G.R. No.

70736 March 16, 1987

BONIFACIO L. HILARIO and EDUARDA M. BUENCAMINO HILARIO, petitioners,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT AND SALVADOR
BALTAZAR, respondents.
Bonifacio L. Hilario for petitioners.
Alberto Mala, Jr. for private respondent.

GUTIERREZ, JR., J .:
This is a petition for review on certiorari of the Court of Appeals' decision declaring
Salvador Baltazar a leasehold tenant entitled to security of tenure on a parcel of land
consisting of 1,740 square meters.
On January 13, 1981, Salvador Baltazar filed a verified complaint with the Court of
Agrarian Relations, Branch VI at Baliuag, Bulacan alleging that since January, 1955 he
had been in continuous possession as a share tenant of a parcel of land with an area of
about 2 hectares situated in San Miguel, Bulacan, which was previously owned by one
Socorro Vda. de Balagtas; that on or about December 27, 1980, and thereafter, the
spouses Hilario began to threaten him to desist from entering and cultivating a portion of
the aforesaid land with an area of 4,000 square meters and otherwise committed acts in
violation of his security of tenure; that the Hilarios were contemplating the putting up of
a fence around the said portion of 4,000 square meters and that unless restrained by
the court, they would continue to do so to his great irreparable injury.
Baltazar claims that he became a tenant of Socorro P. Vda. de Balagtas on the latter's
two-hectare landholding located at San Juan, San Miguel, Bulacan by virtue of a
"Kasunduan" executed between them on January 8, 1979, He states that he erected his
house and planted "halaman," the produce of which was divided at 70-30 and 50-50
(sic) in his favor. After the death of Socorro P. Vda. de Balagtas, he allegedly gave the
share pertaining to the landowner to her daughter Corazon Pengzon. It was only in
December, 1980 that he came to know that a portion of the 2 hectares or 4,000 square
meters is already owned by the Hilarios.
On the other hand, the petitioners aver that they acquired the landholding of 4,000
square meters from the Philippine National Bank (PNB) after it had been foreclosed by
virtue of a deed of sale executed between Bonifacio Hilario and the PNB. The former
owner Corazon Pengzon testified that she owned only two lots-Lot 427-B with an area
of 841 square meters and Lot 427-C with an area of 899 square meters with a total area
of 1,740 square meters. The other 2 lots were owned by Ruben Ocampo and Juan
Mendoza. She further testified that in 1964 at the time of the partition of the property,
she declared the property for classification purposes as "bakuran" located in the
Poblacion and had no knowledge that there were other things planted in it except
bananas and pomelos.
On November 27, 1981, the Court of Agrarian Relations (CAR) in determining whether
or not respondent Baltazar is the tenant of the petitioners ruled that the land in question
is not an agricultural landholding but plain "bakuran," hence, Baltazar is not a tenant on
the land.
On January 30, 1982, the Court of Appeals, however, remanded the case to the lower
court for further proceedings on the ground that the findings of the Court of Agrarian
Relations (CAR) were not supported by substantial evidence.
In compliance with the order of the Court of Appeals, the CAR admitted additional
evidence.
On December 19, 1983, the CAR admitted the petitioners' third party complaint filed
with leave against the Philippine National Bank (PNB) which states that in the event that
judgment would be rendered against them under the original complaint, the PNB must
contribute, indemnify, and reimburse the spouses the full amount of the judgment.
On the basis of the parties' and their witnesses' affidavits containing detailed narrations
of facts and documentary exhibits which served as their direct testimonies pursuant to
PD 946, the CAR found that there was no tenancy relationship existing between
Baltazar and the former owner, Corazon Pengzon. The dispositive portion of the
decision reads:
WHEREFORE, judgment is hereby rendered declaring plaintiff not to be a
tenant on the landholding described in the complaint and ordering his
ejectment therefrom.
The third-party complaint is hereby dismissed for lack of merit. (pp. 25- 26,
Rollo)
Again, respondent Salvador Baltazar appealed to the then Intermediate Appellate Court
(IAC).
The IAC, however, reversed the decision of the CAR and held that:
... [T]he decision appealed from is hereby SET ASIDE, and another one
entered declaring plaintiff-appellant ii leasehold tenant entitled to security
of tenure on the land in question consisting of 1,740 square meters. Costs
against defendants-appellees. (p. 31, Rollo)
Consequently, the spouses Hilarios filed this petition for review making the following
assignments of errors:
I. THE INTERMEDIATE APPELLATE COURT ERRED IN DISTURBING THE
FINDINGS OF FACTS AND DECISION OF THE COURT OF AGRARIAN RELATIONS
(CAR) WHICH IS SUPPORTED BY SUBSTANTIAL EVIDENCE.
II. THE INTERMEDIATE APPELLATE COURT ERRED IN SUBSTITUTION (SIC) THE
FINDINGS OF FACTS OF CAR, OF ITS OWN FINDINGS.
III. THE INTERMEDIATE APPELLATE COURT ERRED IN NOT AFFIRMING THE
DECISION OF CAR, FINDING THE LOTS IN QUESTION WITH AN AREA OF 1,740
SQUARE METERS AS RESIDENTIAL LOT AND PRIVATE RESPONDENT NOT TO
BE A TENANT.
We agree with the respondent court when it stated that it can affirm on appeal the
findings of the CAR only if there is substantial evidence to support them. However, after
a careful consideration of the records of the case, we find no valid reason to deviate
from the findings of the CAR. The evidence presented by the petitioners is more than
sufficient to justify the conclusion that private respondent Salvador Baltazar is not a
tenant of the landholding in question.
Salvador Baltazar claims: that he is working on the land in question pursuant to a
"kasunduan" executed between him and Socorro Balagtas. The contract covers a two-
hectare parcel of land. The disputed landholding is only 4,000 square meters more or
less, although Baltazar claims that this area is a portion of the two hectares in the
contract. He testified that sometime in 1965, he relinquished 1.5 hectares of the two
hectares subject of the "kasunduan" to Nemesio Ocampo, Juan Mendoza, Miguel
Ocampo and Miguel Viola and what remained under his cultivation was 1/2 hectare
owned by Corazon Pengson. He stated that when Socorro Balagtas died, no new
contract was executed. However, he insists that the old contract was continued between
Corazon Pengson and himself. (Rollo, p. 23).
This claim is controverted by the testimony of Corazon Pengson herself which we quote
as follows:
Q After the death of your mother in 1965, what step, if any,
have you taken, regarding this subject landholding or after
the death of your mother how did you
Q ... administer this landholding in 1963, 1964, 1965, 1966,
etc?
A What I did is to fix the title of ownership, sir.
COURT:
Q What else?
A None other, Your Honor.
Q After the death of your mother in 1962, have you seen Mr.
Salvador Baltazar in this landholding in question?
A Yes, Your Honor.
Q What was he doing?
WITNESS:
A We are neighbors, Your Honor, sometimes he visits and
goes to our place and we used to meet there, Your Honor.
Q What was the purpose of his visit and your meeting in this
landholding?
A Sometimes when he visits our place he tens us that there
are some bananas to be harvested and sometimes there are
other fruits, your Honor.
Q You mean to say he stays in this subject landholding
consisting of 7,000 square meters?
A After the survey it turned out-
A . . . that he is occupying another lot which I learned that
property does not belong to us, Your Honor.
Q what was your arrangement regarding his stay in that
landholding which you don't own?
A He said that he had a contract with my late mother which I
don't know; in order not to cause any trouble because I will
be bothered in my business, I told him to continue, Your
Honor.
Q What do you mean when you-
COURT:
(continuing)
. . .told him to continue?
A What I mean to say is that he can stay there although I
don't understand the contract with my mother, Your Honor.
Q Was he paying rentals for his stay in that lot?
A No, Your Honor (T.S.N., pp. 15-19, hearing of August 5,
1981).
Corazon Pengson further explained that she did not receive any share from the produce
of the land from 1964 up to the filing of the case and she would not have accepted any
share from the produce of the land because she knew pretty well that she was no longer
the owner of the lot since 1974 when it was foreclosed by the bank and later on
purchased by the spouses Hilarios.
We note the CAR's finding:
Tenancy relationship is indivisible. The two-hectare land subject of
plaintiff's alleged contract with Socorro Balagtas having been parcelled
into seven (7) and possession thereof relinquished/surrendered in 1965
results in the termination of plaintiff's tenancy relationship with the
previous owner/landholder. Such being the case, he cannot now claim that
the landholding in question consisting of 4,000 square meters, more or
less, is being cultivated by him under the old contract. The owner thereof
Corazon Pengson has no tenancy relationship with him (plaintiff). (p. 25,
Rollo)
From the foregoing, it is clear that Corazn Pengson did not give her consent to
Baltazar to work on her land consisting of only 1,740 square meters. We agree with the
CAR when it said:
The law accords the landholder the right to initially choose his tenant to
work on his land. For this reason, tenancy relationship can only be created
with the consent of the true and lawful landholder through lawful means
and not by imposition or usurpation. So the mere cultivation of the land by
usurper cannot confer upon him any legal right to work the land as tenant
and enjoy the protection of security of tenure of the law (Spouses
Tiongson v. Court of Appeals, 130 SCRA 482) (Ibid)
And in the case of Tuazon v. Court of Appeals (118 SCRA 484), this Court had the
occasion to explain:
xxx xxx xxx
... 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, as in
this case, their written agreements, provided these are complied with and
are not contrary to law, are even more important."
The respondent court ruled that the fact that the land in question is located in the
poblacion does not necessarily make it residential.
The conclusion is purely speculative and conjectural, We note that the evidence
presented by the petitioners sufficiently establishes that the land in question is
residential and not agricultural.
As we stated in Tiongson v. Court of Appeals (supra) "the key factor in ascertaining
whether or not there is a landowner-tenant relationship in this case is the nature of the
disputed property."
The records show that the disputed property, only 1,740 square meters in area, is
actually located in the poblacion of San Miguel, Bulacan not far from the municipal
building and the church. It is divided into two lots-Lot 427-B with an area of 841 square
meters and Lot 427-C with an area of 899 square meters. Two other lots which the
respondent claims to cultivate as "tenant" were originally owned by Ruben Ocampo and
Juan Mendoza, not Corazon Pengson, through whom the respondent traces his alleged
tenancy rights.
Respondent Baltazar is a full-time government employee working in the Bureau of Plant
Industry.
The disputed lots were acquired at a foreclosure sale from the Philippine National Bank.
They were purchased as residential lots and the deed of sale describes them as
"residential." The inspection and appraisal report of the PNB classified the land as
residential. The declaration of real property on the basis of which taxes are paid and
approved by the Acting Provincial Assessor of Bulacan classifies the land as residential.
The tax declarations show that the 841 square meter lot is assessed for tax purposes at
P25,236.00 while the 899 square meter lot is assessed at P26,920.00. The owner
states that the land has only bananas and pomelos on it. But even if the claim of the
private respondent that some corn was planted on the lots is true, this does not convert
residential land into agricultural land.
The presumption assumed by the appellate court, that a parcel of land which is located
in a poblacion is not necessary devoted to residential purposes, is wrong. It should be
the other way around. A lot inside the poblacion should be presumed residential or
commercial or non-agricultural unless there is clearly preponderant evidence to show
that it is agricultural.
The respondent court also failed to note that the alleged tenant pays no rental or share
to the landowners. Baltazar made a vague allegation that he shared 70-30 and 50-50 of
the produce in his favor. The former owner flatly denied that she ever received anything
from him,
The requirements set by law for the existence of a tenancy relationship, to wit: (1) The
parties are the landholder and tenant; (2) The subject is agricultural land; (3) The
purpose is agricultural production; and (4) There is consideration; have not been met by
the private respondent.
We held in Tiongson v. Court of Appeals, cited above that:
All these requisites are necessary in order to create tenancy
relationship between the parties and the absence of one or more
requisites do not make the alleged tenant a de facto tenant as contra-
distinguished from a de jure tenant. This is so because unless a person
has established his status as a dejure 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 ... (emphasis supplied).
WHEREFORE, the petition is GRANTED. The decision of the respondent Court of
Appeals is hereby REVERSED and SET ASIDE and the decision of the Court of
Agrarian Relations is AFFIRMED.
SO ORDERED.
Fernan (Chairman), Ala

