. As Assistant Director of this agri-business project, Obrique was
found guilty of mishandling the CMU funds and was separated from service by virtue
of Executive Order No. 17, the re-organization law of the CMU.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project
called CMU-Income Enhancement Program (CMU-IEP) to develop unutilized land
resources, mobilize and promote the spirit of self-reliance, provide socio-economic and
technical training in actual field project implementation and augment the income of the
faculty and the staff.
2
Under the terms of a 3-party Memorandum of Agreement among the CMU, the CMU-
Integrated Development Foundation (CMU-IDF) and groups or "seldas" of 5 CMU
employees, the CMU would provide the use of 4 to 5 hectares of land to a selda for one
(1) calendar year. The CMU-IDF would provide researchers and specialists to assist in
the preparation of project proposals and to monitor and analyze project implementation.
The selda in turn would pay to the CMU P100 as service fee and P1,000 per hectare as
participant's land rental fee. In addition, 400 kilograms of the produce per year would
be turned over or donated to the CMU-IDF. The participants agreed not to allow their
hired laborers or member of their family to establish any house or live within vicinity of
the project area and not to use the allocated lot as collateral for a loan. It was expressly
provided that no tenant-landlord relationship would exist as a result of the Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff
members who were still employed with the CMU and was not made available to former
workers or employees. In the middle of 1987, to cushion the impact of the
discontinuance of the rice, corn and sugar cane project on the lives of its former
workers, the CMU allowed them to participate in the CMU-IEP as special participants.
Under the terms of a contract called Addendum To Existing Memorandum of
Agreement Concerning Participation To the CMU-Income Enhancement Program, 3 a
former employee would be grouped with an existing selda of his choice and provided
one (1) hectare for a lowland rice project for one (1) calendar year. He would pay the
land rental participant's fee of P1,000.00 per hectare but on a charge-to-crop basis. He
would also be subject to the same prohibitions as those imposed on the CMU
employees. It was also expressly provided that no tenant-landlord relationship would
exist as a result of the Agreement.
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those
whose contracts were not renewed were served with notices to vacate.
The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane
project, the loss of jobs due to termination or separation from the service and the
alleged harassment by school authorities, all contributed to, and precipitated the filing
of the complaint.
On the basis of the above facts, the DARAB found that the private respondents were
not tenants and cannot therefore be beneficiaries under the CARP. At the same time, the
DARAB ordered the segregation of 400 hectares of suitable, compact and contiguous
portions of the CMU land and their inclusion in the CARP for distribution to qualified
beneficiaries.
The petitioner CMU, in seeking a review of the decisions of the respondents DARAB
and the Court of Appeals, raised the following issues:
1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for
Declaration of Status of Tenants and coverage of land under the CARP.
2.) Whether or not respondent Court of Appeals committed serious errors and grave
abuse of discretion amounting to lack of jurisdiction in dismissing the Petition for
Review on Certiorari and affirming the decision of DARAB.
In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants
Obrique, et al. claimed that they are tenants of the CMU and/or landless peasants
claiming/occupying a part or portion of the CMU situated at Sinalayan, Valencia,
Bukidnon and Musuan, Bukidnon, consisting of about 1,200 hectares. We agree with
the DARAB's finding that Obrique, et. al. are not tenants. Under the terms of the
written agreement signed by Obrique, et. al., pursuant to the livelihood program called
"Kilusang Sariling Sikap Program", it was expressly stipulated that no landlord-tenant
relationship existed between the CMU and the faculty and staff (participants in the
project). The CMU did not receive any share from the harvest/fruits of the land tilled by
the participants. What the CMU collected was a nominal service fee and land use
participant's fee in consideration of all the kinds of assistance given to the participants
by the CMU. Again, the agreement signed by the participants under the CMU-IEP
clearly stipulated that no landlord-tenant relationship existed, and that the participants
are not share croppers nor lessees, and the CMU did not share in the produce of the
participants' labor.
In the same paragraph of their complaint, complainants claim that they are landless
peasants. This allegation requires proof and should not be accepted as factually true.
Obrique is not a landless peasant. The facts showed he was Physics Instructor at CMU
holding a very responsible position was separated from the service on account of
certain irregularities he committed while Assistant Director of the Agri-Business
Project of cultivating lowland rice. Others may, at the moment, own no land in
Bukidnon but they may not necessarily be so destitute in their places of origin. No
proof whatsoever appears in the record to show that they are landless peasants.
The evidence on record establish without doubt that the complainants were originally
authorized or given permission to occupy certain areas of the CMU property for a
definite purpose — to carry out certain university projects as part of the CMU's
program of activities pursuant to its avowed purpose of giving training and instruction
in agricultural and other related technologies, using the land and other resources of the
institution as a laboratory for these projects. Their entry into the land of the CMU was
with the permission and written consent of the owner, the CMU, for a limited period
and for a specific purpose. After the expiration of their privilege to occupy and cultivate
the land of the CMU, their continued stay was unauthorized and their settlement on the
CMU's land was without legal authority. A person entering upon lands of another, not
claiming in good faith the right to do so by virtue of any title of his own, or by virtue of
some agreement with the owner or with one whom he believes holds title to the land, is
a squatter. 4 Squatters cannot enter the land of another surreptitiously or by stealth, and
under the umbrella of the CARP, claim rights to said property as landless peasants.
Under Section 73 of R.A. 6657, persons guilty of committing prohibited acts of forcible
entry or illegal detainer do not qualify as beneficiaries and may not avail themselves of
the rights and benefits of agrarian reform. Any such person who knowingly and wilfully
violates the above provision of the Act shall be punished with imprisonment or fine at
the discretion of the Court.
In view of the above, the private respondents, not being tenants nor proven to be
landless peasants, cannot qualify as beneficiaries under the CARP.
The questioned decision of the Adjudication Board, affirmed in toto by the Court of
Appeals, segregating 400 hectares from the CMU land is primarily based on the alleged
fact that the land subject hereof is "not directly, actually and exclusively used for school
sites, because the same was leased to Philippine Packing Corporation (now Del Monte
Philippines)".
In support of this view, the Board held that the "respondent University failed to show
that it is using actually, really, truly and in fact, the questioned area to the exclusion of
others, nor did it show that the same is directly used without any intervening agency or
person", 5 and "there is no definite and concrete showing that the use of said lands are
essentially indispensable for educational purposes". 6 The reliance by the respondents
Board and Appellate Tribunal on the technical or literal definition from Moreno's
Philippine Law Dictionary and Black's Law Dictionary, may give the ordinary reader a
classroom meaning of the phrase "is actually directly and exclusively", but in so doing
they missed the true meaning of Section 10, R.A. 6657, as to what lands are exempted
or excluded from the coverage of the CARP.
The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, are as follows:
Sec. 4. SCOPE. — The Comprehensive Agrarian Reform Law of
1988 shall cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229 including other
lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the
Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to
or suitable for agriculture. No reclassification of forest of mineral
lands to agricultural lands shall be undertaken after the approval of
this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined by
law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits ad
determined by Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable
for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless
of the agricultural products raised or that can be raised thereon.
Sec. 10 EXEMPTIONS AND EXCLUSIONS. — Lands actually,
directly and exclusively used and found to be necessary for parks,
wildlife, forest reserves, reforestration, fish sanctuaries and breeding
grounds, watersheds and mangroves, national defense, school sites
and campuses including experimental farm stations operated by
public or private schools for educational purposes, seeds and
seedlings research and pilot production centers, church sites and
convents appurtenant thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and cemeteries, penal
 colonies and penal farms actually worked by the inmates, government
and private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already
developed shall be exempt from the coverage of this Act. (Emphasis
supplied).
The construction given by the DARAB to Section 10 restricts the land area of the CMU
to its present needs or to a land area presently, actively exploited and utilized by the
university in carrying out its present educational program with its present student
population and academic facility — overlooking the very significant factor of growth of
the university in the years to come. By the nature of the CMU, which is a school
established to promote agriculture and industry, the need for a vast tract of agricultural
land and for future programs of expansion is obvious. At the outset, the CMU was
conceived in the same manner as land grant colleges in America, a type of educational
institution which blazed the trail for the development of vast tracts of unexplored and
undeveloped agricultural lands in the Mid-West. What we now know as Michigan State
University, Penn State University and Illinois State University, started as small land
grant colleges, with meager funding to support their ever increasing educational
programs. They were given extensive tracts of agricultural and forest lands to be
developed to support their numerous expanding activities in the fields of agricultural
technology and scientific research. Funds for the support of the educational programs of
land grant colleges came from government appropriation, tuition and other student fees,
private endowments and gifts, and earnings from miscellaneous sources. 7 It was in this
same spirit that President Garcia issued Proclamation No. 476, withdrawing from sale
or settlement and reserving for the Mindanao Agricultural College (forerunner of the
CMU) a land reservation of 3,080 hectares as its future campus. It was set up in
Bukidnon, in the hinterlands of Mindanao, in order that it can have enough resources
and wide open spaces to grow as an agricultural educational institution, to develop and
train future farmers of Mindanao and help attract settlers to that part of the country.
In line with its avowed purpose as an agricultural and technical school, the University
adopted a land utilization program to develop and exploit its 3080-hectare land
reservation as follows: 8
No. of Hectares Percentage
a. Livestock and Pasture 1,016.40 33
b. Upland Crops 616 20
c. Campus and Residential sites 462 15
d. Irrigated rice 400.40 13
e. Watershed and forest reservation 308 10
f. Fruit and Trees Crops 154 5
g. Agricultural
Experimental stations 123.20 4
3,080.00 100%
The first land use plan of the CARP was prepared in 1975 and since then it has
undergone several revisions in line with changing economic conditions, national
economic policies and financial limitations and availability of resources. The CMU,
through Resolution No. 160 S. 1984, pursuant to its development plan, adopted a multi-
disciplinary applied research extension and productivity program called the "Kilusang
Sariling Sikap Project" (CMU-KSSP). The objectives9 of this program were:
1. Provide researches who shall assist in (a) preparation of proposal;
(b) monitor project implementation; and (c) collect and analyze all
data and information relevant to the processes and results of project
implementation;
2. Provide the use of land within the University reservation for the
purpose of establishing a lowland rice project for the party of the
Second Part for a period of one calendar year subject to discretionary
renewal by the Party of the First Part;
3. Provide practical training to the Party of the Second Part on the
management and operation of their lowland project upon request of
Party of the Second Part; and
4. Provide technical assistance in the form of relevant livelihood
project specialists who shall extend expertise on scientific methods of
crop production upon request by Party of the Second Part.
In return for the technical assistance extended by the CMU, the participants in a project
pay a nominal amount as service fee. The self-reliance program was adjunct to the
CMU's lowland rice project.
The portion of the CMU land leased to the Philippine Packing Corporation (now Del
Monte Phils., Inc.) was leased long before the CARP was passed. The agreement with
the Philippine Packing Corporation was not a lease but a Management and
Development Agreement, a joint undertaking where use by the Philippine Packing
Corporation of the land was part of the CMU research program, with the direct
participation of faculty and students. Said contracts with the Philippine Packing
Corporation and others of a similar nature (like MM-Agraplex) were made prior to the
enactment of R.A. 6657 and were directly connected to the purpose and objectives of
the CMU as an educational institution. As soon as the objectives of the agreement for
the joint use of the CMU land were achieved as of June 1988, the CMU adopted a blue
print for the exclusive use and utilization of said areas to carry out its own research and
agricultural experiments.
As to the determination of when and what lands are found to be necessary for use by
the CMU, the school is in the best position to resolve and answer the question and pass
upon the problem of its needs in relation to its avowed objectives for which the land
was given to it by the State. Neither the DARAB nor the Court of Appeals has the right
to substitute its judgment or discretion on this matter, unless the evidentiary facts are so
manifest as to show that the CMU has no real for the land.
It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed
by the Court of Appeals in its Decision dated August 20, 1990, is not covered by the
CARP because:
(1) It is not alienable and disposable land of the public domain;
(2) The CMU land reservation is not in excess of specific limits as
determined by Congress;
(3) It is private land registered and titled in the name of its lawful
owner, the CMU;
(4) It is exempt from coverage under Section 10 of R.A. 6657
because the lands are actually, directly and exclusively used
and found to be necessary for school site and campus, including
experimental farm stations for educational purposes, and for
establishing seed and seedling research and pilot production centers.
(Emphasis supplied).
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of
the DARAB is limited only to matters involving the implementation of the CARP.
More specifically, it is restricted to agrarian cases and controversies involving lands
falling within the coverage of the aforementioned program. It does not include those
which are actually, directly and exclusively used and found to be necessary for, among
such purposes, school sites and campuses for setting up experimental farm stations,
research and pilot production centers, etc.
Consequently, the DARAB has no power to try, hear and adjudicate the case pending
before it involving a portion of the CMU's titled school site, as the portion of the CMU
land reservation ordered segregated is actually, directly and exclusively used and found
by the school to be necessary for its purposes. The CMU has constantly raised the issue
of the DARAB's lack of jurisdiction and has questioned the respondent's authority to
hear, try and adjudicate the case at bar. Despite the law and the evidence on record
tending to establish that the fact that the DARAB had no jurisdiction, it made the
adjudication now subject of review.
Whether the DARAB has the authority to order the segregation of a portion of a private
property titled in the name of its lawful owner, even if the claimant is not entitled as a
beneficiary, is an issue we feel we must resolve. The quasi-judicial powers of DARAB
are provided in Executive Order No. 129-A, quoted hereunder in so far as pertinent to
the issue at bar:
Sec. 13. –– AGRARIAN REFORM ADJUDICATION BOARD —
There is hereby created an Agrarian Reform Adjudication Board
under the office of the Secretary. . . . The Board shall assume the
powers and functions with respect to adjudication of agrarian reform
cases under Executive Order 229 and this Executive Order . . .
Sec. 17. –– QUASI JUDICIAL POWERS OF THE DAR. — The
DAR is hereby vested with quasi-judicial powers to determine and
adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters including implementation of Agrarian
Reform.
Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:
The DAR is hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have original jurisdiction
over all matters involving the implementation of agrarian reform. . . .
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50,
R.A. 6657. There is no doubt that the DARAB has jurisdiction to try and
decide any agrarian dispute in the implementation of the CARP. An agrarian
dispute is defined by the same law as any controversy relating to tenurial
rights whether leasehold, tenancy stewardship or otherwise over lands devoted
to
agriculture. 10
In the case at bar, the DARAB found that the complainants are not share tenants or
lease holders of the CMU, yet it ordered the "segregation of a suitable compact and
contiguous area of Four Hundred hectares, more or less", from the CMU land
reservation, and directed the DAR Regional Director to implement its order of
segregation. Having found that the complainants in this agrarian dispute for Declaration
of Tenancy Status are not entitled to claim as beneficiaries of the CARP because they
are not share tenants or leaseholders, its order for the segregation of 400 hectares of the
CMU land was without legal authority. w do not believe that the quasi-judicial function
of the DARAB carries with it greater authority than ordinary courts to make an award
beyond what was demanded by the complainants/petitioners, even in an agrarian
dispute. Where the quasi-judicial body finds that the complainants/petitioners are not
entitled to the rights they are demanding, it is an erroneous interpretation of authority
for that quasi-judicial body to order private property to be awarded to future
beneficiaries. The order segregation 400 hectares of the CMU land was issued on a
finding that the complainants are not entitled as beneficiaries, and on an erroneous
assumption that the CMU land which is excluded or exempted under the law is subject
to the coverage of the CARP. Going beyond what was asked by the complainants who
were not entitled to the relief prayed the complainants who were not entitled to the
relief prayed for, constitutes a grave abuse of discretion because it implies such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The education of the youth and agrarian reform are admittedly among the highest
priorities in the government socio-economic programs. In this case, neither need give
way to the other. Certainly, there must still be vast tracts of agricultural land in
Mindanao outside the CMU land reservation which can be made available to landless
peasants, assuming the claimants here, or some of them, can qualify as CARP
beneficiaries. To our mind, the taking of the CMU land which had been segregated for
educational purposes for distribution to yet uncertain beneficiaries is a gross
misinterpretation of the authority and jurisdiction granted by law to the DARAB.
The decision in this case is of far-reaching significance as far as it concerns state
colleges and universities whose resources and research facilities may be gradually
eroded by misconstruing the exemptions from the CARP. These state colleges and
universities are the main vehicles for our scientific and technological advancement in
the field of agriculture, so vital to the existence, growth and development of this
country.
It is the opinion of this Court, in the light of the foregoing analysis and for the reasons
indicated, that the evidence is sufficient to sustain a finding of grave abuse of discretion
by respondents Court of Appeals and DAR Adjudication Board. We hereby declare the
decision of the DARAB dated September 4, 1989 and the decision of the Court of
Appeals dated August 20, 1990, affirming the decision of the quasi-judicial body, as
null and void and hereby order that they be set aside, with costs against the private
respondents.
SO ORDERED
LBP VS. HEIRS OF TRINIDAD
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 P1,145,806.06 REQUIRED UNDER
moved for the dismissal of the petition for being filed out of time. SECTION 16 (E) OF RA 6657 AND
THE RULING IN THE CASE OF
Private respondent filed a Motion for Delivery of the Initial LAND BANK OF THE PHILIPPINES
Valuation praying that petitioner LBP be ordered to deposit the V. COURT OF APPEALS, PEDRO L.
DARAB determined amount of P10,294,721.00 in accordance with YAP, ET AL., G.R. NO.
the Supreme Court ruling in Land Bank of the Philippines vs. Court 118712, OCTOBER 6, 1995AND JULY
of Appeals, Pedro L. Yap, Et Al., G.R. No. 118712, October 6, 1995. 5, 1996.

Petitioner LBP filed a Manifestation praying that the amount II. THE SPECIAL AGRARIAN COURT IS
of the deposit should only be the initial valuation of the DAR/LBP in NOT AN APPELLATE COURT FOR
the amount ofP1,145,806.06 and not P10,294,721.00 as determined DARAB DECISIONS ON
by the DARAB. COMPENSATION AND HAS NO
JURISDICTION TO REVIEW,
On December 12, 2002, public respondent rendered the ADOPT, OR ORDER THE
assailed resolution ordering petitioner LBP to deposit for release to EXECUTION OF DARAB
the private respondent the DARAB determined just compensation DECISIONS ON COMPENSATION
of P10,294,721.00. PENDING FINAL DETERMINATION
OF JUST COMPENSATION OR TO
On December 13, 2002, petitioner LBP filed a motion for PREJUDGE THE CASE IN
reconsideration of the said order to deposit. VIOLATION OF PETITIONERS
RIGHT TO DUE PROCESS OF
On December 17, 2002, private respondent filed a motion to
LAW.[2]
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. 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:
After the filing of private respondents comment to the motion
for reconsideration and petitioner LBPs explanation and Section 16 (a) refers to an offer of the DAR to pay a
memorandum to the motion for reconsideration, public respondent corresponding value of the land. Facts of the case show
rendered the assailed resolution datedFebruary 17, 2003, denying that P1,145,806.06 was the offered price which was rejected by the
petitioner LBPs motion for reconsideration. private respondent.
Petitioner LBP filed a motion to admit a second motion for
In cases of rejection of the offer, Section 16(d) states that there
reconsideration which still remains unacted upon by public
shall be a summary administrative proceedings to determine the
respondent.
compensation for the land.Hence, the proceedings before the
Hence, this petition based on the following grounds: DARAB, through the RARAD for Region XI as in this case.

I. THE SAC ORDER TO DEPOSIT HAD NO Note that in Sections 16(a) to (d), or, during the offer until its
LEGAL BASIS, CONSIDERING rejection, there was no reference to a deposit of the compensation.
THAT THE REQUIREMENT FOR
THE PROMPT PAYMENT OF JUST The reference to a deposit of the compensation appears only in
COMPENSATION TO THE PRIVATE Section 16(e) or after the DAR, in a summary administrative
RESPONDENT WAS SATISFIED BY proceedings, had determined or decided the case relative to the
THE DEPOSIT OF THE compensation of the land.
PROVISIONAL COMPENSATION OF
 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 ofP10,294,721.00.
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.
xxxx
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]
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 Activity Forms/Documents
Agency/Unit (Requirements)
D. Land Valuation and
Compensation

The amount of offer which the DAR gives to the landowner as compensation 13 LBP-LVLCO Receives and evaluates
for his land, as mentioned in Section 16 (b) and (c), is based on the initial valuation by the CF for completeness,
consistency and document
the LBP.[14] This then is the amount which may be accepted or rejected by the sufficiency. Gathers
landowner under the procedure established in Section 16. Perforce, such initial additional valuation
valuation by the LBP also becomes the basis of the deposit of provisional compensation documents.
pending final determination of just compensation, in accordance with sub-paragraph
14 LBP-LVLCO Determine land valuation Claims Valuation
(e). based on valuation inputs and Processing
Form (CVPF)
The procedure for the determination of compensation cases Note: CFs where the land
under Republic Act No. 6657, as devised by this Court, commences valuation amounts to more
with the valuation by the LBP of the lands taken by the State from thanP3 million shall be
private owners under the land reform program.Based on the forwarded to LBP-HO.
valuation of the land by the LBP, the DAR makes an offer to the
15 LBP-LVLCO Prepares and sends Memo CARP Form No.
of Valuation, Claim 9(Memorandum If LO rejects or fails to
Folder Profile and of Valuation and reply, proceed to D.2.
Valuation Summary ClaimFolder
(MOV-CFPVS) to PARO Profile and xxxx
Valuation
Summary) D.2. Where LO rejects the
Land Valuation
16 DARPO Receives LBPs MOV-
CFPVS and ascertains the 20 DARPO If the LO rejects the offered CARP Form No.
completeness of the data price or fails to reply within 10.a (LOs Reply
and information therein. thirty (30) days from to NLVA)
receipt of the Notice of Land
17 DARPO Sends Notice of Land CARP Form No. Valuation and CARP Form No.
Valuation and Acquisition 10(Notice of Land Acquisition,forwards to LBP 15(Request for
to LO by personal delivery Valuation and the Request to Deposit the Deposit)
with proof of service or by Acquisition) compensation proceedsin
registered mail with return cash and in bonds in the name
card, attaching copy of of the LO
MOV-CFPVS and inviting
LOs attention to the 21 DARPO Requests the CARP Form No. 14
submission of documents DARAB/RARAD/ PARAD Advice to DARAB/
required for payment of to conduct administrative RARAD/PARAD
claim. proceedings pursuant to
DARAB guidelines, as the
case maybe, furnishing
18 DARPO Posts a copy of the Notice CARP Form No. therein a copy each of the
of Land Valuation (NLVA) 11(Certification of LOs Letter of Rejection,
for at least seven (7) Posting Notice of Land Valuation and
working days on the Compliance) Acquisition and LBPs
bulletin board of the Memorandum of Valuation.
provincial capitol,
municipal and barangay 22 LBP-LVO Deposits the compensation CARP Form No. 17
halls where the property is LBP-HO proceeds in the name of the (Certification of
located and issues a LOand issues Certification of Deposit)
Certification of Posting Deposit to DAR through the
Compliance. PARO, copy furnished the
LO.
19 LO Replies to Notice of Land CARP Form No.
Valuation and Acquisition The entire deposit may be 17.a (Confirmation
and submits documents withdrawn by the LO; of Coverage and
required for payment of however, actual release of Transfer For Claims
compensation claim. same shall be subject to LOs of Individual LOs
submission of all Still Pending with
If LO accepts, proceed to requirements for payment DARAB)
D.1. and execution of
 Confirmation of Coverage CARP Form No. Thereafter, LBP follows CARP Form No.
and Transfer. 17.b (Confirmation Activity Nos. 25-26 under 17.d (Confirmation
of Coverage and D.1. In case the LO still of Coverage and
Transfer For rejects DARAB decision, he Transfer) For
Claimsof Corporate may go to the Special Claims of
LOs Still Pending Agrarian Reform Court Corporate LOs
with DARAB) (SAC) for the final Already decided by
determination of just DARAB)
23 DARPO Upon receipt of the CARP Form No. 18 compensation.
Certification of Deposit from (Request to Issue
LBP, transmits the same to TCT in the name of It must also be noted that under the DARAB 2003 Rules of Procedure, there is
the Register of Deeds RP) no requirement of delivery or deposit of provisional compensation based on the
concerned, including the judgment or award by the PARAD/RARAD or DARAB. Section 10, Rule XIX of
approved
segregation/subdivision plan the DARAB 2003 Rules only allows execution of judgments for compensation which
of subject property, if have become final and executory.[16] This only underscores the primary responsibility
partially covered and of the LBP to submit an initial valuation at which DAR would offer to purchase the
simultaneously requests the
ROD to issue TCT in the land, and to deposit said amount after the landowner has rejected the offer.
name of RP.
There is still another reason why we cannot agree with the appellate courts
24 ROD Issues new TCT in the name New TCT in the
of RP and forwards owners name of RP and interpretation of Section 16, R.A. No. 6657. Petitioner had assumed a more significant
duplicate certificate of title in owners duplicate role as financial intermediary for the CARP after 1989, primarily due to scandals and
the name of RP to LBP-LVO copy of title in the anomalies, which stalled its implementation during the Aquino administration,
which furnishes the PARO a name of RP.
certified xerox copy of the involving overvalued private haciendas voluntarily offered by big landowners in
same. collusion with DAR officers and employees. The most notorious of these land scams
25 DARAB/ Simultaneously with even became the subject of a joint inquiry conducted by the Senate and House of
RARAD/ Activity Nos. 22-24 above,
PARAD the DARAB/ Representatives committees on agrarian reform. With government acquisition of large
RARAD/PARAD conducts landholdings at inflated prices, the farmers are at a losing end, as they can hardly afford
summary administrative the overpriced land.[17]
proceedings, renders
decision and informs parties
concerned of the same. 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
26 DARPO Upon receipt of the CARP Form No.
Certificate of Finality of the 17.c (Confirmation primary responsibility of determining land valuation and compensation for all lands
DARAB Order, requests of Coverage and covered under CARP from the DAR to the LBP, a specialized government bank. The
LBP to pay the LO in Transfer For intent is to accelerate program implementation by tapping the LBPs professional
accordance with the Claims of
expertise, as expressed in the EOs whereas clause:
DARAB decision; requests Individual LOs
LBP to prepare Confirmation Already decided by
WHEREAS, the Land Bank of the Philippines employs
of Coverage and Transfer for DARAB)
commercial banking personnel whose professional expertise includes
LO to accomplish.
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 thePhilippines, 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.
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
The objective of the procedures on land valuation provided by the Comprehensive
valuation and determination of compensation for all private lands. It has the discretion
Agrarian Reform Law (CARL) as amplified by the issuances of the DAR/DARAB is to
to approve or reject the land valuation and just compensation for a private agricultural
enforce the constitutional guarantee of just compensation for the taking of private
land placed under the CARP. In case the LBP disagrees with the valuation of land and
agricultural lands placed under the CARP. It must be stressed that the DARs authority
determination of just compensation by a party, the DAR, or even the courts, the LBP
to determine just compensation is merely preliminary. On the other hand, under Section
not only has the right, but the duty, to challenge the same, by appeal to the CA or to this
1 of EO No. 405, series of 1990, the LBP is charged with the initial responsibility of
Court, if appropriate.[22] Both LBP and respondent filed petitions before the SAC
determining the value of lands placed under land reform and the just compensation to
disputing the RARAD judgment awarding compensation in the amount
be paid for their taking.
of P10,294,721.00. In view of the substantial difference in the valuations -- the initial
valuation by the LBP being onlyP1,145,806.06 -- the more prudent course is to await
In both voluntary and compulsory acquisitions, wherein the landowner rejects the final resolution of the issue of just compensation already filed with said court.
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
Lastly, the Court finds no merit in the contention of respondent that the
matter may be brought to the RTC, acting as a special agrarian court. But as with the
RARADs decision had already become final due to failure of the petitioner to appeal
DAR-awarded compensation, LBPs valuation of lands covered by CARL is considered
the same to the Board, in accordance with Section 5, Rule XIX of the 2003 DARAB
only as an initial determination, which is not conclusive, as it is the RTC, sitting as a
Rules of Procedure. It must be noted that said Rules was adopted only onJanuary 17,
Special Agrarian Court, that should make the final determination of just compensation,
2003. Section 1, Rule XXIV of the 2003 DARAB Rules explicitly states that:
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 SECTION 1. Transitory Provisions. These rules shall govern
eminent domain is essentially a judicial function which is vested with the RTC acting 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
Decision datedAugust 8, 2003 of the Court of Appeals in CA-G.R. SP No. 76572 is
herebyREVERSED 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.
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC.,
JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR.,
BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B.
MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA
C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO,
CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS
JEREZA, HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and
PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias, Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN
REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY
OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR TALENTO,
JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND
BANK OF THE PHILIPPINES,respondents.
assailed
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor. The
two wrestled mightily and Hercules flung his adversary to the ground thinking him
dead, but Antaeus rose even stronger to resume their struggle. This happened several
times to Hercules' increasing amazement. Finally, as they continued grappling, it
dawned on Hercules that Antaeus was the son of Gaea and could never die as long as
any part of his body was touching his Mother Earth. Thus forewarned, Hercules then
held Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to
death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch
even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the
elemental forces of life and death, of men and women who, like Antaeus need the
sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the
distribution of this precious resource among our people. But it is more than a slogan.
Through the brooding centuries, it has become a battle-cry dramatizing the increasingly
urgent demand of the dispossessed among us for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to
"insure the well-being and economic security of all the people," 1 especially the less
privileged. In 1973, the new Constitution affirmed this goal adding specifically that
"the State shall regulate the acquisition, ownership, use, enjoyment and disposition of
private property and equitably diffuse property ownership and profits." 2 Significantly,
there was also the specific injunction to "formulate and implement an agrarian reform
program aimed at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it
also adopted one whole and separate Article XIII on Social Justice and Human Rights,
containing grandiose but undoubtedly sincere provisions for the uplift of the common
people. These include a call in the following words for the adoption by the State of an
agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers,
who are landless, to own directly or collectively the lands they till or,
in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations and
subject to the payment of just compensation. In determining retention
limits, the State shall respect the right of small landowners. The State
shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform
Code, had already been enacted by the Congress of the Philippines on August 8, 1963,
in line with the above-stated principles. This was substantially superseded almost a
decade later by P.D. No. 27, which was promulgated on October 21, 1972, along with
martial law, to provide for the compulsory acquisition of private lands for distribution
among tenant-farmers and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the
thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued
E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27
and providing for the valuation of still unvalued lands covered by the decree as well as
the manner of their payment. This was followed on July 22, 1987 by Presidential
Proclamation No. 131, instituting a comprehensive agrarian reform program (CARP),
and E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines
took over legislative power from the President and started its own deliberations,
including extensive public hearings, on the improvement of the interests of farmers.
The result, after almost a year of spirited debate, was the enactment of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988, which
President Aquino signed on June 10, 1988. This law, while considerably changing the
earlier mentioned enactments, nevertheless gives them suppletory effect insofar as they
are not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve common legal
questions, including serious challenges to the constitutionality of the several measures
mentioned above. They will be the subject of one common discussion and resolution,
The different antecedents of each case will require separate treatment, however, and
will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228
and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned
by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four
tenants and owned by petitioner Augustin Hermano, Jr. The tenants were declared full
owners of these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds
inter alia of separation of powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use without just
compensation.
They contend that President Aquino usurped legislative power when she promulgated
E.O. No. 228. The said measure is invalid also for violation of Article XIII, Section 4,
of the Constitution, for failure to provide for retention limits for small landowners.
Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a
valid appropriation.
In connection with the determination of just compensation, the petitioners argue that the
same may be made only by a court of justice and not by the President of the
Philippines. They invoke the recent cases of EPZA v. Dulay 5and Manotok v. National
Food Authority. 6 Moreover, the just compensation contemplated by the Bill of Rights
is payable in money or in cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also
deprives the petitioners of their property rights as protected by due process. The equal
protection clause is also violated because the order places the burden of solving the
agrarian problems on the owners only of agricultural lands. No similar obligation is
imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be
the owners of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives
and so violated due process. Worse, the measure would not solve the agrarian problem
because even the small farmers are deprived of their lands and the retention rights
guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld
in the earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice
and Corn Producers of the Philippines, Inc. v. The National Land Reform
Council. 9 The determination of just compensation by the executive authorities
conformably to the formula prescribed under the questioned order is at best initial or
preliminary only. It does not foreclose judicial intervention whenever sought or
warranted. At any rate, the challenge to the order is premature because no valuation of
their property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do not exceed
the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not
provide for retention limits on tenanted lands and that in any event their petition is a
class suit brought in behalf of landowners with landholdings below 24 hectares. They
maintain that the determination of just compensation by the administrative authorities is
a final ascertainment. As for the cases invoked by the public respondent, the
constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was
decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27,
E.O. Nos. 228 and 229 (except Sections 20 and 21) have been impliedly repealed by
R.A. No. 6657. Nevertheless, this statute should itself also be declared unconstitutional
because it suffers from substantially the same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente
Cruz, owner of a 1. 83- hectare land, who complained that the DAR was insisting on
the implementation of P.D. No. 27 and E.O. No. 228 despite a compromise agreement
he had reached with his tenant on the payment of rentals. In a subsequent motion dated
April 10, 1989, he adopted the allegations in the basic amended petition that the above-
mentioned enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District,
Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This petition seeks to prohibit the implementation
of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform
Program as decreed by the Constitution belongs to Congress and not the President.
Although they agree that the President could exercise legislative power until the
Congress was convened, she could do so only to enact emergency measures during the
transition period. At that, even assuming that the interim legislative power of the
President was properly exercised, Proc. No. 131 and E.O. No. 229 would still have to
be annulled for violating the constitutional provisions on just compensation, due
process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the
Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian
Reform Program from 1987 to 1992 which shall be sourced from the receipts of the sale
of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten wealth
received through the Presidential Commission on Good Government and such other
sources as government may deem appropriate. The amounts collected and accruing to
this special fund shall be considered automatically appropriated for the purpose
authorized in this Proclamation the amount appropriated is in futuro, not in esse. The
money needed to cover the cost of the contemplated expropriation has yet to be raised
and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just
compensation as it is traditionally understood, i.e., with money and in full, but no such
payment is contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6,
thereof provides that the Land Bank of the Philippines "shall compensate the landowner
in an amount to be established by the government, which shall be based on the owner's
declaration of current fair market value as provided in Section 4 hereof, but subject to
certain controls to be defined and promulgated by the Presidential Agrarian Reform
Council." This compensation may not be paid fully in money but in any of several
modes that may consist of part cash and part bond, with interest, maturing periodically,
or direct payment in cash or bond as may be mutually agreed upon by the beneficiary
and the landowner or as may be prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made
to make a careful study of the sugar planters' situation. There is no tenancy problem in
the sugar areas that can justify the application of the CARP to them. To the extent that
the sugar planters have been lumped in the same legislation with other farmers,
although they are a separate group with problems exclusively their own, their right to
equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of
Sugarcane Planters (NASP) which claims a membership of at least 20,000 individual
sugar planters all over the country. On September 10, 1987, another motion for
intervention was filed, this time by Manuel Barcelona, et al., representing coconut and
riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform
Program and that, in any event, the appropriation is invalid because of uncertainty in
the amount appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O.
No. 229 provide for an initial appropriation of fifty billion pesos and thus specifies the
minimum rather than the maximum authorized amount. This is not allowed.
Furthermore, the stated initial amount has not been certified to by the National
Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by
clear and convincing evidence the necessity for the exercise of the powers of eminent
domain, and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the
expropriation of the said land for an amount equal to the government assessor's
valuation of the land for tax purposes. On the other hand, if the landowner declares his
own valuation he is unjustly required to immediately pay the corresponding taxes on
the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the
necessity for the expropriation as explained in the "whereas" clauses of the
Proclamation and submits that, contrary to the petitioner's contention, a pilot project to
determine the feasibility of CARP and a general survey on the people's opinion thereon
are not indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to
show that they belong to a different class and should be differently treated. The
Comment also suggests the possibility of Congress first distributing public agricultural
lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the
payment of public money without the corresponding appropriation. There is no rule that
only money already in existence can be the subject of an appropriation law. Finally, the
earmarking of fifty billion pesos as Agrarian Reform Fund, although denominated as an
initial amount, is actually the maximum sum appropriated. The word "initial" simply
means that additional amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own
behalf, assailing the constitutionality of E.O. No. 229. In addition to the arguments
already raised, Serrano contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;
(3) The power of the President to legislate was terminated on July 2,
1987; and
(4) The appropriation of a P50 billion special fund from the National
Treasury did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in
violation of due process and the requirement for just compensation, placed his
landholding under the coverage of Operation Land Transfer. Certificates of Land
Transfer were subsequently issued to the private respondents, who then refused
payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small
landholding under Operation Land transfer and asked for the recall and cancellation of
the Certificates of Land Transfer in the name of the private respondents. He claims that
on December 24, 1986, his petition was denied without hearing. On February 17, 1987,
he filed a motion for reconsideration, which had not been acted upon when E.O. Nos.
228 and 229 were issued. These orders rendered his motion moot and academic because
they directly effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of
the Philippines.
(2) The said executive orders are violative of the constitutional
provision that no private property shall be taken without due process
or just compensation.
(3) The petitioner is denied the right of maximum retention provided
for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before
Congress convened is anomalous and arbitrary, besides violating the doctrine of
separation of powers. The legislative power granted to the President under the
Transitory Provisions refers only to emergency measures that may be promulgated in
the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due
process of law and to the retention of his small parcels of riceholding as guaranteed
under Article XIII, Section 4 of the Constitution. He likewise argues that, besides
denying him just compensation for his land, the provisions of E.O. No. 228 declaring
that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the
land.
is an unconstitutional taking of a vested property right. It is also his contention that the
inclusion of even small landowners in the program along with other landowners with
lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the
motion for reconsideration filed with the Minister of Agrarian Reform is still
unresolved. As for the validity of the issuance of E.O. Nos. 228 and 229, he argues that
they were enacted pursuant to Section 6, Article XVIII of the Transitory Provisions of
the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first
Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21. 1972, the tenant-farmer of agricultural land was deemed
the owner of the land he was tilling. The leasehold rentals paid after that date should
therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed
was resolved on December 14, 1987. An appeal to the Office of the President would be
useless with the promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the
validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to
owners of rice and corn lands not exceeding seven hectares as long as they are
cultivating or intend to cultivate the same. Their respective lands do not exceed the
statutory limit but are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and
corn shall be ejected or removed from his farmholding until such time
as the respective rights of the tenant- farmers and the landowner shall
have been determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their
right of retention because the Department of Agrarian Reform has so far not issued the
implementing rules required under the above-quoted decree. They therefore ask the
Court for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by
LOI 474 removing any right of retention from persons who own other agricultural lands
of more than 7 hectares in aggregate area or lands used for residential, commercial,
industrial or other purposes from which they derive adequate income for their family.
And even assuming that the petitioners do not fall under its terms, the regulations
implementing P.D. No. 27 have already been issued, to wit, the Memorandum dated
July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21,
1978, (Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81
dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and
Retention by Small Landowners), and DAR Administrative Order No. 1, series of 1985
(Providing for a Cut-off Date for Landowners to Apply for Retention and/or to Protest
the Coverage of their Landholdings under Operation Land Transfer pursuant to P.D.
No. 27). For failure to file the corresponding applications for retention under these
measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this
case notwithstanding the pendency of their appeal to the President of the Philippines.
Moreover, the issuance of the implementing rules, assuming this has not yet been done,
involves the exercise of discretion which cannot be controlled through the writ
of mandamus. This is especially true if this function is entrusted, as in this case, to a
separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to
them because they do not own more than seven hectares of agricultural land. Moreover,
assuming arguendo that the rules were intended to cover them also, the said measures
are nevertheless not in force because they have not been published as required by law
and the ruling of this Court in Tanada v. Tuvera. 10 As for LOI 474, the same is
ineffective for the additional reason that a mere letter of instruction could not have
repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to
annul the acts of either the legislative or the executive or of both when not conformable
to the fundamental law. This is the reason for what some quarters call the doctrine of
judicial supremacy. Even so, this power is not lightly assumed or readily exercised. The
doctrine of separation of powers imposes upon the courts a proper restraint, born of the
nature of their functions and of their respect for the other departments, in striking down
the acts of the legislative and the executive as unconstitutional. The policy, indeed, is a
blend of courtesy and caution. To doubt is to sustain. The theory is that before the act
was done or the law was enacted, earnest studies were made by Congress or the
President, or both, to insure that the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of
the Supreme Court who took part in the deliberations and voted on the issue during
their session en banc. 11 And as established by judge made doctrine, the Court will
assume jurisdiction over a constitutional question only if it is shown that the essential
requisites of a judicial inquiry into such a question are first satisfied. Thus, there must
be an actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been opportunely raised
by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the cases before
us, we hold that the same is satisfied by the petitioners and intervenors because each of
them has sustained or is in danger of sustaining an immediate injury as a result of the
acts or measures complained of. 13 And even if, strictly speaking, they are not covered
by the definition, it is still within the wide discretion of the Court to waive the
requirement and so remove the impediment to its addressing and resolving the serious
constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders issued by President Quirino
although they were invoking only an indirect and general interest shared in common
with the public. The Court dismissed the objection that they were not proper parties and
ruled that "the transcendental importance to the public of these cases demands that they
be settled promptly and definitely, brushing aside, if we must, technicalities of
procedure." We have since then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not hesitate to
declare a law or act invalid when it is convinced that this must be done. In arriving at
this conclusion, its only criterion will be the Constitution as God and its conscience
give it the light to probe its meaning and discover its purpose. Personal motives and
political considerations are irrelevancies that cannot influence its decision.
Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not
hesitate to "make the hammer fall, and heavily," to use Justice Laurel's pithy language,
where the acts of these departments, or of any public official, betray the people's will as
expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does not
in reality nullify or invalidate an act of the Legislature, but only
asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy
the rights which that instrument secures and guarantees to them. This
is in truth all that is involved in what is termed "judicial supremacy"
which properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional questions that this Court must
categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more
serious challenges to the constitutionality of the several measures involved in these
petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers
under martial law has already been sustained in Gonzales v. Estrella and we find no
reason to modify or reverse it on that issue. As for the power of President Aquino to
promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized under
Section 6 of the Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the
Congress of the Philippines was formally convened and took over legislative power
from her. They are not "midnight" enactments intended to pre-empt the legislature
because E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e., Proc.
No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it correct to
say that these measures ceased to be valid when she lost her legislative power for, like
any statute, they continue to be in force unless modified or repealed by subsequent law
or declared invalid by the courts. A statute does not ipso facto become inoperative
simply because of the dissolution of the legislature that enacted it. By the same token,
President Aquino's loss of legislative power did not have the effect of invalidating all
the measures enacted by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they
shall be suppletory to R.A. No. 6657 whenever not inconsistent with its
provisions. 17 Indeed, some portions of the said measures, like the creation of the P50
billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229,
have been incorporated by reference in the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does not
conform to the requirements of a valid appropriation as specified in the Constitution.
Clearly, however, Proc. No. 131 is not an appropriation measure even if it does provide
for the creation of said fund, for that is not its principal purpose. An appropriation law
is one the primary and specific purpose of which is to authorize the release of public
funds from the treasury.19 The creation of the fund is only incidental to the main
objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24
and Section 25(4) of Article VI, are not applicable. With particular reference to Section
24, this obviously could not have been complied with for the simple reason that the
House of Representatives, which now has the exclusive power to initiate appropriation
measures, had not yet been convened when the proclamation was issued. The legislative
power was then solely vested in the President of the Philippines, who embodied, as it
were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be
invalidated because they do not provide for retention limits as required by Article XIII,
Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for such
limits now in Section 6 of the law, which in fact is one of its most controversial
provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act, no
person may own or retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but
in no case shall retention by the landowner exceed five (5) hectares.
Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen
(15) years of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep
the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall
have only one subject, to be expressed in its title, deserves only short attention. It is
settled that the title of the bill does not have to be a catalogue of its contents and will
suffice if the matters embodied in the text are relevant to each other and may be
inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential issuance,
by whatever name it was called, had the force and effect of law because it came from
President Marcos. Such are the ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27
because the former was only a letter of instruction. The important thing is that it was
issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to
comply with the requirement for publication as this Court held in Tanada v.
Tuvera. 21 Hence, unless published in the Official Gazette in accordance with Article 2
of the Civil Code, they could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was published, though, in the
Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ
of mandamus cannot issue to compel the performance of a discretionary act, especially
by a specific department of the government. That is true as a general proposition but is
subject to one important qualification. Correctly and categorically stated, the rule is that
mandamus will lie to compel the discharge of the discretionary duty itself but not to
control the discretion to be exercised. In other words, mandamus can issue to require
action only but not specific action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of such duty
occurs, if it is a clear duty imposed by law, the courts will intervene
by the extraordinary legal remedy of mandamus to compel action. If
the duty is purely ministerial, the courts will require specific action. If
the duty is purely discretionary, the courts by mandamus will require
action only. For example, if an inferior court, public official, or board
should, for an unreasonable length of time, fail to decide a particular
question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave
it jurisdiction mandamus will issue, in the first case to require a
decision, and in the second to require that jurisdiction be taken of the
cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a
plain, speedy and adequate remedy available from the administrative authorities, resort
to the courts may still be permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent
domain that logically preclude the application of both powers at the same time on the
same subject. In the case of City of Baguio v. NAWASA, 24 for example, where a law
required the transfer of all municipal waterworks systems to the NAWASA in exchange
for its assets of equivalent value, the Court held that the power being exercised was
eminent domain because the property involved was wholesome and intended for a
public use. Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be
demolished for the public safety, or obscene materials, which should be destroyed in
the interest of public morals. The confiscation of such property is not compensable,
unlike the taking of property under the power of expropriation, which requires the
payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits
of the police power in a famous aphorism: "The general rule at least is that while
property may be regulated to a certain extent, if regulation goes too far it will be
recognized as a taking." The regulation that went "too far" was a law prohibiting
mining which might cause the subsidence of structures for human habitation
constructed on the land surface. This was resisted by a coal company which had earlier
granted a deed to the land over its mine but reserved all mining rights thereunder, with
the grantee assuming all risks and waiving any damage claim. The Court held the law
could not be sustained without compensating the grantor. Justice Brandeis filed a lone
dissent in which he argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of
the police power deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by the State of rights in
property without making compensation. But restriction imposed to
protect the public health, safety or morals from dangers threatened is
not a taking. The restriction here in question is merely the prohibition
of a noxious use. The property so restricted remains in the possession
of its owner. The state does not appropriate it or make any use of it.
The state merely prevents the owner from making a use which
interferes with paramount rights of the public. Whenever the use
prohibited ceases to be noxious — as it may because of further
changes in local or social conditions — the restriction will have to be
removed and the owner will again be free to enjoy his property as
heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police
power and the power of eminent domain, with the latter being used as an implement of
the former like the power of taxation. The employment of the taxing power to achieve a
police purpose has long been accepted. 26 As for the power of expropriation, Prof. John
J. Costonis of the University of Illinois College of Law (referring to the earlier case of
Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning law under the
police power) makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the
Police and eminent domain powers on different planets. Generally
speaking, they viewed eminent domain as encompassing public
acquisition of private property for improvements that would be
available for public use," literally construed. To the police power, on
the other hand, they assigned the less intrusive task of preventing
harmful externalities a point reflected in the Euclid opinion's reliance
on an analogy to nuisance law to bolster its support of zoning. So
long as suppression of a privately authored harm bore a plausible
relation to some legitimate "public purpose," the pertinent measure
need have afforded no compensation whatever. With the progressive
growth of government's involvement in land use, the distance
between the two powers has contracted considerably. Today
government often employs eminent domain interchangeably with or
as a useful complement to the police power-- a trend expressly
approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to
match that of the police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted
areas in the District of Columbia as a proper exercise of the police power. On the role
of eminent domain in the attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's
Capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to
realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978,
the U.S Supreme Court sustained the respondent's Landmarks Preservation Law under
which the owners of the Grand Central Terminal had not been allowed to construct a
multi-story office building over the Terminal, which had been designated a historic
landmark. Preservation of the landmark was held to be a valid objective of the police
power. The problem, however, was that the owners of the Terminal would be deprived
of the right to use the airspace above it although other landowners in the area could do
so over their respective properties. While insisting that there was here no taking, the
Court nonetheless recognized certain compensatory rights accruing to Grand Central
Terminal which it said would "undoubtedly mitigate" the loss caused by the regulation.
This "fair compensation," as he called it, was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was
authorized to transfer to neighboring properties the authorized but unused rights
accruing to the site prior to the Terminal's designation as a landmark — the rights
which would have been exhausted by the 59-story building that the city refused to
countenance atop the Terminal. Prevailing bulk restrictions on neighboring sites were
proportionately relaxed, theoretically enabling Penn Central to recoup its losses at the
Terminal site by constructing or selling to others the right to construct larger, hence
more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under challenge
merely prescribe retention limits for landowners, there is an exercise of the police
power for the regulation of private property in accordance with the Constitution. But
where, to carry out such regulation, it becomes necessary to deprive such owners of
whatever lands they may own in excess of the maximum area allowed, there is
definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the use
of the land. What is required is the surrender of the title to and the physical possession
of the said excess and all beneficial rights accruing to the owner in favor of the farmer-
beneficiary. This is definitely an exercise not of the police power but of the power of
eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the
several measures before us are challenged as violative of the due process and equal
protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no
retention limits are prescribed has already been discussed and dismissed. It is noted that
although they excited many bitter exchanges during the deliberation of the CARP Law
in Congress, the retention limits finally agreed upon are, curiously enough, not being
questioned in these petitions. We therefore do not discuss them here. The Court will
come to the other claimed violations of due process in connection with our examination
of the adequacy of just compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal protection because
of the absence of retention limits has also become academic under Section 6 of R.A.
No. 6657. Significantly, they too have not questioned the area of such limits. There is
also the complaint that they should not be made to share the burden of agrarian reform,
an objection also made by the sugar planters on the ground that they belong to a
particular class with particular interests of their own. However, no evidence has been
submitted to the Court that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to each
other in certain particulars and different from each other in these same particulars. 31 To
be valid, it must conform to the following requirements: (1) it must be based on
substantial distinctions; (2) it must be germane to the purposes of the law; (3) it must
not be limited to existing conditions only; and (4) it must apply equally to all the
members of the class. 32 The Court finds that all these requisites have been met by the
measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be
treated alike both as to the rights conferred and the liabilities imposed. 33 The
petitioners have not shown that they belong to a different class and entitled to a
different treatment. The argument that not only landowners but also owners of other
properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that is
clearly visible except to those who will not see. There is no need to elaborate on this
matter. In any event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts of justice
except only where its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police
power only if there is a concurrence of the lawful subject and the lawful method. Put
otherwise, the interests of the public generally as distinguished from those of a
particular class require the interference of the State and, no less important, the means
employed are reasonably necessary for the attainment of the purpose sought to be
achieved and not unduly oppressive upon individuals. 34 As the subject and purpose of
agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the
method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the
individual are concerned, the end does not justify the means. It is not enough that there
be a valid objective; it is also necessary that the means employed to pursue it be in
keeping with the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral conviction or the most
urgent public need, subject only to a few notable exceptions, will excuse the bypassing
of an individual's rights. It is no exaggeration to say that a, person invoking a right
guaranteed under Article III of the Constitution is a majority of one even as against the
rest of the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of
Article III of the Constitution. With regard to his property, the owner enjoys the added
protection of Section 9, which reaffirms the familiar rule that private property shall not
be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to
forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions
offered by the vendee, that the power of eminent domain will come
into play to assert the paramount authority of the State over the
interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored
justification, as in the case of the police power, that the welfare of the
people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute
(as indeed no power is absolute). The limitation is found in the constitutional injunction
that "private property shall not be taken for public use without just compensation" and
in the abundant jurisprudence that has evolved from the interpretation of this principle.
Basically, the requirements for a proper exercise of the power are: (1) public use and
(2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the
State should first distribute public agricultural lands in the pursuit of agrarian reform
instead of immediately disturbing property rights by forcibly acquiring private
agricultural lands. Parenthetically, it is not correct to say that only public agricultural
lands may be covered by the CARP as the Constitution calls for "the just distribution of
all agricultural lands." In any event, the decision to redistribute private agricultural
lands in the manner prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in reviewing that
discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As explained by
Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those questions
which, under the Constitution, are to be decided by the people in their
sovereign capacity; or in regard to which full discretionary authority
has been delegated to the legislative or executive branch of the
government." It is concerned with issues dependent upon the wisdom,
not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts "to
determine whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as a license for us to reverse the
other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the
CARP the redistribution of private landholdings (even as the distribution of public
agricultural lands is first provided for, while also continuing apace under the Public
Land Act and other cognate laws). The Court sees no justification to interpose its
authority, which we may assert only if we believe that the political decision is not
unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March 3,1909
that the entire St. Mary's river between the American bank and the
international line, as well as all of the upland north of the present ship
canal, throughout its entire length, was "necessary for the purpose of
navigation of said waters, and the waters connected therewith," that
determination is conclusive in condemnation proceedings instituted
by the United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by
the Constitution itself No less than the 1987 Charter calls for agrarian reform, which is
the reason why private agricultural lands are to be taken from their owners, subject to
the prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc.
No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that
the State adopt the necessary measures "to encourage and undertake the just distribution
of all agricultural lands to enable farmers who are landless to own directly or
collectively the lands they till." That public use, as pronounced by the fundamental law
itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and
more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. 39 It has been repeatedly stressed by this Court that the
measure is not the taker's gain but the owner's loss.40 The word "just" is used to
intensify the meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full,
ample. 41
It bears repeating that the measures challenged in these petitions contemplate more than
a mere regulation of the use of private lands under the police power. We deal here with
an actual taking of private agricultural lands that has dispossessed the owners of their
property and deprived them of all its beneficial use and enjoyment, to entitle them to
the just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when
the following conditions concur: (1) the expropriator must enter a private property; (2)
the entry must be for more than a momentary period; (3) the entry must be under
warrant or color of legal authority; (4) the property must be devoted to public use or
otherwise informally appropriated or injuriously affected; and (5) the utilization of the
property for public use must be in such a way as to oust the owner and deprive him of
beneficial enjoyment of the property. All these requisites are envisioned in the
measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit
upon its taking possession of the condemned property, as "the compensation is a public
charge, the good faith of the public is pledged for its payment, and all the resources of
taxation may be employed in raising the amount." 43 Nevertheless, Section 16(e) of the
CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in
case of rejection or no response from the landowner, upon the deposit
with an accessible bank designated by the DAR of the compensation
in cash or in LBP bonds in accordance with this Act, the DAR shall
take immediate possession of the land and shall request the proper
Register of Deeds to issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified
beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d), which provides that in case of
the rejection or disregard by the owner of the offer of the government to buy his land-
... the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the landowner,
the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of
the notice. After the expiration of the above period, the matter is
deemed submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts
of justice and may not be usurped by any other branch or official of the
government. EPZA v. Dulay 44 resolved a challenge to several decrees promulgated by
President Marcos providing that the just compensation for property under expropriation
should be either the assessment of the property by the government or the sworn
valuation thereof by the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile in a matter which
under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for the
property, following the applicable decrees, its task would be relegated
to simply stating the lower value of the property as declared either by
the owner or the assessor. As a necessary consequence, it would be
useless for the court to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the due process clause
in the taking of private property is seemingly fulfilled since it cannot
be said that a judicial proceeding was not had before the actual
taking. However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or charade as
the court has only to choose between the valuation of the owner and
that of the assessor, and its choice is always limited to the lower of
the two. The court cannot exercise its discretion or independence in
determining what is just or fair. Even a grade school pupil could
substitute for the judge insofar as the determination of constitutional
just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor decrees,
still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to
appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
 It is violative of due process to deny the owner the opportunity to hectarage is concerned —
prove that the valuation in the tax documents is unfair or wrong. And Twenty-five percent (25%) cash,
it is repulsive to the basic concepts of justice and fairness to allow the the balance to be paid in
haphazard work of a minor bureaucrat or clerk to absolutely prevail government financial instruments
over the judgment of a court promulgated only after expert negotiable at any time.
commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and (b) For lands above twenty-four
considerations essential to a fair and just determination have been (24) hectares and up to fifty (50)
judiciously evaluated. hectares — Thirty percent (30%)
cash, the balance to be paid in
A reading of the aforecited Section 16(d) will readily show that it does not suffer from government financial instruments
the arbitrariness that rendered the challenged decrees constitutionally objectionable. negotiable at any time.
Although the proceedings are described as summary, the landowner and other interested
parties are nevertheless allowed an opportunity to submit evidence on the real value of (c) For lands twenty-four (24)
the property. But more importantly, the determination of the just compensation by the hectares and below — Thirty-five
DAR is not by any means final and conclusive upon the landowner or any other percent (35%) cash, the balance
interested party, for Section 16(f) clearly provides: to be paid in government
financial instruments negotiable
Any party who disagrees with the decision may bring the matter to at any time.
the court of proper jurisdiction for final determination of just
compensation. (2) Shares of stock in government-owned or controlled corporations,
LBP preferred shares, physical assets or other qualified investments
The determination made by the DAR is only preliminary unless accepted by all parties in accordance with guidelines set by the PARC;
concerned. Otherwise, the courts of justice will still have the right to review with
finality the said determination in the exercise of what is admittedly a judicial function. (3) Tax credits which can be used against any tax liability;

The second and more serious objection to the provisions on just compensation is not as (4) LBP bonds, which shall have the following features:
easily resolved.
(a) Market interest rates aligned
This refers to Section 18 of the CARP Law providing in full as follows: with 91-day treasury bill rates.
Ten percent (10%) of the face
SEC. 18. Valuation and Mode of Compensation. — The LBP shall value of the bonds shall mature
compensate the landowner in such amount as may be agreed upon by every year from the date of
the landowner and the DAR and the LBP, in accordance with the issuance until the tenth (10th)
criteria provided for in Sections 16 and 17, and other pertinent year: Provided, That should the
provisions hereof, or as may be finally determined by the court, as the landowner choose to forego the
just compensation for the land. cash portion, whether in full or in
part, he shall be paid
The compensation shall be paid in one of the following modes, at the correspondingly in LBP bonds;
option of the landowner:
(b) Transferability and
(1) Cash payment, under the following terms and conditions: negotiability. Such LBP bonds
may be used by the landowner,
his successors-in- interest or his
(a) For lands above fifty (50)
assigns, up to the amount of their
hectares, insofar as the excess
face value, for any of the
following:
(i) Acquisition of land or other
real properties of the government,
including assets under the Asset
Privatization Program and other
assets foreclosed by government
financial institutions in the same
province or region where the
lands for which the bonds were
paid are situated;
(ii) Acquisition of shares of stock
of government-owned or
controlled corporations or shares
of stock owned by the
government in private
corporations;
(iii) Substitution for surety or bail
bonds for the provisional release
of accused persons, or for
performance bonds;
(iv) Security for loans with any
government financial institution,
provided the proceeds of the
loans shall be invested in an
economic enterprise, preferably
in a small and medium- scale
industry, in the same province or
region as the land for which the
bonds are paid;
(v) Payment for various taxes and
fees to government: Provided,
That the use of these bonds for
these purposes will be limited to a
certain percentage of the
outstanding balance of the
financial instruments; Provided,
further, That the PARC shall
determine the percentages
mentioned above;
(vi) Payment for tuition fees of
the immediate family of the
original bondholder in
government universities, colleges,
trade schools, and other
institutions;
(vii) Payment for fees of the
immediate family of the original
bondholder in government
hospitals; and
(viii) Such other uses as the
PARC may from time to time
allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is
unconstitutional insofar as it requires the owners of the expropriated properties to
accept just compensation therefor in less than money, which is the only medium of
payment allowed. In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the
property expropriated is entitled to a just compensation, which should
be neither more nor less, whenever it is possible to make the
assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and complete
equivalent of the loss which the owner of the thing expropriated has
to suffer by reason of the expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent for the
value of the property at the time of its taking. Anything beyond that is
more, and anything short of that is less, than just compensation. It
means a fair and full equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain would accrue to the
expropriating entity. The market value of the land taken is the just
compensation to which the owner of condemned property is entitled,
the market value being that sum of money which a person desirous,
but not compelled to buy, and an owner, willing, but not compelled to
sell, would agree on as a price to be given and received for such
property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived,
the weight of authority is also to the effect that just compensation for property
expropriated is payable only in money and not otherwise. Thus —
The medium of payment of compensation is ready money or cash.
The condemnor cannot compel the owner to accept anything but
money, nor can the owner compel or require the condemnor to pay
him on any other basis than the value of the property in money at the
time and in the manner prescribed by the Constitution and the
statutes. When the power of eminent domain is resorted to, there must
be a standard medium of payment, binding upon both parties, and the
law has fixed that standard as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of
things, be regarded as a reliable and constant standard of
compensation. 48
"Just compensation" for property taken by condemnation means a fair
equivalent in money, which must be paid at least within a reasonable
time after the taking, and it is not within the power of the Legislature
to substitute for such payment future obligations, bonds, or other
valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been
paid in the past solely in that medium. However, we do not deal here with the
traditional excercise of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively limited area is sought to be
taken by the State from its owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention limits allowed
their owners. This kind of expropriation is intended for the benefit not only of a
particular community or of a small segment of the population but of the entire Filipino
nation, from all levels of our society, from the impoverished farmer to the land-glutted
owner. Its purpose does not cover only the whole territory of this country but goes
beyond in time to the foreseeable future, which it hopes to secure and edify with the
vision and the sacrifice of the present generation of Filipinos. Generations yet to come
are as involved in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less
than the Constitution itself that has ordained this revolution in the farms, calling for "a
just distribution" among the farmers of lands that have heretofore been the prison of
their dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed, far more indeed than the
amount of P50 billion initially appropriated, which is already staggering as it is by our
present standards. Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they
called for agrarian reform as a top priority project of the government. It is a part of this
assumption that when they envisioned the expropriation that would be needed, they also
intended that the just compensation would have to be paid not in the orthodox way but a
less conventional if more practical method. There can be no doubt that they were aware
of the financial limitations of the government and had no illusions that there would be
enough money to pay in cash and in full for the lands they wanted to be distributed
among the farmers. We may therefore assume that their intention was to allow such
manner of payment as is now provided for by the CARP Law, particularly the payment
of the balance (if the owner cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of value. We may also suppose that
what they had in mind was a similar scheme of payment as that prescribed in P.D. No.
27, which was the law in force at the time they deliberated on the new Charter and with
which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any
categorical agreement among the members regarding the meaning to be given the
concept of just compensation as applied to the comprehensive agrarian reform program
being contemplated. There was the suggestion to "fine tune" the requirement to suit the
demands of the project even as it was also felt that they should "leave it to Congress" to
determine how payment should be made to the landowner and reimbursement required
from the farmer-beneficiaries. Such innovations as "progressive compensation" and
"State-subsidized compensation" were also proposed. In the end, however, no special
definition of the just compensation for the lands to be expropriated was reached by the
Commission. 50
On the other hand, there is nothing in the records either that militates against the
assumptions we are making of the general sentiments and intention of the members on
the content and manner of the payment to be made to the landowner in the light of the
magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the
just compensation provided for in the afore- quoted Section 18 of the CARP Law is not
violative of the Constitution. We do not mind admitting that a certain degree of
pragmatism has influenced our decision on this issue, but after all this Court is not a
cloistered institution removed from the realities and demands of society or oblivious to
the need for its enhancement. The Court is as acutely anxious as the rest of our people
to see the goal of agrarian reform achieved at last after the frustrations and deprivations
of our peasant masses during all these disappointing decades. We are aware that
invalidation of the said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization and resurrecting the spectre
of discontent and dissent in the restless countryside. That is not in our view the
intention of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be
made fully in money, we find further that the proportion of cash payment to the other
things of value constituting the total payment, as determined on the basis of the areas of
the lands expropriated, is not unduly oppressive upon the landowner. It is noted that the
smaller the land, the bigger the payment in money, primarily because the small
landowner will be needing it more than the big landowners, who can afford a bigger
balance in bonds and other things of value. No less importantly, the government
financial instruments making up the balance of the payment are "negotiable at any
time." The other modes, which are likewise available to the landowner at his option, are
also not unreasonable because payment is made in shares of stock, LBP bonds, other
properties or assets, tax credits, and other things of value equivalent to the amount of
just compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big
and small, not a little inconvenience. As already remarked, this cannot be avoided.
Nevertheless, it is devoutly hoped that these countrymen of ours, conscious as we know
they are of the need for their forebearance and even sacrifice, will not begrudge us their
indispensable share in the attainment of the ideal of agrarian reform. Otherwise, our
pursuit of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229
does not seem to be viable any more as it appears that Section 4 of the said Order has
been superseded by Section 14 of the CARP Law. This repeats the requisites of
registration as embodied in the earlier measure but does not provide, as the latter did,
that in case of failure or refusal to register the land, the valuation thereof shall be that
given by the provincial or city assessor for tax purposes. On the contrary, the CARP
Law says that the just compensation shall be ascertained on the basis of the factors
mentioned in its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property even
before actual payment to him in full of just compensation, in contravention of a well-
accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other democratic
jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the
condemnor until the judgment fixing just compensation is entered and paid, but the
condemnor's title relates back to the date on which the petition under the Eminent
Domain Act, or the commissioner's report under the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete at the
time of entry, title to the property taken remains in the owner until payment is actually
made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniformly to this effect. As early as 1838,
in Rubottom v. McLure, 54 it was held that "actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to the
property in the State" albeit "not to the appropriation of it to public use." In Rexford v.
Knight, 55 the Court of Appeals of New York said that the construction upon the statutes
was that the fee did not vest in the State until the payment of the compensation although
the authority to enter upon and appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and authority the rule is ... that the right to
enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass
from the owner without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is paid
... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as
October 21, 1972 and declared that he shall "be deemed the owner" of a portion of land
consisting of a family-sized farm except that "no title to the land owned by him was to
be actually issued to him unless and until he had become a full-fledged member of a
duly recognized farmers' cooperative." It was understood, however, that full payment of
the just compensation also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
 All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after
proof of full-fledged membership in the farmers' cooperatives and full payment of just
compensation. Hence, it was also perfectly proper for the Order to also provide in its
Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary after
October 21, 1972 (pending transfer of ownership after full payment of just
compensation), shall be considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the
land to the government on receipt by the landowner of the corresponding payment or
the deposit by the DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner. 57 No outright change of
ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D.
No. 27, as recognized under E.O. No. 228, are retained by him even now under R.A.
No. 6657. This should counter-balance the express provision in Section 6 of the said
law that "the landowners whose lands have been covered by Presidential Decree No. 27
shall be allowed to keep the area originally retained by them thereunder, further, That
original homestead grantees or direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742 that the
appeal filed by the petitioners with the Office of the President has already been
resolved. Although we have said that the doctrine of exhaustion of administrative
remedies need not preclude immediate resort to judicial action, there are factual issues
that have yet to be examined on the administrative level, especially the claim that the
petitioners are not covered by LOI 474 because they do not own other agricultural lands
than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the
petitioners have not yet exercised their retention rights, if any, under P.D. No. 27, the
Court holds that they are entitled to the new retention rights provided for by R.A. No.
6657, which in fact are on the whole more liberal than those granted by the decree.
V DISMISSED, without pronouncement as to costs.
The CARP Law and the other enactments also involved in these cases have been the
subject of bitter attack from those who point to the shortcomings of these measures and
ask that they be scrapped entirely. To be sure, these enactments are less than perfect;
indeed, they should be continuously re-examined and rehoned, that they may be sharper
instruments for the better protection of the farmer's rights. But we have to start
somewhere. In the pursuit of agrarian reform, we do not tread on familiar ground but
grope on terrain fraught with pitfalls and expected difficulties. This is inevitable. The
CARP Law is not a tried and tested project. On the contrary, to use Justice Holmes's
words, "it is an experiment, as all life is an experiment," and so we learn as we venture
forward, and, if necessary, by our own mistakes. We cannot expect perfection although
we should strive for it by all means. Meantime, we struggle as best we can in freeing
the farmer from the iron shackles that have unconscionably, and for so long, fettered his
soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian
reform program are removed, to clear the way for the true freedom of the farmer. We
may now glimpse the day he will be released not only from want but also from the
exploitation and disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the farm on which he
toils will be his farm. It will be his portion of the Mother Earth that will give him not
only the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now
at last can he banish from his small plot of earth his insecurities and dark resentments
and "rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and
229 are SUSTAINED against all the constitutional objections raised
in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State
only upon full payment of compensation to their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D.
No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of retention
under P.D. No. 27 shall enjoy the retention rights granted by R.A. No.
6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are
LAND BANK OF THE G.R. No. 167809
PHILIPPINES,
Petitioner, Present: The properties are covered by: (1) Transfer Certificate of Title (TCT) No. T-
YNARES-SANTIAGO, J., 1180 with an area of 11.33 hectares;[5] (2) TCT No. 41508 consisting of 6.2201
- versus - Chairperson,
AUSTRIA-MARTINEZ, hectares;[6] (3) TCT No. 41507 with an area of 4.0001 hectares;[7] (4) TCT No. 41506
CHICO-NAZARIO, consisting of 3.9878 hectares;[8] (5) TCT No. 41504 consisting of 5.0639 hectares; and
JOSEFINA R. DUMLAO, NACHURA, and
(6) TCT No. 41505 with an area of 1.6360 hectares.
A. FLORENTINO R. DUMLAO, REYES, JJ.
JR., STELLA DUMLAO-ATIENZA,
and NESTOR R. DUMLAO, The properties were placed under Operation Land Transfer by the Department
represented by Attorney-In-Fact, Promulgated:
A. Florentino R. Dumlao, Jr., of Agrarian Reform (DAR).[9] However, the definite time of actual taking was not
Respondents. November 27, 2008 stated.[10]

x--------------------------------------------------x
DECISION
REYES, R.T., J.:
IN determining just compensation for lands covered by the governments Operation
Land Transfer, which law applies Presidential Decree (PD) No. 27 [1] or Republic Act
(RA) No. 6657[2] known as the Comprehensive Agrarian Reform (CARP) Law?
This and other related questions are brought to the Court via this petition for review
on certiorari[3] of the Decision[4] of the Court of Appeals (CA) granting each of
respondents a five-hectare retention area and ordering petitioner to pay them One
Hundred Nine Thousand Pesos (P109,000.00) per hectare for the excess of the retained
area.
The Facts
Pursuant to PD No. 27 and Executive Order (EO) No. 228, [11] a preliminary
valuation was made by the DAR on the landholdings covered by TCT Nos. 41504 and
T-1180 with a total area of 16.3939 hectares. Finding the valuation to be correct,
petitioner bank informed respondents of the said valuation. [12] Payments were then
deposited in the name of the landowners.[13] Meanwhile, processing of the properties
covered by the other four (4) titles, namely, TCT Nos. 41505, 41506, 41507 and 41508,
remains pending with the DAR.[14]
On July 9, 1995, respondents filed a Complaint[15] before the Regional Trial
Court (RTC) in Nueva Vizcaya, Branch 28,[16] for determination of just compensation
for their properties. It was claimed, inter alia, that they were not paid their just
compensation for the properties despite issuance of certificates of land transfer to
farmer-beneficiaries by the DAR.[17] They prayed for the appointment of three (3)
competent and disinterested commissioners who would determine and report to the
court the just compensation of their landholdings based on their current fair market
value, without prejudice to their retention rights. They also asked for payment of actual
and moral damages, attorneys fees, and costs of suit.[18]

Respondents Josefina R. Dumlao, A. Florentino R. Dumlao, Jr., Stella In its Answer, the DAR, represented by the Municipal Agrarian Reform
Dumlao-Atienza, and Nestor R. Dumlao, heirs of the deceased Florentino G. Dumlao, Office(MARO) and Provincial Agrarian Reform Office (PARO), posited that the
were the co-owners of several parcels of agricultural land with an aggregate area of complaint lacked a cause of action and that the RTC did not have jurisdiction.Under
32.2379 hectares situated at Villaverde, Nueva Vizcaya. Section 50 of RA No. 6657, it is the Department of Agrarian Reform Adjudication
Board (DARAB) which is vested with primary and original jurisdiction over land
valuation, while the RTC as a Special Agrarian Court may review the DARABs
decision.[19]
Petitioner, which was impleaded as defendant in the valuation case before the trial
court, likewise filed its Answer, raising a similar line of defense.[20] Petitioner added
that while payment for the properties covered by TCT Nos. T-1180 and T-41504 were
already deposited in trust for respondents, the claimfolders for the remaining four
properties is still with the DAR. Thus, the filing of the complaint against petitioner was
premature.
After the termination of pre-trial conference, respondent Atty. A. Florentino Dumlao,
Jr. submitted his affidavit on which he was cross-examined. Following the submission
of their testimonial and documentary evidence, respondents rested their case.
Upon motion of respondents, the RTC, on April 15, 1998, appointed Atty.
John D. Balasya, Clerk of Court, as commissioner. He was mandated to receive,
examine, and ascertain valuation of the properties.[21] Believing that the valuation of the
properties is not commensurate to their true value and, hence, not a just compensation,
Atty. Balasya stated in his Commissioners Report dated July 21, 1998,[22] that:
The evidences submitted by the parties as well as those
gathered by the undersigned show that only two (2) parcels of land
were valued under Presidential Decree No. 27. The parcels of land are
located in Nagbitin, Villaverde, Nueva Vizcaya and per Exhibit O,
the unirrigated riceland in Nagbitin are considered first class
agricultural lands. Under Tax Ordinance No. 96-45 adopting and
authorizing the 1996 Schedule of Fair Market Values for the
Different Classes of Real Property in Nueva Vizcaya (Exhibit G and
Exhibit G-1) the market value of first class unirrigated Riceland in the
Municipality of Villaverde is P109,000.00 Per Department Order No.
56-97 dated May 27, 1997 issued by the Department of Finance, Re:
Implementation of the Revised Zonal Values of Real Properties in all
Municipalities under the jurisdiction of Revenue District Office No.
14 (Bayombong, Nueva Vizcaya), Revenue Region No. 3,
Tuguegarao, Cagayan for Internal Revenue Tax purposes, the zonal
value of land in other Barangays in Villaverde is P60.00/square
meter.
In summary, the undersigned believes that the valuation of
respondents Land Bank of the Philippines and the Department of
Agrarian Reform is not commensurate to the definition of just
compensation x x x.[23]
RTC Ruling
On October 14, 1998, the RTC issued a decision,[24] the fallo of which reads:
WHEREFORE, the Court hereby orders the remand of the
case with respect to TCT Nos. 1180 and T-41504 to the
proper DAR agency for further proceedings and orders the dismissal
of the case with respect to TCT Nos. T-41508, T-41507, T-41506,
and T-41505 for having been prematurely filed, there being no
preliminary valuation made yet on the said parcels of land. No
pronouncement as to costs.
SO ORDERED.[25]
Respondents moved for reconsideration. Consequently, on December 21,
1998, the trial court modified[26] its decision in the following manner:
WHEREFORE, premises considered, in the higher interest
of justice, the Court MODIFIES its October 14, 1998 decision by
ordering plaintiffs to adduce additional evidence to support their
contentions under PD 27/EO 228 within 30 days from receipt of this
Order furnishing a copy thereof to the defendants who are given 15
days from receipt to comment thereon. Thereafter, the matter shall be
deemed submitted for resolution.
SO ORDERED.[27]
Instead of adducing additional evidence, respondents filed a motion for
reconsideration of the trial courts December 21, 1998 order. Positing that the additional
evidence required by the court pertains to the formula under PD No. 27, respondents
insisted on P109,000.00 per hectare, the market value of the properties, as just
compensation.[28] Accordingly, the trial court, on March 18, 1999, issued another
order,[29] the dispositive portion of which states:
 transferred is within the meaning of the phrase just compensation
WHEREFORE, premises considered, the Court hereby sets provided for in J.M. Tuazon Co. vs. Land Tenure Administration(31
the just compensation in the amount of P6,912.50 per hectare for lot SCRA 413).[36]
covered by TCT No. T-1180 and the amount provided for in the Land
Valuation Summary and Farmers Undertaking for lot covered
by TCT No. T-41504 to be paid to the plaintiffs with interest from the
time of the taking until fully paid. Relying on the Commissioners Report, the CA assigned the lower value ofP109,000.00
per hectare as just compensation for the subject properties. [37]
SO ORDERED.[30]

Issues
CA Disposition

Petitioner bank has resorted to the present recourse, imputing to the CA the following
Dissatisfied with the March 18, 1999 RTC Order, respondents appealed to the
errors:
CA.On February 16, 2005, the CA rendered a decision[31] modifying the trial courts
ruling, viz.: A.
WHEN THE CHALLENGED DECISION ADHERED TO THE
WHEREFORE, in view of the foregoing, the trial courts COMMISSIONERS REPORT AND FIXED THE VALUE OF THE
decision is hereby MODIFIED. The plaintiffs-appellants right of LANDHOLDINGS AT P109,000.00 PER HECTARE WITH
retention is recognized. Plaintiffs-appellants Josefina, A. Florentino, INTEREST AT THE PREVAILING RATE FROM THE TIME OF
Jr. and Stella, all surnamed Dumlao are each entitled to retain five (5) TAKING UNTIL FULLY PAID, WORKING A MODIFICATION
hectares pursuant to the provisions of R.A. 6657. OF THE LEGALLY PRESCRIBED BASIC FORMULA FOR
DETERMINING THE JUST COMPENSATION OF LANDS
The excess in area after application of the right of retention ACQUIRED THROUGH OPERATION LAND TRANSFER (OLT),
is valued at One Hundred Nine Thousand (P109,000.00) Pesos per CONTRARY TO THE CLEAR MANDATE OF PD 27/EO 228.
hectare with interest at the prevailing rate from the time of taking
until fully paid. B.
WHEN THE CHALLENGED DECISION DECLARED
No costs. THAT OCTOBER 21, 1972 CANNOT BE DEEMED AS THE
DATE OF TAKING OF THE SUBJECT PROPERTIES.
SO ORDERED.[32]
C.
WHEN THE CHALLENGED DECISION DECLARED THAT
The CA declared that the definite time of the actual taking of the subject RESPONDENTS ENTIRE LANDHOLDINGS ARE COVERED BY
properties is not certain.[33] Further, there is no doubt that the transfer of the subject PD 27 AND THAT RESPONDENTS JOSEFINA, A.
FLORENTINO, JR., AND STELLA AREENTITLED TO
landholdings is governed by PD No. 27.[34] However, after the passage of RA No. 6657, RETAIN FIVE (5) HECTARES EACH.[38] (Underscoring supplied)
the formula relative to valuation under PD No. 27 no longer applies. [35] The appellate
court held: Our Ruling

The trial court, therefore, in the determination of just

compensation is not confined within the valuation provisions of P.D. The just compensation due to respondents should be determined under the
27. It can depart from it so long as the valuation assigned on the land provisions of RA No. 6657.

Petitioner asserts that since the properties were acquired pursuant to PD No.
27, the formula for computing just compensation provided by said decree and EO No.
228 should apply. Respondents, on the other hand, insist on the application of RA No.
6657 with respect to the computation.
Petitioner is mistaken. The 1987 Constitution, specifically Article XIII on
Social Justice and Human Rights, mandates the States adoption of an agrarian reform
program for the benefit of the common people.[39] The recognition of the need for
genuine land reform, however, started earlier. PD No. 27, issued onOctober 21,
1972, more than a decade before the enactment of the 1987 Constitution, provided for
the compulsory acquisition of private lands for distribution among tenant-farmers and
specified the maximum retention limits for landowners.[40]
The agrarian reform thrust was further energized with the enactment of EO
No. 228 on July 17, 1987, when full land ownership was declared in favor of the
beneficiaries of PD No. 27. The executive issuance also provided for the valuation of
still unvalued covered lands, as well as the manner of their payment. On July 22, 1987,
Presidential Proclamation No. 131, instituting a comprehensive agrarian reform
program, as well as EO No. 229[41] providing the mechanics for its implementation,
were likewise enacted.[42]
When the Philippine Congress was formally reorganized, RA No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988, was
immediately enacted. It was signed by President Corazon Aquino on June 10,
1988.This law, while considerably changing the earlier presidential issuances, including
PD No. 27 and EO No. 228, nevertheless gave them suppletory effect insofar as they
are not inconsistent with its provisions.[43]
On one hand, PD No. 27 provides the formula to be used in arriving at the
[44]
exact total cost of the acquired lands:
For the purpose of determining the cost of the land to be
transferred to the tenant-farmer pursuant to this Decree, the value of
the land shall be equivalent to two and one half (2-1/2) times the
average harvest of three normal crop years immediately
preceding the promulgation of this Decree.
The total cost of the land, including interest at the rate of six
(6) per centum per annum, shall be paid by the tenant in fifteen (15)
years of fifteen (15) equal annual amortizations. (Emphasis supplied)
Implementing the formula under PD No. 27, EO No. 228 states:
SECTION 2. Henceforth, the valuation of rice and corn
lands covered by P.D. No. 27 shall be based on the average gross
production determined by theBarangay Committee on Land
Production in accordance with Department Memorandum Circular
No. 26, series of 1973 and related issuances and regulation of the
Department of Agrarian Reform. The average gross production per
hectare shall be multiplied by two and a half (2.5), the product of
which shall be multiplied by Thirty-Five Pesos (P35.00), the
government support price for one cavan of 50 kilos
of palay on October 21, 1972, or Thirty-One Pesos (P31.00), the
government support price for one cavan of 50 kilos of corn onOctober
21, 1972, and the amount arrived at shall be the value of the rice
and corn land, as the case may be, for the purpose of determining
its cost to the farmer and compensation to the
landowner. (Emphasis supplied)
Thus, under PD No. 27 and EO No. 228, the formula for computing the Land
Value (LV) or Price Per Hectare (PPH) of rice and corn lands is:
2.5 x AGP[45] x GSP[46] = LV or PPH
The parameters of PD No. 27 and EO No. 228 are manifestly different from
the guidelines provided by RA No. 6657 for determining just compensation. Section 17
of RA No. 6657 is explicit:
Sec. 17. Determination of Just Compensation. In
determining just compensation, the cost of acquisition of the land, the
current value of the 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.
Due to the divergent formulae or guidelines presented by these laws, a number
of cases have already been brought to the Court regarding which law applies in
computing just compensation for landholdings acquired under PD No. 27.On this score,
the Court has repeatedly held that if just compensation was not settled prior to the
passage of RA No. 6657, it should be computed in accordance with said law, although
the property was acquired under PD No. 27.
In the recent Land Bank of the Philippines v. Heirs of Angel T.
Domingo,[47]We rejected the DARs valuation of just compensation based on the
formula provided by PD No. 27 and EO No. 228. We held then that Section 17 of RA
No. 6657 is applicable. The latter law, being the latest law in agrarian reform, should
control.
When RA 6657 was enacted into law in 1988, the agrarian
reform process in the present case was still incomplete as the amount
of just compensation to be paid to Domingo had yet to be settled. Just
compensation should therefore be determined and the expropriation
process concluded under RA 6657.
Guided by this precept, just compensation for purposes
of agrarian reform under PD 27 should adhere to Section 17 of
RA 6657 x x x.
In Land Bank of the Philippines v. Estanislao,[48] the Court ruled that taking
into account the passage of RA No. 6657 in 1988 pending the settlement of just
compensation, it is that law which applies to landholdings seized under PD No. 27, with
said decree and EO No. 288 having only suppletory effect. Prior to that declaration, the
Court already decreed in Land Bank of the Philippines v. Natividad,[49] citing Paris v.
Alfeche,[50] that:
Under the factual circumstances of this case, the agrarian
reform process is still incomplete as the just compensation to be paid
private respondents has yet to be settled. Considering the passage of
Republic Act No. 6657 (6657) before the completion of the process,
the just compensation should be determined and the process
concluded under the said law. Indeed, RA 6657 is the applicable law,
with PD 27 and EO 228 having only suppletory effect, conformably
with our ruling inParis v. Alfeche.[51]
Agrarian reform is a revolutionary kind of expropriation. [52] The recognized
rule in expropriation is that title to the expropriated property shall pass from the owner
to the expropriator only upon full payment of the just compensation.[53]Thus, payment
of just compensation to the landowner is indispensable.
In fact, Section 4, Article XIII of the 1987 Constitution mandates that the
redistribution of agricultural lands shall be subject to the payment of just
compensation. The deliberations of the 1986 Constitutional Commission on this subject
reveal that just compensation should not do violence to the Bill of Rights but should
also not make an insurmountable obstacle to a successful agrarian reform
program. Hence, the landowners right to just compensation should be balanced with
agrarian reform.[54]
In the case under review, the agrarian reform process was not completed. The
just compensation to be paid respondents was not settled prior to the enactment of RA
No. 6657, the law subsequent to PD No. 27 and EO No. 228. In fact, the non-payment
of just compensation is precisely the reason why respondents filed a petition for the
determination of just compensation before the RTC on July 13, 1995.
The records do not show when respondents or their father, Florentino Dumlao,
was formally notified of the expropriation. The records, however, bear out that the bank
sent Florentino Dumlao a letter stating that it had approved the land transfer claim
involving that property covered by TCT No. T-1180 on November 5, 1990. Moreover,
the various Land Valuation Summary and Farmers Undertakings showing the valuation
of the land transferred to the farmers-beneficiaries were approved on May 17,
1989[55] and July 21, 1989.[56] It is thus crystal clear that even after the passage of RA
No. 6657 in 1988, neither petitioner nor the DAR had settled the matter of just
compensation with respondents as landowners.
Besides, RA No. 6657 applies to rice and corn lands covered by PD No.
27.In Paris v. Alfeche,[57] the Court explained:
Considering the passage of RA 6657 before the completion
of the application of the agrarian reform process to the subject lands,
the same should now be completed under the said law, with PD 27
and EO 228 having only suppletory effect. This ruling finds support
in Land Bank of the Philippines v. CA,wherein the Court stated:
We cannot see why Sec. 18 of RA 6657
should not apply to rice and corn lands under
PD 27. Section 75 of RA 6657 clearly states that
the provisions of PD 27 and EO 228 shall only have
a suppletory effect. Section 7 of the Act also
provides
Sec.
7. Priorities. The DAR, in
coordination with the PARC shall
plan and program the acquisition
and distribution of all agricultural
lands through a period of ten (10)
years from the effectivity of this
Act. Lands shall be acquired and
distributed as follows:
Phase One: Rice and
Corn lands under P.D. 27; all
idle or abandoned lands; all
private lands voluntarily offered
by the owners for agrarian
reform; x x x and all other lands
owned by the government
devoted to or suitable for
agriculture, which shall be
acquired and distributed
immediately upon the effectivity
of this Act, with the
implementation to be completed
within a period of not more than
four (4) years.
This eloquently demonstrates that RA
6657 includes PD 27 lands among the
properties which the DAR shall acquire and
distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs. 16, 17,
and 18 of the Act should be adhered
to. In Association of Small Landowners of the
Philippines v. Secretary of Agrarian Reform, this
Court applied the provisions (of) RA 6657 to rice
and corn lands when it upheld the constitutionality
of the payment of just compensation for PD 27
lands through the different modes stated in Sec.
18. (Emphasis supplied)
Verily, there is nothing to prevent Section 17 of RA No. 6657 from being
applied to determine the just compensation for lands acquired under PD No. 27.
In Natividad,[58] the Court ruled that the DARs failure to determine the just
compensation for a considerable length of time made it inequitable to follow the
guidelines provided by PD No. 27 and EO No. 228. Hence, RA No. 6657 should
apply. The same rationale was followed in Meneses v. Secretary of Agrarian
Reform.[59] There, the Court noted that despite the lapse of more than thirty (30) years
since the expropriation of the property in 1972, petitioners had yet to benefit from it,
while the farmer-beneficiaries were already harvesting the propertys produce. Thus, RA
No. 6657 was applied instead of PD No. 27 in determining just compensation.
In Meneses, the Court compared the conflicting rulings in Gabatin v. Land
Bank of the Philippines,[60] cited by petitioner, and Land Bank of the Philippines v.
Natividad.[61] This Court affirmed Natividad, stating that it would be more equitable to
apply the same due to the circumstances obtaining, i.e. the more than 30-year delay in
the payment of just compensation.