NICORP MANAGEMENT AND G.R. No. 176942
DEVELOPMENT CORPORATION,
Petitioner, Present:

Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,
Chico-Nazario,
Nachura, and
Reyes, JJ.
LEONIDA DE LEON,
Respondent.

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

SALVADOR R. LIM, G.R. No. 177125
Petitioner,

- versus -
Promulgated:
LEONIDA DE LEON,
Respondent. August 28, 2008
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J .:


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.

On August 26, 2004, respondent filed a complaint before the Office of the
Provincial Agrarian Reform Adjudicator (PARAD) of Region IV- Province of Cavite,
praying that petitioners Salvador R. Lim and/or NICORP Management and
Development Corporation (NICORP) be ordered to respect her tenancy rights over a
parcel of land located in Barangay Mambog III, Bacoor, Cavite, registered under TCT
No. T-72669 in the name of Leoncia De Leon and Susana De Leon Loppacher (De
Leon sisters), who were likewise impleaded as parties-defendants in the suit.

Respondent alleged that she was the actual tiller and cultivator of the land since
time immemorial with full knowledge and consent of the owners, who were her sisters-
in-law; that sometime in 2004, petitioners circulated rumors that they have purchased
the property from the De Leon sisters; that petitioners ignored respondents requests to
show proof of their alleged ownership; that on August 12, 2004, petitioners entered the
land and uprooted and destroyed the rice planted on the land and graded portions of the
land with the use of heavy equipment; that the incident was reported to the Municipal
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
redemption over the land; and for actual damages and attorneys fees.
[6]


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
program.
[10]
Eventually, NICORP purchased the subject property from Lim on October
19, 2004.
[11]


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 is void because it violated Section 70 of Republic Act (R.A.) No.
6657
[20]
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 x Provided,
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 not ipso
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
asde 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 affirmed in
totothe Decision of the Regional Adjudicator in DARAB Case No. 0402-031-
03, dismissing the complaint of respondent Leonida De Leon for lack of merit,
is REINSTATED andAFFIRMED. SO ORDERED.

[G.R. No. 108941. July 6, 2000]
REYNALDO BEJASA AND ERLINDA BEJASA, petitioners, vs. THE HONORABLE
COURT OF APPEALS, Special Sixteenth Division, ISABEL CANDELARIA and
JAMIE DINGLASAN, respondents.
D E C I S I O N
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)
Reynaldo Bejasa
(signed)
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.
No costs.
SO ORDERED.

G.R. No. L-62626 July 18, 1984
SPOUSES CAYETANO and PATRICIA TIONGSON, SPOUSES EDWARD and
PACITA GO, SPOUSES ROBERTO and MYRNA LAPERAL III, ELISA R. MANOTOK,
SPOUSES IGNACIO and PACITA MANOTOK, SEVERINO MANOTOK, JR.,
SPOUSES FAUSTO and MILAGROS MANOTOK, ROSA R. MANOTOK, Minors
MIGUEL A. B. SISON and MA. CRISTINA E. SISON, represented by their judicial
guardian FILOMENA M. SISON, SPOUSES MAMERTO and PERPETUA M.
BOCANEGRA, GEORGE M. BOCANEGRA, represented by his judicial guardian
MAMERTO BOCANEGRA, SPOUSES FRANCISCO and FILOMENA SISON, JOSE
CLEMENTE MANOTOK, SPOUSES JESUS and THELMA MANOTOK, Minors
PHILIP MANOTOK, MARIA TERESA MANOTOK and RAMON SEVERINO
MANOTOK, represented by their judicial guardian SEVERINO MANOTOK, JR.,
Minors JESUS JUDE MANOTOK, JR. and JOSE MARIA MANOTOK, represented
by their judicial guardian JESUS MANOTOK, petitioners,
vs.
HONORABLE COURT OF APPEALS and TEODORO S. MACAYA, respondents.
Romeo J. Callejo and Gil Venerando R. Racho for petitioners.
David Advincula Jr. and Jose J. Francisco for respondents.

GUTIERREZ, JR., J .:
In this petition for review on certiorari of the decision of the Court of, Appeal declaring
the existence of a landholder-tenant relationship and ordering the private respondent's
reinstatement, the petitioners contend that the appellate court committed an error of law
in:
1. Disregarding the findings of fact of the Court of Agrarian Relations
which are supported by substantial evidence; and
2. Substituting the findings of fact of the Court of Agrarian Relations with
its own findings.
Briefly, the facts of the case as found by the Court of Agrarian Relations, Seventh
Regional District, Branch 1 at Pasig, Metro Manila are as follows: Sometime in 1946,
the late Severino Manotok donated and transferred to his eight (8) children and two (2)
grandchildren namely: Purificacion Manotok, Eliza Manotok, Perpetua manotok,
Filomena Manotok, Severino Manotok, Jr., Jesus Manotok, Rahula Ignacio Manotok,
Severino Manotok III, Fausto Manotok and Rosa Manotok, a thirty-four-hectare lot
located in Payong, Old Balara, Quezon City covered by a certificate of title. Severino
Manotok who was appointed judicial guardian of his minor children 'accepted on their
behalf the aforesaid donation. At that time, there were no tenants or other persons
occupying the said property.
In that same year, Teodoro Macaya accompanied by Vicente Herrera, the overseer of
the property, went to the house of Manotok in Manila and pleaded that he be allowed to
live on the Balara property so that he could at the same time guard the property and
prevent the entry of squatters and the theft of the fruits and produce of the fruit trees
planted by the owner. Manotok allowed Macaya to stay in the property as a guard
(bantay) but imposed the conditions that at any time that the owners of the property
needed or wanted to take over the property, Macaya and his family should vacate the
property immediately; that while he could raise animals and plant on the property, he
could do so only for his personal needs; that he alone could plant and raise animals on
the property; and that the owners would have no responsibility or liability for said
activities of Macaya. Macaya was allowed to use only three (3) hectares. These
conditions, however, were not put in writing.
On December 5, 1950, the property-owners organized themselves into a corporation
engaged primarily in the real estate business known as the Manotok Realty, Inc. The
owners transferred the 34-hectare lot to the corporation as part of their capital
contribution or subscription to the capital stock of the corporation.
From 1946 to 1956, Macaya did not pay, as he was not required to pay anything to the
owners or corporation whether in cash or in kind for his occupancy or use of the
property. However, the corporation noted that the realty taxes on the property had
increased considerably and found it very burdensome to pay the said taxes while on the
other hand, Macaya had contributed nothing nor even helped in the payment of the
taxes. Thus, Macaya upon the request of the owners agreed to help by remitting ten
(10) cavans of palay every year as his contribution for the payment of the realty taxes
beginning 1957.
On June 5, 1964, the corporation requested Macaya to increase his contribution from
ten (10) cavans to twenty (20) cavans of palay effective 1963 because the assessed
value of the property had increased considerably. Macaya] agreed.
In 1967, Macaya informed the corporation that he could not afford anymore to deliver
any palay because the palay dried up. He further requested that in the ensuring years,
he be allowed to contribute only ten (10) cavans of palay. The corporation said that if
that was the case, he might as well not deliver anymore. Thus, from 1967 up to 1976,
Macaya did not deliver any palay.
On January 31, 1974, Manotok Realty, Inc. executed a "Unilateral Deed of
Conveyance" of the property in favor of Patricia Tiongson, Pacita Go, Roberto Laperal
III, Elisa Manotok, Rosa Manotok, Perpetua M. Bocanegra, Filomena M. Sison,
Severino Manotok, Jr., Jesus Manotok, Ignacio S. Manotok, Severino Manotok III and
Fausto Manotok.
Sometime in 1974, Macaya was informed by the Manotoks that they needed the
property to construct their houses thereon. Macaya agreed but pleaded that he be
allowed to harvest first the planted rice before vacating the property.
However, he did not vacate the property as verbally promised and instead expanded the
area he was working on.
In 1976, the Manotoks once more told Macaya to vacate the entire property including
those portions tilled by him. At this point, Macaya had increased his area from three (3)
hectares to six (6) hectares without the knowledge and consent of the owners. As he
was being compelled to vacate the property, Macaya brought the matter to the
Department (now Ministry) of Agrarian Reforms. The Manotoks, during the conference
before the officials of the Department insisted that Macaya and his family vacate the
property. They threatened to bulldoze Macaya's landholding including his house, thus
prompting Macaya to file an action for peaceful possession, injunction, and damages
with preliminary injunction before the Court of Agrarian Relations.
The sole issue to be resolved in the present petition is whether or not a tenancy
relationship exists between the parties. The Court of Agrarian Relations found that
Macaya is not and has never been a share or leasehold tenant of Severino Manotok nor
of his successors-in-interest over the property or any portion or portions thereof but has
only been hired as a watchman or guard (bantay) over the same. On Macaya's appeal
from the said decision, the respondent appellate court declared the existence of an
agricultural tenancy relationship and ordered Macaya's reinstatement to his landholding.
Since what is involved ed is agricultural tenancy, we refer to Republic Act No. 1199 as
amended by Republic Act No. 2263. Section 3 thereof defines agricultural tenancy as:
xxx xxx xxx
... the physical possession by a person of land devoted to agriculture
belonging to, or legally possessed by, another for the purpose of
production through the labor of the former and of the members of his
immediate farm household, in consideration of which the former agrees to
share the harvest with the latter, or to pay a price certain, either in produce
or in money, or in both.
Thus, the essential requisites of tenancy relationship are: 1) the parties are the
landholder and the tenant; 2) the subject is agricultural land; 3) there is consent; 4) the
purpose is agricultural production; and 5) there is consideration (Agustin, Code of
Agrarian Reforms of the Philippines, 1981, p. 19). As
xxx xxx xxx
All these requisites are necessary in order to create tenancy relationship
between the parties and the absence of one or more requisites do not
make the alleged tenant a de facto tenant, as contra-distinguished from a
de jure tenant, This is so because unless a person has established 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. ...
The key factor in ascertaining whether or not there is a landowner-tenant relationship in
this case is the nature of the disputed property.
Is the thirty-four (34) hectare lot, of which the six (6) hectares occupied by the private
respondent form a part, against agricultural land? If not, the rules on agrarian reform do
not apply.
From the year 1948 up to the present, the tax declarations of real property and the
annual receipts for real estate taxes paid have always classified the land as
"residential". The property is in Balara, Quezon City, Metro Manila, not far from the
correctly held by the trial court:
University of the Philippines and near some fast growing residential subdivisions. The
Manotok family is engaged in the business of developing subdivisions in Metro Manila,
not in farming.
The trial court observed that a panoramic view of the property shows that the entire 34
hectares is rolling forestal land without any flat portions except the small area which
could be planted to palay. The photographs of the disputed area show that flush to the
plantings of the private respondent are adobe walls separating expensive looking
houses and residential lots from the palay and newly plowed soil. Alongside the plowed
or narrowed soil are concrete culverts for the drainage of residential subdivisions. The
much bigger portions of the property are not suitable for palay or even vegetable crops.
The trial court noted that in a letter dated April 12, 1977, the City Engineer of Quezon
City certified on the basis of records in his office that the property in question falls within
the category of "Residential I Zone."
The respondent court ignored all the above considerations and noted instead that the
appellees never presented the tax declarations for the previous year, particularly for
1946, the year when Macaya began cultivating the property. It held that while the
petitioners at that time might have envisioned a panoramic residential area of the
disputed property, then cogonal with some forest, that vision could not materialize due
to the snail pace of urban development to the peripheral areas of Quezon City where
the disputed property is also located and pending the consequent rise of land values. As
a matter of fact, it found that the houses found thereon were constructed only in the
70's.
Whatever "visions" the owners may have had in 1946, the fact remains that the land has
always been officially classified as "residential" since 1948. The areas surrounding the
disputed six hectares are now dotted with residences and, apparently, only this case
has kept the property in question from being developed together with the rest of the lot
to which it belongs. The fact that a caretaker plants rice or corn on a residential lot in the
middle of a residential subdivision in the heart of a metropolitan area cannot by any
strained interpretation of law convert it into agricultural land and subject it to the
agrarian reform program.
On this score alone, the decision of the respondent court deserves to be reversed.