The application of RA No. 6657 due to the inequity faced by landowners
continued in Lubrica v. Land Bank of the Philippines.[62] The landowners were also
deprived of their properties in 1972 but had yet to receive their just compensation even
after the passage of RA No. 6657. Since the landholdings were already subdivided and
distributed to the farmer-beneficiaries, the Court, speaking through Justice Consuelo
Ynares-Santiago, deemed it unreasonable to compute just compensation using the
values at the time of taking in 1972 as dictated by PD No. 27, and not at the time of
payment pursuant to RA No. 6657.
We find no cogent reason not to apply the same ratiocination here. In the case
at bar, emancipation patents, and eventually, transfer certificates of title, were issued to
[63]
the farmer-beneficiaries at least twenty-eight (28) years ago. OnMarch 16, 1990,
the DAR acknowledged that the property covered by TCT No. T-1180 had already been
distributed to farmer-beneficiaries through emancipationpatents. As early as June 10,
1975, a portion of the same property was conveyed to a certain Rosalina Abon,
[64]
although this was not annotated on the owners title.
Needless to say, respondents have already been deprived of the use and
dominion over their landholdings for a substantial period of time. In the interim,
petitioner bank has abjectly failed to pay, much less to determine, the just compensation
due to respondents. The law clearly recognizes that the exact value of lands taken under
PD No. 27, or the just compensation to be given to the landowner must be determined
with certainty before the land titles are transferred. [65]Petitioners gross failure to
compensate respondents for loss of their land, while transferring the same to the farmer-
beneficiaries, make it unjust to determine just compensation based on the guidelines
provided by PD No. 27 and EO No. 228.
Accordingly, just compensation should be computed in accordance with RA
No. 6657 in order to give full effect to the principle that the recompense due to the
landowner should be the full and fair equivalent of the property taken from the owner
by the expropriator. The measure is not the takers gain but the owners loss.The word
just is used to intensify the meaning of the word compensation to convey the idea that
the equivalent to be rendered for the property to be taken shall be real, substantial,
full, and ample.[66]
The determination of just compensation is a function addressed to the courts of
justice and may not be usurped by any other branch or official of the
government.[67] However, the determination made by the trial court, which relied solely
on the formula prescribed by PD No. 27 and EO No. 228, is grossly erroneous. The
amount of P6,912.50 per hectare, which is based on the DARvaluation of the properties
at the time of their taking in the 1970s,[68] does not come close to a full and fair
equivalent of the property taken from respondents.
Meanwhile, the CAs act of setting just compensation in the amount
ofP109,000.00 would have been a valid exercise of this judicial function, had it
followed the mandatory formula prescribed by RA No. 6657. However, the appellate
court merely chose the lower of two (2) values specified by the commissioner as basis
for determining just compensation, namely: (a) P109,000.00 per hectare as the market
value of first class unirrigated rice land in the Municipality of Villaverde; and
(b) P60.00 per square meter as the zonal value of the land in other barangays in
Villaverde. This is likewise erroneous because it does not adhere to the formula
provided by RA No. 6657.
It cannot be overemphasized that the just compensation to be given to the
owner cannot be assumed and must be determined with certainty. [69] Its determination
involves the examination of the following factors specified in Section 17 of RA No.
6657, as amended, namely: (1) the cost of acquisition of the land; (2) the current value
of the properties; (3) its nature, actual use, and income; (4) the sworn valuation by the
owner; (5) the tax declarations; (6) the assessment made by government assessors; (7)
the social and economic benefits contributed by the farmers and the farmworkers and
by the government to the property; and (8) the non-payment of taxes or loans secured
from any government financing institution on the said land, if any. [70]
 Section 17 was converted into a formula by the DAR through Administrative Valuation Input Regional Consumer Price
Index (RCPI) Adjustment
Order (AO) No. 6, Series of 1992,[71] as amended by AO No. 11, Series of 1994, [72] the Factor
pertinent portions of which provide: 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
A. There shall be one basic formula for the valuation of from DAR for processing or, in its absence, the most recent
lands covered by [Voluntary Offer to Sell] or [Compulsory available RCPI for the month issued prior to the date of
Acquisition] regardless of the date of offer or coverage of the claim: receipt of CF from DAR and the RCPI for the month as of
the date/effectivity/registration of the valuation input.
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Expressed in equation form:
Where: LV = Land Value RCPI for the Month as of the
CNI = Capitalized Net Income Date of Receipt of Claimfolder
CS = Comparable Sales by LBP from DAR or the Most
MV = Market Value per Tax Declaration recent RCPI for the Month
The above formula shall be used if all the three factors are Issued Prior to the Date of
present, relevant and applicable. RCPI Receipt of CF
A.1 When the CS factor is not present and CNI and MV are Adjustment =
applicable, the formula shall be: Factor RCPI for the Month Issued as of
the Date/Effectivity/Registration
LV = (CNI x 0.9) + (MV x 0.1) of the Valuation Input
A.2 When the CNI factor is not present, and CS and MV are B. Capitalized Net Income (CNI) This shall refer to the
applicable, the formula shall be: difference between the gross sales (AGP x SP) and total cost of
operations (CO) capitalized at 12%.
LV = (CS x 0.9) + (MV x 0.1)
Expressed in equation form:
A.3 When both the CS and CNI are not present and only MV is
applicable, the formula shall be: CNI = (AGP x SP) - CO
.12
LV = MV x 2
Where: CNI = Capitalized Net Income
In no case shall the value of the land using the formula AGP = Latest available 12-month's gross
MV x 2 exceed the lowest value of land within the same production
estate under consideration or within the same barangay or immediately preceding the date of
municipality (in that order) approved by LBP within one offer in case of VOS or date of
(1) year from receipt of claimfolder. notice of coverage in case of CA.
xxxx SP = The average of the latest available 12
months selling prices prior to the
A.6 The basic formula in the grossing-up of valuation inputs date of receipt of the claimfolder
such as LOs Offer, Sales Transaction (ST), Acquisition by LBP for processing, such
Cost (AC), Market Value Based on Mortgage (MVM) and prices to be secured from the
Market Value per Tax Declaration (MV) shall be: Department of Agriculture (DA)
and other appropriate regulatory
Grossed-up = Valuation input x
 bodies or, in their absence, from
the Bureau of Agricultural
Statistics. If possible, SP data While the determination of just compensation involves the exercise of judicial
shall be gathered from discretion, such discretion must be discharged within the bounds of the
thebarangay or municipality
where the property is located. In law.[73] The DAR, as the government agency principally tasked to implement the
the absence thereof, SP may be agrarian reform program, has the duty to issue rules and regulations to carry out the
secured within the province or
object of the law. The DAR administrative orders precisely filled in the details of
region.
Section 17 of RA No. 6657 by providing a basic formula by which the factors
CO = Cost of Operations mentioned in the provision may be taken into account.[74] Special agrarian courts are not
Whenever the cost of operations
could not be obtained or verified, at liberty to disregard the formula devised to implement the said provision because
an assumed net income rate unless an administrative order is declared invalid, courts have no option but to apply
(NIR) of 20% shall be used.
Landholdings planted to coconut it.[75]
which are productive at the time
of offer/coverage shall continue In his Report, the Commissioner merely specified the market value of first
to use the 70% NIR.DAR and
LBP shall continue to conduct class unirrigated ricelands in the municipality where the properties are located, as well
joint industry studies to establish as the zonal value of lands in other barangays in the same municipality. For their part,
the applicable NIR for each crop
covered under CARP. respondents attempted to prove the following: market value of unirrigated ricelands for
the Municipality of Villaverde, set at P109,000.00 per hectare, pursuant to Sangguniang
.12 = Capitalization Rate
Bayan Tax Ordinance No. 96-45;[76] annual production of unirrigated ricefields in
xxxx Villaverde, at 80 cavans during palagad cropping, and 101 cavans under regular
cropping;[77] government support price for palay for the period October 1, 1990 to
C. CS shall refer to any one or the average of all the applicable
sub-factors, namely, ST, AC and MVM: October 1995 at P6.00 per kilo, and from November 1, 1995 to the time of the filing of
the petition at P8.00 per kilo.[78]
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
However, the records do not bear out if these factors are the only
xxxx onesrelevant, present and applicable in this case, so that just compensation can now
be computed by the Court based on the formula provided by the DARadministrative
D. In the computation of Market Value per Tax Declaration
(MV), the most recent Tax Declaration (TD) and Schedule of orders. Based on the evidence adduced, it appears that market value and comparable net
Unit Market Value (SMV) issued prior to receipt of claimfolder income (CNI) are being proved. However, CNI cannot be computed in the absence of
by LBP shall be considered. The Unit Market Value (UMV) shall
information regarding cost of operations.[79]
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. (Emphasis and underscoring We are thus compelled to remand the case to the court a quo to determine the
supplied)
final valuation of respondents properties. The trial court is mandated to consider the
factors provided under Section 17 of RA No. 6657, as translated into the formula had to be made first, conformably to the constitutional
requirement.[84] (Emphasis supplied)
prescribed by DAR AO No. 6-92, as amended by DAR AO No. 11-94.

In Land Bank of the Philippines v. Estanislao,[85] the Court declared that seizure of
Furthermore, upon its own initiative, or at the instance of any of the parties,
landholdings or properties covered by PD No. 27 did not take place on October 21,
the RTC may again appoint one or more commissioners to examine, investigate and
1972, but upon the payment of just compensation.
ascertain facts relevant to the dispute including the valuation of properties and to file a
written report with the RTC.[80] Land Banks contention that the property was acquired for
purposes of agrarian reform on October 21, 1972, the time of the
effectivity of PD 27, ergo just compensation should be based on the
We next address the second issue date of taking. value of the property as of that time and not at the time of possession
in 1993, is likewise erroneous. In Office of the President,
Malacaang, Manila v. Court of Appeals, we ruled that the seizure of
The taking of the properties for the purpose of computing just compensation
the landholding did not take place on the date of effectivity of PD 27
should be reckoned from the date of issuance of emancipation patents, and not but would take effect on the payment of just
on October 21, 1972, as petitioner insists. The nature of the compensation.[86] (Emphasis in the original)
[81]
land at that timedetermines the just compensation to be paid.
However, for purposes of computing just compensation, this Court recently declared

We cannot sustain petitioners position that respondents properties were in Land Bank of the Philippines v. Heirs of Angel T. Domingo [87] that the time of taking

statutorily taken on October 21, 1972, the date of effectivity of PD No. 27; that on that should be reckoned from the issue dates of emancipation patents.

date, respondents were effectively deprived of possession and dominion over the land;
The date of taking of the subject land for purposes of
and that when EO No. 228 fixed the basis in determining land valuation using the computing just compensation should be reckoned from the
government support price of P35.00 for one cavan of 50 kilos of palay onOctober 21, issuance dates of the emancipation patents. An emancipation
patent constitutes the conclusive authority for the issuance of a
1972, it was consistent with the settled rule that just compensation is the value of the Transfer Certificate of Title in the name of the
property at the time of the taking.[82] grantee. It is from theissuance of an emancipation patent that the
grantee can acquire the vested right of ownership in the landholding,
subject to the payment of just compensation to the
In Association of Small Landowners v. Secretary of Agrarian Reform,[83] the landowner.[88] (Emphasis supplied)
Court held that title to the property expropriated shall pass from the
owner to theexpropriator only upon full payment of just compensation. The Court It is undisputed that emancipation patents were issued to the farmer-
further held that: beneficiaries.However, their issuance dates are not shown. As such, the trial court
should determine the date of issuance of these emancipation patents in order to
It is true that P.D. No. 27 expressly ordered the
emancipation of tenant-farmer as [of] October 21, 1972 and declared ascertain the date of taking and proceed to compute the just compensation due to
that he shall be deemed the owner of a portion of land consisting of a respondents, in accordance with RA No. 6657.
family-sized farm except that no title to the land owned by him was to
be actually issued to him unless and until he had become a full-
fledged member of a duly recognized farmers cooperative. It was Now, to the third and final issue.
understood, however, that full payment of just compensation also

Respondents are entitled to payment of just compensation even on those
properties which have not been processed by the DAR.
Petitioner admits that of respondents landholdings, only those covered
byTCT Nos. T-1180 and T-41504, totaling 16.3939 hectares, were processed and
initially valued by the DAR. Pending initial processing by the DAR of the remaining
landholdings, petitioner posits that it cannot be made to pay the amount of P109,000.00
per hectare for those covered by TCT Nos. 41508, 41507, 41506, and 41505, with an
aggregate area of 17.2379 hectares.
The argument is specious for three reasons.
First, the determination of just compensation is judicial in nature. The DARs
land valuation is only preliminary and is not, by any means, final and conclusive upon
the landowner or any other interested party. In the exercise of its functions, the courts
still have the final say on what the amount of just compensation will be. [89]
In Natividad, the Court held that:
[T]here is nothing contradictory between the DARs primary
jurisdiction to determine and adjudicate agrarian reform matters and
exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, which includes the determination
of questions of just compensation, and theoriginal and exclusive
jurisdiction of regional trial courts over all petitions for the
determination of just compensation. The first refers to
administrative proceedings, while the second refers to judicial
proceedings.
In accordance with settled principles of administrative law,
primary jurisdiction is vested in the DAR to determine in
a preliminary manner the just compensation for the lands taken
under the agrarian reform program, but such determination is
subject to challenge before the courts. The resolution of just
compensation cases for the taking of lands under agrarian reform is,
after all, essentially a judicial function.
Thus, the trial court did not err in taking cognizance of the
case as the determination of just compensation is a function addressed
to the courts of justice.[90] (Emphasis supplied)
In fact, the law does not make the DAR valuation absolutely binding as the
amount payable by petitioner. A reading of Section 18[91] of RA No. 6657 shows that it
is the courts, not the DAR, which make the final determination of just compensation.
Accordingly, RA No. 6657 directs petitioner to pay the DARs land valuation
only if the landowner, the DAR and petitioner agree on the amount of just
compensation. Otherwise, the amount determined by the special agrarian court as just
compensation shall be paid by petitioner. Corollarily,
there is no reason forpetitioner to wait for the DAR valuation of the properties, if the
court has already determined the just compensation due to respondents.
Second, to wait for the DAR valuation despite its unreasonable neglect and
delay in processing the four properties claimfolders is to violate the elementary rule that
payment of just compensation must be within a reasonable period from the taking of
property. Cosculluela v. Court of Appeals[92] could not have been clearer:
Just compensation means not only the correct
determination of the amount to be paid to the owner of the land
but also the payment of the land within a reasonable time from its
taking. Without prompt payment, compensation cannot be considered
just for the property owner is made to suffer the consequence of being
immediately deprived of his land while being made to wait for a
decade or more before actually receiving the amount necessary to
cope with his loss. x x x.[93] (Emphasis supplied)
In the case at bar, the properties have long been expropriated by the
government and their fruits enjoyed by the farmer-beneficiaries. Respondent have been
made to wait for decades for payment of their recompense. They were not even allowed
to withdraw the amount claimed to have been deposited with petitioner bank on their
behalf. It would certainly be iniquitous to wait for the DARto process the properties
covered by the four other titles before the special agrarian court can finally determine
the amount of their just compensation.[94]
 Third, while the DAR is vested with primary jurisdiction to determine in
apreliminary manner the amount of just compensation, the circumstances of this case
militate against the application of the doctrine of primary jurisdiction.
The principle of exhaustion of administrative remedies is a relative one and is
flexible depending on the peculiarity and uniqueness of the factual and circumstantial
settings of a case. It is disregarded: (1) when there is a violation of due process; (2)
when the issue involved is purely a legal question; (3) when the administrative action is
patently illegal and amounts to lack or excess of jurisdiction; (4) when there is estoppel
on the part of the administrative agency concerned; (5) when there is irreparable injury;
(6) when respondent is a department secretary whose acts, as an alter ego of the
President, bears the implied and assumed approval of the latter; (7) when to require
exhaustion of administrative remedies would be unreasonable; (8) when it would
amount to a nullification of a claim; (9) when the subject matter is a private land in land
case proceedings; (10) when the rule does not provide a plain, speedy and adequate
remedy; (11) when there are circumstances indicating the urgency of judicial
intervention, and unreasonable delay would greatly prejudice the complainant;
(12) when no administrative review is provided by law; (13) where the rule of qualified
political agency applies; and (14) when the issue of non-exhaustion of administrative
remedies has been rendered moot.[95]
Here, to require exhaustion of administrative remedies would be
unreasonable. What is more, judicial intervention is necessary so as not to unduly
prejudice the landowners. Respondents have long been deprived of their landholdings,
yet compensation has been withheld from them. Accordingly, to make respondents wait
for the DAR to process the claimfolders of the remaining four properties would be
unreasonable, unjust and manifestly prejudicial to them.
Respondents are entitled to the right of retention over their lands.
The right of retention is constitutionally guaranteed, subject to qualification by
the legislature. It serves to mitigate the effects of compulsory land acquisition by
balancing the rights of the landowner and the tenant and by implementing the doctrine
that social justice was not meant to perpetrate an injustice against the landowner. A
retained area, as its name denotes, is land which is not supposed to anymore leave the
landowners dominion, thus sparing the government from the inconvenience of taking
land only to return it to the landowner afterwards, which would be a pointless
process.[96]
The opinion of the MARO[97] that respondents are not entitled to retain areas
out of their landholdings because they applied for the same after the grace period set by
the government[98] fails to persuade. A landowner whose land was taken pursuant to PD
No. 27 has a right to retain seven hectares of land, provided that the landowner is
cultivating the area or will now cultivate it.[99] Those who did not avail of their rights of
retention under PD No. 27 are entitled to exercise the same under Section 6[100] of RA
No. 6657.[101] Landowners may still avail of their retention rights notwithstanding
the August 27, 1985 deadline imposed byDAR AO No. 1, Series of 1985. In Daez v.
Court of Appeals,[102] the Court, citingAssociation of Small Landowners, Inc. v.
Secretary of Agrarian Reform,[103]disregarded said deadline and sustained the
landowners retention rights. Notably, under RA No. 6657, landowners who do not
personally cultivate their lands are no longer required to do so in order to qualify for the
retention of an area not exceeding five hectares. Instead, they are now required to
maintain the actual tiller of the area retained, should the latter choose to remain in those
lands.[104] Verily, there is no impediment to the exercise by respondents of their
retention rights under RA No. 6657.
In sum, We rule that:
1. The provisions of RA No. 6657 apply in determining the just compensation due to
respondents for the taking of their property. However, the value of P109,000.00, based
on the propertys market value and assigned by the CA as just compensation, is Reform Law, the Court is left with no evidence on record that could aid in the proper resolution
erroneous. The trial court is thus directed to receive evidence pertaining to the factors to of the case. While remand is frowned upon for obviating the speedy dispensation of justice, it
be considered in determining just compensation, in accordance with DARAO No. 6, becomes necessary to ensure compliance with the law and to give everyone the landowner, the
Series of 1992, as amended by AO No. 11, Series of 1994. farmers, and the State their due.

2. For purposes of computing just compensation, the date of issuance of emancipations
is deemed the date of taking, not October 21, 1972.
3. Respondents are entitled to payment of just compensation on their entire
landholdings covered by Operation Land Transfer, except for the five hectares of
retention area each of them are entitled to.
This is a Petition for Review under Rule 45, assailing the August 30, 2005 Decision[1] of the
Court of Appeals (CA), as well as its December 5, 2005 Resolution[2] in CA-GR SP No.
83138. The dispositive portion of the assailed Decision reads as follows:
WHEREFORE, premises considered, the petition is DENIED. The Decision
dated January 29, 2004 and the Order dated March 16, 2004 of the RTC,
Branch 56, Angeles City in Civil Case No. 10405 are hereby AFFIRMED.[3]

WHEREFORE, the petition is DENIED. The case is REMANDED to the

Factual Antecedents
court a quo for final determination of just compensation due to respondents.

SO ORDERED. Petitioner Land Bank of the Philippines (LBP) is the government financial
LAND BANK OF THE G.R. No. 170685 [4]
institution established to aid in the implementation of the Comprehensive Agrarian Reform
PHILIPPINES,
Petitioner, Present: Program (CARP) as well as to act as financial intermediary of the Agrarian Reform Fund.[5]

CORONA, C. J., Chairperson, Respondent Enrique Livioco (Livioco) was the owner of 30.6329 hectares of sugarland[6]located
CARPIO MORALES,⃰
in Dapdap, Mabalacat, Pampanga. Sometime between 1987 and 1988,[7] Livioco offered his
- versus - VELASCO, JR.,
DEL CASTILLO, and sugarland to the Department of Agrarian Reform (DAR) for acquisition under the CARP
PEREZ, JJ. at P30.00 per square meter, for a total of P9,189,870.00. The voluntary-offer-to-sell (VOS)
ENRIQUE LIVIOCO, Promulgated: form[8] he submitted to the DAR indicated that his property is adjacent to residential subdivisions
Respondent. September 22, 2010 and to an international paper mill.[9]
x--------------------------------------------------------x

DECISION
DEL CASTILLO, J.
When the evidence received by the trial court are irrelevant to the issue of just compensation and
in total disregard of the requirements provided under Section 17 of the Comprehensive Agrarian
The DAR referred Liviocos offer to the LBP for valuation.[10] Following Section 17 of Republic
Act (RA) No. 6657 and DAR Administrative Order No. 17, series of 1989,[11]as amended by
Administrative Order No. 3, series of 1991,[12] the LBP set the price atP3.21 per square meter or a
total of P827,943.48 for 26 hectares.[13] Livioco was then promptly informed of the
valuation[14] and that the cash portion of the claim proceeds have been kept in trust pending [his]
submission of the [ownership documentary] requirements.[15] It appears however that Livioco did
not act upon the notice given to him by both government agencies. On September 20, 1991, LBP
issued a certification to the Register of Deeds of Pampanga that it has earmarked the amount
of P827,943.48 as compensation for Liviocos 26 hectares.[16]
It was only two years later[17] that Livioco requested for a reevaluation of the compensation on the
ground that its value had already appreciated from the time it was first offered for sale.[18] The
request was denied by Regional Director Antonio Nuesa on the ground that there was already a
perfected sale.[19]
The DAR proceeded to take possession of Liviocos property. In 1994, the DAR awarded
Certificates of Land Ownership Award (CLOAs) covering Liviocos property to 26 qualified
farmer-beneficiaries.[20]
Livioco filed separate complaints to cancel the CLOAs and to recover his property but the same
proved futile. The first case he filed in 1995 was for quieting of title, recovery of possession and
damages against the DAR, LBP, Register of Deeds, and the farmer-beneficiaries.[21] In its final
and executory Decision,[22] the CA sustained the validity of the CLOAs.[23] The relevant portions
of the Decision read:
What matters most is the fact that the requirements for Compulsory
Acquisition of private lands, especially the indispensable ones, to wit: (1)
valuation of the subject property by the proper government agency which is
the LBP; (2) DARs Notice of Land Valuation to petitioner and; (3) most
importantly, the deposit of the amount of land valuation in the name of
petitioner after he rejected the said amount, were substantially complied with
in the instant case.
Considering therefore that there was material and substantial compliance
with the requirements for the Compulsory Acquisition of the subject land, the
acquisition of the same is indubitably in order and in accordance with law.[24]
[25]
Livioco then filed in 1998 a petition for reconveyance before the DAR Regional Office.
case eventually reached the CA, which dismissed the petition on the ground that the validity of
the compulsory acquisition had already been decided with finality in the earlier CA case, to wit:
As the disputed property was eventually acquired through Compulsory
Acquisition, its reconveyance to the petitioners was properly disallowed by
the DAR. The certifications by other government agencies that the land was
identified as a resettlement area [are] of no avail as the DAR is vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and
has exclusive original jurisdiction over all matters involving the
implementation of agrarian reform.
xxxx
Indeed, it is to the best interest of the public that the litigation regarding the
reconveyance of the disputed property between the same parties for the same
grounds must come to an end, the matter having [been] already fully and
fairly adjudicated by the DAR, this Court and the Supreme Court which had
declined to disturb the judgment of this Court.[26]
Upon the request of DAR, LBP made two amendments to the valuation. At first, they reduced
the acquired area from 30.6329 hectares to 23.9191 hectares. Later, they increased the acquired
area to 24.2088 hectares. The remaining 6.4241 hectares of the property was determined as not
compensable because this comprised a residential area, a creek, road, and a chapel.[27] The total
value for 24.2088 hectares was P770,904.54.Livioco was informed on August 8, 2001 that the
payment was already deposited in cash and agrarian reform bonds and may be withdrawn upon
submission of the documentary requirements.[28]
Unable to recover his property but unwilling to accept what he believes was an outrageously low
valuation of his property, Livioco finally filed a petition for judicial determination of just
compensation against DAR, LBP, and the CLOA holders before Branch 56 of the Regional Trial
Court (RTC) of Angeles City on December 18, 2001.[29]He maintained that between 1990 and
2000, the area where his property is located has become predominantly residential hence he
should be paid his propertys value as such. To prove that his property is now residential, Livioco
presented a Certification from the Office of the Municipal Planning and Development
Coordinator of the Municipality of Mabalacat that, as per zoning ordinance, Liviocos land is
located in an area where the dominant land use is residential.[30] He also presented certifications
from the Housing and Land Use Regulatory Board,[31] the Mt. Pinatubo Commission,[32] and the
The
National Housing Authority[33] that his property is suitable for a resettlement area or for socialized
housing. None of these plans pushed through.
Livioco then presented evidence to prove the value of his property as of 2002. According to his
sworn valuation, his property has a market value of P700.00/square meter.[34] He also presented
the Bureau of Internal Revenue (BIR) zonal value for residential lands in Dapdap, as ranging
from P150.00 to P200.00/square meter.[35] He then presented Franklin Olay (Olay), chief
appraiser of the Rural Bank of Mabalacat, who testified[36]and certified[37] that he valued the
property at P800.00 per square meter, whether or not the property is residential. Olay explained
that he arrived at the said value by asking the buyers of adjacent residential properties as to the
prevailing selling price in the area.[38]There was also a certification from the Pinatubo Project
Management Office that Liviocos property was valued at P300.00/square meter.[39] Livioco
prayed that just compensation be computed at P700.00/square meter.[40]
Only LBP filed its Answer[41] and participated in the trial. It justified the P3.21/square meter
valuation of the property on the ground that it was made pursuant to the guidelines in RA 6657
and DAR Administrative Order No. 3, series of 1991. LBP objected to respondents theory that
his property should be valued as a residential land because the same was acquired for agricultural
purposes, not for its potential for conversion to other uses.[42] LBP presented its agrarian affairs
specialist who testified[43] that, due to the increase in the acquired area, she was assigned to amend
the claim of Livioco. She computed the total value thereof at P770,904.54, using the DAR
Administrative Order No. 3, series of 1991.[44] The only other witness of LBP was its lawyer,
who explained the legal basis for the DAR administrative orders and the factors for land
valuation provided in Section 17 of RA 6657.[45]
Ruling of the Regional Trial Court
Apparently aware that neither party presented relevant evidence for the proper computation of the
just compensation, the trial court issued its April 2, 2003 Order requiring the reception of
additional evidence:
A perusal of the record of this case as well as the evidence adduced by the
parties shows that the facts required for the proper computation and/or
determination of just compensation for the plaintiffs property i.e., land value
of the property in accordance with the Listasaka, capitalized net income,
comparable sales and market value pursuant to the corresponding tax
declaration, are unavailable and insufficient.
WHEREFORE, for the Court to properly determine and fix the just
compensation to be accorded to [respondents] property, the reopening of this
case for the purpose of the presentation of additional evidence is hereby
ordered.
Let the reception of aforesaid additional evidence be set on April 22, 2003 at
8:30 am.
x x x x[46]
Based on the records, the next hearing took place on July 10, 2003 where none of the parties
presented additional evidence, whether testimonial or documentary.[47]Nevertheless, the trial court
proceeded to rule in favor of Livioco:
WHEREFORE, premises considered, the Court hereby renders judgment in
favor of the [respondent], Enrique Livioco, and against the Department of
Agrarian Reform and the Land Bank of the Philippines with a determination
that the just compensation of Liviocos property, consisting of 24.2088
hectares located at Mabalacat, Pampanga is worth Php700.00 per square
meter.
Defendants Department of Agrarian Reform and Land Bank of the
Philippines are, therefore, ordered to pay [respondent] the amount of
Php700.00 per square meter multiplied by 24.2088 hectares representing the
entire area taken by the government from the plaintiff.[48]
The trial court was of the opinion that Livioco was able to prove the higher valuation of his
property with a preponderance of evidence. In contrast, there was a dearth of evidence to support
LBPs P3.21 per square meter valuation of the property. Not a single documentary evidence was
presented to substantiate its valuation.
LBP sought a reconsideration[49] of the adverse decision arguing that the court should have
considered the factors appearing in Section 17. It stressed that in failing to consider the propertys
productive capacity (capitalized net income), the court placed the farmer-beneficiaries in a very
difficult position. They would not be able to pay off the just compensation for their lands because
it is valued way beyond its productive capacity. The same was denied by the trial court.[50]
Upon respondents motion, the lower court ordered LBP on March 29, 2004 to release as initial
cash down payment the amount of P827,943.48, inclusive of legal interest accruing from the time
of taking on September 20, 1991 (the date when LBP informed the Register of Deeds that it has
earmarked the said amount in favor of Livioco).[51]

LBP sought a reconsideration of the said order. It clarified that the just compensation
deposited by LBP in the account of respondent was only P770,904.54 for the 24.2088 hectares. It
likewise asked that the release of the deposit be subject to respondents compliance with the
release requirements of the ownership documents.[52]The records are silent as to the courts action
on the motion as well as to the execution of this order.
Ruling of the Court of Appeals[53]
Petitioner turned to the CA to no avail. The CA affirmed the trial courts decision in toto.First it
held that factual findings of the trial courts are entitled to respect. It held that the factors for
determining just compensation, set out in Section 17 of RA 6657, were all considered by the trial
court in arriving at its decision. It stated that among the relevant evidence considered were
Liviocos sworn valuation, tax declarations, zonal value, actual use of the property, and the socio-
economic benefits contributed by the government to the property. It likewise noted that the taking
of Liviocos property coincided with the Mt. Pinatubo eruption in 1991, which event affected its
[54]
valuation. Pursuant to Section 18(1)(b) of RA 6657, the CA ordered LBP to pay 30% of the
purchase price in cash, while the balance may be paid in government financial instruments
negotiable at any time.[55]
A motion for reconsideration[56] was filed on September 29, 2005, which was denied in a
Resolution[57] dated December 5, 2005.
Hence, this petition.
Petitioners arguments
In this Petition before us, LBP assails the CAs assent to the valuation of Liviocos property as a
residential land. It maintains that it is not the States policy to purchase residential land.Since the
[58]
property was acquired under the CARP, it had to be valued as an agricultural land. Moreover,
the assumption that Liviocos property has a residential use is entirely speculative and baseless
because none of the government plans to use it as a residential land was carried out.[59]
LBP also assails the Decision of the trial court which valued the land as of 1997 when the rule is
that just compensation must be valued at the time of taking, which in this case was in 1988. By
considering events that transpired after 1988, the court obviously relied on factors that were not in
existence at the time of taking.[60]
LBP further argues that the trial court should have given more weight to its land
valuation because it is the authorized agency recognized by the legislature as having expertise on
the matter.[61]
LBP insists that the Claim Valuation and Processing Form that it presented before the
appellate court clearly established the area covered, the land use or crop planted, the average
price/hectare and the total value of the subject land. LBP describes this document as clear and
convincing evidence of the correctness of its valuation.[62]
LBP likewise assails the lower courts valuation on the ground that they disregarded the factors set
out in Section 17 of RA 6657 for the determination of just compensation. It argues that the factors
stated in that provision are exclusive and the courts cannot consider factors that are not included
therein.[63]
Respondents arguments
Respondent argues that by seeking a review of the just compensation, LBP is raising a question
of fact, which entails an examination of the probative value of the evidence presented by the
parties.[64] He points out that LBP is merely reiterating the arguments already presented in its
motion for reconsideration before the CA, which makes the instant petition dilatory.[65]
Respondent then argues that, with respect to the determination of just compensation, courts are
not bound by the findings of administrative agencies such as LBP. Courts are the final authority
in this matter. LBPs valuation is only preliminary and it has the duty to prove to the trial courts
the veracity of its valuation. In the instant case, the trial court decided based on the evidence
presented but found LBPs valuation unsubstantiated.[66]He then prays for the dismissal of the
instant petition for review.[67]
Issue

Was the compensation for respondents property
determined in accordance with law?
Our Ruling
For purposes of just compensation, the fair market value of an expropriated property is
determined by its character and its price at the time of taking.[68] There are three important
concepts in this definition the character of the property, its price, and the time of actual
taking. Did the appellate court properly consider these three concepts when it affirmed the trial
courts decision? We find that it did not.
As to the character of the property
The trial and appellate courts valued respondents property as a residential land
worth P700.00 per square meter. They considered the use for the property as having changed
from agricultural in 1988 (when Livioco offered it to DAR) to residential by 2002 (allegedly due
to the eruption of Mt. Pinatubo). Both courts erred in treating the land as residential and accepting
the change in the character of the property, without any proof that authorized land conversion had
taken place.
In expropriation cases (including cases involving lands for agrarian reform), the
propertys character refers to its actual use at the time of taking,[69] not its potential
[70]
uses. Respondent himself admitted that his property was agricultural at the time he offered it
for sale to DAR in 1988. In his letter to the DAR in 1988, respondent manifested that his land is
agricultural and suitable for agricultural purposes, although it stood adjacent to residential
[71]
properties. Moreover, it has been conclusively decided by final judgment in the earlier
[72]
cases filed by respondent that his property was validly acquired under RA 6657 and validly
distributed to agrarian reform beneficiaries. Since the coverage of RA 6657 only extends to
agricultural lands, respondents property should be conclusively treated as an agricultural land
and valued as such.
The lower courts erred in ruling that the character or use of the property has changed
from agricultural to residential, because there is no allegation or proof that the property was
approved for conversion to other uses by DAR. It is the DAR that is mandated by law to evaluate
and to approve land use conversions[73] so as to prevent fraudulent evasions from agrarian reform
coverage. Even reclassification[74] and plans for expropriation[75] by local government units
(LGUs) will not ipso facto convert an agricultural property to residential, industrial or
commercial. Thus, in the absence of any DAR approval for the conversion of respondents
property or an actual expropriation by an LGU, it cannot be said that the character or use of said
property changed from agricultural to residential. Respondents property remains agricultural and
should be valued as such.Hence, the CA and the trial court had no legal basis for considering the
subject propertys value as residential.
Respondents evidence of the value of his land as residential property (which the lower courts
found to be preponderant) could, at most, refer to the potential use of the property.While the
potential use of an expropriated property is sometimes considered in cases where there is a great
improvement in the general vicinity of the expropriated property,[76] it should never control the
determination of just compensation (which appears to be what the lower courts have erroneously
done). The potential use of a property should not be the principal criterion for determining just
compensation for this will be contrary to the well-settled doctrine that the fair market value of an
expropriated property is determined by its character and its price at the time of taking, not its
potential uses. If at all, the potential use of the property or its adaptability for conversion in the
future is a factor, not the ultimate in determining just compensation.[77]
The proper approach should have been to value respondents property as an agriculturalland,
which value may be adjusted in light of the improvements in the Municipality of
Mabalacat. Valuing the property as a residential land (as the lower courts have done) is not the
correct approach, for reasons explained above. It would also be contrary to the social policy of
agrarian reform, which is to free the tillers of the land from the bondage of the soil without
delivering them to the new oppression of exorbitant land valuations. Note that in lands acquired
under RA 6657, it is the farmer-beneficiaries who will ultimately pay the valuations paid to the
former land owners (LBP merely advances the payment).[78] If the farmer-beneficiaries are made
to pay for lands valued as residential lands (the valuation for which is substantially higher than
the valuation for agricultural lands), it is not unlikely that such farmers, unable to keep up with
payment amortizations, will be forced to give up their landholdings in favor of the State or be
driven to sell the property to other parties. This may just bring the State right back to the starting
line where the landless remain landless and the rich acquire more landholdings from desperate
farmers.
The CA also erroneously considered the Mt. Pinatubo eruption in 1991 as converting the use for
respondents property from agricultural to residential. We find no basis for the appellate courts
conclusion. First, as already explained, there was no conversion order from DAR, or even an
application for conversion with DAR, to justify the CAs decision to treat the property as
residential. Second, respondent himself testified that his property was not affected by the volcanic
ashfall,[79] which can only mean that its nature as an agricultural land was not drastically
affected. The Mt. Pinatubo eruption only served to make his property attractive to government
agencies as a resettlement area, but none of these government plans panned out; hence, his
property remained agricultural. Third, the circumstance that respondents property was
surrounded by residential subdivisions was already in existence when he offered it for sale
sometime between 1987 and 1988. The VOS form that respondent accomplished described his
property as being located adjacent to residential subdivisions. It was not therefore a drastic
change caused by volcanic eruption. All together, these circumstances negate the CAs ruling that
the subject property should be treated differently because of the natural calamity.
As to the price: Applying Section 17 of RA 6657
The trial and appellate courts also erred in disregarding Section 17 of RA 6657[80] in their
determination of just compensation. Section 17 of RA 6657 provides:
Sec. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of the like
properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessments 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.
Jurisprudence is replete with reminders to special agrarian courts to strictly adhere to the factors
set out in Section 17 of RA 6657.[81]
By issuing its April 2, 2003 Order requiring the reception of additional evidence, the trial court
revealed its awareness of the importance of adhering to Section 17 of RA 6657. It recognized that
the evidence presented by the parties were insufficient to arrive at the just compensation and that
the necessary evidence were unavailable for its consideration. For some reason, however, the trial
court proceeded to rule on the case without actually receiving such relevant evidence. Instead, the
trial court, as affirmed by the CA, ruled in favor of respondent based on preponderance of
evidence, regardless of the fact that the evidence presented by respondent were not really relevant
to the factors mentioned in section 17 of RA 6657.
The CA ruled that the trial court took into account all the factors in Section 17 of RA 6657. We
disagree. Going over the factors in Section 17, it is clear that almost all were not properly
considered and some positively ignored. For instance: (a) The cost of acquisitionwas not even
inquired into. It would not have been difficult to require respondent to present evidence of the
propertys price when he acquired the same. (b) As to the nature of the property, it has already
been explained that the lower courts erroneously treated it as residential rather than
agricultural. (c) Also, no heed was given to the current value of like properties. Since
respondents property is agricultural in nature, like properties in this case would be agricultural
lands, preferably also sugarcane lands, within the municipality or adjacent municipalities. But the
chief appraiser of the Rural Bank of Mabalacat testified that he considered the value of
adjacent residential properties, not like properties as required under the law. Comparing
respondents agricultural property to residential properties is not what the law envisioned. (d) The
factor of actual use and income of the property was also ignored; what was instead considered
was the propertys potential use.
Thus, we cannot accept the valuation by the lower courts, as it is not in accordance with Section
17 of RA 6657. It was based on respondents evidence which were irrelevant or off-tangent to the
factors laid down by Section 17.
However, we also cannot accept the valuation proffered by LBP for lack of proper
substantiation.
LBP argues that its valuation should be given more weight because it is the recognized
agency with expertise on the matter, but this same argument had been struck down in Landbank
of the Philippines v. Luciano.[82] The Court ruled that LBPs authority is only preliminary and
the landowner who disagrees with the LBPs valuation may bring the matter to court for a judicial
determination of just compensation. The RTCs, organized as special agrarian courts, are the final
[83]
adjudicators on the issue of just compensation.
We have ruled in several cases that in determining just compensation, LBP must
substantiate its valuation. In Luciano, the Court held:
LAND BANKs 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
SAC, that should make the final determination of just compensation, taking
into consideration the factors enumerated in Section 17 of RA 6657 and the
applicable DAR regulations. Land Banks valuation had to be
substantiated during the hearing before it could be considered sufficient
in accordance with Section 17 of RA 6657 and DAR AO No. x x x[84]
there is no way of knowing if the values or data used in the computation are true. For this Court
to accept such valuation would be jumping to a conclusion without anything to support it.[88]
Remand of the case
Given that both parties failed to adduce evidence of the propertys value as an agricultural land at
the time of taking, it is premature for the Court to make a final decision on the matter. The barren
records of this case leave us in no position to resolve the dispute. Not being a trier of facts, the
Court cannot also receive new evidence from the parties that would aid in the prompt resolution
of this case. We are thus constrained to remand the case to the trial court for the reception of
evidence and determination of just compensation in accordance with Section 17 of RA 6657.
Guidelines in the remand of the case

The trial court should value the property as an agricultural land.