Another requisite is that the parties must be landholder and tenant. Rep. Act No. 11 99
as amended defines a landholder
Sec. 5(b) A landholder shall mean a person, natural or juridical, who,
either as owner, lessee, usufructuary, or legal possessor, lets or grants to
another the use or cultivation of his land for a consideration either in
shares under the share tenancy system, or a price certain under the
leasehold tenancy system.
On the other hand, a tenant is defined as
Sec. 5(a) A tenant shall mean a person who, 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, sharing the produce with the landholder under the
share tenancy system or paying to the landholder a price certain in
produce or in money or both, under the leasehold tenancy system.
Under these definitions, may Macaya be considered as a tenant and Manotok as a
landholder? Significant, as the trial court noted, is that the parties have not agreed as to
their contributions of the several items of productions such as expenses for
transplanting, fertilizers, weeding and application of insecticides, etc. In the absence of
an agreement as to the respective contributions of the parties or other terms and
conditions of their tenancy agreement, the lower court concluded that no tenancy
relationship was entered into between them as tenant and landholder.
On this matter, the respondent Appellate Court disagreed. It held that:
... Whether the appellant was instituted as tenant therein or as bantay, as
the appellees preferred to call him, the inevitable fact is that appellant
cleared, cultivated and developed the once unproductive and Idle property
for agricultural production. Appellant and Don Severino have agreed and
followed a system of sharing the produce of the land whereby, the former
takes care of all expenses for cultivation and production, and the latter is
only entitled to 10 cavans of rice per harvest. This is the essense of
leasehold tenancy.
It should be noted, however, that from 1967 to the present, Macaya did not deliver any
cavans of palay to the petitioners as the latter felt that if Macaya could no longer deliver
the twenty (20) cavans of palay, he might as well not deliver any. The decision of the
petitioners not to ask for anymore contributions from Macaya reveals that there was no
tenancy relationship ever agreed upon by the parties. Neither can such relationship be
implied from the facts as there was no agreed system of sharing the produce of the
property. Moreover, from 1946 to 1956 at which time, Macaya was also planting rice,
there was no payment whatsoever. At the most and during the limited period when it
was in force, the arrangement was a civil lease where the lessee for a fixed price leases
the property while the lessor has no responsibility whatsoever for the problems of
production and enters into no agreement as to the sharing of the costs of fertilizers,
irrigation, seedlings, and other items. The private respondent, however, has long
stopped in paying the annual rents and violated the agreement when he expanded the
area he was allowed to use. Moreover, the duration of the temporary arrangement had
expired by its very terms.
Going over the third requisite which is consent, the trial court observed that the property
in question previous to 1946 had never been tenanted. During that year, Vicente
Herrera was the overseer. Under these circumstances, coupled by the fact that the land
is forested and rolling, the lower court could not see its way clear to sustain Macaya's
contention that Manotok had given his consent to enter into a verbal tenancy contract
with him. The lower court further considered the fact that the amount of ten (10) cavans
of palay given by Macaya to the owners from 1957 to 1964 which was later increased to
twenty (20) cavans of palay from 1964 to 1966 was grossly disproportionate to the
amount of taxes paid by the owners. The lot was taxed as residential land in a
metropolitan area. There was clearly no intention on the part of the owners to devote
the property for agricultural production but only for residential purposes. Thus, together
with the third requisite, the fourth requisite which is the purpose was also not present.
The last requisite is consideration. This is the produce to be divided between the
landholder and tenant in proportion to their respective contributions. We agree with the
trial court that this was also absent.
As earlier stated, the main thrust of petitioners' argument is that the law makes it
mandatory upon the respondent Court of Appeals to affirm the decision of the Court of
Agrarian Relations if the findings of fact in said decision are supported by substantial
evidence, and the conclusions stated therein are not clearly against the law and
jurisprudence. On the other hand, private respondent contends that the findings of the
Court of Agrarian Relations are based not on substantial evidence alone but also on a
misconstrued or misinterpreted evidence, which as a result thereof, make the
conclusions of the Court of Agrarian Relations clearly contrary to law and jurisprudence.
After painstakingly going over the records of the case, we find no valid and cogent
reason which justifies the appellate court's deviation from the findings and conclusions
of the lower court. It is quite clear from the 44-page decision of the trial court, that the
latter has taken extra care and effort in weighing the evidence of both parties of the
case. We find the conclusions of the respondent appellate court to be speculative and
conjectural.
It bears re-emphasizing that from 1946 to 1956, there was no agreement as to any
system of sharing the produce of the land. The petitioners did not get anything from the
harvest and private respondent Macaya was using and cultivating the land free from any
charge or expense. The situation was rather strange had there been a tenancy
agreement between Don Severino and Macaya.
From 1957 to 1964, Macaya was requested to contribute ten (10) cavans a year for the
payment of the realty taxes. The receipts of these contributions are evidenced by the
following exhibits quoted below:
(a) Exhibit "4" adopted and marked as Exhibit "K" for plaintiff (Macaya):
Ukol sa taon 1961
Tinanggap naniin kay G. Teodoro Macaya ang sampung
(10) cavan na palay bilang tulong niya sa pagbabayad ng
amillaramiento sa lupa ng corporation na nasa Payong, Q.C.
na kaniyang binabantayan.
(b) Exhibit "9" adopted and marked as Exhibit "L" for plaintiff (Macaya):
Tinanggap namin kay Ginoong Teodoro Macaya ang
TATLONG (3) kabang palay bilang kapupunan sa
DALAWAMPUNG (20) kabang palay na kanyang tulong sa
pagbabayad ng amillaramiento para sa taong 1963 ng
lupang ari ng Manotok Realty, Inc. na nasa Payong, Quezon
City, na kanyang binabantayan samantalang hindi pa
ginagawang SUBDIVISION PANGTIRAHAN.
c) Exhibit "10" adopted and marked as Exhibit "N" for plaintiff (Macaya):
Tinanggap namin kay Ginoong Teodoro Macaya ang
DALAWAMPUNG (20) kabang palay na kanyang tulong sa
pagbabayad ng amillaramiento para sa taong 1964 ng
lupang ari ng Manotok Realty Inc., na nasa Payong, Quezon
City, na kanyang binabantayan samantalang hindi pa
ginagawang SUBDIVISION PANG TAHANAN.
d) Exhibit "11" adopted and marked as Exhibit "M" for plaintiff (Macaya):
Tinanggap namin kay Ginoong Teodoro Macaya ang
DALAWAMPUNG (20) kabang ng palay na kanyang tulong
sa pagbabayad ng amillaramiento para sa taong 1965 ng
lupang ari ng Manotok Realty, Inc., na nasa Payong,
Quezon City, na kanyang binabantayan samantalang hindi
pa ginagawang SUBDIVISION PANG TAHANAN.
From the above-quoted exhibits, it clearly appears that the payment of the cavans of
palay was Macaya's contribution for the payment of the real estate taxes; that the nature
of the work of Macaya is that of a watchman or guard (bantay); and, that the services of
Macaya as such watchman or guard (bantay) shall continue until the property shall be
converted into a subdivision for residential purposes.
The respondent appellate court disregarded the receipts as self-serving. While it is true
that the receipts were prepared by petitioner Perpetua M. Bocanegra, Macaya
nevertheless signed them voluntarily. Besides, the receipts were written in the
vernacular and do not require knowledge of the law to fully grasp their implications.
Furthermore, the conclusion of the respondent appellate court to the effect that the
receipts having been prepared by one of the petitioners who happens to be a lawyer
must have been so worded so as to conceal the real import of the transaction is highly
speculative. There was nothing to conceal in the first place since the primary objective
of the petitioners in allowing Macaya to live on the property was for security purposes.
The presence of Macaya would serve to protect the property from squatters. In return,
the request of Macaya to raise food on the property and cultivate a three-hectare portion
while it was not being developed for housing purposes was granted.
We can understand the sympathy and compassion which courts of justice must feel for
people in the same plight as Mr. Macaya and his family. However, the petitioners have
been overly generous and understanding of Macaya's problems. For ten years from
1946 to 1956, he lived on the property, raising animals and planting crops for personal
use, with only his services as "bantay" compensating for the use of another's property.
From 1967 to the present, he did not contribute to the real estate taxes even as he dealt
with the land as if it were his own. He abused the generosity of the petitioners when he
expanded the permitted area for cultivation from three hectares to six or eight hectares.
Mr. Macaya has refused to vacate extremely valuable residential land contrary to the
clear agreement when he was allowed to enter it. The facts of the case show that even
Mr. Macaya did not consider himself as a true and lawful tenant and did not hold himself
out as one until he was asked to vacate the property.
WHEREFORE, the petition is GRANTED. The decision of the respondent Court of
Appeals is hereby REVERSED and SET ASIDE and the decision of the Court of
Agrarian Relations is AFFIRMED.
SO ORDERED.



PAG-ASA FISHPOND G.R. No. 164912
CORPORATION ,
Petitioner,
Present:

- versus - YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
BERNARDO JIMENEZ, CHICO-NAZARIO,
ROBERT BELENBOUGH, REYES, and
LEONARD MIJARES, BRION,
*
JJ.
EDUARDO JIMENEZ,
JOSE CRUZ, ELIZALDE
EDQUIBAL, DOMINADOR
ELGINCOLIN and Promulgated:
GERONIMO DARILAG,
Respondents. June 18, 2008

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

D E C I S I O N


REYES, R.T., J .:


FOCUS of this petition is the long-term effect of hiring by a civil law lessee of
fishpond farmworkers with right to share in the fish harvests.

May karapatan bang manatili ang mga nasabing manggagawa kahit tapos n
a ang kontrata ng kumuha sa kanila sa may-ari ng palaisdaan?

Wala. Ito ang sagot namin sa katanungan sa kasong ito.

For Our review on certiorari is the Decision
[1]
of the Court of Appeals (CA)
affirming that
[2]
of the Department of Agrarian Reform Adjudication Board (DARAB) in
an action for maintenance of peaceful possession of a forty-hectare portion of a
fishpond situated in Masinloc, Zambales.

The Facts

Petitioner PAG-ASA Fishpond Corporation is the owner of a 95.6123-hectare
fishpond and saltbed situated at the Municipality of Masinloc, Province of Zambales. It
is covered by Transfer Certificate of Title (TCT) No. T-1747 issued by the Register of
Deeds of Zambales. On May 1, 1989, petitioner leased the subject fishpond to David
Jimenez and Noel Hilario. The lease agreement, in full, provides:

CONTRACT OF LEASE

KNOW ALL MEN BY THESE PRESENT:

This Contract of Lease made and entered into this 27
th
day of
April, 1989 by and between:

PAG-ASA FISHPOND CORPORATION, a corporation duly
organized and existing in accordance with the laws of the
Philippines, with principal office and business address at 465
A. Flores St., Ermita, Manila, herein represented by its
President, Mr. SEGUNDO SEANGIO, of legal age, married,
Filipino and with postal address at 465 A. Flores St., Ermita,
Manila, herein known as the LESSOR;

- A N D -

DAVID JIMENEZ, of legal age, married to Pascuala Ramos
Jimenez, Filipino and residing at
1173 Paco, Obando, Bulacan and Noel Hilario, of legal age,
married to Teresita SantiagoHilario, Filipino and residence
of Lawa, Obando, Bulacan, herein known as the LESSEES.





W I T N E S S E T H

WHEREAS, the Lessor is the registered and absolute owner of a
Real Property, more particularly described as follows, to wit:

CERTIFICATE TITLE NO. T-1747
REGISTER OF DEEDS
PROVINCE OF ZAMBALES

A PARCEL OF LAND CONTAINING AN AREA OF NINETY-
FIVE HECTARES, SIXTY-ONE ACRES AND TWENTY-
THREE CENTARES SITUATED IN THE BARRIO OF STO.
ROSARIO, MASINLOC, ZAMBALES.

WHEREAS, the Lessor has granted and the Lessees have
accepted a lease of the above-described property under the terms and
conditions hereinafter provided;

NOW, THEREFORE, for and in consideration of the above
premises and in consideration of the terms and conditions hereinafter
specified the parties herein do hereby agree and stipulate as follows:

1. The terms of this lease shall be five (5) years
effective May 1, 1989 and shall terminate on May 1,
1994 and is not renewable after said term unless
renewed in writing by both parties;

2. The Lessees have agreed to lease five (5) lots of
fishponds, one nursery pond, all the 331 saltbeds and
the Paalatan located within the described property
under Certificate Titles No. T-1747;

3. The lease does not include the bodega located within
the leased premises which is to be used exclusively by
the Lessor unless with written approval of the Lessor,
the Lessee may share in the use of the bodega;

4. The Leessees shall make a deposit of ONE HUNDRED
THOUSAND PESOS (P100,000.00) Philippine Currency
upon signing of this Contract of Lease. Said deposit is
without interest and shall answer for any unpaid rental of
the Lessees at the termination of this lease, penalties or
any liabilities which may incur during the effectivity of
this Contract. The Lessees cannot apply the aforesaid
deposit as rental payment before the cancellation,
termination or expiration of this agreement;

5. The Lessees shall pay to the Lessor immediately upon
signing of this Contract the amount of THREE
HUNDRED FIFTY THOUSAND PESOS (P350,000.00),
Philippine Currency as rental for the year May 1,
1989 to May 1, 1990. This payment is not refundable
and will be forfeited in the event the Lessees cancel this
Contract of Lease prior to May 1, 1990;

6. The Lessees shall pay to the Lessor the yearly advance
rental in Philippine Currency at the office of
the Lessor which shall be due and payable on or before
the 1st of March of every year for five (5) years without
the necessity of express demand, therefore it being
understood that in case of default of said Lessees in the
payment of the said rental if and when the same
becomes due and payable, the amount of rental owing
shall bear interest at the rate of twenty-four
percent (24%) per annum, to be computed daily from the
date of such default until fully paid, payment of such
interest to be considered as a penalty by reason of such
default, without prejudice to the right of the owner to
terminate this Contract and eject the Lessees, as
hereinafter set forth;

That the Schedule of Payment of the annual lease cash
payment of rentals are as follows:

a) May 1, 1989 or upon signing of this Contract of
Lease:
P350,000.00 rental for May 1,
1989 to May 1, 1990

b) March 1, 1990 P400,000.00 rental for May 1,
1990 to May 1, 1991;

c) March 1, 1991 P440,000.00 rental of May 1,
1991 to May 1, 1992;

d) March 1, 1992 P484,000.00 rental of May 1,
1992 to May 1, 1993;

e) March 1, 1993 P532,400.00 rental of May 1,
1994;

The Lessees shall in addition to the cash rental
referred to the above, pay to the Lessor Seven
Thousand (7,000) cavans of salt measured at
four (4) tin cans, size of four gallons of 16 liters
per can, per cavan yearly, starting the year 1990
up to and including the year 1994. The Lessees
shall deliver the aforesaid salt to the Lessor from
the time the Lessees commences to harvest
salt, provided that the 7,000 cavans should
already be delivered to the Lessor by the end of
the harvest season in May of a particular
year. In the event that the Lessees cannot or
fail to deliver the 7,000 cavans of salt in full or in
part, the Lessees are obliged to pay whatever
difference in cash at the prevailing market value
at the end of harvest in May of a particular year;

7. That the personal character and integrity of the Lessees
and the nature of the occupancy of the leased property
as above restricted are special considerations and
inducements for granting this lease by the Lessor;
consequently, the Lessees shall not sub-let the property,
nor allow any person, firm or corporation to occupy the
same in whole or in part, nor shall the Lessees assign in
whole or in part any of their right under this Contract and
no right or interest thereto or therein shall be conferred
on or vested in anyone by the Lessees, either by
operation of law or otherwise;

8. Failure on the part of the Lessees to pay within its
stipulated due period or failure to observe any of the
conditions of this Agreement, shall entitle the Lessor to
terminate this Agreement immediately and to forefeit the
deposit of One Hundred Thousand Pesos (P100,000.00)
and demand that the Lessees vacate the leased
property;

9. In the event that the Lessees shall elect to terminate this
Agreement before its expiration, the One Hundred
Thousand Pesos (P100,000.00) deposit will be forfeited
in favor of theLessorr;

10. The Lessees shall at their own expense, improve and
develop the aforesaid fishponds and to keep up and
maintain in good repair and condition all fences,
dikes, saltbeds and other improvements existing thereon
by (a) raising and keeping the elevation of the pilapil
inside the fishpond to 1 1/2 meters high and 2 meters
height to the pilapil constituting the boundary of the
fishponds and those fronting the river and a width of 2
meters for all the pilapil; (b) to repair all the
331 saltbeds with tisa and wooden
division saltbeds; (c) to clean and clear the whole area
of the leased premises by removing all the bushes,
weeds and cogons, provided, moreover, that the
Lessees are obliged to maintain throughout the
effectivity of this Lease, the said elevation and
cleanliness of the leased premises. The Lessees shall
make improvements not less than 25% every year and
thereafter for the duration of this contract. That all the
improvements and development made by the Lessees
shall after the expiration of this Lease belong to
the Lessor.