It is not enough that the landowner fails to prove a higher valuation for the property; LBP must
still prove the correctness of its claims.[85] In the absence of such substantiation, the case may
It is reminded to adhere strictly to the doctrine that just compensation must be valued at the time
have to be remanded for the reception of evidence.[86]
of taking. The time of taking[89] is the time when the landowner was deprived of the use and
benefit of his property, such as when title is transferred to the Republic. In the instant case, the
In the case at bar, we find that LBP did not sufficiently substantiate its valuation.While
records are silent as to the date when title was transferred to the Republic.However, we can take
LBP insists that it strictly followed the statutory provision and its relevant implementing
guidance from the findings contained in the final and executory decision in CA-GR SP No.
guidelines in arriving at its valuation, the Court notes the lack of evidence to prove the veracity of
45486, which ruled on the validity of the DAR acquisition and is binding on both Livioco and
LBPs claims. LBP merely submitted its computation to the court without any evidence on record,
LBP. The said Decision states that between 1993 and 1994, the Republic[,] through DAR[,] took
whether documentary or testimonial, that would support the correctness of the values or data used
possession of the subject portion of [Liviocos] land and awarded the same to [agrarian reform
in such computation.
beneficiaries] who were issued Certificates of Land Ownership Award sometime in 1994.[90]
So as not to lose time in resolving this issue, the Court declares that
LBP presented two of its officials, but their testimonies were hardly of any use. The
the evidence to be presented by the parties before the trial court for the valuation of the property
first witness only testified that she prepared the documents, computed the value, and had the
must be based on the values prevalent in 1994 for like agricultural lands. The evidence must
same approved by her superior. The other testified that LBP follows Section 17 of RA 6657 and
conform to Section 17 of RA 6657 and, as far as practicable, to DAR Administrative Order No.
the relevant administrative orders in arriving at its valuations. LBP also offered in evidence
6, series of 1992, as amended by DAR Administrative Order No. 11, series of 1994.[91]
the Claims Valuation and Processing Form to show the total valuation[87] of the property. The
Given the expertise of the DAR on the matter, due reliance on DAR Administrative Orders is
effort was however futile because LBP did not prove the correctness of the values or data
encouraged; but, as the Administrative Orders themselves recognize, there are situations where
contained in the said Form. The computation in the Form may be mathematically correct, but
their application is not practicable or possible. If the cited factors in the DAR Administrative
Order are absent, irrelevant, or unavailable, the trial court should exercise judicial discretion and
make its own computation of the just compensation based on the factors set in Section 17 of RA
6657.
[92]
The trial court may impose interest on the just compensation as may be warranted by the
circumstances of the case and based on prevailing jurisprudence.
The trial court is reminded that the practice of earmarking funds and opening trust accounts has
been rejected by the Court for purposes of effecting payment;[93] hence, it must not be considered
as valid payment.
In the event that the respondent had already withdrawn the amount deposited in the LBP as
required by the trial courts March 29, 2004 Order,[94] the withdrawn amount should be deducted
from the final land valuation to be paid by LBP.
In case the release required by the trial courts March 29, 2004 Order has not yet been effected, the
trial courts first order of business should be to require LBPs immediate compliance therewith.[95]
WHEREFORE, premises considered, the petition is DENIED insofar as it seeks to have the
Land Bank of the Philippines valuation of the subject property sustained. The assailed August 30,
2005 Decision of the Court of Appeals and its December 5, 2005 Resolution in CA-G.R. SP No.
83138 are REVERSED and SET ASIDE for lack of factual and legal basis. Civil Case No.
10405 is REMANDED to Branch 56 of the Regional Trial Court[96] of Angeles City for
reception of evidence on the issue of just compensation.The trial court is directed to determine the
just compensation in accordance with the guidelines set in this Decision. The trial court is further
directed to conclude the proceedings and to submit to this Court a report on its findings and
recommended conclusions within sixty (60) days from notice of this Decision. [97]
LBP VS. NABLE
Land Bank of the Philippines (LBP) hereby assails the amount
ofP26,523,180.00 as just compensation for the taking of landowner Veronica Atega
Nables landholding pursuant to the Comprehensive Agrarian Reform Program (CARP)
determined by the Regional Trial Court (RTC) as Special Agrarian Court (SAC) and
affirmed by the Court of Appeals (CA).
Antecedents
Veronica Atega Nable (Nable) was the sole owner of a landholding consisting
of three contiguous agricultural lots situated in Barangay Taligaman, Butuan City and
covered by Original Certificate of Title (OCT) No. P-5 whose total area aggregated to
129.4615 hectares.[1] She had inherited the landholding from her late parents, Spouses
Pedro C. Atega and Adela M. Atega. In 1993, the Department of Agrarian Reform
(DAR) compulsorily acquired a portion of the landholding with an area of 127.3365
hectares pursuant to Republic Act No. 6657 (Comprehensive Agrarian Reform Law of
1988, or CARL).[2] LBP valued the affected landholding at only ₱5,125,036.05,[3] but
Nable rejected the valuation.[4]
On January 17, 2001, the Department of Agrarian Reform Adjudication Board
(DARAB) affirmed the valuation of LBP.[5] After DARAB denied her motion for
reconsideration,[6] Nable instituted against DAR and LBP a petition for the judicial
determination of just compensation in the RTC in Butuan City, praying that the affected
landholding and its improvements be valued at₱350,000.00/hectare, for an aggregate
valuation of ₱44,567,775.00.[7]
During pre-trial, the parties agreed to refer the determination of just
compensation to a board of commissioners,[8] who ultimately submitted a written report
to the RTC on June 27, 2003 recommending ₱57,660,058.00 as the just compensation
for Nable.[9]
On November 26, 2004, the RTC rendered its judgment, as follows:
WHEREFORE, in the light of the foregoing consideration, this
Court hereby renders judgment ordering the public defendants to pay
the following:
a) The total amount of P26,523,180.00 for the land and
improvements;
b) The 6% interest based on the total amount as Just
Compensation to be reckoned at the time of taking that is January
1993;
 c) Commissioners fee in the amount of P25,000.00;
IN THE LIGHT OF THE FOREGOING, the petition for
d) Attorneys Fee which is 10% percent of the total amount review is DENIED for lack of merit. The assailed decision is
awarded as Just Compensation; and AFFIRMED with MODIFICATION that the just compensation of the
subject property is P36,159,855.00 less the amount ofP5,125,036.05
e) Litigation expenses. paid by petitioner to private respondent.
SO ORDERED.[10] Petitioner Bank is hereby ORDERED to immediately pay:

The RTC later denied LBPs motion for reconsideration.[11] A] Respondent the remaining balance of P31,034,819.00 plus
twelve (12%) percent per annum as interest (computed
from the above remaining balance and from 1993 until full
On appeal, LBP urged in its petition for review that the RTC gravely erred as payment thereof); and
follows: B] Mr. Hospicio T. Suralta, Jr., Mr. Rogelio C. Virtudazo, and
Mr. Simeon E. Avila, Jr. the sum of P25,000.00 as
I Commissioners fee.
IN TOTALLY DISREGARDING DAR ADMINISTRATIVE
ORDER (AO) NO. 11, S. OF 1994 AS AMENDED BY AO NO. 5, The Writ of Preliminary Injunction issued is hereby
S. 1998 IN CONJUNCTION WITH SEC. 17, RA 6657 AND THE DISSOLVED.
DECISION OF THE DARAB CENTRAL, QUEZON CITY [JC-RX-
BUT-0055-CO-97] AND THE DECISION OF THE SUPREME SO ORDERED.
COURT IN THE CASE OF VICENTE AND LEONIDAS BANAL
VS. LANDBANK, G.R. NO. 143276 PROMULGATED ON 20
JULY 2004; Upon denial of its motion for reconsideration on January 30, 2007,[13] LBP has
appealed by petition for review on certiorari.
II
IN TAKING JUDICIAL NOTICE OF THE RESPONDENTS
CARETAKER AFFIDAVIT; FARMING EXPERIENCE AND Issues
RULE OF THUMB METHOD OF CONVERSION IN
DEROGATION OF THE PRODUCTION DATA FROM THE
DEPARTMENT OF AGRICULTURE, AND PHILIPPINE LBP asserts that:
COCONUT AUTHORITY (PCA) USED BY LBP/DAR IN THE
DETERMINATION OF JUST COMPENSATION; AND A
THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING
III THE SACs DECISION WHICH TOTALLY DISREGARDED SEC.
IN (1) AWARDING SIX (6%) PERCENT INTEREST ON THE 17, RA 6657 IN CONJUNCTION WITH DAR ADMINISTRATIVE
TOTAL AMOUNT OF JUST COMPENSATION; (2) ORDER (AO) NO. 11, S. OF 1994 AS AMENDED BY AO NO. 5,
COMMISSIONERS FEES IN THE AMOUNT OF P25,000.00; AND S. 1998; THE DECISION OF THE DARAB CENTRAL, QUEZON
(3) TEN (10%) ATTORNEYS FEES OF THE TOTAL AMOUNT CITY [JC-RX-BUT-0055-CO-97] AND THE DECISION OF THE
AWARDED. SUPREME COURT IN THE CASE OF VICENTE AND
LEONIDAS BANAL VS. LANDBANK, G.R. NO. 143276
PROMULGATED ON 20 JULY 2004 AND LBP VS CELADA,
On August 17, 2006, the CA affirmed the RTC judgment with G.R. NO. 164876 PROMULGATED ON 23 JANUARY 2006.
modifications,[12] to wit:
B
 THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING
THE SACs DECISION WHICH TAKE JUDICIAL NOTICE OF
THE RESPONDENTS OWN FACTORS OF VALUATION SUCH
AS CARETAKER AFFIDAVIT; FARMING EXPERIENCE AND
RULE OF THUMB METHOD OF CONVERSION WHICH ARE
NOT RELATED TO OR NECESSARILY IMPLIED FROM THE
FACTORS ENUMERATED UNDER SEC. 17, RA 6657 AND DAR
AOs.
C constitutional mandate. Section 17 of Republic Act No. 6657 has defined the
THE COURT OF APPEALS GRAVELY ERRED IN GIVING
PROBATIVE VALUE AND JUDICIAL NOTICE TO THE BOARD
OF COMMISSIONERS REPORT WHICH IS NOT ONLY
HEARSAY AND IRRELEVANT AS NO HEARING WAS
CONDUCTED THEREON IN VIOLATION OF SEC. 3, RULE 129
OF THE RULES OF COURT AS THE PARTIES WERE
REQUESTED TO SUBMIT THEIR RESPECTIVE MEMORANDA.
D social and economic benefits contributed by the farmers and the
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
(1) TWELVE (12%) PER CENT INTEREST PER ANNUM
COMPUTED FROM THE REMAINING BALANCE
OF P31,034,819.00 FROM 1993 UNTIL FULL PAYMENT
THEREOF; (2) COMMISSIONERS FEES IN THE AMOUNT
OFP25,000.00; AND (3) TEN (10%) PER CENT ATTORNEYS
FEES OF THE TOTAL AMOUNT AWARDED.[14]
Ruling
The appeal lacks merit.
I.
The CA and the RTC did not disregard Section 17,
Republic Act No. 6657, and DAR AO No. 5, Series of 1998
Section 4, Article XIII, of the Constitution has mandated the implementation
of an agrarian reform program for the distribution of agricultural lands to landless
farmers subject to the payment of just compensation to the landowners, viz:
Section 4. The Sate shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers,
who are landless, to own directly or collectively the lands they till or,
in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In determining retention
limits, the State shall respect the rights of small landowners. The
State shall further provide incentives for voluntary land-sharing.
The Congress has later enacted Republic Act No. 6657 to implement the
parameters for the determination of the just compensation, viz:
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
farmworkers and by the Government to the property as well as the
nonpayment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to
determine its valuation.
The Congress has thereby required that any determination of just
compensation should consider the following factors, namely: (a) the cost of the
acquisition of the land; (b) the current value of like properties; (c) the nature, actual use
and income of the land; (d) the sworn valuation by the owner; (e) the tax declarations;
(f) the assessment made by government assessors; (g) the social and economic benefits
contributed to the property by the farmers and farmworkers and by the Government;
and (h) the fact of the non-payment of any taxes or loans secured from any government
financing institution on the land.
Pursuant to its rule-making power under Section 49 of Republic Act No.
[15]
6657, the Department of Agrarian Reform (DAR) promulgated DAR Administrative
Order (AO) No. 6, Series of 1992, DAR AO No. 11, Series of 1994 (to amend AO No.
6), and DAR AO No. 5, Series of 1998 (to amend AO No. 11) ostensibly to translate
the factors provided under Section 17 in a basic formula. The formulae embodied in
these AOs have been used in computing the just compensation upon taking into account
all the factors stated in Section 17, supra. It is relevant to note that the Court has
consistently regarded reliance on the formulae under these AOs to be mandatory.[16]
Of relevance here is DAR AO No. 5, whose formula of just compensation
follows:
A. II. The following rules and regulations are hereby promulgated to
govern the valuation of lands subject of acquisition whether under
voluntary offer to sell (VOS) or compulsory acquisition (CA).
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, theformula 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)
A.3 When both the CS and CNI are not present and only MV is
applicable, the formula shall be:
LV = MV x 2.
The RTC found that the entire landholding was prime coconut land located
along the national highway planted to 95 fruit-bearing coconut trees per hectare, more
or less, or a total of 12,153 fruit-bearing coconut trees. It ascertained Nables just
compensation by considering the affected landholdings nature, location, value and the
volume of the produce, and by applying the formula under DAR AO No. 5, Series of
1998, viz:
xxx
Nonetheless, the said report (commissioners report) impliedly
belied the classification made by the defendants (DAR and LBP) by
stating among others, that the land is fully cultivated contrary to the
allegation that portion of which is an idle land. While this Court may
affirm, modify or disregard the Commissioners Report, the Court
may consider the number of listed coconut trees and bananas
actually counted by the Board during their field inspection.
xxx
The Court is of the opinion that the actual production
data not the government statistics is the most accurate data that
should be used if only to reflect the true and fair equivalent value of
the property taken by the defendant through expropriation.
Considering the number of coconut trees to a high of 12,153 all
bearing fruits, it would be contrary to farming experience involving
coconuts to have an average production per month of 2,057.14 kilos
without necessarily stating that the said land is classified as prime
coconut land. Apportioning the number of coconut trees to the total
land area would yield, more or less 95 trees per hectare well within
the classification of a prime coconut land.
Even the settled rule of thumb method of conversion, 1000
kilos of nuts make 250 kilos copra resecada long before adopted by
coconut farmers spells substantial difference. The Court deems it
more reasonable the production datasubmitted by the plaintiff
supported by the affidavit of Mrs. Wilma Rubi, to wit:
xxx Hence, the computation of the just compensation of the
subject land, to wit:
FORMULA: LV = (CNI X 0.6) + (CS X 0.3) + (MV X 0.1)
WHERE: LV = Land Values
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
Since the Comparable Sales factor is missing, the formula shall
be as follows:
LV = (CNI X 0.9) + (MV X 0.1)
To compute the CNI, the following formula shall be used, to
wit:
CNI = (AGP X SP) CO
0.12
The cost of operation could not be obtained or verified and
since the landholdings subject in the instant case are planted to
coconut which are productive at the time of Field Investigation (FI), it
will continue to use the assumed NIR of 70%.
Thus, the computation, to wit:
 CNI = (AGP X SP (70%) To recapitulate, the Annual and Monthly Gross Production of
.12 copra on the subject property are as follows:
= (5,671.3 kls. X 5.93) 70% Average Yearly Average Monthly
.12 Production Production
Directly Processed Copra 15,580 kilos 1,298.3 kilos
= 23,541.56 Whole Nuts Resecada - 209,908 kilos 4,373 kilos
.12 (converted tibook)
CNI = 196,179.7 5,671.3 kilos
LV = (196,179.7 X 0.9) + (14,158 X 0.1) We likewise observe that in the computation of the CNI OR
= 176,561.73 + 1,415.8 Capitalized Net Income, both DARAB and the court a quo used the
LV = ₱22,662,466 following formula:
Improvements:
Computation: CNI = (AGP x SP) - CO
xxx .12
Total - ₱3,860,714.00
Summary Computation of Total Just Compensation: Unfortunately, DARAB and the court a quo committed an
1) Land Value - ₱22,662,466.00 error in the calculation thereon (emphasis supplied). After
2) Improvements -₱ 3,860,714.00 multiplying the AGP (Average Gross Production) from SP (Selling
Price/kilo), they multiplied the result with the CO (Cost of
Total - ₱26,523,180.00 Operation), instead of subtracting the same as reflected in the above
formula.
Just compensation means the equivalent for the value of the
property at the time of its taking. It means a fair and full equivalent Thus, pursuant to Administrative Order No. 11, as
value for the loss sustained. All the facts as to the condition of the amended, the correct computation should be:
property and its surroundings, its improvements and capabilities
should be considered (Export Processing Zone Authority vs. Dulay CNI = (AGP x SP) - CO
149 SCRA 305 [1987]). Consistent with the said ruling, the Court .12
considered the findings of the commissioners as to the plants/fruit Wherein: AGP 5,671.3 kilos (Average Gross Production)
tree introduced into the land constituting as valuable SP - ₱5.93/kilo (Selling Price from PCA data)
improvements thereto. Thus, the above computation. CO 70% (assumed Cost of Operations, AO No. 11)
xxx = (5,671.53 kilos x 5.93) 70%
Considering therefore the actual production in addition with .12
the desirable land attributes as a contiguous titled property fertile, = 33.632.17 -.7
with valuable intercrops, constituting as improvements, fully .12
cultivated, proximate location along the national highway, the = 33.631.472
Court deems it just and equitable the valuation in total per Courts .12
computation.[17] CNI = 280,262.26
To compute the Land Value (LV) per hectare, we use the
formula as prescribed by Administrative Order No. 11, as amended:
LV = (CNI x 0.9) + (CS x 0.3) + (MV x 0.1)
The CA affirmed the RTCs valuation upon finding that the evidence on record WHERE: LV = Land Values
substantiated the valuation, but saw the need to correct the amount from₱26,523,180.00 CNI = Capitalized Net Income
CS = Comparable Sales
to ₱31,034,819.00 because of the RTCs honest error in calculation. The CAs following
MV = Market Value per Tax Declaration
explanation for its affirmance is worth noting: When CS is not present and CNI and MV are applicable, the
formula shall be:
 LV = (CNI x 0.9) + (MV x 0.1)
Wherein: CNI 280,262.26
MV - ₱14,158.40 (Market Value per Tax Declaration of the
subjectproperty)
LV = (280,262.26 x 0.9) + (₱14,158.40 x 0.1)
= 252,236.03 + ₱1,415.84
LV = ₱253,651.87/hectare
Total Land Value = ₱253,651.87 hectare x 127.3365
hectares
= ₱32,299,141.00
Summary of Valuation:
1) Total Land Value - ₱32,299,141.00
2) Improvements - ₱3,860,714.00 (as found by the court a
quo)
TOTAL - ₱36,159,855.00
Hence, the correct just compensation that must be paid to
herein respondent is Thirty Six Million One Hundred Fifty Nine
Thousand Eight Hundred Fifty Five Pesos (₱36,159,855.00). [18]
xxx
In the case at bench, petitioner Bank initially paid respondent
the sum of₱5,125,036.05 on August 26, 1993. The total just
compensation payable to the latter, as computed above,
is ₱36,159,855.00. Hence, the difference
of₱31,034,819.00 (emphasis supplied) must earn the interest of 12%
per annum, or₱3,724,178.20, from 1993 until fully paid thereon in
order to place the owner in a position as good (but not better than) the
position she was in before the taking occurred as mandated by the
Reyes doctrine.[19] (Emphasis supplied)
We cannot fail to note that the computation by the CA closely conformed to
the factors listed in Section 17 of Republic Act No. 6657, especially the factors of
the actual use and income of the affected landholding. The Court has consistently ruled
that the ascertainment of just compensation by the RTC as SAC on the basis of the
landholdings nature, location, market value, assessors value, and the volume and value
of the produce is valid and accords with Section 17, supra.[20] The Court has likewise
ruled that in appraising just compensation the courts must consider, in addition, all the
facts regarding the condition of the landholding and its surroundings, as well as the
improvements and the capabilities of the landholding. [21] Thus, we sustain the
computation.
We also stress that the factual findings and conclusions of the RTC, when
affirmed by the CA, are conclusive on the Court. We step in to review the factual
findings of the CA only when we have a compelling reason to do so, such as any of the
following:
1. When the factual findings of the CA and the RTC are
contradictory;
2. When the findings are grounded entirely on speculation,
surmises, or conjectures;
3. When the inference made by the CA is manifestly mistaken,
absurd, or impossible;
4. When there is grave abuse of discretion in the appreciation of
facts;
5. When the CA, in making its findings, went beyond the issues of
the case, and such findings are contrary to the admissions of both
appellant and appellee;
6. When the judgment of the CA is premised on a misapprehension
of facts;
7. When the CA fails to notice certain relevant facts that, if
properly considered, will justify a different conclusion;
8. When the findings of fact are themselves conflicting;
9. When the findings of fact are conclusions without citation of the
specific evidence on which they are based; and,
10. When the findings of fact of the CA are premised on the
absence of evidence, but such findings are contradicted by the
evidence on record.[22]
Considering that LBP has not shown and established the attendance of any of
the foregoing compelling reasons to justify a review of the findings of fact of the CA,
we do not disturb the findings of fact of the CA and the RTC.
 Nonetheless, LBP urges that the CA should have relied on the rulings in Land Republic Act No. 6657 and the applicable DAR AOs as well as the value of the
[23] [24]
Bank of the Philippines v. Banal and Land Bank of the Philippines v. Celada in improvements.
resolving the issue of just compensation.
II.
Farming Experience and Rule of Thumb Method of
In Banal, the Court invalidated the land valuation by the RTC because the Conversion are relevant to the statutory factors
RTC did not observe the basic rules of procedure and the fundamental requirements in for determining just compensation
determining just compensation cases. In Celada, the Court set aside the land valuation
because the RTC had used only one factor in valuing the land and had disregarded the
The RTC elucidated:
formula under DAR AO No. 5, Series of 1998. The Court stated that the RTC was at no
liberty to disregard the formula which was devised to implement the said The Court is of the opinion that the actual production data not
provision.[25] Thus, LBP submits that the RTCs land valuation, as modified by the CA, the government statistics is the most accurate data that should be used
if only to reflect the true and fair equivalent value of the property
should be disregarded because of the failure to consider the factors listed in Section 17
taken by the defendant through expropriation. Considering the
of RA 6657 and the formula prescribed under DAR AO No. 5, Series of 1998, number of coconut trees to a high of 12,153 all bearing fruits, it
amending DAR AO No. 11, Series of 1994. would be contrary to farming experience involving coconuts to have
an average production per month of 2,057.14 kilos without
necessarily stating that the said land is classified as prime coconut
LBPs submission is grossly misleading. As the Court has already noted, the land. Apportioning the number of coconut trees to the total land area
would yield, more or less 95 trees per hectare well within the
CA and the RTC did not disregard but applied the formula adopted in DAR AO No. 5. classification of a prime coconut land.
Moreover, the reasons for setting aside the RTCs determinations of just compensation
in Banal and Celada did not obtain here. In Banal, the RTC as SAC did not conduct Even the settled rule of thumb method of conversion, 1000
kilos of nuts make 250 kilos copra resecada long before adopted by
a hearing to determine the landowners compensation with notice to and upon coconut farmers spells substantial difference. The Court deems it
participation of all the parties, but merely took judicial notice of the average production more reasonable the production data submitted by the plaintiff
supported by the affidavit of Mrs. Wilma Rubi, to wit:
figures adduced in another pending land case and used the figures without the consent
of the parties.[26] The RTC did not also appoint any commissioners to aid it in COPRA RESECADA:
Months No. of Kilos Sales
determining just compensation. In contrast, the RTC as SAC herein conducted actual
a.) November 1992 No copra -0-
hearings to receive the evidence of the parties; appointed a board of commissioners to b.) October 1992 1,416 ₱ 9,345.60
inspect and to estimate the affected landholdings value; and gave due regard to the c.) September 1992 2,225 ₱14,540.65
d.) August 1992 No copra -0-
various factors before arriving at its valuation. In Celada, the Court accepted the e.) July 1992 323.5 ₱ 2,523.30
valuation by LBP and set aside the valuation determined by the RTC because the latter f.) June 1992 1,867 ₱15,946.10
g.) May 1992 713 ₱ 5,940.60
valuation had been based solely on the observation that there was a patent disparity h.) April 1992 746 ₱ 6,490.20
between the price given to the respondent and the other landowners. [27] Apparently, the i.) March 1992 1,962.5 ₱16,485.00
j.) February 1992 2,652.5 ₱22,281.00
RTC had used only a single factor in determining just compensation. Here, on the other
k.) January 1992 495.5 ₱ 4,558.00
hand, the RTC took into consideration not only the board of commissioners report on l.) December 1991 3,178.5 ₱27,419.05
the affected landholdings value, but also the several factors enumerated in Section 17 of ------------------- --------------------
 15,580 ₱125,080.10
xxx
The defendant (LBP) did not bother to disprove the aforestated
documentary evidence submitted by the plaintiff (Nable). However,
the selling price/kilo (SP/Kg.) used by the defendants (DAR and
LBP) in their computation is more reasonable/fair price per kilo of
copra during the time of taking. The time of taking must have
relevance on the determination of the selling price (SP) prevailing
when expropriation was effected. xxx[28]
LBP protests the use by the RTC of the farming experience and the thumb
method of conversion as gauges of the justness of LBP and DARABs valuation of the
affected landholding.
The Court finds nothing objectionable or irregular in the use by the RTC of the
assailed the farming experience and the thumb method of conversion tests. Such tests
are not inconsistent or incompatible with the factors listed in Section 17 of Republic
Act No. 6657, as the aforequoted elucidation of the RTC shows.
Although Section 17 of Republic Act No. 6657 has not explicitly mentioned
the farming experience and the thumb method of conversion as methods in the
determination of just compensation, LBP cannot deny that such methods were directly
relevant to the factors listed in Section 17, particularly those on the nature, actual use
and income of the landholding.
III.
LBP was allowed the opportunity to refute
the Commissioners Report and Rubis affidavit
LBP insists that the CA and the RTC both erred in relying on the
Commissioners Report and on caretaker Wilma Rubis affidavit because the RTC did
not conduct a hearing on the motion to approve the Commissioners Report; and because
it (LBP) was deprived of the opportunity to contest the Commissioners Report and
Wilma Rubis affidavit.
LBPs insistence is factually and legally unwarranted.
It appears that upon its receipt of the Commissioners Report, LBP submitted to
the RTC on July 30, 2003 an opposition to the Commissioners Report and to Nables
motion to approve the Commissioners Report;[29] and that the RTC later sent to LBP a
notice for the hearing on September 19, 2003 of the motion to approve the
Commissioners Report.[30] LBPs counsel received the notice of hearing on August 28,
2003.[31] Yet, neither LBPs counsel nor its representative appeared at the hearing held
on September 19, 2003; instead, only Nables counsel attended. [32] Even so, the RTC
still directed the parties to submit their respective memoranda on the Commissioners
Report.[33] On its part, LBP filed its memorandum (with supporting documents
attached).[34]
Under the circumstances, LBP had no justification to complain that it had not
been allowed the opportunity to oppose or comment on the Commissioners Report.
Anent Wilma Rubis affidavit, LBP did not object to its presentation during the
trial. LBP objected to the affidavit for the first time only on appeal in the CA.
Expectedly, the CA rejected its tardy objection, and further deemed LBPs failure to
timely object to respondents introduction of (the) affidavit as an implied admission of
the affidavit itself.[35]
The Court agrees with the CAs rejection of LBPs objection to the affidavit.
Any objection to evidence must be timely raised in the course of the
proceedings in which the evidence is first offered. [36] This enables the adverse party to
meet the objection to his evidence, as well as grants to the trial court the opportunity to
pass upon and rule on the objection. The objection to evidence cannot be made for the
first time on appeal, both because the party who has failed to timely object becomes
estopped from raising the objection afterwards; and because to assail the judgment of
the lower court upon a cause as to which the lower court had no opportunity to pass
upon and rule is contrary to basic fairness and procedural orderliness. [37]
 IV.
Awarding of interest and commissioners fee,
and deletion of attorneys fee are proper
The CA correctly prescribed 12% interest per annum on the unpaid balance
of ₱31,034,819.00 reckoned from the taking of the land in 1993 until full payment of
the balance. This accords with our consistent rulings on the matter of interest in the
expropriation of private property for a public purpose. [38] The following justification
for that rate of interest rendered in Republic v. Reyes[39] is now worthy of
reiteration, viz:
The constitutional limitation of just compensation is
considered to be the sum equivalent to the market value of the
property, broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and
competition or the fair value of the property as between one who
receives, and one who desires to sell, it fixed at the time of the actual
taking by the government. Thus, if property is taken for public use
before compensation is deposited with the court having
jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid
or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interests accrue in order
to place the owner in a position as good as (but not better than)
the position he was in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in
imposing interests on the zonal value of the property to be computed
from the time petitioner instituted condemnation proceedings and
took the property in September 1969.This allowance of interest on
the amount found to be the value of the property as of the time of
the taking computed, being an effective forbearance, at 12% per
annum should help eliminate the issue of the constant fluctuation
and inflation of the value of the currency over time. Article 1250
of the Civil Code, providing that, in case of extraordinary inflation or
deflation, the value of the currency at the time of the establishment of
the obligation shall be the basis for the payment when no agreement
to the contrary is stipulated, has strict application only to contractual
obligations. In other words, a contractual agreement is needed for the
effects of extraordinary inflation to be taken into account to alter the
value of the currency. (Emphasis supplied)
The charging of ₱25,000.00 as commissioners fees against LBP is likewise
upheld. Section 16, Rule 141 of the Rules of Court, expressly recognizes such fees, to
wit:
Section 16. Fees of commissioners in eminent domain
proceedings. The commissioners appointed to appraise land sought to
be condemned for public uses in accordance with the rules shall each
receive a compensation to be fixed by the court of not less than
(₱300.00) Pesos per day for the time actually and necessarily
employed in the performance of their duties and in making their
report to the court which fees shall be taxed as a part of costs of the
proceedings.
Applying the rule, the Court finds the amount of ₱25,000.00 as fair and
commensurate to the work performed by the commissioners, which the CA summed up
as follows:
We observe that in the Commissioners Report, the three (3)
appointed Commissioners actually inspected 127 hectares of the
subject property. It took them five (5) days to complete the ocular
inspection and individually counted 12,153 coconut trees, 28,024
bananas, 4,928 Tundan, 821 Falcata, 1,126 Temani, 298 Bamboos,
Jackfruit, 90 Santol, 51 Rombuon, 260 Ipil-Ipil, 5,222 Abaca plant, 68
Star Apple, 1,670 Antipolo, 67 Narra trees, 23 Durian trees, 139
Mango trees, 83 Avocado trees, 23 Lanzones trees, 84 Cacao,
18 Marang, and 13 trees ofLawaan.
Hence, for the actual time spent and thoroughness of its
Report, it is proper for the said commissioners to be compensated in
the amount of ₱25,000.00, which is only ₱1,666.66 per day.[40]
We sustain the CAs deletion of the RTCs award of 10% attorneys fees. Under
Article 2208, Civil Code, an award of attorneys fees requires factual, legal, and
equitable justifications. Clearly, the reason for the award must be explained and set
forth by the trial court in the body of its decision. The award that is mentioned only in
the dispositive portion of the decision should be disallowed.[41]
 Considering that the reason for the award of attorneys fees was not clearly
explained and set forth in the body of the RTCs decision, the Court has nothing to
review and pass upon now. The Court cannot make its own findings on the matter
because an award of attorneys fees demands the making of findings of fact.
WHEREFORE, the Court AFFIRMS the decision promulgated on August
17, 2006 by the Court of Appeals; and ORDERS petitioner to pay the costs of suit.
SO ORDERED.
HEIRS OF LORENZO VS. LBP
CARPIO, J.:
The Case
The heirs of Lorenzo and Carmen Vidad and Agvid Construction Co., Inc. (petitioners)
filed this Petition for Review[1] assailing the Court of Appeals (CA) Decision[2] dated 28
November 2003 in CA-G.R. SP No. 68157 as well as the Resolution[3] dated 20
December 2004 denying the Motion for Reconsideration. In the assailed decision, the
CA affirmed the 15 August 2001 Decision[4] of the Regional Trial Court of Santiago
City, Branch 21 (RTC), sitting as a Special Agrarian Court (SAC). The SAC fixed the
valuation for purposes of just compensation of petitioners land (land) at P5,626,724.47.
The Facts
Petitioners are the owners of a land located in Barangay Masipi East, Cabagan,
Isabela, with an area of 589.8661 hectares and covered by Original Certificate of Title
No. (OCT) 0-458. On 26 September 1989, the land was voluntarily offered for sale to
the government under Republic Act No. (RA) 6657 orthe Comprehensive Agrarian
Reform Law of 1988.[5] Of the entire area, the government only acquired 490.3436
[6]
hectares.
Respondent Land Bank of the Philippines (LBP) is a government banking
institution designated under Section 64 of RA 6657 as the financial intermediary of the
agrarian reform program of the government.[7]
By virtue of Executive Order No. (EO) 405 vesting LBP with primary
responsibility to determine the valuation and compensation for all lands covered by RA
6657, LBP computed the initial value of the land at P2,961,333.03 for 490.3436
hectares, taking into consideration the factors under Department of Agrarian Reform
(DAR) Administrative Order (AO) No. 06, series of 1992, and the applicable provisions
of RA 6657.[8] Petitioners rejected the valuation.[9]
On 17 January 1994, petitioners filed a Petition for Review with the
Department of Agrarian Reform Adjudication Board (DARAB). The DARAB
dismissed the petition in an Order dated 9 December 1994. [10]
Undaunted, petitioners filed a second petition for review asking for a re-
evaluation of the land on 17 December 1998.[11] Acting on the petition, the Provincial
Agrarian Reform Adjudicator (PARAD) issued an Order dated 26 January 1999
directing LBP to re-compute the value of the land.[12] In compliance with the PARADs
Order, LBP revalued the land at P4,158,947.13 for 402.3835 hectares
[13]
and P1,467,776.34 for 43.8540 hectares. LBP used the guidelines in DAR AO No. 5,
[14]
series of 1998 for the revaluation. Petitioners similarly rejected this offer.
Still unable to agree on the revalued proposal, petitioners instituted JC
RARAD Case No. II-001-ISA-99 before the Regional Agrarian Reform Adjudicator of
Tuguegarao (RARAD) for the purpose of determining the just compensation for their
land. In a decision dated 29 March 2000, the RARAD fixed the just compensation for
the land at P32,965,408.46.[15] On 28 April 2000, petitioners manifested their
acceptance thereof.[16]
On the other hand, LBP moved for reconsideration. In an Order dated 2 May
2000, the RARAD denied the motion for lack of merit.[17]
 On 12 May 2000, pursuant to Section 57 [18] of RA 6657, LBP filed a petition
for determination of just compensation with the RTC, sitting as a SAC. [19]The case was
docketed as CAR Case No. 21-0632.
Petitioners moved to dismiss LBPs petition on the ground that they already
accepted the RARADs decision, which, perforce rendered it final and executory. They
alleged that LBPs petition must be considered barred by the RARADs decision on the
ground of res judicata. Petitioners secured a certificate of finality of the RARADs
decision and subsequently moved for the execution thereof, over LBPs objection.
Petitioners also questioned LBPs legal personality to institute the action. [20]
On 28 August 2000, the SAC issued an Order denying petitioners motion to
[21]
dismiss. Petitioners moved to reconsider this Order, which was denied in the Order
dated 17 October 2000.[22]
During the pendency of CAR Case No. 21-0632, petitioners would time and
again, attempt to execute the RARADs decision until they were temporarily restrained
by the SAC in an Order dated 31 January 2001. [23] However, upon hearing the parties
regarding the propriety of issuing the injunctive writ against the execution of the
RARADs decision, the SAC found that it had no jurisdiction to resolve the
matter.[24] Forthwith, LBP referred the matter to the DARAB in a petition for certiorari
docketed as DCSA No. 0213. The DARAB eventually issued a temporary restraining
order and, later, a writ of preliminary injunction, directed against the implementation of
the RARADs decision. The propriety of executing the RARADs decision pending the
resolution of CAR Case No. 21-0632 is an issue that is yet to be resolved by the
DARAB.[25]
In CAR Case No. 21-0632, petitioners failed to file their answer and, on 30
January 2001, petitioners were held in default and the SAC heard LBPs evidenceex-
[26]
parte on the merits of the case.
On 15 August 2001, the SAC rendered a decision, based on LBPs evidence
alone, fixing the just compensation at P5,626,724.47 for the 446.2375 hectares of the
land.[27] The SAC, in an Order dated 22 November 2001, denied petitioners motion for
reconsideration of the decision.[28]
Petitioners filed an appeal docketed as CA-G.R. SP No. 68157, questioning
the authority of the SAC to give due course to the petition of LBP, claiming that the
RARAD has concurrent jurisdiction with the SAC over just compensation cases
involving lands covered by RA 6657. Furthermore, petitioners insisted that LBP has no
legal personality to institute a case for determination of just compensation against
landowners with the SAC.[29]
On 28 November 2003, the CA rendered the assailed decision, dismissing the
appeal for lack of merit, and affirming the valuation of the SAC in the amount
ofP5,626,724.47.[30]
Petitioners filed a motion for reconsideration, which was denied in a
Resolution dated 20 December 2004.[31]
Aggrieved by the CAs Decision and Resolution, petitioner elevated the case before this
Court.
Ruling of the RARAD of Tuguegarao City
The RARAD took note of the certifications presented as evidence that some 392.2946
hectares were listed as idle land when this portion was already cornland. The RARAD
considered the certifications issued by LBP officials, Mr. Andres T. Barican, Jr., AA
Specialist, Mr. Jose T. Gacutan, Property Appraiser, and MARO[32] Francisco C.
Verzola of Cabagan, Isabela.[33]
The RARAD reclassified 392.2946 hectares from idle land to cornland. Then, the
RARAD considered the submitted average valuation per hectare paid by LBP under
similar situations for 1996, 1998 and 1999 [34] particularly on lands in Region 2:
Land Use 1996 1998 1999 Average
Cornland 100,140.70 62,695.23 60,371.31 74,402.41
 Riceland 137,197.67 49,373.99 93,285.83 The SAC stated that petitioners were declared in default so LBP adduced its
Irrigated
Riceland Rainfed 34,511.66 34,511.66 evidence ex parte. The SAC evaluated the pieces of evidence submitted by LBP and
Riceland 43,374.44 37,582.40 40,748.42 computed the just compensation for petitioners land, thus:
Unirrigated
Rice Upland 20,271.41 20,271.41
Vegetables 20,379.20 20,379.20 Land Use Area Acqd Average LV/Ha. Total Land Value
(Ha.)
Irrig. Riceland 3.7940 50, 354.07 P 191,043.34
Unirrig. Riceland 6.1289 20,158.64 123,550.29
Upland Riceland 1.2700 14,401.00 18,289.27
Based on this table, the RARAD made the following computation: Cornland 42.5200 33,986.01 1,445,085.15
Vegetable land 0.2400 14,401.00 3,456.24
Summary of Valuation of OCT No. 0-458 Idleland (below 392.2846 9,802.32 3,845,299.18
Land Use Area in has. Land Value Per Total Land Value 18% slope)
Ha. (PhP) PhP 446.2375 P 5,626,723.47
This MOV
Upland Rice land 1.2700 20,271.41 P 25,744.69
Ruling of the Court of Appeals
Cornland 8.5889 74,402.41 639,034.85
Vegetable land 0.2400 20,379.20 4,891.01
The CA stated that RA 6657 mandates that in determining just compensation, there
Cornland (not idle) 392.2846 74,402.41 29,186,919.00
must be a consensus among the landowner, DAR and LBP. [35] The CA explained, thus:
Subtotal 402.3835 P 29,856,589.55
For subsequent
MOV In the case at bench, petitioners have availed of the summary
administrative proceedings in determining the just compensation due
Riceland irrigated 3.7940 93,285.33 P 353,924.54
for their property under docket of JC RARAD Case No. 11-001-ISA-
Riceland 6.1289 37,582.40 230,338.77
99. But just because they have agreed to the amount thereof fixed by
unirrigated
the RARAD does not, however, mean that his decision has become
Corn land 33.9311 74,402.41 2,524,555.60 final and executory. It must be remembered that the law requires the
consensus of three (3) parties in the determination of just
Sub-total 43.8540 P 3,108,818.91
compensation: the landowners, the DARs and the LBPs. Since the
Total P 32,965,408.46 LBP did not agree with the DARs decision, then it had a right to
invoke the court a quos jurisdiction. The RARADs decision will not
serve to bar this subsequent suit for the simple reason that said
The RARAD directed LBP to pay petitioners P32,965,408.46 as just compensation for decision has not attained finality as not all the parties concerned
446.2375 hectares. agreed to the amount of just compensation he had fixed. [36]