In the event that the Lessees shall fail and/or refuse to
make the aforesaid improvements and/or clean the
leased premises as herein provided, the Lessor shall
have the right to cancel and terminate this Agreement
without prejudice to the right of the Lessor or itself make
the required improvements, and cleaning and utilizing for
said purpose, the deposit of P100,000.00 in which event,
the Lessor is obliged to notify the Lessees of said use,
and the amount so used within
fifteen (15) days from said notice, the Lessees shall be
obliged to replenish the said amount of deposit
of P100,000.00. Failure of the Lessees to replenish the
said amount shall entitle the Lessor to cancel or
terminate this Agreement;

11. Except as heretofore stipulated on, the Lessees are
prohibited from using the property or portion thereof for
any other purpose except as fishpond or saltbeds and
from subleasing the property herein lease, or any other
portion thereof, or from assigning their rights under this
Contract of Lease, or mortgaging or otherwise
encumbering the same, without the express written
consent of the Lessor;

12. That the Contract of Lease between the Lessor and the
Lessees is entirely a civil lease of a fishpond and not in
any manner to be construed or misunderstood to be
agrarian in nature and extent. Labor disputes and
wages regarding hired workers or laborers of the
Lessees in the operation and maintenance of the Lease,
shall not be the responsibility of the Lessor, including
any claim pertaining to labor problems but the Lessees
will be held solely liable for the settlement and/or
payment of the wages and claims;

13. The Lessor shall be solely liable for the payment of only
the realty taxes on the leased premises while the
Lessees shall answer and be liable for the payment of
the fees for business licenses and permits and other
business taxes be due to the government from the
operation of fishponds and saltbeds;

14. The Lessor, through its authorized representative, is
entitled to make an inspection of the leased premises at
any time during the day time;

15. In the event, the Lessees cancel or terminate this
Contract of Lease on their own volition prior to May 1,
1994, they are not entitled to any refund of any rentals
already paid by them to the Lessor, as well as to the
deposit;

16. Upon the termination, expiration or cancellation of this
Contract of Lease, the Lessor shall automatically take
possession of the leased premises and the Lessees
shall, without need of any demand and without any need
of court action, vacate the premises and surrender
possession thereof to the Lessor, including the
improvements shall appertaining complete ownership to
the Lessor, upon the introduction of the said
improvements;

17. In the event that the Lessees violated and/or fail to
refuse to abide by and comply with the terms and
conditions of this Agreement or failure to pay within
its stipulated due period, the deposit of the Lessees in
the amount of P100,000.00 shall be forfeited in favor of
the Lessor and the latter shall have the right to cancel
and terminate this Contract immediately and to secure
from the Court a writ of execution or other order for the
enforcement of the terms hereof against the Lessees, all
expenses including sheriffs fees, incurred by
the Lessor for securing said writ or/and for enforcing the
same as well as liquidated damages shall be borne
solely by the Lessees;

18. That in the event the Lessees fail to vacate or leave the
leased premises voluntarily after the termination of the
leased contract, notwithstanding demands made on
them by the Lessor, and insist and ignore the demands,
the Lessees shall pay the Lessor jointly and severally
unrealized income and profit in point of unpaid rentals for
overstaying in the leased premises without any legal
right or interest whatsoever, in the amount of the
reasonable use and benefit of the leased premises to be
computed by the Lessor, based on double the rentals of
the last year of Contract of Lease plus legal interest, until
the Lessees vacate the leased premises;

19. That if the said property is not surrendered to
the Lessor in the manner provided for in this Contract,
the Lessees shall be responsible to the Lessor for all
damages which the Lessor may suffer by reason thereof
and shall indemnify the Lessor against any and all
claims made by the succeeding tenants against
the Lessor, resulting from delay by the Lessor in
delivering possession of the property;

20. In case of the default of the Lessees in their obligations
under this Contract of Lease, the Lessees agrees to pay
the sum equivalent of 25% of the amount due from them
as liquidated damages as attorneys fee aside from court
costs, should the Lessor be constrained to resort to court
from the enforcement of its rights under the Contract;

21. In case the Philippine Pesos is officially devalued, all
payments to be made by the Lessees to the Lessor after
such devaluation shall be made in amounts properly
readjusted and proportionately increased in accordance
with or on the basis of the official value of the peso at the
time of the execution of this lease contract;

22. The Lessees hereby agree that any question which may
arise between the Lessor and the Lessees by reason of
this document and which has to be submitted for
decision to the court of justice, may at the option of
the Lessor be brought before the court of competent
jurisdiction in the City of Manila, waiving for this purpose
other proper venue;



23. The Lessees shall jointly and severally be liable for any
liability or liabilities pertaining to the Lessor concerning
the relationship and its stipulations entered into in this
Contract of Lease;

24. This Contract of Lease cancelled and superseded, the
Contract of Lease signed by the Lessor and Mr. David
Jimenez on May 20, 1985 and notarized by Francisco
Agustin for and in behalf of the City of Manila and
appearing in the notarial register as Document No. 431,
Page No. 45, Book No. XII, Series of 1985;

25. The parties herein hereby attest and confirm that the
terms and conditions of the Contract of Lease and the
effect thereof have been explained to them to their
satisfaction and that they fully understand the same.

IN WITNESS WHEREOF, the parties have hereunto affixed their
signatures this 28th day of April, 1989 at the City of Manila, Philippines.

PAG-ASA FISHPOND
CORPORATION Sgd.
Lessor NOEL HILARIO Lessee

By:
Sgd. Sgd.
MR. SEGUNDO SEANGIO-President DAVID JIMENEZ-Lessee

W I T N E S S E S S

Sgd. Sgd.

A C K N O W L E D G M E N T

REPUBLIC OF THE PHILIPPINES) S.S.
CITY OF MANILA )

BEFORE ME, a Notary Public for and in the City of Manila,
Philippines, personally appeared the following persons with their
respective Residence Certificates, to wit:

SEGUNDO SEANGIO A-4328120 Manila, January 3,
1989
DAVID JIMENEZ A-03704324 Bulacan, Obando
February 17, 1989
NOEL HILARIO A-
11107684 Lawa, Obando, Bulacan
May 5, 1989

known to me and to me known to be the same persons who executed
the aforegoing instrument and have acknowledged before me that the
same is their free and voluntary act and deed.

This document consists of eight (8) pages, signed by the parties
and their instrumental witnesses on every page refers to a Contract of
Lease that Real Property situated at Sto. Rosario, Masinloc,Zambales.




WITNESS MY HAND AND SEAL THIS 9TH DAY OF MAY, 1989.

ROBERTO M. MENDOZA
Notary Public
Until December 31, 1989
PTR No. 52454710
TAN 4784-113-M
Doc. No. 422
Page No. 86
Book No. XIX
Series of 1989.
[3]


It is an important sense of the agreement that the fishpond will be managed by
the two lessees jointly. Jimenez was charged with the management of a 40-hectare
portion of the fishpond, situated at Sitio Simelyahan, Barangay Sto. Rosario, and
in Sitios Mapait and Elman, Barangay Bamban, all in
the Municipality of Masinloc, Zambales. The remaining portions of petitioners
landholding were to be managed by Hilario.

In the meantime, the Philippine Congress enacted Republic Act (R.A.) No. 6657,
the Comprehensive Agrarian Reform Law (CARL).
[4]
The social legislation was 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 farm workers, to receive a just
share of the fruits thereof. It aimed to undertake the just distribution of all agricultural
lands, having taken into account ecological, developmental, and equity considerations,
and subject to the payment of just compensation.
[5]


On September 26, 1989, petitioner, through its president Segundo Seangio,
applied for exemption from the coverage of the agrarian reform program.
[6]
The request
was reiterated via a letter dated October 17, 1989, addressed to Justice Milagros A.
German, Senior Special Consultant and Adviser in Legal Affairs, Department of
Agrarian Reform (DAR).
[7]


On November 10, 1989, the DAR, speaking through Justice German, acted
favorably on petitioners application for exemption. Consequently, the DAR advised the
Municipal Agrarian Reform Officer (MARO) of Masinloc to observe the status quo and
defer the inclusion of petitioners fishpond in the compulsory acquisition program.

Sometime in 1990, Jimenez hired respondents, namely: Bernardo Jimenez,
Robert Belenbough, Leonard Mijares, Eduardo Jimenez, Jose Cruz, Elizalde Edquibal,
Dominador Elgincolin and Geronimo Darilag, to work as farmworkers in the
fishpond.
[8]
As farmworkers, respondents each received a monthly allowance
of P1,500.00 from David Jimenez, as well as 50% of the fishponds net proceeds from
the total fish harvests, which they divided equally among themselves.
[9]


In April 1994, they were required by David Jimenez to vacate the fishpond on or
before May 1, 1994. The demand to vacate was made due to the impending expiration
of Jimenezs civil law lease over the property with petitioner.
[10]


Respondents were not agreeable to the demand to vacate. Accordingly, on April
25, 1994, they filed a complaint directly against petitioner for maintenance of
possession before the Provincial Agrarian Reform Adjudication Board (PARAD) in Iba,
Zambales.
[11]
In their complaint, they contended, inter alia, that they are entitled to
security of tenure; and that the fishpond is covered by the Comprehensive Agrarian
Reform Program (CARP) under R.A. No. 6657.