Ruling of the SAC

The Issues
 Petitioners raise the following arguments:
1. WHETHER THE SUMMARY ADMINISTRATIVE PROCEEDING
BEING CONDUCTED BY THE DARAB FOR THE DETERMINATION
FOR JUST COMPENSATION OF LANDS PLACED UNDER THE
COVERAGE OF CARP IS IN ACTUALITY A SALE TRANSACTION
BETWEEN THE LANDOWNERS AND DAR WHICH CAN BE
CONCLUDED AND CONSUMMATED BY THE AGREEMENT OF
THE PARTIES;
2. WHETHER THE DECISION OF THE RARAD DATED 29 MARCH
2000 FIXING THE JUST COMPENSATION FOR PETITIONERS
PROPERTY AT P32,965,408.46 HAD BECOME FINAL AND
EXECUTORY UPON FAILURE OF RESPONDENT LAND BANK TO
INTERPOSE AN APPEAL WITH THE SUPREME COURT AS
MANDATED BY SECTION 60 OF R.A. NO. 6657;
3. WHETHER RESPONDENT HAS THE PERSONALITY OR CAUSE
OF ACTION TO INSTITUTE A CASE AGAINST LANDOWNERS AT
THE SAC;
4. WHETHER THE DARAB EXERCISING QUASI-JUDICIAL POWERS
HAS CONCURRENT JURISDICTION WITH THE SAC IN THE
DETERMINATION OF JUST COMPENSATION CASES INVOLVING
LANDS PLACED BY DAR UNDER CARP COVERAGE;
5. WHETHER THE SAC CAN ASSUME JURISDICTION OVER THE
PETITION FOR DETERMINATION OF JUST COMPENSATION
FILED BY RESPONDENT AFTER THE RARAD HAD RENDERED
ITS DECISION OF 29 MARCH 2000 AND A WRIT OF EXECUTION
IS ISSUED;
6. WHETHER RESPONDENT LAND BANK IS GUILTY OF FORUM
SHOPPING.[37]
The Ruling of the Court
Petitioners contend that the CA erred in affirming the decision of the SAC in
CAR Case No. 21-0632, which is now barred by the RARADs decision, more so when
together with the DARAB, the SAC exercises concurrent jurisdiction on cases
involving determination of just compensation. And since it was the DARAB, through
the RARAD, which first assumed jurisdiction on the issue of just compensation for
petitioners land, then the SAC is precluded from assuming jurisdiction on the same
issue.[38]
Convinced that only the landowners can invoke the jurisdiction of the SAC
when they do not agree to the amount of just compensation proposed by DAR,
petitioners also question LBPs personality to institute the petition with the
SAC.[39] Petitioners also accuse LBP of forum shopping for trifling with the RARADs
decision which petitioners claim to have attained finality.[40]
As a new theory in this petition for review, petitioners submit that when they
accepted the RARADs decision of 29 March 2000 fixing the just compensation of the
land at P32,965,408.46, that acceptance was the operative act that consummated the
contract/agreement involving the voluntary sale of their property to the Republic of the
Philippines under CARP Law.[41]
LBP claims that SAC has original and exclusive jurisdiction in just
compensation cases, and, as LBP has timely filed an original action for determination
of just compensation with the SAC, the decision of the RARAD wasipso facto vacated.
In sum, the original action filed by LBP with the SAC automatically barred the
RARADs decision from attaining finality.[42]
New issues cannot be raised for the first time on appeal
The records show that petitioners were declared in default in the SAC case for
their failure to file an answer to the complaint. Hence, the SAC proceeded on hearing
LBPs evidence ex parte. After due trial, the SAC rendered its decision dated 15 August
2001, which was the subject of petitioners appeal to the CA.
In its petition for review with the CA, petitioners never put as an issue the alleged
existence of a consummated sale between the DAR and the petitioners under RA 6657.
What petitioners questioned was SACs jurisdiction over determination of just
compensation cases involving lands covered by RA 6657. Furthermore, petitioners
insist that LBP has no legal personality to institute a case for determination of just being a final determination of the appraisal of just compensation by the DARAB,
compensation against landowners with the SAC. It is only in the present petition for should be appealed to this Court and not the SAC.
review that petitioners raised the alleged existence of a consummated sale between the
DAR and petitioners. For its part, LBP insists that the RARAD/DARAB decision is merely a preliminary
valuation, since the courts have the ultimate power to decide the question on just
The argument that a consummated sale between the DAR and petitioners compensation.
existed upon petitioners acceptance of the valuation made in the RARADs decision of
29 March 2000 is an issue being raised for the first time. Section 15, Rule 44 of the The procedure for the determination of just compensation under RA 6657, as
1997 Rules of Court provides that the appellant may include in his assignment of errors summarized by this Court in Land Bank of the Philippines v. Spouses
[46]
any question of law or fact that has been raised in the court below and which is within Banal, commences with LBP determining the value of the lands under the land
the issues framed by the parties. reform program. Using LBPs valuation, the DAR makes an offer to the landowner
through a notice sent to the landowner, pursuant to Section 16(a) [47] of RA 6657. In case
A perusal of the questions raised in the SAC and the CA shows that the issue the landowner rejects the offer, the DAR adjudicator [48] conducts a summary
on the existence of a consummated sale between the DAR and petitioners was not administrative proceeding to determine the compensation for the land by requiring the
among the issues therein. Hence, this issue is being raised for the first time on appeal. landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land. A party who disagrees with the decision of the DAR
It is a fundamental rule that this Court will not resolve issues that were not adjudicator may bring the matter to the RTC designated as a Special Agrarian Court for
[43]
properly brought and ventilated in the lower courts. Questions raised on appeal must final determination of just compensation.[49]
be within the issues framed by the parties and, consequently, issues not raised in the
trial court cannot be raised for the first time on appeal.[44] Contrary to petitioners argument, the PARAD/RARAD/DARAB do not
exercise concurrent jurisdiction with the SAC in just compensation cases. The
An issue, which was neither averred in the complaint nor raised during the trial determination of just compensation is judicial in nature.
in the lower courts, cannot be raised for the first time on appeal because it would be
offensive to the basic rule of fair play and justice, and would be violative of the The original and exclusive jurisdiction of the SAC in just compensation cases
[45]
constitutional right to due process of the other party. is not a novel issue. This has been extensively discussed in Land Bank of the
Philippines v. Belista,[50] to wit:
Jurisdiction of the SAC in just compensation cases
Sections 50 and 57 of RA No. 6657 provide:
The second, fourth, and fifth issues, being inter-related, will be discussed together, in Section 50. Quasi-judicial Powers of the DAR. The
DAR is hereby vested with primary jurisdiction to
relation to the jurisdiction of the SAC in just compensation cases. determine and adjudicate agrarian reform matters
and shall have exclusive original jurisdiction over
all matters involving the implementation of
Petitioners insist that the RARAD, in exercising quasi-judicial powers, has concurrent agrarian reform, except those falling under the
jurisdiction with the SAC in just compensation cases. Hence, the RARADs decision, exclusive jurisdiction of the Department of
 Agriculture (DA) and the Department of
Environment and Natural Resources (DENR) x x x
Section 57. Special Jurisdiction. The Special
Agrarian Court shall have original and exclusive
jurisdiction over all petitions for the determination
of just compensation to landowners, and the
prosecution of all criminal offenses under this Act.
xxx
The Special Agrarian Courts shall decide all
appropriate cases under their special jurisdiction
within thirty (30) days from submission of the case
for decision.
Clearly, under Section 50, DAR has primary jurisdiction to determine
and adjudicate agrarian reform matters and exclusive original
jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive jurisdiction of the
DA and the DENR. Further exception to the DARs original and
exclusive jurisdiction are all petitions for the determination of just
compensation to landowners and the prosecution of all criminal
offenses under RA No. 6657, which are within the jurisdiction of the
RTC sitting as a Special Agrarian Court. Thus, jurisdiction on just
compensation cases for the taking of lands under RA No. 6657 is
vested in the courts.
In Republic v. CA, the Court explained:
Thus, Special Agrarian Courts, which are Regional
Trial Courts, are given original and exclusive
jurisdiction over two categories of cases, to wit: (1)
all petitions for the determination of just
compensation to landowners and (2) the
prosecution of all criminal offenses under [R.A.
No. 6657]. The provisions of 50 must be construed
in harmony with this provision by considering cases
involving the determination of just compensation
and criminal cases for violations of R.A. No. 6657
as excepted from the plenitude of power conferred
on the DAR. Indeed, there is a reason for this
distinction. The DAR is an administrative agency
which cannot be granted jurisdiction over cases of
eminent domain (for such are takings under R.A.
No. 6657) and over criminal cases. Thus, inEPZA v.
Dulay and Sumulong v. Guerrero - we held that the
valuation of property in eminent domain is
essentially a judicial function which cannot be
vested in administrative agencies, while in Scotys
Department Store v. Micaller, we struck down a
law granting the then Court of Industrial Relations
jurisdiction to try criminal cases for violations of
the Industrial Peace Act.
In a number of cases, the Court has upheld the original and exclusive
jurisdiction of the RTC, sitting as SAC, over all petitions for
determination of just compensation to landowners in accordance with
Section 57 of RA No. 6657.
In Land Bank of the Philippines v. Wycoco, the Court upheld the
RTCs jurisdiction over Wycocos petition for determination of just
compensation even where no summary administrative proceedings
was held before the DARAB which has primary jurisdiction over the
determination of land valuation. The Court held:
In Land Bank of the Philippines v. Court of
Appeals, the landowner filed an action for
determination of just compensation without waiting
for the completion of DARABs re-evaluation of the
land. This, notwithstanding, the Court held that the
trial court properly acquired jurisdiction because of
its exclusive and original jurisdiction over
determination of just compensation, thus
It is clear from Sec. 57 that the
RTC, sitting as a Special
Agrarian Court, has original and
exclusive jurisdiction over all
petitions for the determination of
just compensation to landowners.
This original and exclusive
jurisdiction of the RTC would be
undermined if the DAR would
vest in administrative officials
original jurisdiction in
compensation cases and make the
RTC an appellate court for the
review of administrative
decisions. Thus, although the new
rules speak of directly appealing
the decision of adjudicators to the
RTCs sitting as Special Agrarian
 Courts, it is clear from Sec. 57
that the original and exclusive
jurisdiction to determine such
cases is in the RTCs. Any effort
to transfer such jurisdiction to the
adjudicators and to convert the
original jurisdiction of the RTCs
into an appellate jurisdiction
would be contrary to Sec. 57 and,
therefore, would be void. Thus,
direct resort to the SAC [Special
Agrarian Court] by private
respondent is valid.
xxx
In Land Bank of the Philippines v. Natividad, wherein Land Bank
questioned the alleged failure of private respondents to seek
reconsideration of the DARs valuation, but instead filed a petition to
fix just compensation with the RTC, the Court said:
At any rate, in Philippine Veterans Bank v. CA, we
held that there is nothing contradictory between the
DARs primary jurisdiction to determine and
adjudicate agrarian reform matters and exclusive
original jurisdiction over all matters involving the
implementation of agrarian reform, which includes
the determination of questions of just
compensation, and the original and exclusive
jurisdiction of regional trial courts over all petitions
for the determination of just compensation. The
first refers to administrative proceedings, while the
second refers to judicial proceedings.
In accordance with settled principles of
administrative law, primary jurisdiction is vested in
the DAR to determine in a preliminary manner the
just compensation for the lands taken under the
agrarian reform program, but such determination is
subject to challenge before the courts. The
resolution of just compensation cases for the taking
of lands under agrarian reform is, after all,
essentially a judicial function.
Thus, the trial court did not err in taking cognizance
of the case as the determination of just
compensation is a function addressed to the courts
of justice.
In Land Bank of the Philippines v. Celada, where the issue was
whether the SAC erred in assuming jurisdiction over respondents
petition for determination of just compensation despite the pendency
of the administrative proceedings before the DARAB, the Court
stated that:
It would be well to emphasize that the taking of
property under RA No. 6657 is an exercise of the
power of eminent domain by the State. The
valuation of property or determination of just
compensation in eminent domain proceedings is
essentially a judicial function which is vested with
the courts and not with administrative agencies.
Consequently, the SAC properly took cognizance
of respondents petition for determination of just
compensation.
We do not agree with petitioners submission that the SAC erred in assuming
jurisdiction over the petition for determination of just compensation filed by LBP after
the RARAD rendered its 29 March 2000 decision. In Land Bank of the Philippines v.
Court of Appeals,[51] we had the occasion to rule that the SAC acquired jurisdiction over
the action for the determination of just compensation even during the pendency of the
DARAB proceedings, for the following reason:
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian
Court, has original and exclusive jurisdiction over all petitions for
the determination of just compensation to landowners. This original
and excusive jurisdiction of the RTC would be undermined if the
DAR would vest in administrative officials original jurisdiction in
compensation cases and make the RTC an appellate court for the
review of administrative decisions. Thus, although the new rules
speak of directly appealing the decision of adjudicators to the
RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57
that the original and exclusive jurisdiction to determine such cases
is in the RTCs. Any effort to transfer such jurisdiction to the
adjudicators and to convert the original jurisdiction of the RTCs
into an appellate jurisdiction would be contrary to Sec. 57 and
 therefore would be void. Thus, direct resort to the SAC by private
respondent is valid.[52]
In fact, RA 6657 does not make DARs valuation absolutely binding as the
amount payable by LBP. A reading of Section 18 of RA 6657 shows that the courts,
[53]
and not the DAR, make the final determination of just compensation. It is well-
settled that the DARs land valuation is only preliminary and is not, by any means, final
and conclusive upon the landowner or any other interested party. The courts will still
have the right to review with finality the determination in the exercise of what is
admittedly a judicial function.[54]
It must be emphasized that the taking of property under RA 6657 is an
exercise of the States power of eminent domain.[55] The valuation of property or
determination of just compensation in eminent domain proceedings is essentially a
judicial function which is vested with the courts and not with administrative
agencies.[56] When the parties cannot agree on the amount of just compensation, only
the exercise of judicial power can settle the dispute with binding effect on the winning
and losing parties. On the other hand, the determination of just compensation in the
RARAD/DARAB requires the voluntary agreement of the parties. Unless the parties
agree, there is no settlement of the dispute before the RARAD/DARAB, except if the
aggrieved party fails to file a petition for just compensation on time before the RTC.
LBP thus correctly filed a petition for determination of just compensation with
the SAC, which has the original and exclusive jurisdiction in just compensation cases
under RA 6657. DARs valuation, being preliminary in nature, could not have attained
finality, as it is only the courts that can resolve the issue on just compensation.
Consequently, the SAC properly took cognizance of LBPs petition for determination of
just compensation.
Legal personality of LBP to contest the DAR decision
Petitioners submit that LBP has no legal personality and has no cause of action
to institute the agrarian case before the SAC. Petitioners argue that LBP cannot on its
own, separate and independent of DAR, file an original action for determination of just
compensation against the RARAD and petitioners, because it is a usurpation of the
exclusive authority of DAR to initiate and prosecute expropriation proceedings.
Petitioners thus insist that in land acquisition cases, the only real parties-in-interest are
the landowners and the government, the latter acting through the DAR.
We do not agree.
Section 18 of RA 6657 states:
Sec. 18. Valuation and Mode of Compensation. The LBP
shall compensate the landowner in such amount as may be agreed
upon by the landowner and the DAR and the LBP x x x, or as may
be finally determined by the court as the just compensation for the
land.
This provision clearly states that there should be a consensus among the landowner, the
DAR, and the LBP on the amount of just compensation. Therefore, LBP is not merely a
nominal party in the determination of just compensation. RA 6657 directs LBP to pay
the DARs land valuation only if the landowner, the DAR and LBP agree on the amount
of just compensation.[57] The DAR proceedings are but preliminary, and becomes final
only when the parties have all agreed to the amount of just compensation fixed by the
DAR.[58] However, should a party disagree with the amount fixed by DAR, then the
jurisdiction of the SAC may be invoked for the purpose. [59]
There is likewise no merit in petitioners allegation that LBP lacks locus standi to file a
case with the SAC, separate and independent from the DAR. In Heirs of Roque F.
Tabuena v. Land Bank of the Philippines,[60] we ruled that the LBP is an indispensable
party in expropriation proceedings under RA 6657, and thus, has the legal personality
to question the determination of just compensation, independent of the DAR:
LBP is an agency created primarily to provide financial support in all
phases of agrarian reform pursuant to Section 74 of Republic Act
(RA) No. 3844 and Section 64 of RA No. 6657. It is vested with the
primary responsibility and authority in the valuation and
compensation of covered landholdings to carry out the full
implementation of the Agrarian Reform Program. It may agree with
 the DAR and the land owner as to the amount of just compensation to
be paid to the latter and may also disagree with them and bring the
matter to court for judicial determination.
Once an expropriation proceeding for the acquisition of private
agricultural lands is commenced by the DAR, the indispensable role
of LBP begins, which clearly shows that there would never be a
judicial determination of just compensation absent respondent LBPs
participation. Logically, it follows that respondent is an
indispensable party in an action for the determination of just
compensation in cases arising from agrarian reform program; as
such, it can file an appeal independently of DAR.[61]
Hence, in Land Bank of the Philippines v. AMS Farming Corporation,[62]we
ruled that LBP is a real party-in-interest which could file its own appeal in agrarian
reform cases, to wit:
The Court of Appeals was indeed in error for denying LBP its right to
file an appeal on the ground that it was not a real party-in-interest,
since it did not stand to lose or gain anything from the RTC Decision
dated 11 March 2003 in Special Agrarian Case No. 61-2000. It is
worthy to note that in making its pronouncement that LBP was a
mere depositary of the Agrarian Reform Fund and the financial
intermediary for purposes of the CARL, the appellate court was
unable to cite any statutory or jurisprudential basis therefor.
To the contrary, the Court had already recognized in Sharp
International Marketing v. Court of Appeals that the LBP plays a
significant role under the CARL and in the implementation of the
CARP, thus:
As may be gleaned very clearly from EO 229, the
LBP is anessential part of the government sector
with regard to the payment of compensation to the
landowner. It is, after all, the instrumentality that is
charged with the disbursement of public funds for
purposes of agrarian reform. It is therefore part, an
indispensable cog, in the governmental machinery
that fixes and determines the amount compensable
to the landowner. Were LBP to be excluded from
that intricate, if not sensitive, function of
establishing the compensable amount, there would
be no amount to be established by the government
as required in Sec. 6, EO 229. This is precisely why
the law requires the [Deed of Absolute Sale
(DAS)], even if already approved and signed by the
DAR Secretary, to be transmitted still to the LBP
for its review, evaluation and approval.
It needs no exceptional intelligence to understand
the implications of this transmittal. It simply means
that if LBP agrees on the amount stated in the DAS,
after its review and evaluation, it becomes its duty
to sign the deed. But not until then. For, it is only in
that event that the amount to be compensated shall
have been established according to law. Inversely,
if the LBP, after review and evaluation, refuses to
sign, it is because as a party to the contract it does
not give its consent thereto. This necessarily
implies the exercise of judgment on the part of
LBP, which is not supposed to be a mere rubber
stamp in the exercise. Obviously, were it not so,
LBP could not have been made a distinct member
of [Presidential Agrarian Reform Council (PARC)],
the super body responsible for the successful
implementation of the CARP. Neither would it
have been given the power to review and evaluate
the DAS already signed by the DAR Secretary. If
the function of the LBP in this regard is merely to
sign the DAS without the concomitant power of
review and evaluation, its duty to review/evaluate
mandated in Adm. Order No. 5 would have been a
mere surplus age, meaningless, and a useless
ceremony.
xxxx
Even more explicit is R.A. 6657 with respect to the
indispensable role of LBP in the determination of
the amount to be compensated to the landowner.
Under Sec. 18 thereof, the LBP shall compensate
the landowner in such amount as may be agreed
upon by the landowner and the DAR and LBP,
in accordance with the criteria provided in Secs. 16
and 17, and other pertinent provisions hereof, or as
may be finally determined by the court, as the just
compensation for the land.
Without the signature of the LBP President, there
was simply no contract between Sharp and the
Government. The Deed of Absolute Sale dated
January 9, 1989, was incomplete and therefore had
 no binding effect at all. Consequently, Sharp cannot
claim any legal right thereunder that it can validly
assert in a petition for mandamus. (Emphasis in the
original)
The issue of whether LBP can file an appeal on its own, separately
and independently of the DAR, in land valuation and just
compensation cases, had been squarely addressed by the Court
in Gabatin v. Land Bank of the Philippines,(G.R. No. 148223, 25
November 2004, 444 SCRA 176, 186-188), where it ruled:
It must be observed that once an expropriation
proceeding for the acquisition of private
agricultural lands is commenced by the DAR,
the indispensable role of Land Bank begins.
xxx
It is evident from the afore-quoted jurisprudence that the role of LBP
in the CARP is more than just the ministerial duty of keeping and
disbursing the Agrarian Reform Funds. 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 Court of Appeals or to this Court, if
appropriate. x x x[63]
It is thus beyond question that LBP has the legal personality to file the petition
for determination of just compensation with the SAC.
LBP did not commit forum shopping
Petitioners also submit that LBP is guilty of forum shopping because after
LBP invoked the jurisdiction of the SAC of Santiago City, Isabela, and obtained a
Temporary Restraining Order (TRO), LBP filed a petition for certiorari with the
DARAB (DSCA No. 0213) to prevent the execution of the Order of the RARAD. The
DARAB eventually issued a TRO, and later, a writ of preliminary injunction, directed
against the implementation of the RARADs decision.
Petitioners argument is mislaid.
In Canuto, Jr. v. National Labor Relations Commission,[64] we held that forum
shopping is manifest whenever a party repetitively avail[s] of several judicial remedies
in different courts, simultaneously or successively, all substantially founded on the
same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in, or already resolved adversely by, some
other court. It has also been defined as an act of a party against whom an adverse
judgment has been rendered in one forum of seeking and possibly getting a favorable
opinion in another forum, other than by appeal or the special civil action of certiorari,
or the institution of two or more actions or proceedings grounded on the same cause on
the supposition that one or the other court would make a favorable disposition.
Considered a pernicious evil, it adversely affects the efficient administration of justice
since it clogs the court dockets, unduly burdens the financial and human resources of
the judiciary, and trifles with and mocks judicial processes. [65]
In Veluz v. Court of Appeals,[66] we held:
There is forum shopping when, in the two or more cases
pending, there is identity of parties, rights or causes of action and
relief sought. Forum shopping exists where the elements of litis
pendentia are present or when a final judgment in one case will
amount to res judicata in the other. For litis pendentia to exist, the
following requisites must be present:
1. Identity of parties, or at least such parties as those
representing the same interests in both actions;
2. Identity of rights asserted and reliefs prayed for, the
reliefs being founded on the same facts;
3. Identity with respect to the two preceding particulars in
the two cases, such that any judgment that may be
rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other
case.[67]

Reviewing the facts of this case, the SAC, after hearing the parties regarding
the propriety of issuing the injunctive writ against the execution of the RARADs
decision, found that it had no jurisdiction to resolve the matter. Hence, LBP filed a
petition for certiorari with the DARAB (DSCA No. 0213) seeking the issuance of a
TRO and preliminary injunction.
It is thus seen that there is no forum shopping because the SAC had no
jurisdiction on the issuance of an injunctive writ against the RARADs decision. As the
SAC had no jurisdiction over such matter, any ruling it renders is void and of no legal
effect. Thus, LBPs act of filing the petition for certiorari with the DARAB, which has
the correct jurisdiction for the remedy sought, does not amount to forum shopping.
Computation of just compensation for the subject lands
The only question that remains for resolution is the value of just compensation
to be paid to petitioners.
Petitioners maintain that it is the valuation made by RARAD in its decision
dated 29 March 2000, fixing the just compensation for the subject property
atP32,965,408.46, which should be awarded to them considering that the same is
supported by substantial evidence. On the other hand, respondent argues that just
compensation should be computed on the revalued appraisal of P5,626,723.47.
Pertinently, Section 17 of RA 6657 provides:
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 assessments 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.
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.[68] 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,[69] 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.[70] 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 with this Decision, applying Section 17 of RA 6657, DAR AO No. 5, series of 1998, as
exceed the lowest value of land within the same estate under
consideration or within the same barangay or municipality (in that amended, and the prevailing jurisprudence. The Court of Appeals is directed to
order) approved by LBP within one (1) year from receipt of conclude the proceedings and submit to this Court a report on its findings and
claimfolder.[71]
recommended conclusions within forty-five (45) days from notice of this Decision. The
Court of Appeals is further directed to raffle this case immediately upon receipt of this
In Land Bank of the Philippines v. Spouses Banal,[72] we remanded the case to
Decision.
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.
SO ORDERED.
DEPARTMENT OF AGRARIAN REFORM, G.R. No. 188670
The mandatory application of the aforementioned guidelines in determining represented by OIC-Secretary JOSE MARI B.
PONCE, now by Secretary NASSER C. Present:
just compensation has been reiterated recently in Land Bank of the Philippines v.
PANGANDAMAN,
Lim[73] and Land Bank of the Philippines v. Heirs of Eleuterio Cruz,[74] where we also Petitioner, CARPIO, J.,
ordered the remand of the cases to the SAC for the determination of just compensation Chairperson,
BRION,
strictly in accordance with the applicable DAR regulations. - versus - PEREZ,
SERENO, and
REYES, JJ.
Thus, the remand of the case is necessary for the parties to present their
evidence, as we are not a trier of facts.
HEIRS OF ANGEL T. DOMINGO, Promulgated:
Respondents.
Considering, however, that the land was acquired in 1989 and the only March 7, 2012
surviving petitioner is now an octogenarian and is in need of urgent medical
attention,[75] we find these special circumstances justifying in the acceleration of the x------------------------------------------------------------------------------------x
final disposition of this case. This Court deems it best pro hac vice to commission the
CA as its agent to receive and evaluate the evidence of the parties. [76] The CAs mandate RESOLUTION
is to ascertain the just compensation due in accordance with this Decision, applying
Section 17 of RA 6557 and applicable DAR regulations. As explained in Land Bank of REYES, J.:
the Philippines v. Gallego, Jr.,[77] the remand of cases before this Court to the CA for
the reception of further evidence is not a novel procedure. It is sanctioned by Section 6,
This is a petition for review on certiorari under Rule 45 of the Rules of Court
Rule 46 of the Rules of Court.[78] In fact, the Court availed of this procedure in quite a
filed by the Department of Agrarian Reform (DAR) assailing the Decision[1] dated June
few cases.[79]
WHEREFORE, we GRANT the petition. We SET ASIDE the Decision and 30, 2009 issued by the Court of Appeals (CA) in the consolidated cases of CA-G.R. SP

Resolution of the Court of Appeals in CA-G.R. SP No. 68157. We REMANDAgrarian Nos. 83765 and 84791 entitled Land Bank of the Philippines v. Heirs of Angel T.
Case No. 21-0632 to the Court of Appeals, which is directed to receive evidence and Domingo and Department of Agrarian Reform v. Heirs of Angel T.
determine with dispatch the just compensation due petitioners strictly in accordance Domingo, respectively.
 for the subject land should not be less than P5,236,920.00 for the whole 34.9128
The late Angel T. Domingo (Domingo) is the registered owner of a 70.3420- hectares or P150,000.00 per hectare. He asserted that the subject land is a fully irrigated
hectare rice land situated at Macapabellag, Guimba, Nueva Ecija, covered by Transfer rice land capable of one-half harvest in two years, yielding an average harvest of
Certificate of Title No. NT-97157. 50 cavans per hectare. He likewise claimed that he has yet to receive the just
compensation for the subject land.
On October 21, 1972, Presidential Decree No. 27 [2] (P.D. No. 27) was issued,
pursuant to which actual tenant farmers of private agricultural lands devoted to rice and The LBP and DAR disputed Domingos valuation and claimed that the
corn were deemed as full owners of the land they till. The land transfer program under determination of just compensation should be governed by the provisions of P.D. No.
P.D. No. 27 was subsequently implemented by Executive Order No. 228 [3] (E.O. No. 27 in relation to E.O. No. 228, i.e. Land Value = Average Gross Production (AGP) x
228) which was issued on July 17, 1987. 2.5 x P35.00,[5] the latter amount representing the Government Support Price (GSP) on
October 21, 1972. Thus, using this formula, they claimed that the just compensation for
Consequently, out of the 70.3420 hectares of the said rice land, 34.9128 the subject land should be P459,091.60 inclusive of the benefit of DAR Administrative
hectares (subject land) were taken by the government under its land transfer program Order No. 13[6] (A.O. No. 13).
and awarded the same to tenant farmers. Several Emancipation Patents were then issued
to qualified tenant farmers on various dates, to wit: Further, the LBP asserted that it had already paid Domingo the just
compensation for the subject land, the latter having withdrawn the amounts
Number Emancipation
Date Issued Total Area Covered ofP419,438.17 and P39,653.43.
Patents Issued
April 29, 1988 11 21.8520 hectares
October 4, 1994 3 2.9372 hectares
July 29, 1997 3 7.3997 hectares On January 21, 2004, the RTC rendered a Decision which, inter alia, fixed the
February 21, 2001 1 2.7245 hectares just compensation for the subject land at P3,709,999.49. Evidently, the RTC used the
method set forth under P.D. No. 27 in relation to E.O. No. 228 except that it used the
On April 26, 2000, Domingo filed with the Regional Trial Court (RTC) of GSP rate at the time of issuance of the various Emancipation Patents. The RTC
Guimba, Nueva Ecija a complaint for determination and payment of just compensation computed the just compensation as follows:
against the Land Bank of the Philippines (LBP) and DAR. Apparently, the LBP and
DAR initially pegged the amount of just compensation for the subject land a. For the 21.8520 hectare portion taken in 1988

at P127,298.61. = 91.42 x 2.5 x 175

= P39,996.25 x 21.8520
= P873,998.05 x 2.397 (Annual compounding rate of 6% p/a for
Domingo opposed the said valuation and claimed that the just compensation 15 years)
= P2,094,973.32
for the subject land should be computed using the parameters set forth under Republic
Act No. 6657[4] (R.A. No. 6657). Thus, Domingo claimed that the just compensation b. For the 2.9372 hectare portion taken in 1994
 SO ORDERED.[8]
= 91.42 x 2.5 x 300
= P68,565.00 per hectare x 2.9372
= P201,389.11 x 1.689 (Annual compounding rate of 6% pa)
= P340,146.20 In remanding the case to the RTC for the computation of the just
compensation due on the subject land, the CA ruled that:
c. For the 7.3997 hectare portion taken in 1997

= 91.42 x 2[.]5 x 400 In fine, the RTC did not commit an error when it applied the
= 91.420 (sic) per hectare x 7.3997 provisions of R.A. 6657 and that the date of taking of Domingos rice
= 676,480.74 x 1.419 (Annual compounding rate of 6% pa for 6 land for purposes of computing just compensation should be reckoned
years) from the issuance dates of emancipation patents. However, the just
= P959,926.17 compensation for the subject land in the present case should be
computed in accordance with Lubrica vs. Land Bank x x x. In said
d. For the 2.7245 hectare portion taken in 2001 case, it was held that:

= 91.42 x 2.5 x 450 Section 18 of R.A. No. 6657 mandates that

= P102,847.50 per hectare x 2.72[4]5 the LBP shall compensate the landowner in such
= P280,208.01 x 1.124 (Annual compounding rate of 6% for 2 amount as may be agreed upon by the landowner
years) and the DAR and the LBP or as may be finally
= P314,953.80 determined by the court as the just compensation
for the land. In determining just compensation, the
or a total of P3,709,999.49 x x x[7] 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
The LBP and DAR filed their respective motions for reconsideration, which government assessors shall be considered. The
social and economic benefits contributed by the
were partially granted by the RTC in its Order dated March 29, 2004. Accordingly, the
farmers and the farmworkers and by the
RTC, after deleting the 6% additional increment it imposed, directed the LBP and DAR government to the property as well as the non-
payment of taxes or loans secured from any
to pay Domingo the total amount of P2,032,075.91 as just compensation for the subject government financing institution on the said land
land. shall be considered as additional factors to
determine its valuation.

The LBP and DAR then appealed from the foregoing disposition of the RTC. In the case of Land Bank of the Philippines v. Celada x x x,
the above provision was converted into a formula by the DAR
On June 30, 2009, the CA rendered the herein assailed Decision, the decretal portion of through Administrative Order No. 05, S. 1998, to wit:
which reads:
Land Value (LV) = (Capitalized Net Income x 0.6)
+ (Comparable Sales x 0.3) + Market Value per
WHEREFORE, the decision of the RTC Tax Declaration x 0.1)[9]
is AFFIRMED withMODIFICATION. Conformably, the RTC of
Guimba, Nueva Ecija, Branch 33, acting as a Special Agrarian Court,
is DIRECTED to compute the final valuation of the subject land with
deliberate dispatch in accordance with this Decision. Undaunted, the DAR instituted the instant petition for review on certiorari before this
Court alleging that the CA erred when it affirmed the ruling of the RTC that, for

purposes of determining the just compensation for lands covered by P.D. No. 27, the
provisions of R.A. No. 6657 must be applied.
In their comment,[10] the respondents Heirs of Angel T. Domingo asserted that
the instant petition ought to be denied, asserting that this Court, in a long line of cases,
had established that the method of computing for just compensation set forth under
R.A. No. 6657 applies to lands taken by the government under P.D. No. 27 in relation
to E.O. No. 228.
Basically, this Court is called upon to determine this issue: whether the
method set forth under R.A. No. 6657 in the computation of just compensation may be
applied to private agricultural lands taken by the government under the auspices of P.D.
No. 27 in relation to E.O. No. 228.
We rule in the affirmative.
The issue presented by the instant case is not novel. In Land Bank of
thePhilippines v. Natividad,[11] this Court held that just compensation for private
agricultural lands acquired by the government under the auspices of P.D. No. 27 in
relation to E.O. No. 228 should be computed in accordance with the method set forth
under R.A. No. 6657. Thus:
Land Banks contention that the property was acquired for
purposes of agrarian reform on October 21, 1972, the time of the
effectivity of PD 27, ergo just compensation should be based on the
value of the property as of that time and not at the time of possession
in 1993, is likewise erroneous. In Office of the President,
Malacaang, Manila v. Court of Appeals, we ruled that the seizure of
the landholding did not take place on the date of effectivity of PD 27
but would take effect on the payment of just compensation.
Under the factual circumstances of this case, the agrarian
reform process is still incomplete as the just compensation to be paid
private respondents has yet to be settled. Considering the passage of
Republic Act No. 6657 (RA 6657) before the completion of this
process, the just compensation should be determined and the process
concluded under the said law. Indeed, RA 6657 is the applicable
law, with PD 27 and EO 228 having only suppletory effect,
conformably with our ruling in Paris v. Alfeche.
xxx
It would certainly be inequitable to determine just
compensation based on the guideline provided by PD 27 and EO
228 considering the DARs failure to determine the just
compensation for a considerable length of time. That just
compensation should be determined in
accordance with RA 6657, and not PD 27 or EO 228, is especially
imperative considering that just compensation should be the full
and fair equivalent of the property taken from its owner by the
expropriator, the equivalent being real, substantial, full and
ample.[12](Citations omitted and emphasis supplied)
Likewise, in the cognate case of Land Bank of the Philippines v. Heirs of
Angel T. Domingo,[13] this court held that:
LBPs contention that the property was taken on 21 October
1972, the date of effectivity of PD 27, thus just compensation should
be computed based on the GSP in 1972, is erroneous. The date of
taking of the subject land for purposes of computing just
compensation should be reckoned from the issuance dates of the
emancipation patents. An emancipation patent constitutes the
conclusive authority for the issuance of a Transfer Certificate of Title
in the name of the grantee. It is from the issuance of an emancipation
patent that the grantee can acquire the vested right of ownership in
the landholding, subject to the payment of just compensation to the
landowner.
When RA 6657 was enacted into law in 1988, the agrarian
reform process in the present case was still incomplete as the amount
of just compensation to be paid to Domingo had yet to be settled. Just
compensation should therefore be determined and the expropriation
process concluded under RA 6657.
Guided by this precept, just compensation for purposes of
agrarian reform under PD 27 should adhere to Section 17 of RA 6657
which states:
 Sec. 17. Determination of Just
Compensation. In determining just compensation,
the cost of acquisition of the land, the current value WHEREFORE, in consideration of the foregoing disquisitions, the petition
of the like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax is DENIED. The assailed Decision dated June 30, 2009 issued by the Court of Appeals
declarations, and the assessment made by in CA-G.R. SP Nos. 83765 and 84791 are AFFIRMED.
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- SO ORDERED.
payment of taxes or loans secured from any
government financing institution on the said land HEIRS OF DE LESTE VS. LBP
shall be considered as additional factors to
determine its valuation. VELASCO, JR., J.:

xxx

In sum, we affirm the rulings of the trial court and the

appellate court that the provisions of RA 6657 apply to the The Case
present case and that the date of taking of Domingos riceland for
purposes of computing just compensation should be reckoned
from the issuance dates of emancipation patents.[14] x x x
(Citations omitted and emphasis supplied) Before Us is a Petition for Review on Certiorari under Rule 45 seeking to
reverse and set aside the October 28, 2004 Resolution[1] of the Court of Appeals (CA)
and its September 13, 2005 Resolution[2] denying petitioners motion for
Indeed, it would be the height of inequity if we are to compute the just
reconsideration.
compensation for the subject land using the values at the time when P.D. No. 27 was
issued. Admittedly, the expropriation of the subject land was initiated under P.D. No.
27. Nevertheless, with the passage of R.A. No. 6657, the CA aptly ruled that the
method set forth thereunder should be adopted in computing just compensation for the The Facts

subject land.

The spouses Gregorio Nanaman (Gregorio) and Hilaria Tabuclin (Hilaria)

In sum, in determining just compensation, the cost of the acquisition of the
were the owners of a parcel of agricultural land located in Tambo, Iligan City,
land, the current value of like properties, its nature, actual use and income, the sworn
consisting of 34.7 hectares (subject property). Said spouses were childless, but Gregorio
valuation by the owner, the tax declarations, and the assessment made by government
had a son named Virgilio Nanaman (Virgilio) by another woman. Virgilio had been
assessors shall be considered. The social and economic benefits contributed by the
raised by the couple since he was two years old. Gregorio also had two daughters,
farmers and the farmworkers and by the government to the property as well as the non-
Esperanza and Caridad, by still another woman.[3]
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. [15]
 When Gregorio died in 1945, Hilaria and Virgilio administered the subject property was placed under the said program.[12] However, only the heirs of Gregorio
property.[4] On February 16, 1954, Hilaria and Virgilio sold the subject property to Dr. were identified by the Department of Agrarian Reform (DAR) as the
Jose Deleste (Deleste) for PhP 16,000.[5] The deed of sale was notarized on February landowners. Concomitantly, the notices and processes relative to the coverage were
17, 1954 and registered on March 2, 1954. Also, the tax declaration in the name of sent to these heirs.[13]
Virgilio was canceled and a new tax declaration was issued in the name of Deleste. The
arrears in the payment of taxes from 1952 had been updated by Deleste and from then
on, he paid the taxes on the property.[6] In 1975, the City of Iligan passed City Ordinance No. 1313, known as the
Zoning Regulation of Iligan City, reclassifying the subject property as
commercial/residential.[14]
On May 15, 1954, Hilaria died.[7] Gregorios brother, Juan Nanaman, was
appointed as special administrator of the estate of the deceased spouses. Subsequently,
Edilberto Noel (Noel) was appointed as the regular administrator of the joint estate.[8] Eventually, on February 12, 1984, DAR issued Certificates of Land Transfer
(CLTs) in favor of private respondents who were tenants and actual cultivators of the
subject property.[15] The CLTs were registered on July 15, 1986.[16]
On April 30, 1963, Noel, as the administrator of the intestate estate of the
deceased spouses, filed before the Court of First Instance, Branch II, Lanao del Norte
an action against Deleste for the reversion of title over the subject property, docketed as In 1991, the subject property was surveyed.[17] The survey of a portion of the
Civil Case No. 698.[9] Said case went up to this Court in Noel v. CA, where We land consisting of 20.2611 hectares, designated as Lot No. 1407, was approved on
rendered a Decision[10] on January 11, 1995, affirming the ruling of the CA that the January 8, 1999.[18] The claim folder for Lot No. 1407 was submitted to the LBP which
subject property was the conjugal property of the late spouses Gregorio and Hilaria and issued a Memorandum of Valuation and a Certificate of Cash Deposit on May 21, 2001
that the latter could only sell her one-half (1/2) share of the subject property to Deleste. and September 12, 2001, respectively. Thereafter, Emancipation Patents (EPs) and
As a result, Deleste, who died in 1992, and the intestate estate of Gregorio were held to Original Certificates of Title (OCTs) were issued on August 1, 2001 and October 1,
be the co-owners of the subject property, each with a one-half (1/2) interest in it.[11] 2001, respectively, in favor of private respondents over their respective portions of Lot
No. 1407.[19]

Notably, while Civil Case No. 698 was still pending before the CFI,
particularly on October 21, 1972, Presidential Decree No. (PD) 27 was issued. This law Meanwhile, on November 22, 1999, the City of Iligan filed a complaint with
mandates that tenanted rice and corn lands be brought under the Operation Land the Regional Trial Court (RTC), Branch 4 in Iligan City for the expropriation of a
Transfer (OLT) Program and awarded to farmer-beneficiaries. Thus, the subject 5.4686-hectare portion of Lot No. 1407, docketed as Special Civil Action No. 4979. On
December 11, 2000, the RTC issued a Decision granting the expropriation. Considering
that the real owner of the expropriated portion could not be determined, as the subject
property had not yet been partitioned and distributed to any of the heirs of Gregorio and
Deleste, the just compensation for the expropriated portion of the subject property in
the amount of PhP 27,343,000 was deposited with the Development Bank of the
Philippines in Iligan City, in trust for the RTC in Iligan City. [20]
On February 28, 2002, the heirs of Deleste, petitioners herein, filed with the
Department of Agrarian Reform Adjudication Board (DARAB) a petition seeking to
nullify private respondents EPs.[21] This was docketed as Reg. Case No. X-471-LN-
2002.
On July 21, 2003, the Provincial Agrarian Reform Adjudicator (PARAD)
rendered a Decision[22] declaring that the EPs were null and void in view of the pending
issues of ownership, the subsequent reclassification of the subject property into a
residential/commercial land, and the violation of petitioners constitutional right to due
process of law.
Dissatisfied, private respondents immediately filed their Notice of Appeal on
July 22, 2003. Notwithstanding it, on July 24, 2003, petitioners filed a Motion for a
Writ of Execution pursuant to Section 2, Rule XII of the Revised Rules of Procedure,
which was granted in an Order dated August 4, 2003 despite strong opposition from
private respondents.[23] On January 28, 2004, the DARAB nullified the Order dated
August 4, 2003 granting the writ of execution.[24]
Subsequently, the DARAB, in DARAB Case No. 12486, reversed the ruling of
the PARAD in its Decision[25] dated March 15, 2004. It held, among others, that the EPs
were valid as it was the heirs of Deleste who should have informed the DAR of the
pendency of Civil Case No. 698 at the time the subject property was placed under the
coverage of the OLT Program considering that DAR was not a party to the said case.
Further, it stated that the record is bereft of any evidence that the city ordinance has
been approved by the Housing and Land Use Regulatory Board (HLURB), as mandated
by DAR Administrative Order No. 01, Series of 1990, and held that whether the subject
property is indeed exempt from the OLT Program is an administrative determination,
the jurisdiction of which lies exclusively with the DAR Secretary or the latters
authorized representative. Petitioners motion for reconsideration was likewise denied
by the DARAB in its Resolution[26] dated July 8, 2004.
Undaunted, petitioners filed a petition for review with the CA, docketed as
CA-G.R. SP No. 85471, challenging the Decision and Resolution in DARAB Case No.
12486. This was denied by the CA in a Resolution dated October 28, 2004 for
petitioners failure to attach the writ of execution, the order nullifying the writ of
execution, and such material portions of the record referred to in the petition and other
supporting papers, as required under Sec. 6 of Rule 43 of the Rules of Court. Petitioners
motion for reconsideration was also denied by the appellate court in a Resolution dated
September 13, 2005 for being pro forma.
On November 18, 2005, petitioners filed a petition for review with this Court.
In Our Resolution[27] dated February 4, 2008, We resolved to deny the said petition for
failure to show sufficiently any reversible error in the assailed judgment to warrant the
exercise by the Court of its discretionary appellate jurisdiction in this case.
 RECLASSIFYING THE AREA INTO A STRICTLY
On March 19, 2008, petitioners filed a Motion for Reconsideration. [28] On
RESIDENTIAL AREA IN 1975.
April 11, 2008, they also filed a Supplement to the Motion for Reconsideration. [29]

IV. [WHETHER THE LAND] THAT HAS BEEN

PREVIOUSLY AND PARTIALLY EXPROPRIATED BY
In Our Resolution[30] dated August 20, 2008, this Court resolved to grant
A CITY GOVERNMENT [MAY] STILL BE
petitioners motion for reconsideration and give due course to the petition, requiring the SUBJECT[ED] TO AGRARIAN REFORM.
parties to submit their respective memoranda.

V. [WHETHER DAR VIOLATED] THE RIGHTS OF

PETITIONERS TO PROCEDURAL DUE PROCESS.
The Issues

VI. [WHETHER] THE COMPENSATION DETERMINED

BY DAR AND LBP IS CORRECT GIVEN THAT THE
I. [WHETHER THE CA WAS CORRECT IN FORMULA USED HAD BEEN REPEALED.
DISMISSING] OUTRIGHT THE PETITION FOR
REVIEW OF PETITIONERS X X X.
VII. [WHETHER] THE ISSUANCE OF EMANCIPATION
PATENTS [IS] LEGAL GIVEN THAT THEY WERE
II. [WHETHER] THE OUTRIGHT DENIAL OF FRUITS OF AN ILLEGAL PROCEEDING.
PETITIONERS MOTION FOR RECONSIDERATION
BASED ON A MISAPPRECIATION OF FACTS IS
JUSTIFIED; AND [WHETHER THE] OUTRIGHT
VIII. [WHETHER] THE CERTIFICATES OF TITLE [ARE]
DISMISSAL OF THE PETITION IS JUST CONSIDERING
VALID GIVEN THAT THEY WERE DIRECTLY ISSUED
THE IMPORTANCE OF THE ISSUES RAISED
TO THE FARMER-BENEFICIARIES IN GROSS
THEREIN.
VIOLATION OF SECTION 16(E) OF R.A. 6657 X X X.[31]

XXXX
Our Ruling

III. [WHETHER PETITIONERS LAND IS] COVERED BY

The petition is meritorious.
AGRARIAN REFORM GIVEN THAT THE CITY
OF ILIGAN PASSED [CITY] ORDINANCE NO. 1313
Effect of non-compliance with the requirements
petition, shall be sufficient ground for its dismissal as stated in Sec. 7, Rule 43 of the
under Sec. 6, Rule 43 of the Rules of Court Rules:

Sec. 7. Effect of failure to comply with requirements. The

In filing a petition for review as an appeal from awards, judgments, final
orders, or resolutions of any quasi-judicial agency in the exercise of its quasi-judicial
functions, it is required under Sec. 6(c), Rule 43 of the Rules of Court that it be
accompanied by a clearly legible duplicate original or a certified true copy of the
failure of the petitioner to comply with any of the foregoing
requirements regarding the payment of the docket and other lawful
fees, the deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the
petition shall be sufficient ground for the dismissal thereof.
(Emphasis supplied.)

award, judgment, final order, or resolution appealed from, with certified true copies of
such material portions of the record referred to in the petition and other supporting
papers. As stated:
In the instant case, the CA dismissed the petition in CA-G.R. SP No. 85471 for
petitioners failure to attach the writ of execution, the order nullifying the writ of
Sec. 6. Contents of the petition. The petition for review shall
(a) state the full names of the parties to the case, without impleading execution, and such material portions of the record referred to in the petition and other
the court or agencies either as petitioners or respondents; (b) contain a supporting papers.[32]
concise statement of the facts and issues involved and the grounds
relied upon for the review; (c) be accompanied by a clearly legible
duplicate original or a certified true copy of the award, judgment,
final order or resolution appealed from, together with certified A perusal of the issues raised before the CA would, however, show that the
true copies of such material portions of the record referred to
foregoing documents required by the appellate court are not necessary for the proper
therein and other supporting papers; and (d) contain a sworn
certification against forum shopping as provided in the last paragraph disposition of the case. Specifically:
of section 2, Rule 42. The petition shall state the specific material
dates showing that it was filed within the period fixed herein.
(Emphasis supplied.) Is [Lot No. 1407] within the ambit of the [Comprehensive Agrarian
Reform Program]?

Can the OLT by DAR over the subject land validly proceed without
Non-compliance with any of the above-mentioned requirements concerning notice to the landowner?
the contents of the petition, as well as the documents that should accompany the
 Can the OLT be validly completed without a certification of deposit
by Land Bank?
[I]s the landowner barred from exercising his right of retention x x x
[considering that EPs were already issued on the basis of CLTs]?
Are the EPs over the subject land x x x valid x x x? [33]
Petitioners complied with the requirement under Sec. 6(c), Rule 43 of the
Rules of Court when they appended to the petition filed before the CA certified true
copies of the following documents: (1) the challenged resolution dated July 8, 2004
issued by the DARAB denying petitioners motion for reconsideration; (2) the duplicate
original copy of petitioners Motion for Reconsideration dated April 6, 2005; (3) the
assailed decision dated March 15, 2004 issued by the DARAB reversing on appeal the
decision of the PARAD and nullifying with finality the order of execution pending
appeal; (4) the Order dated December 8, 2003 issued by the PARAD reinstating the
writ of execution earlier issued; and (5) the Decision dated July 21, 2003 issued by the
PARAD in the original proceedings for the cancellation of the EPs. [34] The CA,
therefore, erred when it dismissed the petition based on such technical ground.
Even assuming that the omitted documents were material to the appeal, the
appellate court, instead of dismissing outright the petition, could have just required
petitioners to submit the necessary documents. In Spouses Espejo v. Ito,[35] the Court
held that under Section 3 (d), Rule 3 of the Revised Internal Rules of the Court of
Appeals,[36] the Court of Appeals is with authority to require the parties to submit
additional documents as may be necessary to promote the interests of substantial
justice.
Moreover, petitioners subsequent submission of the documents required by the
CA with the motion for reconsideration constitutes substantial compliance with Section
6(c), Rule 43 of the Rules of Court.[37] In Jaro v. CA, this Court held that subsequent
and substantial compliance may call for the relaxation of the rules of procedure.
Particularly:
The amended petition no longer contained the fatal defects
that the original petition had but the Court of Appeals still saw it fit to
dismiss the amended petition. The Court of Appeals reasoned that
non-compliance in the original petition is admittedly attributable to
the petitioner and that no highly justifiable and compelling reason has
been advanced to the court for it to depart from the mandatory
requirements of Administrative Circular No. 3-96. The hard stance
taken by the Court of Appeals in this case is unjustified under the
circumstances.
There is ample jurisprudence holding that the
subsequent and substantial compliance of an appellant may call
for the relaxation of the rules of procedure. In Cusi-Hernandez vs.
Diaz and Piglas-Kamao vs. National Labor Relations Commission,
we ruled that the subsequent submission of the missing documents
with the motion for reconsideration amounts to substantial
compliance. The reasons behind the failure of the petitioners in these
two cases to comply with the required attachments were no longer
scrutinized. What we found noteworthy in each case was the fact that
the petitioners therein substantially complied with the formal
requirements. We ordered the remand of the petitions in these cases
to the Court of Appeals, stressing the ruling that by precipitately
dismissing the petitions the appellate court clearly put a premium on
 technicalities at the expense of a just resolution of the opportunity for the just and proper disposition of his cause.
case.[38] (Citations omitted; emphasis supplied.) (Citations omitted; emphasis supplied.)

Time and again, this Court has held that a strict and rigid application of Clearly, the dismissal of the petition by the CA on mere technicality is
technicalities must be avoided if it tends to frustrate rather than promote substantial unwarranted in the instant case.
[39] [40]
justice. As held in Sta. Ana v. Spouses Carpo:

On the coverage of the subject property

Rules of procedure are merely tools designed to facilitate the
attainment of justice. If the application of the Rules would tend to by the agrarian reform program
frustrate rather than to promote justice, it is always within our
power to suspend the rules or except a particular case from their
operation. Law and jurisprudence grant to courts the prerogative
to relax compliance with the procedural rules, even the most
mandatory in character, mindful of the duty to reconcile the need
Petitioners contend that the subject property, particularly Lot No. 1407, is
to put an end to litigation speedily and the parties right to an
opportunity to be heard. outside the coverage of the agrarian reform program in view of the enactment of City
Ordinance No. 1313 by the City of Iligan reclassifying the area into a
residential/commercial land.[41]
Our recent ruling in Tanenglian v. Lorenzo is
instructive:

Unconvinced, the DARAB, in its Decision, noted that the record is bereft of
We have not been oblivious to or unmindful of the any evidence that the city ordinance has been approved by the HLURB, thereby
extraordinary situations that merit liberal application of the
allegedly casting doubt on the validity of the reclassification over the subject
Rules, allowing us, depending on the circumstances, to set
aside technical infirmities and give due course to the appeal. property.[42] It further noted that whether the subject property is exempt from the OLT
In cases where we dispense with the technicalities, we do not Program is an administrative determination, the jurisdiction of which lies exclusively
mean to undermine the force and effectivity of the periods
with the DAR Secretary, not with the DARAB.
set by law. In those rare cases where we did not stringently
apply the procedural rules, there always existed a clear need
to prevent the commission of a grave injustice. Our judicial
system and the courts have always tried to maintain a
healthy balance between the strict enforcement of procedural
laws and the guarantee that every litigant be given the full
 Indeed, it is the Office of the DAR Secretary which is vested with the primary
and exclusive jurisdiction over all matters involving the implementation of the agrarian
reform program.[43] However, this will not prevent the Court from assuming jurisdiction
over the petition considering that the issues raised in it may already be resolved on the
basis of the records before Us. Besides, to allow the matter to remain with the Office of
the DAR Secretary would only cause unnecessary delay and undue hardship on the
parties. Applicable, by analogy, is Our ruling in the recent Bagong Pagkakaisa ng
Manggagawa ng Triumph International v. Department of Labor and Employment
Secretary,[44] where We held:
But as the CA did, we similarly recognize that undue
hardship, to the point of injustice, would result if a remand would
be ordered under a situation where we are in the position to
resolve the case based on the records before us. As we said
in Roman Catholic Archbishop of Manila v. Court of Appeals:
[w]e have laid down the rule that the remand of the
case to the lower court for further reception of evidence is
not necessary where the Court is in a position to resolve the
dispute based on the records before it.On many occasions,
the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the
merits instead of remanding them to the trial court for
further proceedings, such as where the ends of justice,
would not be subserved by the remand of the case.
Thus, we shall directly rule on the dismissal issue. And
while we rule that the CA could not validly rule on the merits of this
issue, we shall not hesitate to refer back to its dismissal ruling, where
appropriate. (Citations omitted; emphasis supplied.)
Pertinently, after an assiduous study of the records of the case, We agree with
petitioners that the subject property, particularly Lot No. 1407, is outside the coverage
of the agrarian reform program in view of the enactment by the City ofIligan of its local
zoning ordinance, City Ordinance No. 1313.
It is undeniable that the local government has the power to reclassify
agricultural into non-agricultural lands. In Pasong Bayabas Farmers Association, Inc.
v. CA,[45] this Court held that pursuant to Sec. 3 of Republic Act No. (RA) 2264,
amending the Local Government Code, municipal and/or city councils are empowered
to adopt zoning and subdivision ordinances or regulations in consultation with the
National Planning Commission. It was also emphasized therein that [t]he power of the
local government to convert or reclassify lands [from agricultural to non-agricultural
lands prior to the passage of RA 6657] is not subject to the approval of the [DAR]. [46]
Likewise, it is not controverted that City Ordinance No. 1313, which was
enacted by the City of Iligan in 1975, reclassified the subject property into a
commercial/residential area. DARAB, however, believes that the approval of HLURB
is necessary in order for the reclassification to be valid.
We differ. As previously mentioned, City Ordinance No. 1313 was enacted by
the City of Iligan in 1975. Significantly, there was still no HLURB to speak of during
that time. It was the Task Force on Human Settlements, the earliest predecessor of
HLURB, which was already in existence at that time, having been created on
September 19, 1973 pursuant to Executive Order No. 419. It should be noted, however,
that the Task Force was not empowered to review and approve zoning ordinances and
regulations. As a matter of fact, it was only on August 9, 1978, with the issuance of
Letter of Instructions No. 729, that local governments were required to submit their
existing land use plans, zoning ordinances, enforcement systems and procedures to the
Ministry of Human Settlements for review and ratification. The Human Settlements
Regulatory Commission (HSRC) was the regulatory arm of the Ministry of Human
Settlements.[47]
Significantly, accompanying the Certification[48] dated October 8, 1999 issued
by Gil R. Balondo, Deputy Zoning Administrator of the City Planning and
Development Office, Iligan City, and the letter[49] dated October 8, 1999 issued by
Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of Approval
issued by Imelda Romualdez Marcos, then Minister of Human Settlements and
Chairperson of the HSRC, showing that the local zoning ordinance was, indeed,
approved on September 21, 1978. This leads to no other conclusion than that City
Ordinance No. 1313 enacted by the City of Iligan was approved by the HSRC, the
predecessor of HLURB. The validity of said local zoning ordinance is, therefore,
beyond question.
Since the subject property had been reclassified as residential/commercial land
with the enactment of City Ordinance No. 1313 in 1975, it can no longer be considered
as an agricultural land within the ambit of RA 6657. As this Court held in Buklod nang
Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc.,[50] To be exempt
from CARP, all that is needed is one valid reclassification of the land from agricultural
to non-agricultural by a duly authorized government agency before June 15, 1988,
when the CARL took effect.
Despite the foregoing ruling, respondents allege that the subsequent
reclassification by the local zoning ordinance cannot free the land from the legal effects
of PD 27 which deems the land to be already taken as of October 21, 1972, when said
law took effect. Concomitantly, they assert that the rights which accrued from said date
must be respected. They also maintain that the reclassification of the subject property
did not alter its agricultural nature, much less its actual use. [51]
Verily, vested rights which have already accrued cannot just be taken away by
the expedience of issuing a local zoning ordinance reclassifying an agricultural land
into a residential/commercial area. As this Court extensively discussed inRemman
Enterprises, Inc. v. CA:[52]
In the main, REMMAN hinges its application for exemption
on the ground that the subject lands had ceased to be agricultural
lands by virtue of the zoning classification by the Sangguniang Bayan
of Dasmarias, Cavite, and approved by the HSRC, specifying them as
residential.
In Natalia Realty, Inc. v. Department of Agriculture, this
Court resolved the issue of whether lands already classified for
residential, commercial or industrial use, as approved by the Housing
and Land Use Regulatory Board (HLURB) and its precursor
agencies, i.e., National Housing Authority and Human Settlements
Regulatory Commission, prior to 15 June 1988, are covered by
Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988. We answered in the negative, thus:
We now determine whether such lands are covered by
the CARL. Section 4 of R.A. 6657 provides that the CARL
shall cover, regardless of tenurial arrangement and
commodity produced, all public and private agricultural
lands. As to what constitutes agricultural land, it is referred
to as land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential,
commercial or industrial land. The deliberations of the
Constitutional Commission confirm this limitation.
Agricultural lands are only those lands which are arable and
suitable agricultural lands and do not include commercial,
industrial and residential land.
xxx xxx xxx
Indeed, lands not devoted to agricultural activity are
outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the
effectivity of CARL by government agencies other than
respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-
Agricultural Uses, DAR itself defined agricultural land thus
. . . Agricultural lands refers to those devoted to
agricultural activity as defined in R.A. 6657 and not
classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its
predecessor agencies, and not classified in town plans and
zoning ordinances as approved by the Housing and Land
Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential,
commercial or industrial use.
Since the NATALIA lands were converted prior to 15
June 1988, respondent DAR is bound by such conversion. . .
..
However, Natalia should be cautiously applied in light of
Administrative Order 04, Series of 2003, which outlines the rules on
the Exemption on Lands from CARP Coverage under Section (3) of
Republic Act No. 6657, and Department of Justice (DOJ) Opinion
No. 44, Series of 1990. It reads:
I. Prefatory Statement
Republic Act (RA) 6657 or the Comprehensive
Agrarian Reform Law (CARL), Section 3, Paragraph (c)
defines agricultural land as referring to land devoted to
agricultural activity as defined in this Act and not classified
as mineral, forest, residential, commercial or industrial land.
Department of Justice Opinion No. 44, Series of 1990,
(or DOJ Opinion 44-1990 for brevity) and the case
of Natalia Realty versus Department of Agrarian Reform (12
August 2993, 225 SCRA 278) opines that with respect to the
conversion of agricultural land covered by RA 6657 to non-
agricultural uses, the authority of the Department of
Agrarian Reform (DAR) to approve such conversion may be
exercised from the date of its effectivity, on 15 June 1988.
Thus, all lands that are already classified as commercial,
industrial or residential before 15 June 1988 no longer need
any conversion clearance.
However, the reclassification of lands to non-
agricultural uses shall not operate to divest tenant[-
]farmers of their rights over lands covered by Presidential
Decree (PD) No. 27, which have been vested prior to 15
June 1988.
 As emphasized, the reclassification of lands to non- industrial in nature. This simply means that, if we apply
agricultural cannot be applied to defeat vested rights of tenant- the general rule, as we must, the ordinance should be
farmers under Presidential Decree No. 27. given prospective operation only. The further implication
is that it should not change the nature of existing
agricultural lands in the area or the legal relationships
existing over such lands. (Citations omitted; emphasis
Indeed, in the recent case of Sta. Rosa Realty Development
supplied.)
Corporation v. Amante, where the Court was confronted with the
issue of whether the contentious property therein is agricultural in
nature on the ground that the same had been classified as park since
1979 under the Zoning Ordinance of Cabuyao, as approved by the
HLURB, the Court said:
This, however, raises the issue of whether vested rights have actually accrued
The Court recognizes the power of a local government
to reclassify and convert lands through local ordinance, in the instant case. In this respect, We reckon that under PD 27, tenant-farmers of rice
especially if said ordinance is approved by the HLURB. and corn lands were deemed owners of the land they till as of October 21, 1972. This
Municipal Ordinance No. 110-54 dated November 3, 1979,
policy, intended to emancipate the tenant-farmers from the bondage of the soil, is given
enacted by the Municipality of Cabuyao, divided the
municipality into residential, commercial, industrial, effect by the following provision of the law:
agricultural and institutional districts, and districts and parks
for open spaces. It did not convert, however, existing
agricultural lands into residential, commercial, industrial, or The tenant farmer, whether in land classified as landed estate
institutional. While it classified Barangay Casile into a or not, shall be deemed owner of a portion constituting a family size
municipal park, as shown in its permitted uses of land map, farm of five (5) hectares if not irrigated and three (3) hectares if
the ordinance did not provide for the retroactivity of its irrigated. (Emphasis supplied.)
classification. In Co vs. Intermediate Appellate Court, it was
held that an ordinance converting agricultural lands into
residential or light industrial should be
givenprospective application only, and should not change
the nature of existing agricultural lands in the area or
the legal relationships existing over such land. . . . . It should be clarified that even if under PD 27, tenant-farmers are deemed

A reading of Metro Manila Zoning Ordinance No. 81- owners as of October 21, 1972, this is not to be construed as automatically vesting upon
01, series of 1981, does not disclose any provision these tenant-farmers absolute ownership over the land they were tilling. Certain
converting existing agricultural lands in the covered area
requirements must also be complied with, such as payment of just compensation, before
into residential or light industrial. While it declared that after
the passage of the measure, the subject area shall be used full ownership is vested upon the tenant-farmers. This was elucidated by the Court
only for residential or light industrial purposes, it is not in Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian
provided therein that it shall have retroactive effect so as to
Reform:[53]
discontinue all rights previously acquired over lands located
within the zone which are neither residential nor light
 It is true that P.D. No. 27 expressly ordered the
emancipation of tenant-farmer as October 21, 1972 and declared that
he shall be deemed the owner of a portion of land consisting of a
family-sized farm except that no title to the land owned by him was to
be actually issued to him unless and until he had become a full-
fledged member of a duly recognized farmers cooperative. It was
understood, however, that full payment of the just compensation
also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
Prior to compliance with the prescribed requirements, tenant-farmers have, at
most, an inchoate right over the land they were tilling. In recognition of this, a CLT is
issued to a tenant-farmer to serve as a provisional title of ownership over the
landholding while the lot owner is awaiting full payment of [just compensation] or for
as long as the [tenant-farmer] is an amortizing owner.[54] This certificate proves
inchoate ownership of an agricultural land primarily devoted to rice and corn
production. It is issued in order for the tenant-farmer to acquire the land[55] he was
tilling.

All qualified farmer-beneficiaries are now deemed full

owners as of October 21, 1972 of the land they acquired by Concomitantly, with respect to the LBP and the government, tenant-farmers
virtue of Presidential Decree No. 27. cannot be considered as full owners of the land they are tilling unless they have fully
paid the amortizations due them. This is because it is only upon such full payment of
the amortizations that EPs may be issued in their favor.
it was obviously referring to lands already validly
acquired under the said decree, after proof of full-fledged
membership in the farmers cooperatives and full payment of just
compensation. Hence, it was also perfectly proper for the Order to
also provide in its Section 2 that the lease rentals paid to the In Del Castillo v. Orciga, We explained that land transfer under PD 27 is
landowner by the farmer-beneficiary after October 21, 1972 (pending effected in two (2) stages. The first stage is the issuance of a CLT to a farmer-
transfer of ownership after full payment of just compensation), shall
beneficiary as soon as the DAR transfers the landholding to the farmer-beneficiary in
be considered as advance payment for the land.
recognition that said person is its deemed owner. And the second stage is the issuance
of an EP as proof of full ownership of the landholding upon full payment of the annual
The CARP Law, for its part, conditions the transfer of amortizations or lease rentals by the farmer-beneficiary.[56]
possession and ownership of the land to the government on receipt by
the landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner. No In the case at bar, the CLTs were issued in 1984. Therefore, for all intents
outright change of ownership is contemplated either. (Citations
omitted; emphasis supplied.) and purposes, it was only in 1984 that private respondents, as farmer-
beneficiaries, were recognized to have an inchoate right over the subject property
prior to compliance with the prescribed requirements. Considering that the local

zoning ordinance was enacted in 1975, and subsequently approved by the HSRC
in 1978, private respondents still had no vested rights to speak of during this
period, as it was only in 1984 that private respondents were issued the CLTs and
were deemed owners.
The same holds true even if EPs and OCTs were issued in 2001, since
reclassification had taken place twenty-six (26) years prior to their issuance.
Undeniably, no vested rights accrued prior to reclassification and its approval.
Consequently, the subject property, particularly Lot No. 1407, is outside the
coverage of the agrarian reform program.
On the violation of petitioners right to due process of law
Petitioners contend that DAR failed to notify them that it is subjecting the
subject property under the coverage of the agrarian reform program; hence, their right
to due process of law was violated.[57] Citing De Chavez v. Zobel,[58] both the DAR and
the private respondents claim that the enactment of PD 27 is a statutory notice to all
owners of agricultural lands devoted to rice and/or corn production,[59] implying that
there was no need for an actual notice.
We agree with petitioners. The importance of an actual notice in subjecting a
property under the agrarian reform program cannot be underrated, as non-compliance
with it trods roughshod with the essential requirements of administrative due process of
law.[60] Our ruling in Heirs of Jugalbot v. CA[61] is particularly instructive:
Firstly, the taking of subject property was done in violation
of constitutional due process. The Court of Appeals was correct in
pointing out that Virginia A. Roa was denied due process because
the DAR failed to send notice of the impending land reform
coverage to the proper party. The records show that notices were
erroneously addressed and sent in the name of Pedro N. Roa who was
not the owner, hence, not the proper party in the instant case. The
ownership of the property, as can be gleaned from the records,
pertains to Virginia A. Roa. Notice should have been therefore served
on her, and not Pedro N. Roa.
xxxx
In addition, the defective notice sent to Pedro N. Roa was
followed by a DAR certification signed by team leader Eduardo
Maandig on January 8, 1988 stating that the subject property was
tenanted as of October 21, 1972 and primarily devoted to rice and
corn despite the fact that there was no ocular inspection or any on-site
fact-finding investigation and report to verify the truth of the
allegations of Nicolas Jugalbot that he was a tenant of the property.
The absence of such ocular inspection or on-site fact-finding
investigation and report likewise deprives Virginia A. Roa of her
right to property through the denial of due process.
By analogy, Roxas & Co., Inc. v. Court of Appeals applies to
the case at bar since there was likewise a violation of due process in
the implementation of the Comprehensive Agrarian Reform Law
when the petitioner was not notified of any ocular inspection and
investigation to be conducted by the DAR before acquisition of the
property was to be undertaken. Neither was there proof that petitioner
was given the opportunity to at least choose and identify its retention
area in those portions to be acquired. Both in the Comprehensive
Agrarian Reform Law and Presidential Decree No. 27, the right of
retention and how this right is exercised, is guaranteed by law.
 Since land acquisition under either Presidential Decree
No. 27 and the Comprehensive Agrarian Reform Law govern the
extraordinary method of expropriating private property, the law
must be strictly construed. Faithful compliance with legal
provisions, especially those which relate to the procedure for
acquisition of expropriated lands should therefore be observed.In
the instant case, no proper notice was given to Virginia A. Roa by the
DAR. Neither did the DAR conduct an ocular inspection and
investigation. Hence, any act committed by the DAR or any of its
agencies that results from its failure to comply with the proper
procedure for expropriation of land is a violation of constitutional due
process and should be deemed arbitrary, capricious, whimsical and
tainted with grave abuse of discretion. (Citations omitted; emphasis
supplied.)
Markedly, a reading of De Chavez invoked by both the DAR and private
respondents does not show that this Court ever made mention that actual notice may be
dispensed with under PD 27, its enactment being a purported statutory notice to all
owners of agricultural lands devoted to rice and/or corn production that their lands are
subjected to the OLT program.
Quite contrarily, in Sta. Monica Industrial & Devt. Corp. v. DAR,[62] this Court
underscored the significance of notice in implementing the agrarian reform program
when it stated that notice is part of the constitutional right to due process of law. It
informs the landowner of the States intention to acquire a private land upon payment of
just compensation and gives him the opportunity to present evidence that his
landholding is not covered or is otherwise excused from the agrarian law.
The Court, therefore, finds interest in the holding of the DARAB that
petitioners were not denied the right to due process despite the fact that only the
Nanamans were identified as the owners. Particularly:
Fourthly, the PARAD also ruled that the petitioners were
denied the right to be given the notice since only the Nanamans were
identified as the owners. The fault lies with petitioners who did not
present the tax declaration in the name of Dr. Deleste as of October
21, 1972. It was only in 1995 that Civil Case No. 698 was finally
decided by the Supreme Court dividing the 34.7 hectares between the
Delestes and the Nanamans. Note that Dr. Deleste died in 1992 after
PD 27 was promulgated, hence, the subject land or his share was
considered in his name only (see Art. 777, New Civil Code). Even
then, it must be borne in mind that on September 26, 1972, PD No. 2
was issued by President Marcos proclaiming the whole country as a
land reform area, this was followed by PD 27. This should have
alarmed them more so when private respondents are in actual
possession and cultivation of the subject property.
But it was incumbent upon the DAR to notify Deleste, being the landowner of
the subject property. It should be noted that the deed of sale executed by Hilaria in
favor of Deleste was registered on March 2, 1954, and such registration serves as a
constructive notice to the whole world that the subject property was already owned by
Deleste by virtue of the said deed of sale. In Naval v. CA, this Court held:
Applying the law, we held in Bautista v. Fule that the
registration of an instrument involving unregistered land in the
Registry of Deeds creates constructive notice and binds third
person who may subsequently deal with the same property.[63] x x x
(Emphasis supplied.)
 the certificates of land ownership award (CLOAs) already issued to the farmer-
beneficiaries, since the DAR must be given the chance to correct its procedural lapses
in the acquisition proceedings.
It bears stressing that the principal purpose of registration is to notify other
persons not parties to a contract that a transaction involving the property has been
entered into.[64] There was, therefore, no reason for DAR to feign ignorance of the
Manifesting her disagreement that this Court cannot nullify illegally issued
transfer of ownership over the subject property.
CLOAs and should first ask the DAR to reverse and correct itself, Justice Ynares-
Santiago, in her Concurring and Dissenting Opinion,[69] stated that [i]f the acts of DAR
are patently illegal and the rights of Roxas & Co. violated, the wrong decisions of DAR
Moreover, that DAR should have sent the notice to Deleste, and not to the
should be reversed and set aside. It follows that the fruits of the wrongful acts, in this
Nanamans, is bolstered by the fact that the tax declaration in the name of Virgilio was
case the illegally issued CLOAs, must be declared null and void. She also noted that [i]f
already canceled and a new one issued in the name of Deleste.[65] Althoughtax
CLOAs can under the DARs own order be cancelled administratively, with more reason
declarations or realty tax payments of property are not conclusive evidence of
can the courts, especially the Supreme Court, do so when the matter is clearly in issue.
ownership, they are nonetheless good indicia of possession in the concept of an owner,
for no one in his right mind would be paying taxes for a property that is not in his actual
or, at least, constructive possession.[66]
In the same vein, if the illegality in the issuance of the CLTs is patent, the
Court must immediately take action and declare the issuance as null and void. There
being no question that the CLTs in the instant case were improperly issued, for which
Petitioners right to due process of law was, indeed, violated when the DAR
reason, their cancellation is warranted.[70] The same holds true with respect to the EPs
failed to notify them that it is subjecting the subject property under the coverage of the
and certificates of title issued by virtue of the void CLTs, as there can be no valid
agrarian reform program.
transfer of title should the CLTs on which they were grounded are void.[71] Cancellation
of the EPs and OCTs are clearly warranted in the instant case since, aside from the
violation of petitioners right to due process of law, the subject property is outside the
On this note, We take exception to our ruling in Roxas & Co., Inc. v.
coverage of the agrarian reform program.
[67]
CA, where, despite a finding that there was a violation of due process in the
implementation of the comprehensive agrarian reform program when the petitioner was
not notified of any ocular inspection and investigation to be conducted by the DAR
Issue of Validity of EPs Not Barred by Res Judicata
before acquiring the property, thereby effectively depriving petitioner the opportunity
to at least choose and identify its retention area in those portions to be acquired,[68] this
Court nonetheless ruled that such violation does not give the Court the power to nullify

The LBP maintains that the issue of the EPs validity has already been settled
by this Court in Heirs of Sofia Nanaman Lonoy v. Secretary of Agrarian
Reform,[72] where We held that the EPs and OCTs issued in 2001 had already become
indefeasible and incontrovertible by the time the petitioners therein instituted the case
in 2005; hence, their issuance may no longer be reviewed. [73]
In effect, the LBP raises the defense of res judicata in order to preclude a
relitigation of the issue concerning the validity of the EPs issued to private respondents.
Notably, the doctrine of res judicata has two aspects, namely: (1) bar by prior
judgment,[74] wherein the judgment in a prior case bars the prosecution of a second
action upon the same claim, demand, or cause of action; [75] and (2) conclusiveness of
judgment,[76] which precludes relitigation of a particular fact or issue in another action
between the same parties on a different claim or cause of action. [77]
Citing Agustin v. Delos Santos,[78] this Court, in Spouses Antonio v.
Sayman,[79] expounded on the difference between the two aspects of res judicata:
The principle of res judicata is applicable by way of (1) bar
by prior judgment and (2) conclusiveness of judgment. This Court
had occasion to explain the difference between these two aspects
of res judicata as follows:
There is bar by prior judgment when, as between the
first case where the judgment was rendered and the second
case that is sought to be barred, there is identity of parties,
subject matter, and causes of action. In this instance, the
judgment in the first case constitutes an absolute bar to the
second action. Otherwise put, the judgment or decree of the
court of competent jurisdiction on the merits concludes the
litigation between the parties, as well as their privies, and
constitutes a bar to a new action or suit involving the same
cause of action before the same or other tribunal.
But where there is identity of parties in the first and
second cases, but no identity of causes of action, the first
judgment is conclusive only as to those matters actually
and directly controverted and determined and not as to
matters merely involved therein. This is the concept of
res judicata known as conclusiveness of judgment. Stated
differently, any right, fact or matter in issue directly
adjudicated or necessarily involved in the determination of
an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the
parties and their privies whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.
(Citations omitted; emphasis supplied.)
To be sure, conclusiveness of judgment merits application when a fact or
question has been squarely put in issue, judicially passed upon, and adjudged in a
former suit by a court of competent jurisdiction.[80] Elucidating further on this second
aspect of res judicata, the Court, in Spouses Antonio, stated:
x x x The fact or question settled by final judgment or order
binds the parties to that action (and persons in privity with them or
their successors-in-interest), and continues to bind them while the
judgment or order remains standing and unreversed by proper
authority on a timely motion or petition; the conclusively-settled fact
or question cannot again be litigated in any future or other action
 between the same parties or their privies and successors-in-interest, in
the same or in any other court of concurrent jurisdiction, either for the
same or for a different cause of action. Thus, only the identities of
parties and issues are required for the operation of the principle
of conclusiveness of judgment.[81](Citations omitted; emphasis
supplied.)
And in the second place, the issues are also dissimilar. In Heirs of Sofia
Nanaman Lonoy, the issue was whether the filing of a petition for prohibition was the
proper remedy for the petitioners therein, considering that the EPs and OCTs had
already been issued in 2001, four (4) years prior to the filing of said petition in 2005. In
the instant case, however, the issue is whether the EPs and OCTs issued in favor of
private respondents are void, thus warranting their cancellation.

Applying the above statement of the Court to the case at bar, We find that
In addition, the factual circumstances in these two cases are different such that
LBPs contention that this Courts ruling in Heirs of Sofia Nanaman Lonoy that the EPs
the necessity of applying the rule on indefeasibility of title in one is wanting in the
and OCTs issued in 2001 had already become indefeasible and incontrovertible
other. In Heirs of Sofia Nanaman Lonoy, the petition for prohibition was filed by the
precludes a relitigation of the issue concerning the validity of the EPs issued to private
petitioners therein in 2005, notwithstanding the fact that the EPs and OCTs had already
respondents does not hold water.
been issued in 2001. For that reason, apart from making a ruling that [p]rohibition, as a
rule, does not lie to restrain an act that is already a fait accompli, it becomes incumbent
upon this Court to hold that:
In the first place, there is no identity of parties in Heirs of Sofia Nanaman
Lonoy and the instant case. Arguably, the respondents in these two cases are similar.
However, the petitioners are totally different. In Heirs of Sofia Nanaman Lonoy, the x x x Considering that such EPs and OCTs were issued in
2001, they had become indefeasible and incontrovertible by the
petitioners are the more than 120 individuals who claim to be descendants of Fulgencio
time petitioners instituted CA-G.R. SP No. 00365 in 2005, and may
Nanaman, Gregorios brother, and who collectively assert their right to a share in no longer be judicially reviewed.[82](Emphasis supplied.)
Gregorios estate, arguing that they were deprived of their inheritance by virtue of the
improper issuance of the EPs to private respondents without notice to them. On the
other hand, in the instant case, petitioners are the heirs of Deleste who seek nullification
of the EPs issued to private respondents on grounds of violation of due process of law,
On the contrary, in the instant case, the petition for nullification of private
disregard of landowners right of retention, improvident issuance of EPs and OCTs, and
respondents EPs and OCTs was filed on February 28, 2002. Taking into account that
non-coverage of the agrarian reform program, among others. Evidently, there is even no
the EPs and OCTs were issued on August 1, 2001 and October 1, 2001, respectively,
privity among the petitioners in these two cases.
the filing of the petition was well within the prescribed one year period, thus, barring
the defense of indefeasibility and incontrovertibility. Even if the petition was filed
before the DARAB, and not the Regional Trial Court as mandated by Sec. 32 of the

Property Registration Decree,[83] this should necessarily have the same effect,
considering that DARABs jurisdiction extends to cases involving the cancellation of
CLOAs, EPs, and even of certificates of title issued by virtue of a void EP. As this
merely evidence of such transfer, and there can be no valid
transfer of title should the CLOA, on which it was grounded, be
void. The same holds true in the case of a certificate of title issued
by virtue of a void emancipation patent.

Court held in Gabriel v. Jamias:[84]

From the foregoing, it is therefore undeniable that it is the

DARAB and not the regular courts which has jurisdiction herein, this
It is well-settled that the DAR, through its adjudication arm,
notwithstanding the issuance of Torrens titles in the names of the
i.e., the DARAB and its regional and provincial adjudication boards,
petitioners. For, it is a fact that the petitionersTorrens titles emanated
exercises quasi-judicial functions and jurisdiction on all matters
from the emancipation patents previously issued to them by virtue of
pertaining to an agrarian dispute or controversy and the
being the farmer-beneficiaries identified by the DAR under the OLT
implementation of agrarian reform laws. Pertinently, it is provided in
of the government. The DAR ruling that the said emancipation
the DARAB Revised Rules of Procedure that the DARAB has
patents were erroneously issued for failing to consider the valid
primary and exclusive jurisdiction, both original and appellate, to
retention rights of respondents had already attained finality.
determine and adjudicate all agrarian disputes involving the
Considering that the action filed by respondents with the DARAB
implementation of the Comprehensive Agrarian Reform Program
was precisely to annul the emancipation patents issued to the
(CARP) and related agrarian reform laws. Such jurisdiction shall
petitioners, the case squarely, therefore, falls within the jurisdiction of
extend to cases involving the issuance, correction and cancellation
the DARAB. x x x (Citations omitted; emphasis supplied.)
of Certificates of Land Ownership Award (CLOAs) and
Emancipation Patents which are registered with the Land
Registration Authority.

This Court has had the occasion to rule that the mere Inevitably, this leads to no other conclusion than that Our ruling in Heirs of
issuance of an emancipation patent does not put the ownership of the Sofia Nanaman Lonoy concerning the indefeasibility and incontrovertibility of the EPs
agrarian reform beneficiary beyond attack and scrutiny. Emancipation
and OCTs issued in 2001 does not bar Us from making a finding in the instant case that
patents may be cancelled for violations of agrarian laws, rules and
regulations. Section 12 (g) of P.D. No. 946 (issued on June 17, 1976) the EPs and OCTs issued to private respondents are, indeed, void.
vested the then Court of Agrarian Relations with jurisdiction over
cases involving the cancellation of emancipation patents issued under
P.D. No. 266. Exclusive jurisdiction over such cases was later lodged
with the DARAB under Section 1 of Rule II of the DARAB Rules of With the foregoing disquisition, it becomes unnecessary to dwell on the other
Procedure.
issues raised by the parties.

For sure, the jurisdiction of the DARAB cannot be

deemed to disappear the moment a certificate of title is issued, WHEREFORE, the Court GRANTS the petition and REVERSES andSETS
for, such certificates are not modes of transfer of property but
ASIDE the CAs October 28, 2004 and September 13, 2005 Resolutions inCA-G.R. SP
No. 85471. The Emancipation Patents and Original Certificates of Title covering the T-10361 155.8408
subject property, particularly Lot No. 1407, issued in favor of private respondents are
hereby declared NULL and VOID. T-10362 170.7980

T-10363 478.89205
The DAR is ordered to CANCEL the aforementioned Emancipation Patents
and Original Certificates of Title erroneously issued in favor of private respondents. On 12 October 1995, AFC and HPI voluntarily offered to sell the above parcels of land
to the government.6 After the initial processing at the Department of Agrarian Reform
(DAR) of the Voluntary Offer to Sell (VOS)7application of AFC and HPI, it was
referred to the Land Bank of the Philippines (LBP) for initial valuation. On 16 October
1996, AFC and HPI received separately from the DAR’s Provincial Agrarian Reform
No pronouncement as to costs. Officer (PARO) of Davao province a notice of land acquisition and valuation,
informing AFC that the value of the properties has been placed at P86,900,925.88
APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners, or P165,484.47 per hectare8 while HPI’s properties were valued
vs. at P164,478,178.14.91awphi1.net Both AFC and HPI considered the valuations
THE HON. COURT OF APPEALS and LAND BANK OF THE unreasonably low and inadequate as just compensation for the properties.
PHILIPPINES, Respondents.
On 5 November 1996, AFC rejected the valuation for both TCTs No. T-113366 and
DECISION No.113359.10 AFC applied for the shifting of the mode of acquisition for TCT No.
11335911 from VOS to Voluntary Land Transfer/Direct Payment Scheme. 12 HPI also
CHICO-NAZARIO, J.: rejected the valuation of its three parcels of land covered by TCTs No. T-10361, No. T-
10362 and No. T-10363. 13
Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI) are the registered owners
of five parcels of agricultural lands located in San Isidro, Tagum, Davao Province, to Owing to the rejection by both AFC and HPI of LBP’s valuation, the DAR requested
wit: LBP to deposit the amounts equivalent to their valuations in the names and for the
accounts of AFC and HPI.14 AFC thereafter withdrew the amount of P26,409,549.86,
Apo Fruits Corporation while HPI withdrew the amount of P45,481,706.76, both in cash from LBP. The DAR
PARO then directed the Register of Deeds of Davao to cancel the TCTs of AFC and
HPI to the said properties and to issue a new one in the name of the Republic of the
Transfer Certificate of Area (Ha.) Philippines.
Title (TCT)1 No.
After the issuance of the certificate of title in the name of the Republic of the
T-1133592 115.2179 Philippines, the Register of Deeds of Davao, upon the request of the DAR, issued TCTs
and Certificates of Land Ownership Award to qualified farmer-beneficiaries.