They prayed that the entire fishpond of petitioner be placed under the coverage
of the CARP; that they be considered as farmer beneficiaries who are entitled to be
awarded the fishpond; and that they be allowed to remain in possession of the
fishpond.
[12]


In its Answer, petitioner averred that its lessees over the fishpond were only
David Jimenez and one Noel Hilario and that its lease agreement with said lessees was
not agrarian but civil in nature. It also posited that the fishpond, being a commercial
one, is not yet subject to compulsory acquisition under the CARP pursuant to Section
11 of R.A. No. 6657.
[13]
Petitioner alleged that respondents entry into and occupation of
the fishpond, as well as their enjoyment of the fish produced, was without its knowledge
and consent.
[14]


On July 18, 1994, the PARAD ruled in favor of petitioner (defendant) and against
respondents (plaintiffs), dismissing the complaint for lack of merit. The fallo of the
PARADs decision reads:

WHEREFORE, this Forum is constrained to rule out plaintiffs
allegation as a regular farmworker pursuant to R.A. 6657 and/or tenants of
herein defendant and to deny prayer for placing the landholding of the
defendant under CARP coverage which is purely administrative and only
cognizable by the Department of Agrarian Reform, as there are no
concrete evidence. Thus, a judgment is hereby rendered DISMISSING
plaintiffs complaint for lack of merit.

SO DECIDED.
[15]


The PARAD ruled that respondents are not agricultural leasehold tenants who
may be entitled to security of tenure. According to the PARAD, petitioner, as
landowner, did not consent to the hiring of respondents, as farmworkers, by its civil law
lessee, David Jimenez. The PARAD declared:


The original lessees in the Contract of Lease (Annex A) with the
lessor-defendant are David Jimenez and Noel Hilario, who are both
residents of Obando, Bulacan. The said contract expired onMay 01,
1994. Paragraph 7 of the contract of lease provides that, consequently,
the lessees shall not sublet the property, nor allow any person, firm or
corporation to occupy the same in whole or in part nor shall the lessees
assign in whole or in part any of their right under this Contract and no right
or interest thereto or therein shall be conferred or vested in anyone by the
lessees either by operation of law or otherwise. The provision was totally
violated by the lessee David Jimenez when the plaintiff(s) were admittedly
hired as farmworkers. The plaintiffs consist of David Jimenez sons
Bernardo and Eduardo Jimenez, his son-in-law Leonard Mijares and
Robert Belenbough, Jose Cruz, Elizalde Edquibal, Dominador Elgincolin
and Geronimo Darilag. Noticeable from the evidence submitted that all
the plaintiffs are not residents of Zambales where the subject landholding
are situated.

Consequently, because of the violation of the contract, the
plaintiffs are not even recognized by the defendant. Plaintiffs allegation to
be (sic) tenant necessarily failed and has no leg to stand. (sic). Plainly,
consent of a landowner which is an essential element of tenancy is not
attendant.
[16]


On appeal to the DARAB, the PARADs decision was reversed and set
aside. The dispositive part of the DARAB decision reads:

WHEREFORE, premises considered and finding reversible errors,
(sic) committed by the Adjudicator a quo, the assailed decision is hereby
REVERSED and a new judgment is rendered directing the PAG-ASA
Fishpond Corporation, Incorporated (sic) through its President and
Officers, to respect the peaceful possession, cultivation and enjoyment of
the subject landholding by the petitioners-appellants who are the tenants
thereof.

SO ORDERED.
[17]


The DARAB ruled that respondents are agricultural leasehold tenants of the
subject property who deserve the protective mantle of the law despite the fact that only
the civil law lessee installed them as such. It ratiocinated:

x x x plaintiffs-appellants are, by operation of law, tenant-farmers
of the subject landholding, notwithstanding that it was a civil law lessee,
who installed them therein. When all the elements the (sic) tenancy
relation are present, then the protective mantle of the security of tenure as
guaranteed by the 1987 Charter shall be available to them. x x x

x x x x

Verily, Sections 6 and 7 of Republic Act (RA) No. 3844 explicit (sic)
provides, thus:

Section 6. Parties to Agricultural Leasehold Relation.
The agricultural leasehold relation shall be limited to the
person who furnished the landholding, either as owner, civil
law lessee, usufructuary, or legal possessor and the person
who personally cultivates the same.

and

Section 7. Tenure of Agricultural Leasehold Relation.
The Agricultural leasehold relation once established shall
confer upon the agricultural lessee the right to continue
working on the landholding until such leasehold relation is
extinguished, the agricultural lessee shall be entitled to
security of tenure on his landholding and cannot be ejected
therefrom unless authorized by the Court for causes herein
provided.
[18]


When petitioners motion for reconsideration was denied
[19]
by the DARAB
on January 17, 2001, they appealed to the CA via petition for review under Rule 43 of
the 1997 Rules of Civil Procedure.

Petitioner insisted that respondents were not tenants on the property. It argued
anew that it was not a party to any tenancy relationship with anyone vis--vis the
subject property; and that it had not received any share in the fishponds harvests from
respondents.

CA Disposition

In a Decision dated March 30, 2004, the CA affirmed the DARAB decision,
disposing as follows:

Once a tenancy relationship is established, therefore, the tenant is
entitled to security of tenure and cannot be ejected unless upon judicial
authority for causes provided by law. The reliance of the petitioner
on Sanchez v. Court of Appeals, supra, is, consequently misplaced, since
that doctrine was applicable only to the hired laborers of a civil law lessee,
not to bona fide share or leasehold tenants like the respondents.

WHEREFORE, the appealed decision is AFFIRMED.

SO ORDERED.
[20]


The CA opined that although petitioner was not privy to a tenancy relationship
with respondents, its civil law lessee, David Jimenez, made respondents the agricultural
leasehold tenants in the property. The CA concluded that David Jimenez, being the
legal possessor of the fishpond as defined under Section 42 of R.A. No. 1199, has the
authority to hire agricultural leasehold tenants and to bring about agricultural leasehold
relations. This relation, according to the appellate court, is binding upon the landowner,
petitioner, which effectively became obliged to respect the rights of the tenants. Among
said rights is the right to security of tenure.

The CA pointed out:

Finally, although the petitioner is correct in positing that the lease
was one under the civil law, rather than an agricultural lease, the
expiration of the lease did not negate the right of the respondents to
security of tenure as the bona fide tenants.

According to Sec. 8, Republic Act No. 3844, otherwise known as
The Agricultural Land Reform Code, a leasehold relation, once
established, can be terminated on the following grounds, to wit:

1. Abandonment of the landholding without the knowledge
of the agricultural lessor;

2. Voluntary surrender of the landholding by the
agricultural lessee, written notice of which shall be
served 3 months in advance; or

3. Absence of an heir to succeed the lessee in the event of
his/her death of permanent incapacity.

Aggrieved, petitioners moved for reconsideration. The motion was, however,
denied by the appellate court via Resolution
[21]
dated August 5, 2004. Hence, the
present recourse under Rule 45.


Issues

Petitioner now contends that:

I
THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE
HONORABLE COURTS RULING IN THE RECENT CASE
OF VALENCIA VS. COURT OF APPEALS, ET AL., 401 SCRA 666,
WHICH APPLIES SQUARELY TO THE FACTS IN THE INSTANT CASE,
THAT SECTION 6 OF REPUBLIC ACT NO. 3844, AS AMENDED, DOES
NOT AUTOMATICALLY AUTHORIZE A CIVIL LAW LESSEE TO
EMPLOY A TENANT WITHOUT THE CONSENT OF THE
LANDOWNER. ACCORDINGLY, AFTER THE EXPIRATION OF THE
CIVIL LAW LEASE, PETITIONER WAS NOT BOUND BY THE ALLEGED
TENANCY RELATIONSHIP BETWEEN RESPONDENTS AND THE CIVIL
LAW LESSEE WHICH WAS ENTERED INTO WITHOUT ITS CONSENT.