T-1133663 525.1304 On 14 February 1997, AFC and HPI filed separate complaints for determination of just
compensation with the DAR Adjudication Board (DARAB). Despite the lapse of more
than three years from the filing of the complaints, the DARAB failed and refused to
Hijo Plantation, Inc.4 render a decision on the valuation of the land. Hence, two complaints 15 for
determination and payment of just compensation were filed by AFC and HPI before
TCT No. Area (Ha.)
Branch 2 of the Regional Trial Court (RTC) of Tagum City (acting as a Special
Agrarian Court), which were subsequently consolidated.
Agrarian Case No. 54-200016 filed by AFC covers two parcels of land in San Isidro,
Tagum, Davao, with an aggregate area of 640.3483 hectares previously assessed by
LBP with a valuation of P86,900,925.88.
On the other hand, Agrarian Case No. 55-200017 filed by HPI relates to the other three
parcels of land in Tagum City, with a total area of 814.5308 hectares, likewise,
previously assessed by LBP with a valuation ofP164,478,178.14.
Summons was served on 23 May 2000 to defendants DAR and LBP. The trial court
appointed as Commissioners18 persons it considered competent, qualified and
disinterested to determine the proper valuation of the properties.
LBP submitted its Answer on 26 July 2000,19 while the DAR Secretary, represented by
PARO Pedro P. Gumabao, filed its Answer20 on 18 August 2000.
The pre-trial order issued by the trial court reads:
This Court will determine the all-embracing concept of Just Compensation, and
whether the plaintiff is entitled to damages, and also whether the value of the land and
improvements as determined by the Land Valuation of Land Bank for the determination
of just compensation, and whether the plaintiff has violated Section 13 of DARAB new
rules and procedure.21
The commissioners, together with all the representatives of the parties, conducted an
ocular inspection first on 25 August 200022 and again on 16 December 2000.23
On 21 May 2001, the court-appointed commissioners submitted their appraisal report.24
On 14 September 2001, the case was considered submitted for decision. 25
After hearing, the trial court rendered a decision26 dated 25 September 2001, the fallo
thereof reads:
WHEREFORE, consistent with all the foregoing premises, judgment is hereby rendered
by this Special Agrarian Court where it has determined judiciously and now hereby
fixed the just compensation for the 1,388.6027 hectares of lands and its improvements
owned by the plaintiffs: APO FRUITS CORPORATION and HIJO PLANTATION,
INC., as follows:
First – Hereby ordering after having determined and fixed the fair, reasonable
and just compensation of the 1,338.6027 hectares of land and standing crops
owned by plaintiffs – APO FRUITS CORPORATION and HIJO
PLANTATION, INC., based at only P103.33 per sq. meter, ONE BILLION
THREE HUNDRED EIGHTY-THREE MILLION ONE HUNDRED
SEVENTY-NINE THOUSAND PESOS (P1,383,179,000.00), Philippine
Currency, under the current value of the Philippine Peso, to be paid jointly and
severally to the herein PLAINTIFFS by the Defendants-Department of
Agrarian Reform and its financial intermediary and co-defendant Land Bank
of the Philippines, thru its Land Valuation Office;
Second – Hereby ordering Defendants – DEPARTMENT OF AGRARIAN
REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land
Valuation Office, to pay plaintiffs-APO FRUITS CORPORATION and HIJO
PLANTATION, INC., interests on the above-fixed amount of fair, reasonable
and just compensation equivalent to the market interest rates aligned with 91-
day Treasury Bills, from the date of the taking in December 9, 1996, until fully
paid, deducting the amount of the previous payment which plaintiffs received
as/and from the initial valuation;
Third – Hereby ordering Defendants – DEPARTMENT OF AGRARIAN
REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land
Valuation Office, to pay jointly and severally the Commissioners’ fees herein
taxed as part of the costs pursuant to Section 12, Rule 67 of the 1997 Rules of
Civil Procedure, equivalent to, and computed at Two and One-Half (2 ½)
percent of the determined and fixed amount as the fair, reasonable and just
compensation of plaintiffs’ land and standing crops plus interest equivalent to
the interest of the 91-Day Treasury Bills from date of taking until full
payment;
Fourth - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN
REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land
Valuation Office, to pay jointly and severally the attorney’s fees to plaintiffs
equivalent to, and computed at ten (10%) Percent of the determined and fixed
amount as the fair, reasonable and just compensation of plaintiffs’ land and
standing crops, plus interest equivalent to the 91-Day Treasury Bills from date
of taking until the full amount is fully paid;
Fifth - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN
REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land
Valuation Office to deduct from the total amount fixed as fair, reasonable and
just compensation of plaintiffs’ properties the initial payment paid to the
plaintiffs;
Sixth - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN
REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land
Valuation Office, to pay the costs of the suit; and
 Seventh - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN
REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land
Valuation Office, to pay all the aforementioned amounts thru The Clerk of
Court of this Court, in order that said Court Officer could collect for payment
any docket fee deficiency, should there be any, from the plaintiffs. 27
LBP filed a Motion for Reconsideration28 on 5 October 2001 mainly on the ground that
the trial court based its valuation on the value of residential and industrial lands in the
area forgetting that the lands involved are agricultural. LBP also sought a
reconsideration of the award of attorney’s fees, the interest on the compensation over
the lands and the order of the trial court regarding the payment of commissioners’ fees.
In an Order dated 5 December 2001,29 the trial court modified its decision as follows:
WHEREFORE, premises considered, IT IS HEREBY ORDERED that the following
modifications as they are hereby made on the dispositive portion of this Court’s
consolidated decision be made and entered in the following manner, to wit:
On the Second Paragraph of the Dispositive Portion which now reads as follows, as
modified:
Second - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN REFORM
and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay
plaintiffs-APO FRUITS CORPORATION and HIJO PLANTATION, INC., interest at
the rate of Twelve (12%) Percent per annum on the above-fixed amount of fair,
reasonable and just compensation computed from the time the complaint was filed until
the finality of this decision. After this decision becomes final and executory, the rate of
TWELVE (12%) PERCENT per annum shall be additionally imposed on the total
obligation until payment thereof is satisfied, deducting the amounts of the previous
payments by Defendant-LBP received as initial valuation;
On the Third Paragraph of the Dispositive Portion which Now Reads As Follows, As
Modified:
Third - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN REFORM
and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay
jointly and severally the Commissioners’ fees herein taxed as part of the costs pursuant
to Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and
computed at Two and One-Half (2 ½) percent of the determined and fixed amount as
the fair, reasonable and just compensation of plaintiffs’ land and standing crops and
improvements;
On the Fourth Paragraph of the Dispositive Portion which Now Reads As follows, As
Modified:
Fourth - Hereby ordering Defendants – DEPARTMENT OF AGRARIAN REFORM
and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay
jointly and severally the attorney’s fees to plaintiffs equivalent to, and computed at ten
(10%) Percent of the determined and fixed amount as the fair, reasonable and just
compensation of plaintiffs’ land and standing crops and improvements.
Except for the above-stated modifications, the consolidated decision stands and shall
remain in full force and effect in all other respects thereof. 30
From this Order, LBP filed a Notice of Appeal dated 27 December 2001. 31 The same
was given due course in the Order of the RTC dated 15 May 2002.32 In the same Order,
the RTC set aside its Order dated 5 December 2001 granting execution pending appeal.
Subsequently, the trial court, citing this Court’s ruling in the case of "Land Bank of the
Philippines v. De Leon,"33that a petition for review, not an ordinary appeal, is the
proper mode of appeal from a decision on the determination of just compensation
rendered by a special agrarian court, issued an Order dated 4 November
200234 recalling its Order dated 15 May 2002 and directed LBP to file a Petition for
Review within the reglementary period. LBP filed a Motion for
Reconsideration35 claiming that the case of Land Bank of the Philippines v. De Leon
was not yet final at that time; hence, it is not certain whether the decision in that case
would have a retroactive effect and that appeal is the appropriate remedy. This was
denied by the trial court in its Order dated 12 February 2003.36
On 28 March 2003, LBP filed a Petition for Certiorari 37 before the Court of Appeals
assailing the 4 November 2002 and 12 February 2003 orders of the trial court.
The Court of Appeals found the petition of LBP meritorious. In a decision38 dated 12
February 2004, the Court of Appeals held:
WHEREFORE, the petition is GRANTED and the assailed orders dated November 4,
2002 and February 12, 2003 are NULLIFIED and, accordingly, SET ASIDE. 39
AFC and HPI filed a joint Motion for Reconsideration40 which the Court of Appeals
denied in its Resolution dated 21 June 2004.41
Earlier, on 23 January 2003, DAR filed its own separate petition before the Court of
Appeals by way of a Petition for Review.42 In a Resolution43 dated 2 April 2003, the
Court of Appeals dismissed the petition of the DAR for failure to state the material
dates under Rule 42, Section 2,44 of the Rules of Court. The appellate court held:
The importance of stating the material dates cannot be overemphasized. It is only
through a statement thereof in the petition can it be determined whether or not the
petition was filed on time. For its failure to state the material dates, the petition can and
should be outrightly dismissed.
xxxx
The petition is also defective in that it failed to attach material portions of the record as
would support the allegations in the petition. More specifically, copies of the alleged
motion for reconsideration filed by the DAR, the order denying it, and the notice of
appeal were not attached to the petition.
For all the foregoing, the court has no alternative but to dismiss the petition.
WHEREFORE, the petition is DISMISSED.45
The Decision of the Court of Appeals in the Petition filed by the DAR in CA-G.R. SP
No. 74879 became final and executory and entry of judgment was issued by the
appellate court on 7 May 2003.46
On the other hand, from the decision of the Court of Appeals in the Petition filed by
LBP in CA-G.R. SP No. 76222, AFC and HPI filed the present Petition for Review on
Certiorari raising the following issues:
I.
WHETHER OR NOT THE QUESTIONED DECISION AND RESOLUTION ARE IN
ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT?
II.
WHETHER OR NOT RESPONDENT LBP IS BOUND BY THE DECISION OF
COURT OF APPEALS IN CA-G.R. SP NO. 74879 AND IS THEREFORE
PRECLUDED FROM FILING CA-G.R. SP NO. 76222?
III.
WHETHER OR NOT THE FILING BY RESPONDENT LBP OF CA-G.R. SP NO.
76222 IS ALREADY BARRED BY RES JUDICATA?
IV.
WHETHER OR NOT THE RULING OF THE SUPREME COURT IN THE ARLENE
DE LEON CASE, GIVING ONLY PROSPECTIVE EFFECT TO ITS EARLIER
RESOLUTION AS TO THE PROPER MODE OF APPEAL FROM DECISIONS OF
SPECIAL AGRARIAN COURTS IS APPLICABLE IN THE INSTANT CASE?
V.
WHETHER OR NOT RESPONDENT LBP WAS DEPRIVED OF DUE PROCESS
AND/OR OF ITS RIGHT TO APPEAL?
VI.
WHETHER OR NOT THE SUBJECT PETITION (CA-G.R. SP NO. 76222) WAS
MERELY INTERPOSED TO DELAY THE EXECUTION OF SPECIAL AGRARIAN
COURT’S "DECISION" WHICH IS BASED ON EVIDENCE DULY PRESENTED
AND PROVED?47
AFC and HPI pray that the Decision and Resolution of the Court of Appeals in CA-
G.R. SP No. 76222 be reversed and set aside and that the Decision of the RTC dated 25
September 2001 in Agrarian Cases No. 54-2000 and No. 55-2000 be declared as final
and executory.48
In the case of Land Bank of the Philippines v. De Leon, decided on 10 September 2002,
respondents are the registered owners of a parcel of land. They voluntarily offered the
subject property for sale to the government pursuant to Republic Act No. 6657. Unable
to agree on the valuation of the property offered by the DAR, respondents filed a
petition with the RTC (acting as a Special Agrarian Court) to fix the just compensation
of the property. In due time, the RTC rendered judgment fixing the compensation of the
property. Before the Court of Appeals, the DAR and LBP filed separate petitions. The
DAR filed a Petition for Review of the decision of the RTC which was assigned to the
Special 3rd Division of the appellate court. LBP, on the other hand, raised the case on
appeal to the Court of Appeals by way of ordinary appeal. The same was assigned to
the 4th Division of the Court of Appeals. The petition of the DAR was given due
course. On the other hand, the Court of Appeals dismissed LBP’s ordinary appeal on
the ground that the same was erroneous. LBP filed a petition for review before this
Court. In Land Bank, we explained:
A petition for review, not an ordinary appeal, is the proper procedure in effecting an
appeal from decisions of the Regional Trial Courts acting as Special Agrarian Courts in
cases involving the determination of just compensation to the landowners concerned.
Section 60 of RA 6657 clearly and categorically states that the said mode of appeal
should be adopted. There is no room for a contrary interpretation. Where the law is
clear and categorical, there is no room for construction, but only application. 49
LBP filed a Motion for Reconsideration. In a Resolution of this Court dated 20 March
2003, this Court emphasized the prospective application of the Decision dated 10
September 2002.
WHEREFORE, the motion for reconsideration dated October 16, 2002 and the
supplement to the motion for reconsideration dated November 11, 2002 are
PARTIALLY GRANTED. While we clarify that the Decision of this Court dated
September 10, 2002 stands, our ruling therein that a petition for review is the correct
mode of appeal from decisions of Special Agrarian Courts shall apply only to cases
appealed after the finality of this Resolution.50(Emphasis supplied.)
Essentially therefore, the rule is that a decision of the RTC acting as a Special Agrarian
Court should be brought to the Court of Appeals via a Petition for Review. The Court
of Appeals will no longer entertain ordinary appeals thereon. However, this rule applies
only after the finality of the Resolution of this Court in Land Bank of the Philippines v.
De Leon dated 20 March 2003.
In this case, the Court of Appeals correctly ruled when it gave due course to the appeal
of LBP. LBP’s Notice of Appeal was filed on 27 December 2001. This was given due
course by the RTC in an Order dated 15 May 2002. LBP’s appeal was, thus, perfected
before this Court’s Resolution in the aforementioned Land Bank of the Philippines v.
De Leon case. Hence, the Court of Appeals could give due course to LBP’s petition.
Next we proceed to determine the issue of whether or not the petition of LBP before the
Court of Appeals is barred by the disposition of the Petition for Review filed by the
DAR in CA-G.R. SP No. 74879 on the ground of res judicata.
The following are the elements of res judicata:
(a) The former judgment must be final;
(b) The court which rendered judgment must have jurisdiction over the parties
and the subject matter;
(c) It must be a judgment on the merits; and
(d) There must be between the first and second actions identity of parties,
subject matter, and cause of action.51
In this case, the third element of res judicata, i.e., that the former judgment must be on
the merits, is not present. It must be remembered that the dismissal of CA-G.R. SP No.
74879 was based on technicality, that is, for failure on the part of the DAR to state
material dates required by the rules. Having been dismissed based on a technicality and
not on the merits, the principle of res judicata does not apply. Res judicata applies only
where judgment on the merits is finally rendered on the first. 52
Having disposed of the procedural issues involved herein, we shall now proceed to
resolve the substantive questions in this case.
This Court is aware that in the instant case, since LBP’s appeal before the Court of
Appeals is to be given due course, the normal procedure is for us to remand the case to
the appellate court for further proceedings. However, when there is enough basis on
which a proper evaluation of the merits of petitioner’s case may be had, the Court may
dispense with the time-consuming procedure in order to prevent further delays in the
disposition of the case.53 Indeed, remand of the case to the lower court for further
reception of evidence is not conducive to the speedy administration of justice and it
becomes unnecessary where the Court is in a position to resolve the dispute based on
the records before it. On many occasions, the Court, in the public interest and
expeditious administration of justice, has resolved action on the merits, instead of
remanding them for further proceedings, as where the ends of justice would not be
subserved by the remand of the case54 or where the trial court had already received all
the evidence of the parties.55 Briefly stated, a remand of the instant case to the Court of
Appeals would serve no purpose save to further delay its disposition contrary to the
spirit of fair play.
It is already an accepted rule of procedure for us to strive to settle the entire controversy
in a single proceeding,56leaving no root or branch to bear the seeds of future litigation.
If, based on the records, the pleadings, and other evidence, the dispute can be resolved
by us, we will do so to serve the ends of justice instead of remanding the case to the
lower court for further proceedings.57
The complete records of this case have already been elevated to this Court. The
pleadings on record will fully support this adjudication. We have painstakingly gone
over all of LBP’s representations and arguments, and we found that the material and
decisive facts are hardly disputable. From another perspective, due consideration should
also be given to AFC and HPI for having voluntarily offered to sell their properties, a
clear indication of AFC and HPI’s willingness to participate in the agrarian reform
program of the government. In turn, they must be given compensation that is just and
timely. Records indicate that the case has been dragging on for more than ten years now
without the landowners having been fully compensated. We cannot countenance such a
glaring indifference to AFC and HPI’s rights as land owners – they should be afforded
all that is just and due them. To be sure, they deserve nothing less than full
compensation to give effect to their substantive rights.
While eminent domain lies as one of the inherent powers of the state, there is no
requirement that it undertake a prolonged procedure, or that the payment of the private
owner be protracted as far as practicable.58
It is not controverted that this case started way back on 12 October 1995, when AFC
and HPI voluntarily offered to sell the properties to the DAR. In view of the failure of
the parties to agree on the valuation of the properties, the Complaint for Determination
of Just Compensation was filed before the DARAB on 14 February 1997. Despite the
lapse of more than three years from the filing of the complaint, the DARAB failed to
render a decision on the valuation of the land. Meantime, the titles over the properties
of AFC and HPI had already been cancelled and in their place a new certificate of title
was issued in the name of the Republic of the Philippines, even as far back as 9
December 1996. A period of almost 10 years has lapsed. For this reason, there is no
dispute that this case has truly languished for a long period of time, the delay being
mainly attributable to both official inaction and indecision, 59 particularly on the
determination of the amount of just compensation, to the detriment of AFC and HPI,
which to date, have yet to be fully compensated for the properties which are already in
the hands of farmer-beneficiaries, who, due to the lapse of time, may have already
converted or sold the land awarded to them.
Verily, these two cases could have been disposed with dispatch were it not for LBP’s
counsel causing unnecessary delay. At the inception of this case, DARAB, an agency of
the DAR which was commissioned by law to determine just compensation, sat on the
cases for three years, which was the reason that AFC and HPI filed the cases before the
RTC. We underscore the pronouncement of the RTC that "the delay by DARAB in the
determination of just compensation could only mean the reluctance of the Department
of Agrarian Reform and the Land Bank of the Philippines to pay the claim of just
compensation by corporate landowners." 60
To allow the taking of landowners’ properties, and to leave them empty-handed while
government withholds compensation is undoubtedly oppressive. 61
It is in light of the foregoing that this Court will now undertake the final resolution of
the present controversy which, as already elucidated, is within the power of this Court
to do.
The concept of just compensation embraces not only the correct determination of the
amount to be paid to the owners of the land, but also the payment of the land within a
reasonable time from its taking. Without prompt payment, compensation cannot be
considered "just" inasmuch as the property owner is being made to suffer the
consequences of being immediately deprived of his land while being made to wait for a
decade or more before actually receiving the amount necessary to cope with his
loss.62 Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator.63 It has been repeatedly stressed by this Court that
the measure is not the taker’s gain but the owner’s loss.64 The word "just" is used to
intensify the meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full, and
ample.65
The two main issues, thus, for determination of this Court are the date of the taking of
the property and the amount of just compensation.66
First, it is settled that the property was taken on 9 December 1996, when a Certificate of
Title was issued in favor of the Republic of the Philippines, and the Certificates of Title
of AFC and HPI were cancelled. The farmer-beneficiaries themselves took possession
of the subject properties on 2 January 1997.67
Second, on payment of just compensation, we have previously held:
Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the owner.
Obviously, there is no need to expropriate where the owner is willing to sell under
terms also acceptable to the purchaser, in which case an ordinary deed of sale may be
agreed upon by the parties. It is only where the owner is unwilling to sell, or cannot
accept the price or other conditions offered by the vendee, that the power of eminent
domain will come into play to assert the paramount authority of the State over the
interests of the property owner. Private rights must then yield to the irresistible
demands of the public interest on the time-honored justification, as in the case of the
police power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute
(as indeed no power is absolute). The limitation is found in the constitutional injunction
that "private property shall not be taken for public use without just compensation" and
in the abundant jurisprudence that has evolved from the interpretation of this principle.
Basically, the requirements for a proper exercise of the power are: (1) public use and
(2) just compensation.68 (Emphases supplied.)
Section 57 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law) provides:
SEC. 57. Special Jurisdiction. – The Special Agrarian Courts shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners, and the prosecution of all criminal offenses under this Act. The Rules of
Court shall apply to all proceedings before the Special Agrarian Courts, unless
modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special
jurisdiction within thirty (30) days from submission of the case for decision.
To implement the provisions of Republic Act No. 6657, Rule XIII, Section 11 of the
DARAB Rules of Procedure, provides:
Land Valuation and Preliminary Determination and Payment of Just Compensation. –
The decision of the Adjudicator on land valuation and preliminary determination and
payment of just compensation shall not be appealable to the Board but shall be brought
directly to the Regional Trial Courts designated as Special Agrarian Courts within
fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only
one motion for reconsideration. (Emphasis supplied.)
The next question now crops up, who shall determine just compensation? 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 agencies69 and may not be usurped by any other branch or
official of the government.70
We now come to the issue of just compensation.
LBP argues that the trial court’s valuation of the subject landholdings has incorporated
irrelevant and/or immaterial factors such as the schedule of market values given by the
City Assessor of Tagum, the comparative sales of adjacent lands and the
commissioners’ report.71
Section 17 of Republic Act No. 6657, which is particularly relevant, providing as it
does the guideposts for the determination of just compensation, reads, as follows:
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 farm-workers 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.72
The RTC provided the following elucidation in its assailed decision:
The recommendation of the Commissioners’ Report for a value of P85.00 per sq.m.
or P850,000.00 per hectare (sic) is founded on evidence. The schedule of market values
of the City of Tagum as per its 1993 and 1994 Revision of Assessment and Property
Classification (Exhibit "J-6" and "CC-6") give the lowest value for residential land
at P100/sq.m. for 4th class residential land in 1993. In 1994, it gave the lowest value
of P80.00/sq.m. for barangay residential lot. It appears that certain portions of the land
in question have been classified as Medium Industrial District (Exhibit "J-4" and "CC-
4"). The lowest value as for industrial land, 3rd class in a barangay isP130.00 sq.m. The
average of these figures, using the lowest values in Exhibit "6" and "CC-6" yields the
figure ofP103.33 which is even higher by 22.2% than that recommended by the
Commissioners. It is even of judicial notice that assessments made by local
governments are much lower than real market value. Likewise, the value of the
improvements thereon, not even considered in the average of P103.33. If considered,
this will necessarily result in a higher average value.
In said Appraisal Report, mention has been made on "improvements," and our Supreme
Court in Republic vs. Gonzales, 50 O.G. 2461, decreed the rule, as follows:
If such improvements are permanent in character, consisting of good paved road,
playgrounds, water system, sewerage and general leveling of the land suitable for
residential lots together with electric installations and buildings, the same are important
factors to consider in determining the value of the land. The original cost of such
improvements may be considered, with due regard to the corresponding depreciation.
(Davao vs. Dacudao, L-3741, May 8, 1952).
Note should be taken that in said Appraisal Report, permanent improvements on
plaintiffs’ lands have been introduced and found existing, e.g., all weather-road
network, airstrip, pier, irrigation system, packing houses, among others, wherein
substantial amount of capital funding have been invested in putting them up.
This Court, however, notes that the comparative sales (Exhibits "A" to "F") referred to
in the Appraisal Report are sales made after the taking of the land in 1996. However, in
the offer of evidence, the plaintiff offered additional comparative sales of adjacent land
from late 1995 to early 1997, ranging from a high of P580.00/sq.meter in September
1996 (Exhibit "L-4" for plaintiff Apo and "EE-4" for plaintiff Hijo) to a low
of P146.02/sq.meter in October 1997 (Exhibits "L-2" and "EE-2"). The other sales in
1996 were in January 1996 for P530.00/sq.meter ( Exhs. "L-3" and "EE-3") and in
December 1996 for P148.64/sq.meter (Exhs. "L-2" and "EE-1"). On the other hand, the
sale in December 1995 (Exhs. "L-5" and "EE-5") was made for P530.00/sq.meter." The
average selling price based on the foregoing transaction is P386.93/sq.meter. The same
is even higher by around 350% than the recommended value of P85.00, as per the
Commissioners’ Report.
The Cuervo Appraisal Report, on the other hand, gave a value of P84.53/sq. meter
based on the Capitalized Income Approach. The said approach considered only the use
of the land and the income generated from such use.
The just compensation for the parcels of land under consideration, taking into account
the Schedule of Market Values given by the City Assessor of Tagum (Exhs. "J-6" for
Apo "CC-6" for Hijo), the comparative sales covering adjacent lands at the time of
taking of subject land, the Cuervo Report, and the Appraisal Report is hereby fixed
atP103.33/sq.meter.
The valuation given by Cuervo and the Appraisal Report of P84.53 and P85.00,
respectively, in this Court’s judgment, is the minimum value of the subject
landholdings and definitely cannot in anyway be the price at which plaintiffs APO
and/or HIJO might be willing to sell, considering that the parcels of land adjacent
thereto were sold at much higher prices, specifically from a low of P146.02/sq.meter to
a high of P580.00. The average of the lowest value under the 1993 and 1994 Revision
of Assessment and Property Classification (Exhibits "J-6" and "CC-6") were already
at P103.33/sq.meter, even without considering the improvements introduced on the
subject landholdings.
Moreover, the Commission made the findings that "portions of the land subject of th(e)
report may x x x increase to P330.00/sq.meter, specifically th(e) strips of land
surrounding the provincial roads" and made the conclusion that "(c)learly, the value
recommended by th(e) Commission, which is only about P85.00/sq.meter is way below
the x x x assessed values, which effectively was fixed (as early as) 1994 or earlier than
the Voluntary Offer to Sell of the above plaintiffs’ properties." In the absence of any
evidence to the contrary, the said assessed values are presumed to be prevailing [in]
December 1996, the time of taking of plaintiffs’ landholdings. The Commission further
stated that the average of the said "assessed values as submitted by the City Assessor of
Tagum City (is)P265.00/sq.meter." This Court, therefore, finds it unfair that the just
compensation for the subject landholdings should only be fixed at P85.00/sq.meter.
It is similarly true, however, that the determination of just compensation cannot be
made to the prejudice of defendants or the government for that matter.
Thus, the selling price of P580.00/sq. meter nor the average selling price of P386.93/sq.
meter or the average assessed value of P265.00/sq. meter cannot be said to be the value
at which defendants might be willing to buy the subject landholdings.
This Court, therefore, finds the price of P103.33/sq. meter for the subject landholdings
fair and reasonable for all the parties. Said value is even lower than the lowest selling
price of P148.64 for sale of adjacent land at the time of the taking of the subject
landholdings [in] December 1996. It approximates, however, the average of the lowest
values under the 1993 and 1994 Revision of Assessment and Property Clarification
(Exhs. "J-6" and "CC-6") ofP103.33. The said figure will further increase, if the Court
will further consider the improvements introduced by plaintiffs, which should be the
case. Moreover, the said value of P103.33/sq. meter is more realistic as it does not
depart from the government recognized values as specified in the 1993 and 1994
Revised Assessment and Property Classification of Tagum City. This Court finds the
evidence of the plaintiffs sufficient and preponderant to establish the value
of P103.33/sq. meter.73
The trial court further rationalized its award thus:
It may be admitted that plaintiffs’ properties are agricultural; however, it is simply
beyond dispute that in going about the task of appraising real properties, as in the
instant cases, "all the facts as to the condition of the property and its surroundings, its
improvements and capabilities, may be shown and considered in estimating its value."
(Manila Railroad Company vs. Velasquez, 32 Phil. 287, 314). It is undeniable that
plaintiffs’ agricultural lands as borne out from the records hereof, and remaining
unrebutted, shows that all weather-roads network, airstrip, pier, irrigation system,
packing houses, and among numerous other improvements are permanently in place
and not just a measly, but substantial amounts investments have been infused. To
exclude these permanent improvements in rendering its valuation of said properties
would certainly be less than fair. x x x.
xxxx
The plaintiffs’ agricultural properties are just a stone’s throw from the residential and/or
industrial sections of Tagum City, a fact defendants-DAR and LBP should never
ignore. The market value of the property (plus the consequential damages less
consequential benefits) is determined by such factors as the value of like properties, its
actual or potential use, its size, shape and location as enunciated in B.H. Berkenkotter
& Co. vs. Court of Appeals, 216 SCRA 584 (1992). To follow Defendants-DAR and
LBP logic, therefore, would in effect restrict and delimit the broad judicial prerogatives
of this Court in determining and fixing just compensation of properties taken by the
State.
Proceedings before the Panel of Commissioners revealed that permanent improvements
as mentioned above exist inside the lands subject of this complaints. It was also
established during the trial proper upon reception of the evidence of the plaintiffs which
clearly revealed the character, use and valuation of the lands surrounding the properties
involved in these cases, indicating the strategic location of the properties subject of
these cases. The findings being that surrounding properties have been classified as
residential, commercial or industrial. And yet defendant-LBP refused to acknowledge
the factual basis of the findings of the Panel of Commissioners and insisted on its
guideline in determining just compensation. x x x.74
In arriving at its valuation of the subject properties, the RTC conducted a thorough and
meticulous examination of all determining factors. It did not rely merely on the report
of Commissioners nor on the Cuervo appraiser’s report. It took into consideration the
schedule of market values of the City of Tagum per its 1993 and 1994 Revision of
Assessment and Property Clasisification, value of the permanent improvements
thereon, as well as comparative sales of adjacent lands from early 1995 to early 1997,
among other factors.
Contrary to LBP’s claim, the above factors are neither irrelevant nor immaterial. When
the trial court arrived at the valuation of a landowner’s property taking into account its
nature as irrigated land, location along the highway, market value, assessor’s value and
the volume and value of its produce, such valuation is considered in accordance with
Republic Act No. 6657.75
Even the Commissioners’ report which the trial court took into consideration may not
be dismissed as irrelevant. In the first place the trial court acting as a special agrarian
court is authorized to appoint commissioners to assist in the determination of just
compensation.76 In this case the Commissioners’ report was submitted only after ocular
inspections were conducted on the landholdings to give them a better idea of their real
value.77
Conspicuously, the trial court did not merely rely solely on the appraisal report
submitted by the Commissioners. The trial court conducted hearings for the purpose of
receiving the parties’ evidence.
Clearly evident from the records of this case is that in the proceedings before the
Commission constituted by the RTC of Tagum City, Branch 2, to fix the just
compensation for the properties, the LBP and the DAR were given all the opportunities
to justify their stances. Thus:
[T]he Commission set another hearing on February 23, 2001 at 9:00 a.m. at the
Function Room, Marbella mansion, Rizal Street, Davao City, to give the LBP the
opportunity to present evidence. The LBP counsels, Attys. Batingana and Sembrano,
instead of presenting witnesses and other evidence, manifested that they will submit a
position paper within fifteen (15) days from the date of the hearing. This was granted
by the Chairman of the Commission, who also gave the plaintiff the opportunity to
submit within five (5) days, if they so desire, their rejoinder.
Inspite of the lapse of the period, the LBP failed to file its position paper.
xxxx
The plaintiffs have presented evidence to establish the value of their properties before
the Court-appointed Commissioners, as well as before this Court. The Commissioners
who acted and performed their assigned tasks under their Oaths of Office are deemed a
surrogate or extension of the Court itself. (Secs. 3 and 4, Rule 32 of the 1997 Rules of
Civil Procedure). Defendant-DAR and Defendant-LBP failed to present evidence
during the hearings set by the Commissioners on February 5, 2001, and February 23,
2001, for the presentation of their evidence. This Court gave Defendant Land Bank and
Defendant DAR additional opportunities to present evidence. Defendant Land Bank
and DAR asked for extensions to submit their evidence in its motion dated July 27,
2001, which was granted by the Court. All exhibits and other documents offered in
evidence were admitted, after which this Court issued an order that these two cases
were submitted for resolution.78
Given the already exhaustive analysis made by the RTC, this Court is convinced that
the trial court correctly determined the amount of just compensation due to AFC and
HPI.
WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED.
While the Decision, dated 12 February 2004, and Resolution, dated 21 June 2004, of
the Court of Appeals in CA-G.R. SP No. 76222, giving due course to LBP’s appeal, are
hereby AFFIRMED, this Court, nonetheless, RESOLVES, in consideration of public
interest, the speedy administration of justice, and the peculiar circumstances of the case,
to give DUE COURSE to the present Petition and decide the same on its merits. Thus,
the Decision, dated 25 September 2001, as modified by the Decision, dated 5 December
2001, of the Regional Trial Court of Tagum City, Branch 2, in Agrarian Cases No. 54-
2000 and No. 55-2000 is AFFIRMED. No costs.
SO ORDERED.
LBP VS. RIVERA
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure filed by Petitioner Land Bank of the Philippines (LBP) assailing the
Decision[1] of the Court of Appeals dated 9 October 2007 in CA G.R. SP No. 87463,
ordering the payment by LBP of just compensation and interest in favor of respondents
Esther Anson Rivera, Antonio G. Anson and Cesar G. Anson, and at the same time
directed LBP to pay the costs of suit. Likewise assailed is the Resolution[2] of the Court
of Appeals dated 18 March 2008 denying the Motion for Reconsideration of LBP.[3]
The respondents are the co-owners of a parcel of agricultural land embraced
by Original Certificate of Title No. P-082, and later transferred in their names under
Transfer Certificate of Title No. T-95690 that was placed under the coverage of
Operation Land Transfer pursuant to Presidential Decree No. 27 in 1972. Only 18.8704
hectares of the total are of 20.5254 hectares were subject of the coverage.
After the Department of Agrarian Reform (DAR) directed payment, LBP approved the
payment of P265,494.20, exclusive of the advance payments made in the form of lease
rental amounting to P75,415.88 but inclusive of 6% increment ofP191,876.99 pursuant
to DAR Administrative Order No. 13, series of 1994. [4]
On 1 December 1994, the respondents instituted Civil Case No. 94-03 for determination
and payment of just compensation before the Regional Trial Court (RTC), Branch 3 of
Legaspi City,[5] claiming that the landholding involved was irrigated with two cropping
seasons a year with an average gross production per season of 100 cavans of 50
kilos/hectare, equivalent of 200 cavans/year/hectare; and that the fair market value of
the property was not less that P130,000.00/hectare, or P2,668,302.00 for the entire
landholding of 20.5254 hectares.
LBP filed its answer,[6] stating that rice and corn lands placed under the coverage of
Presidential Decree No. 27[7] were governed and valued in accordance with the
provisions of Executive Order No. 228[8] as implemented by DAR Administrative
Order No. 2, Series of 1987 and other statutes and administrative issuances; that the
administrative valuation of lands covered by Presidential Decree No. 27 and Executive
Order No. 228 rested solely in DAR and LBP was the only financing arm; that the
funds that LBP would use to pay compensation were public funds to be disbursed only
in accordance with existing laws and regulations; that the supporting documents were
not yet received by LBP; and that the constitutionality of Presidential Decree No. 27
In arriving at its computation, the Court of Appeals explained:
and Executive Order No. 228 was already settled.

In computing the just compensation of the property, pursuant

On 6 October 2004, the RTC rendered its decision, holding: to Executive Order No. 228, Sec. 2 thereof, the formula is

ACCORDINGLY, the just compensation of the land partly LV = AGP x 2.5 x GSP x A
covered by TCT No. T-95690 is fixed at Php1,297,710.63. Land
Bank of the Philippines is hereby ordered to pay Esther Anson, Cesar
Anson and Antonio Anson the aforesaid value of the land, plus
interest of 12% per annum or Php194.36 per day effective October 7, (LV is Land Valuation; AGP is Average Gross Production; GSP is
2004, until the value is fully paid, in cash or in bond or in any other Government Support Price and A is the Area of the Land)
mode of payment at the option of the landowners in accordance with
Sec. 18, RA 6657.[9]
WHERE: AGP = 99.36 cavans per hectare

GSP = Php 35.00 per cavan

A = 18.8704 hectares
LBP filed a Motion for Reconsideration[10] which the RTC denied in its Order
dated 29 October 2004.[11]

COMPUTATION:

LBP next filed a petition for Review to the Court of Appeals docketed as CA
G.R. SP No. 87463. The Court of Appeals rendered a decision dated 9 October 2007,
the fallo of which reads:[12] LV = (99.36 x2.5 x 35.00) 18.8704

LV = 8,694 x 18.8704

WHEREFORE, the DECISION DATED OCTOBER 6, LV = Php 164,059.26

2004 is MODIFIED, ordering petitioner LAND BANK OF THE
PHILIPPINES to pay to the respondents just compensation (inclusive
of interests as of October 6, 2004) in the amount of P823,957.23, plus
With increment of 6% interest per annum compounded annually
interest of 12% per annum on the amount ofP515,777.57,
beginning October 21, 1972 until October 21, 1994 and immediately
or P61,893.30 per annum, beginning October 7, 2004 until the just
compensation is fully paid in accordance with this decision.
after said date with 12% interest per annum until the value is fully (I is the Interest; P is the Principal; R is the Rate and T is the
paid in accordance with extant jurisprudence, computed as follows: time)

To be compounded annually at 6% per annum from October 21, WHERE: P = Php591,193.68

1972 up toOctober 24, 1994. The formula is
R = 12% per annum
CA = P(1+R)n
T = 9 years

(CA is Compounded Amount; P is Principal; R is Rate; and n is the

number of years) COMPUTATION:

WHERE: P = Php 164,059.26 I = 591,193.68 x 12 x 9

R = 6% per annum I = 70,943.24 x 9

N = 22 years I = Php638,489.18

COMPUTATION: (Plus interest of 12% per annum from October 22, 2003 up
to October 6, 2004 or a period of 350 days)

CA = 164,059.26 x (1+06) 22
COMPUTATION:
CA = 164,059.26 x (1.06) 22

CA = 164,059.26 x 3.60353741
I = (591,193.68 x .12) x 350
CA = Php 591,193.68
350
Plus simple interest of 12% per annum from October 22,
1994 up toOctober 21, 2003, the formula of which is: I = 194.3605 x 350

I = Php68,027.77

I=PxRxT

Total Interest Php 706,516.95

 LBP disagreed with the imposition of 12% interest and its liability to pay the
costs of suit. It filed a Motion for Reconsideration which was denied in the Court of
Appeals Resolution dated 18 March 2008.
RECAPITULATION:

The Court of Appeals held:

Compounded Amount Php 591,193.68

Total Interest 706,516.95

We DENY the petitioners motion for partial reconsideration
for the following reasons, to wit:

TOTAL AMOUNT Php 1,297,710.63

1. Anent the first ground, the decision of October 9,
2007 has explained in detail why the obligation of the petitioner
should be charged 12% interest.Considering that the motion fails to
persuasively show that a modification of the decision thereon would
be justified, we reject such ground for lack of merit.

The Court of Appeals pointed out that:

2. Regarding costs of suit, they are allowed to the prevailing

party as a matter of course, unless there be special reasons for the
Pursuant to AO 13, considering that the landholding involved herein court to decree otherwise (Sec. 1, Rule 43, Rules of Court). In
was tenanted prior to October 21, 1972, the rate of 6% per annum is appeals, the Court has the power to render judgment for costs as
imposed, compounded annually from October 21, 1972 until October justice may require (Sec. 2, Rule 142, Rules of Court).
21, 1994, the date of the effectivity of AO 13. Beyond October 21,
1994, only the simple rate of 6% per annum interest is imposable
until October 6, 2004 (the date of the rendition of the decision of the
RTC) on the total value (that is, P164,059.26 plus the compounded In view of the foregoing, the award of costs to the
increments up to October 21, 1994) but minus the lease rentals of respondents was warranted under the circumstances.[14]
P75,415.88.Only the simple rate of 6% is applicable up to then
because the obligation to pay was not founded on a written agreement
that stipulated a different rate of interest.From October 7, 2004 until
the full payment, the simple interest rate is raised to 12% per
annum. The reason is that the amount thus determined had by then Before this Court, LBP raises the same issues for resolution:
acquired the character of a forbearance in money. [13]

I. Is it valid or lawful to award 12% rate of interest per

annum in favor of respondents notwithstanding the 6% rate of interest
 per annum compounded annually prescribed under DAR A.O. No. 13, Order No. 5, series of 1998 should be applied in computing just
series of 1994, DAR A.O. No. 02, series of 2004, and DAR A.O. No. compensation, thus:
06, series of 2008, xxx from November 1994 up to the time of actual
payment?

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

II. Is it valid or lawful to adjudge petitioner LBP, which is

performing a governmental function, liable for costs of suit? [15]
Where: LV = Land Value

CNI = Capitalized Net Income

CS = Comparable Sales
At the outset, the Court notes that the parcels of land subject matter of this MV = Market Value per Tax Declaration
case were acquired under Presidential Decree No. 27, but the complaint for just
compensation was filed in the RTC on 1 December 1994 after Republic Act No. 6657
already took into effect.[16] Thus, our pronouncement in LBP v. Soriano[17]finds
application. We quote:

In the case before Us, the just compensation was computed based on Executive Order
No. 228, which computation the parties do not contest. Consequently, we reiterate our
x x x [I]f just compensation is not settled prior to the passage of rule in LBP v. Soriano that while we uphold the amount derived from the old formula,
Republic Act No. 6657, it should be computed in accordance with the since the application of the new formula is a matter of law and thus, should be made
said law, although the property was acquired under Presidential applicable, the parties are not precluded from asking for any additional amount as may
Decree No. 27. The fixing of just compensation should therefore be
be warranted by the new formula.[18]
based on the parameters set out in Republic Act No. 6657, with
Presidential Decree No. 27 and Executive Order No. 228 having only
suppletory effect.
That settled, we now proceed to resolve the issue of the propriety of the
imposition of 12% interest on just compensation awarded to the respondents. The Court
of Appeals imposed interest of 12% per annum on the amount of P515,777.57
In the instant case, while the subject lands were acquired under
beginning 7 October 2004, until full payment.
Presidential Decree No. 27, the complaint for just compensation was
only lodged before the court on23 November 2000 or long after the
passage of Republic Act No. 6657 in 1998.Therefore, Section 17 of
Republic Act No. 6657 should be the principal basis of the We agree with the Court of Appeals.
computation for just compensation. As a matter of fact, the factors
enumerated therein had already been translated into a basic formula
by the DAR pursuant to its rule-making power under Section 49 of
Republic Act No. 6657. The formula outlines in DAR Administrative In Republic v. Court of Appeals,[19] we affirmed the award of 12% interest on
just compensation due to the landowner. The court decreed:
 The constitutional limitation of just compensation is
considered to be the sum equivalent to the market value of the
property, broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and
competition or the fair value of the property as between one who
receives, and one who desires to sell, if fixed at the time of the actual
taking by the government. Thus, if property is taken for public use
before compensation is deposited with the court having
jurisdiction over the case, the final compensation must include
interest on its just value to be computed from the time the
property is taken to the time when compensation is actually paid
or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interests accrue in order
to place the owner in a position as good as (but not better than)
the position he was in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in
imposing interest on the zonal value of the property to be computed
from the time petitioner instituted condemnation proceedings and
took the property in September 1969.This allowance of interest on the
amount found to be the value of the property as of the time of the
taking computed, being an effective forbearance, at 12% per annum
should help eliminate the issue of the constant fluctuation and
inflation of the value of the currency over time.[20]
We similarly upheld Republics 12% per annum interest rate on the unpaid expropriation
compensation in the following cases: Reyes v. National Housing Authority,[21] Land
Bank of the Philippines v. Wycoco,[22] Republic v. Court of Appeals,[23] Land Bank of
the Philippines v. Imperial,[24] Philippine Ports Authority v. Rosales-
Bondoc,[25] Nepomuceno v. City of Surigao,[26] and Curata v. Philippine Ports
Authority.[27]
Conformably with the foregoing resolution, this Court rules that a 12% interest
per annum on just compensation, due to the respondents, from the finality of this
decision until its satisfaction, is proper.[28]
We now proceed to the issue of whether or not the Court of Appeals correctly
adjudged LBP liable to pay the cost of suit.
According to LBP, it performs a governmental function when it disburses the
Agrarian Reform Fund to satisfy awards of just compensation. Hence, it cannot be
made to pay costs in eminent domain proceedings.
LBP cites Sps. Badillo v. Hon. Tayag,[29] to further bolster its claim that it is
exempt from the payment of costs of suit. The Court in that case made the following
pronouncement:
On the other hand, the NHA contends that it is exempt from
paying all kinds of fees and charges, because it performs
governmental functions. It citesPublic Estates Authority v. Yujuico,
which holds that the Public Estates Authority (PEA), a government-
owned and controlled corporation, is exempt from paying docket fees
whenever it files a suit in relation to its governmental functions.
We agree. People's Homesite and Housing Corporation v.
Court of Industrial Relations declares that the provision of mass
housing is a governmental function:
Coming now to the case at bar, We note that since 1941
when the National Housing Commission (predecessor of PHHC,
which is now known as the National Housing Authority [NHA] was
created, the Philippine government has pursued a mass housing and
resettlement program to meet the needs of Filipinos for decent
housing. The agency tasked with implementing such governmental
program was the PHHC.
 These can be gleaned from the provisions of Commonwealth
Act 648, the charter of said agency.
We rule that the PHHC is a governmental institution
performing governmental functions.
This is not the first time We are ruling on the proper
characterization of housing as an activity of the government. In the
1985 case of National Housing Corporation v. Juco and the
NLRC (No. L-64313, January 17, 1985, 134 SCRA 172), We ruled
that housing is a governmental function.
While it has not always been easy to distinguish
governmental from proprietary functions, the Court's declaration in
the Decision quoted above is not without basis. Indeed, the
characterization of governmental functions has veered away from the
traditional constituent-ministrant classification that has become
unrealistic, if not obsolete. Justice Isagani A. Cruz avers: "[I]t is now
obligatory upon the State itself to promote social justice, to provide
adequate social services to promote a rising standard of living, to
afford protection to labor to formulate and implement urban and
agrarian reform programs, and to adopt other measures intended to
ensure the dignity, welfare and security of its citizens.....These
functions, while traditionally regarded as merely ministrant and
optional, have been made compulsory by the Constitution." [30]
We agree with the LBP. The relevant provision of the Rules of Court states:
Rule 142
Costs
Section 1. Costs ordinarily follow results of suit. Unless
otherwise provided in these rules, costs shall be allowed to the
prevailing party as a matter of course but the court shall have
power, for special reasons adjudge that either party shall pay the costs
of an action, or that the same be divided, as may be equitable. No
costs shall be allowed against the Republic of
the Philippinesunless otherwise provided by law.
In Heirs of Vidad v. Land Bank of the Philippines,[31]this Court extensively
discussed the role of LBP in the implementation of the agrarian reform program.
LBP is an agency created primarily to provide financial
support in all phases of agrarian reform pursuant to Section 74 of
Republic Act (RA) No. 3844 and Section 64 of RA No. 6657. It is
vested with the primary responsibility and authority in the
valuation and compensation of covered landholdings to carry out
the full implementation of the Agrarian Reform Program. It may
agree with the DAR and the land owner as to the amount of just
compensation to be paid to the latter and may also disagree with them
and bring the matter to court for judicial determination.
xxxx
To the contrary, the Court had already recognized in Sharp
International Marketing v. Court of Appeals that the LBP plays a
significant role under the CARL and in the implementation of the
CARP, thus:
As may be gleaned very clearly from EO 229, the LBP is
an essential partof the government sector with regard to the payment
of compensation to the landowner. It is, after all, the instrumentality
that is charged with the disbursement of public funds for purposes of compensate the landowner in such amount as may be agreed upon
agrarian reform. It is therefore part, an indispensable cog, in the by the landowner and the DAR and LBP, in accordance with the
governmental machinery that fixes and determines the amount criteria provided in Secs. 16 and 17, and other pertinent provisions
compensable to the landowner. Were LBP to be excluded from that hereof, or as may be finally determined by the court, as the just
intricate, if not sensitive, function of establishing the compensable compensation for the land."
amount, there would be no amount "to be established by the
government" as required in Sec. 6, EO 229. This is precisely why the
law requires the [Deed of Absolute Sale (DAS)], even if already
xxxx
approved and signed by the DAR Secretary, to be transmitted still to
the LBP for its review, evaluation and approval.

It must be observed that once an expropriation proceeding

for the acquisition of private agricultural lands is commenced by the
It needs no exceptional intelligence to understand the
DAR, theindispensable role of Land Bank begins.
implications of this transmittal. It simply means that if LBP agrees on
the amount stated in the DAS, after its review and evaluation, it
becomes its duty to sign the deed. But not until then. For, it is only in
that event that the amount to be compensated shall have been xxxx
"established" according to law. Inversely, if the LBP, after review and
evaluation, refuses to sign, it is because as a party to the contract it
does not give its consent thereto. This necessarily implies the
It is evident from the afore-quoted jurisprudence that the role
exercise of judgment on the part of LBP, which is not supposed to
of LBP in the CARP is more than just the ministerial duty of keeping
be a mere rubber stamp in the exercise.Obviously, were it not so,
and disbursing the Agrarian Reform Funds. As the Court had
LBP could not have been made a distinct member of [Presidential
previously declared, the LBP is primarily responsible for the
Agrarian Reform Council (PARC)], the super body responsible for
valuation and determination of compensation for all private lands. It
the successful implementation of the CARP. Neither would it have
has the discretion to approve or reject the land valuation and just
been given the power to review and evaluate the DAS already signed
compensation for a private agricultural land placed under the CARP.
by the DAR Secretary. If the function of the LBP in this regard is
In case the LBP disagrees with the valuation of land and
merely to sign the DAS without the concomitant power of review and
determination of just compensation by a party, the DAR, or even the
evaluation, its duty to "review/evaluate" mandated in Adm. Order No.
courts, the LBP not only has the right, but the duty, to challenge the
5 would have been a mere surplus age, meaningless, and a useless
same, by appeal to the Court of Appeals or to this Court, if
ceremony.
appropriate.[32]

xxxx

It is clear from the above discussions that since LBP is performing a

Even more explicit is R.A. 6657 with respect to the governmental function in agrarian reform proceeding, it is exempt from the payment of
indispensable role of LBP in the determination of the amount to be costs of suit as provided under Rule 142, Section 1 of the Rules of Court.
compensated to the landowner. Under Sec. 18 thereof, "the LBP shall

WHEREFORE, premises considered, the petition is GRANTED. The
decision of the Court of Appeals in CA G.R. SP No. 87463 dated 9 October 2007
isAFFIRMED with the MODIFICATION that LBP is hereby held exempted from the
payment of costs of suit. In all other respects, the Decision of the Court of Appeals
is AFFIRMED. No costs.
LAND BANK OF THE PHILIPPINES, G.R. No. 173226
Petitioner,
The following factual antecedents are undisputed and are matters of record:
Respondents Manuel O. Gallego, Jr., Joseph L. Gallego and Christopher L.
Gallego are the co-owners of several parcels of agricultural lands located in Barangay
Sta. Rita and Barangay Concepcion in Cabiao, Nueva Ecija. The lands have an
aggregate area of 142.3263 hectares and are covered by Transfer Certificate of Title
Nos. T-139629, T-139631 and T-139633.[4]

Present: Sometime in 1972, the DAR placed a portion of the property under the
coverage of Presidential Decree No. 27 (P.D. No. 27). However, the DAR and
QUISUMBING, J.,
- versus - Chairperson, respondents failed to agree on the amount of just compensation, prompting respondents
CARPIO MORALES,
to file on 10 December 1998 a petition before the RTC of Cabanatuan City. [5] The
TINGA,
MANUEL O. GALLEGO, JR., VELASCO, JR., and petition, docketed as Agrarian Case No. 127-AF, named the DAR and herein petitioner
JOSEPH L. GALLEGO and BRION, JJ.
CHRISTOPHER GALLEGO, Land Bank of the Philippines (LBP) as respondents and prayed that just compensation
Respondents. Promulgated: be fixed in accordance with the valuation formula under P.D. No. 27 based on an

January 20, 2009 Average Gross Production of 109.535 cavans per hectare including interest at 6%
compounded annually as provided under PARC Resolution No. 92-24-1.[6]
x -----------------------------------------------------------------------------------x

DECISION
Petitioner LBP filed an answer, averring that only 76.8324 hectares and not
TINGA, J.:
89.5259 hectares as was alleged in the petition were placed under the coverage of P.D.
No. 27 and that just compensation should be determined based on an Average Gross

This instant petition for review on certiorari[1] under Rule 45 of the 1997 Rules Production of 65 cavans and/or 56.6 cavans per hectare which were the values at the

ofCivil Procedure seeks the reversal of the Decision[2] and Resolution[3] of the Court of time of taking of the property. Although the DAR did not file an answer, it was

Appeals in CA-G.R. SP No. 77676. The Court of Appeals Decision modified the represented at the hearings by a certain Atty. Benjamin T. Bagui. [7]

amount of just compensation awarded by the Regional Trial Court (RTC) sitting as a
During the course of the hearing of the petition, the coverage of respondents
Special Agrarian Court, Branch 29, Cabanatuan City to respondents for the
lands had expanded to a bigger area. In order to conform to the increase in the area
expropriation of their property for the comprehensive agrarian reform program of the
placed under agrarian reform, respondents filed on 14 October 2002 an amended
Department of Agrarian Reform (DAR), while the Resolution denied petitioners motion
petition, stating that as certified by the Municipal Agrarian Reform Office (MARO) of
for reconsideration of the Decision.
Cabiao, Nueva Ecija, 122.8464 hectares of the property had already been placed under
the operation of P.D. No. 27. In the answer filed by the DAR as well as during the pre-
trial, the counsels for DAR and petitioner LBP stipulated that the property subject of
[8]
the petition was irrigated and had a total area of 120 hectares, more or less.
After the pre-trial conference, the trial court issued an Order dated 08
November 2002,[9] embodying the agreed stipulation that the property placed under
agrarian reform had an area of 120 hectares, more or less, and directing the MARO of
Cabiao, Nueva Ecija to submit the records pertaining to the exact landholdings already
processed and acquired by petitioner LBP. In a Supplemental Pre-Trial Order dated 25
November 2002,[10] the trial court stated that in view of the parties agreement that the
property was irrigated and had an area of 120 hectares, the only factual issue to be
resolved would be the correct Average Gross Production, based on which just
compensation would be fixed.[11]
On 14 March 2003, the trial court rendered a Decision,[12] adopting respondents formula
which was based on an Average Gross Production of 121.6 cavans per hectare. The
dispositive portion of the RTC Decision reads:
WHEREFORE, judgment is hereby rendered in favor of the
petitioners, and the Land Bank of the Philippines is ordered to pay the
petitioners Manuel O. Gallego, Joseph L. Gallego and Christopher L.
Gallego in a manner set forth in Sections 17 and 18 of R.A. No. 6657
(Comprehensive Land Reform Code) the total amount
of P52,209,720.00 as the just compensation for 122.8464 hectares of
ricelands distributed and awarded to tenants-beneficiaries surveyed,
described and subdivided into lots with corresponding lot numbers,
and areas as indicated in the Summary of Farmer-Beneficiaries and
Lot Distribution in Gallego Estate, consisting of six (6) pages, which
is annexed hereto and made part of this Decision, including all
improvements of roads and irrigation canals therein existing. The
amount of P1,179,027.00 or whatever amount the Land Bank of
thePhilippines has paid to the Gallegos as initial or provisional
valuation shall be deducted from the amount of P52,209,720.00.
SO ORDERED.[13]
In arriving at the amount of just compensation, the trial court adopted the
formula prescribed in P.D. No. 27, which fixed the land value as equivalent to 2.5
multiplied by the Government Support Price of palay multiplied by the Average Gross
Production per hectare of the three preceding agricultural years. The trial court used the
values of P500.00 as Government Support Price for palay and 121.6cavans per hectare
as Average Gross Production of respondents property. Applying Article 1958 [14] of the
Civil Code, the trial court also imposed interest in kind payable from 1972 to 2002 by
multiplying by 1.8 the Average Gross Production ofpalay of 121.6 cavans per hectare
multiplied by 2.5.
Both petitioner LBP and the DAR separately moved for the reconsideration of
the trial courts Decision. In its Order dated 28 April 2003, the trial court denied both
motions.[15]
Only petitioner LBP appealed from the trial courts Decision. According to
petitioner LBP, the trial court erred in applying values that had no basis in law instead
of adopting the Average Gross Production established by the Barangay Committee on
Land Production under DAR Circular No. 26, series of 1973, and the mandated
Government Support Price of P35 per cavan of palay under Section 2 of Executive
Order (E.O.) No. 228.
Upon motion by respondents, the Court of Appeals issued a Resolution on 5
November 2004, ordering the release of P2,000,000.00 in favor of respondents as
partial execution of the Decision of the trial court. The appellate court allowed the
partial execution on the grounds that respondent Manuel Gallego was in need of an
urgent medical operation and that there was no longer any question that respondents
were entitled to just compensation.[16]
The Court of Appeals rendered the assailed Decision on 29 September
[17]
2005. The appellate court agreed that the values applied by the trial court in fixing
just compensation had no legal basis because the formula under P.D. No. 27 and E.O.
 RETROACTIVELY APPLYING R.A. NO. 6657 IN OBVIOUS
No. 228 mandated a Government Support Price of P35.00 per cavan of palay. It also
CONTRAVENTION OF P.D. NO. 27/E.O. NO. 228.
held that the imposition of interest based on Article 1958 of the Civil Code was
2. IS IT LAWFUL OR VALID FOR THE COURT A QUO
improper because said article does not apply to the expropriation of land but AND THE APPELLATE COURT TO USE AN INEXISTENT
contemplates cases of simple loan or mutuum. GOVERNMENT SUPPORT PRICE ALLEGEDLY IN THE
AMOUNT OF FIVE HUNDRED PESOS (P500.00) IN APPARENT
VIOLATION OF THE LEGISLATED GOVERNMENT SUPPORT
According to the Court of Appeals, the peculiar circumstances of the case PRICE (GSP) AMOUNTING TO THIRTY FIVE PESOS (P35.00)
persuaded the appellate court to fix just compensation based on the current market FOR EVERY CAVAN OF 50 KILOS OF PALAY?

value of the subject property on the premise that the provisions of P.D. No. 27 and E.O. 3. IS IT LAWFUL OR VALID FOR THE APPELLATE
No. 228 serve only as guiding principles and are not conclusive on the courts. The COURT TO REQUIRE THE RELEASE OF TWO MILLION
PESOS (PhP 2,000,000.00), WHICH DOES NOT CONSTITUTE AS
appellate court fixed the propertys value at the current market rate of P25.00 per square THE INITIAL AMOUNT OF VALUATION FOR SUBJECT
meter similar to that of other properties located in Barangay Sta. Rita and Barangay PROPERTY, IN FAVOR OF RESPONDENTS?[19]

Concepcion.

The dispositive portion of the Decision reads: On 26 July 2006, the Court issued a Resolution requiring the LBP Legal Department,
the counsel for petitioner LBP, to submit proof of written conformity of the Office of
WHEREFORE, the foregoing considered, the assailed
Decision is herebyMODIFIED in that the award in the amount the Government Corporate Counsel (OGCC) to represent petitioner LBP in the instant
of P52,209,720.00 as just compensation for 122.8464 hectares of petition to conform to the Courts directive in Land Bank of the Philippines v. Teresita
ricelands is hereby REDUCED to THIRTY MILLION SEVEN
HUNDRED ELEVEN THOUSAND SIX HUNDRED PESOS Panlilio-Luciano.[20] Pursuant to said Resolution, the LBP Legal Department submitted
(P30,711,600.00) computed based on the current fair market value of through a Compliance/Manifestation[21] a copy of the Letter of Authority issued by the
the expropriated parcels of land at the rate of P25.00 per square
meter. OGCC authorizing Atty. Rafael L. Berbao and Atty. Jose Marie A. Quimboy to appear
as collaborating counsels in all LBP cases. The OGCC likewise filed a Manifestation
The amount of One Million One Hundred Seventy Nine
Thousand and Twenty Seven Pesos (P1,179,027.00) or whatever and Motion[22] stating its conformity to the appearance of the LBP Legal Department on
amount the petitioner has paid to the Gallegos as initial or provisional
behalf of petitioner LBP and formally entering its appearance as collaborating counsel
valuation, as well as the Two Million Pesos (P2,000,000.00) already
released pursuant to this Courts Resolution dated 5 November 2004 for petitioner LBP. In a Resolution dated 13 November 2006, the Court noted the
as partial execution of the court a quos decision shall be deducted
separate manifestations of the OGCC and the LBP Legal Department and directed
from the foregoing award.[18]
respondents to file a comment on the petition.[23]
Petitioner LBP sought reconsideration but was denied in a Resolution dated23
June 2006. Hence, the instant petition, raising the following issues:
Contrary to respondents claim, the petition is accompanied by a valid
verification and certification of non-forum shopping. Annexed to the petition is a
1. IS IT LAWFUL OR VALID FOR THE COURT A QUO
AND THE APPELLATE COURT TO USE THE ALLEGED special power of attorney[24] issued by Wilfredo C. Maldia, Officer-In-Charge, Agrarian
CURRENT MARKET VALUE IN DETERMINING SUBJECT
PROPERTYS JUST COMPENSATION, IN EFFECT and Domestic Banking Sector of the LBP pursuant to Board Resolution No. 03-077. In
the resolution, the LBP Board of Directors approved the designation of any LBP lawyer
as attorney-in-fact to appear before the courts in all cases where LBP is a
party.[25] Pursuant thereto, Attys. Berbao and Quimboy were constituted as duly
authorized representatives and attorneys-in-fact in the instant case with full power to
[26]
sign the verification of non-forum shopping.
After petitioner filed a reply[27] to respondents comment, respondents filed a Motion for
Partial Execution, praying for the release of P3,179,027.00 by way of partial execution
of judgment, alleging that no partial execution of the award to respondents had been
effected so far notwithstanding the Court of Appeals Resolution dated 05 November
2004 and Decision dated 29 September 2005. Thereafter, respondents filed a
Supplemental Comment dated 24 March 2008. For its part, petitioner LBP filed a
Comment dated 10 April 2008 on respondents Motion for Partial Execution and a
Reply to respondents Supplemental Comment.
Now to the core issue of just compensation.
Citing Gabatin v. Land Bank of the Philippines,[28] petitioner LBP argues that
respondents property was acquired under the effectivity of P.D. No. 27 and E.O. No.
228; thus, the formula provided therein should apply in fixing just compensation.
Petitioner also pointed out the trial courts failure to take judicial notice of the mandated
Government Support Price of P35.00 per cavan for palay at the time of taking in 1972.
The petition lacks merit.
The Court has already ruled on the applicability of agrarian laws, namely, P.D.
No. 27/E.O. No. 228 in relation to Republic Act (R.A.) No. 6657, in prior cases
concerning just compensation.
In Paris v. Alfeche,[29] the Court held that the provisions of R.A. No. 6657 are
also applicable to the agrarian reform process of lands placed under the coverage of
P.D. No. 27/E.O. No. 228, which has not been completed upon the effectivity of R.A.
No. 6657. Citing Land Bank of the Philippines v. Court of Appeals,[30] the Court
in Paris held that P.D. No. 27 and E.O. No. 228 have suppletory effect to R.A. No.
6657, to wit:
We cannot see why Sec. 18 of RA [No.] 6657 should not
apply to rice and corn lands under PD [No.] 27. Section 75 of RA
[No.] 6657 clearly states that the provisions of PD [No.] 27 and EO
[No.] 228 shall only have a suppletory effect. Section 7 of the Act
also provides
Sec. 7. Priorities.The DAR, in
coordination with the PARC shall plan and program
the acquisition and distribution of all agricultural
lands through a period of (10) years from the
effectivity of this Act. Lands shall be acquired and
distributed as follows:
Phase One: Rice and Corn lands under
P.D. 27; all idle or abandoned lands; all private
lands voluntarily offered by the owners of agrarian
reform; x x x and all other lands owned by the
government devoted to or suitable for agriculture,
which shall be acquired and distributed
immediately upon the effectivity of this Act, with
the implementation to be completed within a period
of not more than four (4) years (emphasis supplied).
This eloquently demonstrates that RA [No.] 6657 includes
PD [No.] 27 lands among the properties which the DAR shall acquire
and distribute to the landless. And to facilitate the acquisition and
distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered
to. In Association of Small Landowners of the Philippines v.
Secretary of Agrarian Reform[,] this Court applied the provisions (of)
RA 6657 to rice and corn lands when it upheld the constitutionality of
the payment of just compensation for PD [No.] 27 lands through the
different modes stated in Sec. 18.[31]
Particularly, in Land Bank of the Philippines v. Natividad,[32] where the agrarian reform
process in said case is still incomplete as the just compensation to be paid private
respondents has yet to be settled, the Court held therein that just compensation should
be determined and the process concluded under R.A. No. 6657. [33]
 The retroactive application of R.A. No. 6657 is not only statutory[34] but is also
founded on equitable considerations. In Lubrica v. Land Bank of the Philippines,[35] the
Court declared that it would be highly inequitable on the part of the landowners therein
to compute just compensation using the values at the time of taking in 1972, and not at
the time of payment, considering that the government and the farmer-beneficiaries have
already benefited from the land although ownership thereof has not yet been transferred
in their names. The same equitable consideration is applicable to the factual milieu of
the instant case. The records show that respondents property had been placed under the
agrarian reform program in 1972 and had already been distributed to the beneficiaries
but respondents have yet to receive just compensation due them.
The Court of Appeals fixed the just compensation based on the current market
value of adjacent properties, citing the peculiar circumstances of the case. The appellate
court, however, failed to cite any legal or factual basis in support of its conclusion.
Quite the contrary, the law and jurisprudence on the determination of just compensation
of agrarian lands are settled; they are different from the thrust of the appellate court.
For the purpose of determining just compensation, Section 17 of R.A. No.
6657 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
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.
While the 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 R.A. No. 6657.[36] In Land Bank of thePhilippines v. Celada,[37] the Court
upheld the applicability of DAR Administrative Order (A.O.) No. 5, series of 1998 in
determining just compensation.
Likewise, in Land Bank of the Philippines v. Banal,[38] the Court ruled that the
applicable formula in fixing just compensation is DAR A.O. No. 6, series of 1992, as
amended by DAR A.O. No. 11, series of 1994, then the governing regulation applicable
to compulsory acquisition of lands, in recognition of the DARs rule-making power to
carry out the object of R.A. No. 6657. Because the trial court therein based its valuation
upon a different formula and did not conduct any hearing for the reception of evidence,
the Court ordered a remand of the case to the SAC for trial on the merits.
The mandatory application of the aforementioned guidelines in determining
just compensation has been reiterated recently in Land Bank of the Philippines v.
Lim,[39] where the Court ordered the remand of the case to the SAC for the
determination of just compensation strictly in accordance with DAR A.O. No. 6, series
of 1992, as amended.
In line with the pronouncement in Celada, respondents argue that the just
compensation should be based on DAR A.O. No. 5, series of 1998, which requires
values for Capitalized Net Income, Comparable Sales and Market Value. Thus,
respondents attached to the comment an appraisal report of the fair market value of the
properties. Using the figures therein, respondents arrived at the value ofP78,195,694.07
as just compensation.

The appraisal report, however, does not form part of the records of the case;
thus, it has no probative weight. Any evidence that a party desires to submit for the
consideration of the court must be formally offered by him, otherwise, it is excluded
and rejected. Evidence not formally offered before the trial court cannot be considered
on appeal, for to consider it at such stage will deny the other parties their right to rebut
it.[40] Although respondents are correct in asserting that DAR A.O. No. 5, series of 1998
is the governing formula in determining the just compensation in the case at bar, the
evidence on record is not sufficient to determine the parameters required under DAR
A.O. No. 5, series of 1998. Hence, the remand of the case to the appropriate court
below is necessary also in order to allow respondents to properly present their evidence
and petitioner to submit controverting evidence. This Court is not a trier of facts.
To gain time and accelerate the final disposition of this case, the Court deems
it best pro hac vice to commission the Court of Appeals as its agent to receive and
evaluate the evidence of the parties. Its mandate is to ascertain the just compensation
due in accordance with this Decision, applying Sec. 17 of R.A. No. 6657, DAR A.O.
No. 5 of 1992, as amended, and the prevailing jurisprudence. [41]
The remand of cases before this Court to the Court of Appeals for the
reception of further evidence is not a novel procedure. It is sanctioned by the Rules of
Court.[42] In fact, the Court availed of the procedure in quite a few cases. [43]
Respondents likewise pray for the partial execution of the judgment pending
appeal. They aver that the agrarian reform process has remained pending for the past 35
years from the time of the expropriation of the subject properties and that the original
owner had died while one of the respondents is in need of urgent medical attention.
The execution of a judgment before becoming final by reason of appeal is
recognized. However, this highly exceptional case must find itself firmly founded upon
good reasons warranting immediate execution. For instance, execution pending appeal
was granted by this Court where the prevailing party is of advanced age and in a
precarious state of health and the obligation in the judgment is non-transmissible, being
for support, or where the judgment debtor is insolvent. Execution pending appeal was
also allowed by this Court where defendants were exhausting their income and have no
other property aside from the proceeds of the subdivision lots subject of the action. [44]
In Borja v. Court of Appeals,[45] the Court allowed the execution of the money
judgment pending the resolution of the appeal on the merits. The Court noted that the
circumstance of the case constituted a good reason to allow execution of the challenged
judgment pending appeal. The Court explained, thus:
x x x The case has been dragging for more than ten years
since it was filed in 1979, with no early resolution of the appeal in
sight. The elevation of the records alone from the trial court took all
of six years. The proceedings in the appellate court will entail further
delay. The petitioner has grown old with the case and is now 76 years
of age. He fears he may no longer be in this world when the case is
finally decided.
xxx
The important point is that if the appealed judgment is
annulled, the complaint of the petitioner will have to be tried anew
and will probably be appealed whatever its outcome. It will take years
again before it is finally decided. By that time, the petitioner may be
facing a different judgment from a Court higher than an earthly
tribunal. The decision on his complaint, even if it be in his favor, will
become meaningless as far as he himself is concerned.[46]
The circumstances in Borja are similar to those in the instant case. The records
show that almost 36 years have elapsed since the lands have been taken away from
respondents but they have yet to receive the just compensation of the property in full.
The original owner had died and one of the respondents is in need of urgent medical
attention. There is no doubt that respondents are entitled to just compensation for their
lands which obviously cannot be lower than the amount ofP30,711,600.00 awarded by
the Court of Appeals in the appealed decision. It is butfirst and proper that respondents
request be granted in view of the considerable period of time that has transpired since
the taking in tandem with humanitarian considerations.
WHEREFORE, the instant petition for review on certiorari is DENIED and the
decision and resolution of the Court of Appeals in CA-G.R. SP No. 77676 are
REVERSED and SET ASIDE. Agrarian Case No. 127-AF is REMANDED to the Court
of Appeals, which is directed to receive evidence and determine with dispatch the just
compensation due respondents strictly in accordance with Sec. 17 of R.A. No. 6657,
DAR A.O. No. 5, series of 1998, as amended, and the prevailing jurisprudence. The
Court of Appeals is directed to conclude the proceedings and submit to this Court a
report on its findings and recommended conclusions within forty-five (45) days from
notice of this Decision. The Court of Appeals is further directed to raffle this case
immediately upon receipt of this Decision.
The Court by way of execution pending appeal of this Decision hereby
ORDERS petitioner to pay to respondents the amount of P30,711,600.00 awarded by
the Court of Appeals, less whatever amounts they have been paid thus far.
This Decision is immediately executory.
SO ORDERED.
FIRST DIVISION
[G.R. No. 168787. September 3, 2008.]
DEPARTMENT OF AGRARIAN REFORM, represented by Provincial Agrarian
Reform Officer STEPHEN M. LEONIDAS, petitioner,vs. POLO COCONUT
PLANTATION CO., INC., FLORENCIA D. REMOLLO, NOLI C.
ALCANTARA, 1 ZOSIMO BARBA, ROBERT B. BAJANA, EMETERIO V.
TAG-AT, JUVENAL T. MENDEZ, 2 SHIELA R. REYES, JONITA M.
CADALLO, PRISCO P. BACO, BENJAMIN C. DAYAP, ANTONIO
DEDELES, 3 NARCISO D. DIAZ, JOVENIANO REYES, 4RODOLFO C.
SALVA, AVELINO C. BAJANA, PRAXEDES BAJANA, ALEJANDRO T.
GIMOL, EMELINA B. SEDIGO 5 and HERMINIGILDO
VILLAFLORES, respondents.
[G.R. No. 169271. September 3, 2008.]
MARTINA Q. ABARCA, TOLENTINA E. ABLAY, CONCHITA M. AC-AC,
JOSEPHINA S. AC-AC, LORETA C. AC-AC, CARIDAD Q. AGUILAR,
DIOSDADO A. AGUILAR, ROMULO S. AGUILAR, SHERLITA T. AGUILAR,
WILFREDO T. ALCANTARA, ANACLETO B. ALFORQUE, RICARDO P.
BACO, RODRIGO P. BACO, SR., DARIO B. BAJANA, SR., DEMETRIO F.
BALBUENA, GREGORIA R. BARBA, TOMAS T. BARBA, WILFREDO R.
BARBA, VIVIAN F. BAROT, DOMINGO O. BAROY, ARTURO A.
BORROMEO, FEDENCIA R. BORROMEO, JUANITA P. CABIL, SALVADOR
A. CABORNAY, SEVERINO M. CABUG-OS, AUREA M. CALDA, BALTAZAR
R. CATALOÑA, DANILOO B. CURATO, ARNULFO B. DAEL, DEMOCRITO
B. DAGODOG, GENARO C. DURAN, JOSEPHINE M. ELLEMA, ALBINA R.
ELMAGA, ENRIQUE R. ELMAGA, EDWIN L. ELUMIR, TOMAS M.
GABIHAN, ALBERTO A. GASO, PEDRO R. GASO, VISITACION S. GASO,
ERLINDA S. GAZO, ANDRES M. GENEL, DIOSCOR M. GENEL, ANGEL R.
GOMEZ, LORENZO S. GOMEZ, SANTIAGO T. GOMEZ, SILANDO Q.
GOMEZ, CONSORCIA G. GUEVARRA, FREDESWINDA M. GUMA,
CELODONIA A. GUZMAN, HERCULANO B. GUZMAN, JR., CESAR Q.
HAROY, SR., EDDIE Q. HAROY, ROMEO E. INOFERIO, GENARA R.
JUANO, GEVINO B. JUANO, SR., ROGELIA B. JUANO, ROSALITA G.
JUANO, DIOGRACIAS R. LARAZAN, RELINA H. LARENA, JOSE G.
MAGALSO, INOCENCIA G. MALCO, LUCENA B. MALTO, SANTOS S.
MALTAO, ELINA T. MARIMAT, RAMON C. MARIMAT, MERCY B. MARO,
RUTHELMA D. MARO, CHARITA S. MATEO, ALMA D. MEDINA, ABUNDIO
M. MENDEZ, RENOLD S. MINDEZ, ALBERTO B. MIRA, GAUDENCIA S.
MIRA, CRESTITA D. MONTAÑA, DIONISIA T. MONTAÑA, LORETO R.
NAPAO, ALICIA P. NILLAS, ESPERANZA M. OMATANG, JR., FELICISIMA
M. ORACION, JOEL M. ORACION, PATROCINIO T. PAO, LOURDES T.
PARTOSA, FABIAN S. PIÑERO, FELIX R. PUBLICO, MARIBELLE B.
PUBLICO, CARMELITA M. QUILARIO, ENRIQUE R. QUILARIO,
MANOLITA M. QUILARIO, MIGUEL S. QUILERIO, LEONILA J.
QUINQUILLERIA, DELTA M. RAMIREZ, ELIAS O. RAMOS,
CONSOLACION T. REAL, ERLINDA I. REGALA, DOMINGA M. REMAN,
EUGENIO O. REMAN, PEPITA R. REMAN, RODNEY D. REMAN, RONNIE
 O. REMAN, SR., DOMINADOR P. REMPOJO, EUTIQUIO T. REMPOJO,
ROSITA C. REMPOJO, CAROLINA T. REYES, DIONISIA M. REYES,
EUGENIA B. REYES, LORETA D. REYES, MARIO S. REYES, LAUREANO C.
RIVERA, PETER C. RIVERA, EVANGELINE Q. RODRIGUEZ, RICARDO R.
RODRIGUEZ, PATROCINIO I. SABIHON, FELIPE G. SAGA, ANESIA D.
SALIN, FLAVIANO T. SALIN, JR., WENEFREDO T. SALIN, VIRGILIO B.
SALOMA, ESTELA S. SALVA, GEORGE R. SALVA, TEOFISTA R. SALVA,
JOSEPHINE T. SEDIGO, MICHAEL P. SEGISMAR, SR., JOSEPH S.
SEVILLA, MARISSA H. SIENES, MA. GINA M. SILVA, ARTURO T.
SOLITANA, MARILYN M. TABORA, GABINO G. TEMBLOR, REYNALDO
Q. TEMBLOR, ELSA A. TEVES, LEONORA D. TORCO, GREGORIA O.
TOROY, ANDRES P. TORRES, HILARIO P. TORRES, LEONARDO G.
TORRES, MANOLITA T. TORRES, GENEROSO I. TORRES, LEONARDO F.
TUBAGA, AGRIPINO P. TURCO, FLORDELICO S. VERBO, OLYMPIA T.
YORONG and ROSENDA C. ZERNA, petitioners,vs. POLO COCONUT
PLANTATION CO., INC., FLORENCIA D. REMOLLO, NOLE C.
ALCANTARA, ZOSIMO BARBA, ROBERT B. BAJANA, 6 EMETERIO V.
TAG-AT, JUVENAL T. MENDEZ, SHIELA R. REYES, JONITA M. CADALLO,
PRISCO P. BACO, BENJAMIN C. DAYAP, ANTONIO DEDELES, NARCISO
D. DIAZ, JOVENIANO REYES, RODOLFO C. SALVA, AVELINO C. BAJANA,
PRAXEDES BAJANA, ALEJANDRO T. GIMOL, MELINA B. SEDIGO and
HERMINIGILDO VILLAFLORES,respondents.
DECISION
CORONA, J p:
In the late 1990s, respondent Polo Coconut Plantation Co., Inc. (PCPCI) sought to
convert 280 hectares of its Polo Coconut Plantation 7 (Polo estate) in Tanjay, Negros
Oriental into a special economic zone (ecozone) under the Philippine Economic Zone
Authority (PEZA). On December 19, 1998, PEZA issued Resolution No. 98-320
favorably recommending the conversion of the Polo estate into an ecozone 8 subject to
certain terms and conditions including the submission of "all government clearances,
endorsements and documents required under Rule IV, Section 3 of the Rules and
Regulations to Implement Republic Act (R.A.) 7916." ASTcEa
The following year, PCPCI applied for the reclassification of its agricultural lands
into mixed residential, commercial and industrial lands with the municipal government
of Tanjay. After conducting the prescribed hearing, the Sangguniang Bayan of Tanjay
adopted Resolution No. 344 granting PCPCI's application on November 3, 1999.
When Tanjay became a city, itsSangguniang Panglungsod adopted Resolution No.
16 approving Tanjay's Comprehensive Land Use Plan and Zoning Ordinance where
PCPCI's real properties, including the Polo estate, were reclassified as mixed
residential, commercial and industrial lands. 9
Sometime in 2003, petitioner Department of Agrarian Reform (DAR), through
Provincial Agrarian Reform Officer Stephen M. Leonidas, notified PCPCI that
394.9020 hectares of the Polo estate had been placed under the Comprehensive
Agrarian Reform Program (CARP) 10and would be acquired by the government.
Thereafter, Leonidas requested the Registrar of Deeds of Negros Oriental to cancel
PCPCI's certificate of title and to issue a new one in the name of the Republic of the
Philippines. He likewise asked Region VII Regional Agrarian Reform Adjudicator
Arnold C. Arrieta to determine the just compensation due to PCPCI. 11
On January 29, 2004, a new certificate of title was issued in the name of the
Republic of the Philippines. 12 The next day, that title was cancelled and another was
issued in the name of petitioners in G.R. No. 169271 (petitioners-beneficiaries). 13
Meanwhile, on March 11, 2004, Arrieta approved the land valuation
(P85,491,784.60) 14 of the Land Bank of the Philippines for the Polo estate. PCPCI
moved for reconsideration but it was denied in an order dated March 30, 2004.
On July 16, 2004, Leonidas informed PCPCI that a relocation survey of the Polo
estate would be conducted. PCPCI moved for the suspension of the survey but it was
denied. 15
Aggrieved, PCPCI filed a petition for certiorari 16 in the Court of Appeals (CA)
asserting that the DAR acted with grave abuse of discretion in placing the Polo estate
under the CARP. It argued that the Polo estate should not be subjected to the CARP
because Resolution No. 16 had already designated it as mixed residential, commercial
and industrial land. Moreover, petitioners-beneficiaries were not qualified to receive
land under the CARP.
In its February 16, 2005 decision, the CA found that the Polo estate was no longer
agricultural land when the DAR placed it under the CARP in view of Resolution No.
16. Furthermore, petitioners-beneficiaries were not qualified beneficiaries as they were
not tenants of PCPCI. Thus:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered
by us DECLARING as NOT VALID the acts of the [DAR] of subjecting
PCPCI's [Polo estate] to the coverage of the CARP, of canceling and causing the
cancellation of [PCPCI's] Transfer Certificate of Title No. T-2304 covering such
 land, of issuing or causing the issuance of Transfer Certificate of Title No. T-
36318 for this land in the name of the Republic of the Philippines by way of
transfer to it, of issuing or causing the issuance of Transfer Certificate of Title
No. T-802 for the said land in the names of [petitioner-beneficiaries] in the case
at bench by way of award of them of such land as purported farm beneficiaries
and of doing other things with the end in view of subjecting [the Polo estate] to
CARP coverage, SETTING ASIDE and ENJOINING such acts and the
consequence thereof, ORDERING the [petitioner-beneficiaries] to vacate the
premises of [the Polo estate] if they had entered such premises, and ORDERING
the respondent Register of Deeds of Negros Oriental to cancel Transfer
Certificate of Title Nos. T-36318 and T-802 and to reinstate Transfer Certificate
of Title No. T-2304 in the name of petitioner PCPCI.
SO ORDERED. 17
Both the DAR and petitioners-beneficiaries moved for reconsideration but they were
denied. 18 Hence, this recourse.
The DAR asserts that the reclassification of the Polo estate under Resolution No. 16
as mixed residential, commercial and industrial land did not place it beyond the reach
of the CARP. Petitioners-beneficiaries, on the other hand, insist that they were qualified
beneficiaries. While they were neither farmers nor regular farmworkers of PCPCI, they
were either seasonal or other farmworkers.
There is merit in these petitions.
NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES
Recourse to court action will not prosper until all remedies have been exhausted at
the administrative level. 19
Section 3, Rule II of the 2003 DARAB Rules of Procedure (DARAB Rules)
provides:
Section 3. Agrarian Law Implementation Cases. — The Adjudicator or Board
shall have no jurisdiction over matters involving the implementation of R.A.
6657 otherwise known as the Comprehensive Agrarian Reform Law (CARL) of
1988 and other related agrarian laws enunciated by pertinent rules and
administrative orders, which shall be under the exclusive prerogative of and
cognizable by the Office of the Secretary of the DAR in accordance with his
issuances to wit:
3.1. Classification and identification of landholdings for coverage under the
agrarian reform program and the initial issuance of [certificates of land
ownership award] and [emancipation patents], including protests or oppositions
thereto and petitioners for lifting of such coverage;
3.2. Classification, identification, inclusion, exclusion, qualification or
disqualification of potential/actual farmer/beneficiaries; (emphasis supplied)
xxx xxx xxx
Protests regarding the implementation of the CARP fall under the exclusive
jurisdiction of the DAR Secretary. He determines whether a tract of land is covered by
or exempt from CARP. 20 Likewise, questions regarding the eligibility of CARP
beneficiaries must be addressed to him. The DAR Secretary decides to whom lands
placed under the CARP shall be distributed. 21
Before PCPCI filed its petition forcertiorari in the CA, it did not file a protest or
opposition questioning the propriety of subjecting the Polo estate to the CARP. Neither
did it assail the eligibility of petitioners-beneficiaries before the DAR Secretary. There
were available administrative remedies under the DARAB Rules but PCPCI did not
avail of them.
Moreover, a special civil action forcertiorari under Rule 65 of the Rules of Court
can be availed of only in the absence of an appeal or any plain, speedy and adequate
remedy in the ordinary course of law. 22 Here, recourse to the DAR Secretary was the
plain, speedy and adequate remedy in the ordinary course of law contemplated by Rule
65.
NON-CONVERSION TO MIXED
RESIDENTIAL, COM MERCIAL AND
INDUSTRIAL LAND
In Ros v. DAR, 23 we held that reclassified agricultural lands must undergo the
process of conversion in the DAR 24 before they may be used for other
purposes. 25 Since the DAR never approved the conversion of the Polo estate from
agricultural to another use, the land was never placed beyond the scope of the CARP.
The approval of the DAR for the conversion of agricultural land into an industrial
estate is a condition precedent for its conversion into an ecozone. 26 A proposed
ecozone cannot be considered for Presidential Proclamation unless the landowner first
submits to PEZA a land use conversion clearance certificate from the DAR. 27 This
PCPCI failed to do.
PEZA Resolution No. 98-320 expressly provides:
 Resolved, that the application of [PCPCI] for (1) declaration of the 280-hectare (f) collectives or cooperatives of the abovementioned beneficiaries and
property in Brgy. Polo, Municipality of Tanjay, Province of Negros Oriental as a
(g) others directly working on the land.
Special Economic Zone, subject to Presidential Proclamation, henceforth to be
known as POLO ECOCITY-SPECIAL ECONOMIC ZONE and (2) registration xxx xxx xxx
as the Developer/Owner of the said ECOZONE is hereby APPROVED subject
A basic qualification of a beneficiary is his willingness, aptitude and ability to
to the following terms and conditions:
cultivate and make the land as productive as possible. The DAR shall adopt a
xxx xxx xxx system of monitoring the record or performance of each beneficiary, so that any
beneficiary guilty of negligence or misuse of the land or any support extended to
2. Prior to PEZA's endorsement of the subject area to the President for
him shall forfeit his right to continue as such beneficiary. The DAR shall submit
proclamation as an ECOZONE, the PCPCI shall submit all government
periodic reports on the performance of the beneficiaries to the [Presidential
clearances, endorsements and documents required under Rule IV, Section 3 of
Agrarian Reform Council].
the [Rules and Regulations to Implement R.A. 7916];
xxx xxx xxx
xxx xxx xxx
This provision enumerates who are qualified beneficiaries of the CARP.
This condition proves that the favorable recommendation of PEZA did not ipso
Determining whether or not one is eligible to receive land involves the administrative
facto change the nature of the Polo estate. The property remained as agricultural
implementation of the program. For this reason, only the DAR Secretary can identify
land and, for this reason, was still subject to the CARP.
and select CARP beneficiaries. Thus, courts cannot substitute their judgment unless
In fact, Resolution No. 16 did not exempt PCPCI's agricultural lands (including the there is a clear showing of grave abuse of discretion. 30
Polo estate) from the CARP. Section 20 of the Local Government Code 28 provides that
Section 22 of the CARL does not limit qualified beneficiaries to tenants of the
a city or municipality can reclassify land only through the enactment of an ordinance.
landowners. Thus, the DAR cannot be deemed to have committed grave abuse of
In this instance, reclassification was undertaken by mere resolution; 29 thus, it was
discretion simply because its chosen beneficiaries were not tenants of PCPCI.
invalid. cAHITS
WHEREFORE, the petitions are hereby GRANTED. The February 16, 2005
QUALIFICATION OF CARP
decision and June 29, 2005 resolution of the Court of Appeals in CA-G.R. CEB-SP No.
BENEFICIARIES
00043 are REVERSED and SET ASIDE.
Section 22 of the CARL provides:
The March 11, 2004, March 30, 2004 and August 30, 2004 orders of Region VII
Section 22. Qualified Beneficiaries. — The lands covered by the CARP shall be Regional Agrarian Reform Adjudicator Arnold C. Arrieta in RARAD Case No. VII-N-
distributed as much as possible to landless residents of the same baranggay, or in 1284-2004 are REINSTATED. Transfer Certificate of Title No. T-802 and Certificate
the absence thereof, landless residents of the same municipality in the following of Land Ownership Award No. 00114438 are declared VALID.
order of priority:
SO ORDERED.
(a) agricultural lessees and share tenants;
Puno, C.J., Carpi
(b) regular farmworkers;

(c) seasonal farmworkers;

(d) other farmworkers;

(e) actual tillers or occupants of public lands;