II
THE COURT OF APPEALS GRAVELY ERRED IN CONCLUDING THAT
RESPONDENTS ARE SHARE TENANTS WHO ARE ENTITLED TO
SECURITY OF TENURE.

III
THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE
RULING OF THE HONORABLE COURT IN THE CASE OF SANCHEZ
VS. COURT OF APPEALS, 129 SCRA 717 TO THE INSTANT CASE.
[22]


Our Ruling

Before We begin to consider the issues hoisted by petitioner, the Court takes
cognizance of a pivotal question of jurisdiction. We resolve this issue motu proprio,
even if it was not raised by the parties nor threshed out in their pleadings.
[23]


The jurisdiction of the PARAD, DARAB and the CA on appeal, is limited to
agrarian disputes or controversies and other matters or incidents involving the
implementation of the CARP under R.A. No. 6657, R.A. No. 3844 and other agrarian
laws.
[24]
An agrarian dispute is defined as any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands
devoted to agriculture, including disputes concerning farm workers associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking to
arrange terms or conditions of such tenurial arrangements.
[25]


As early as February 20, 1995, private lands actually, directly and exclusively
used for prawn farms and fishponds were exempted from the coverage of the CARL by
virtue of R.A. No. 7881.
[26]
Section 2 of the said law expressly provides:

Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to
read as follows:

Sec. 10. Exemptions and Exclusions.

a) Lands actually, directly and exclusively used
for parks, wildlife, forest reserves, reforestation, fish
sanctuaries and breeding grounds, watersheds and
mangroves shall be exempt from the coverage of this Act.

b) Private lands actually, directly and exclusively
used for prawn farms and fishponds shall be exempt from
the coverage of this Act: Provided, That said prawn farms
and fishponds have not been distributed and Certificate of
Land Ownership Award (CLOA) issued to agrarian reform
beneficiaries under the Comprehensive Agrarian Reform
Program.

In cases where the fishponds or prawn farms have
been subjected to the Comprehensive Agrarian Reform Law,
by voluntary offer to sell, or commercial farms deferment or
notices of compulsory acquisition, a simple and absolute
majority of the actual regular workers or tenants must
consent to the exemption within one (1) year from the
effectivity of this Act. When the workers or tenants do not
agree to this exemption, the fishponds or prawn farms shall
be distributed collectively to the worker-beneficiaries or
tenants who shall form a cooperative or association to
manage the same.

In cases where the fishponds or prawn farms have
not been subjected to the Comprehensive Agrarian Reform
Law, the consent of the farm workers shall no longer be
necessary, however, the provision of Section 32-A hereof on
incentives shall apply.
c) Lands actually, directly and exclusively used
and found to be necessary for national defense, school sites
and campuses, including experimental farm stations
operated by public or private schools for educational
purposes, seeds and seedling research and pilot production
center, church sites and convents appurtenant thereto,
mosque sites and Islamic centers appurtenant thereto,
communal burial grounds and cemeteries, penal colonies
and penal farms actually worked by the inmates, government
and private research and quarantine centers and all lands
with eighteen percent (18%) slope and over, except those
already developed, shall be exempt from the coverage of
this Act.

Admittedly, there is no express repeal of R.A. No. 3844 as a whole. Its provisions
that are not inconsistent with R.A. No. 6657 may still be
given suppletory effect. Nonetheless, there is now irreconcilable inconsistency or
repugnancy between the two laws as regards the treatment of fishponds and prawn
farms. Such repugnancy leads to the conclusion that the provisions of R.A. No. 6657
supersede the provisions of R.A. No. 3844 insofar as fishponds and prawn farms are
concerned. In any event, Section 76 of R.A. No. 6657, as amended, provides that all
other laws, decrees, issuances, or parts thereof inconsistent thereto are repealed or
amended accordingly.
[27]


Verily, the DARAB finding of agricultural leasehold tenancy relations between
petitioners civil law lessee David Jimenez and respondents have no basis in law. The
rule is well-entrenched in this jurisdiction that for tenancy relations to exist, the following
requisites must concur: (a) the parties are the landholder and the tenant; (b) the subject
is agricultural land; (c) there is consent; (d) the purpose is agricultural production; and
(e) there is consideration.
[28]



The absence of one element makes an occupant of a parcel of land, or a
cultivator thereof, or a planter thereon outside the scope of the CARL. Nor can such
occupant, cultivator or planter be classified as a de jure agricultural tenant for purposes
of agrarian reform law. And unless a person has established 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 agrarian reform laws.
[29]


In the case under review, the subject fishpond is not an agricultural land subject
to compulsory CARP coverage. Neither was there a sharing of the harvests between
petitioner and respondents. That respondents shared the harvests of the fishpond only
with the civil law lessee David Jimenez is uncontroverted. Evidently, there is no
agrarian tenancy relationship between petitioner and respondents.

This is not a case of first impression. The Court has had occasion to affirm the
exemption of fishponds from the coverage of the CARP in Atlas Fertilizer Corp. v.
Secretary, Department of Agrarian Reform
[30]
and in Romero v. Tan.
[31]
In Romero, the
Court scored the PARAD for taking cognizance of a complaint for maintenance of
peaceful possession over a fishpond filed by a tenant-lessee. The Court held then:

On the jurisdictional issue, we find that it was reversible error for the
PARAB to have taken cognizance of petitioners complaint. The
jurisdiction of the PARAB in this case is limited to agrarian disputes or
controversies and other matters or incidents involving the implementation
of the Comprehensive Agrarian Reform Program (CARP) under Rep. Act
No. 6657, Rep. Act No. 3844 and other agrarian laws. An agrarian
dispute is defined as any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, over lands devoted
to agriculture, including disputes concerning farm workers associations or
representation of persons in negotiating, fixing, maintaining, changing or
seeking to arrange terms or conditions of such tenurial arrangements.

Although Section 166(1) of Rep. Act No. 3844 had included
fishponds in its definition of agricultural land within its coverage, this
definition must be considered modified in the light of Sec. 2 of Rep. Act
No. 7881, which amended Section 10 of Rep. Act No. 6657; otherwise
known as the Comprehensive Agrarian Reform Law (CARL). Expressly,
the amendment has excluded private lands actually, directly and
exclusively used for prawn farms and fishponds from the coverage of the
CARL. In fact, under Section 3(c) of R.A. No. 6657, as amended, defines
an agricultural land as that which is devoted to agricultural activity and not
otherwise classified as mineral, forest, residential, commercial or industrial
land. In turn, Section 3(b) thereof defines agricultural activity as the
cultivation of the soil, planting of crops, growing of fruit trees, including the
harvesting of such farm products, and other farm activities, and practices
performed by a farmer in conjunction with such farming operations done
by persons whether natural or juridical. Clearly, by virtue of the
amendments to the CARL, the operation of a fishpond is no longer
considered an agricultural activity, and a parcel of land devoted to
fishpond operation is not agricultural land as therein defined.
[32]


It may well be argued that respondents have acquired a vested right to security of
tenure arising from the alleged existing tenancy relations. The complaint before the
PARAD was filed on April 14, 1994, way before the passage and effectivity of R.A. No.
7881 on February 20, 1995. However, a claim to any vested right has no leg to stand
on. Section 2(b) of R.A. No. 7881
[33]
now contains a proviso, precisely to protect vested
rights of those who have already been issued a Certificate of Land Ownership Award
(CLOA). Without such CLOA, no vested right can accrue to persons claiming it. Here,
the record is bereft of any proof that respondents were issued individual certificates to
evidence the award of the property in their favor.

Even assuming, ex gratia argumenti, that the PARAD, DARAB and the CA had
jurisdiction, the complaint for maintenance of peaceful possession lodged by
respondents still fails for triple reasons.


First. Intent is material in tenancy relations.

The DARAB and the CA anchored its finding of tenancy relations on the legal
possession of David Jimenez, the civil law lessee, over the subject property. According
to them, as the legal possessor, Jimenezs installation of respondents as tenants binds
petitioner.

The rule is well-entrenched in this jurisdiction that tenancy is not a purely
factual relationship, it is also a legal relationship.
[34]
The intent of the parties, the
understanding when the tenant is installed, their written agreements, provided they are
not contrary to law, are crucial.

In Valencia v. Court of Appeals,
[35]
the Court voided the CA finding of tenancy
relations between the landowner and the tenants of the civil law lessee for lack of
intent. The Court held in Valencia:

The substantive issue to be resolved may be expressed in this
manner: Can a contract of civil law lease prohibit a civil law lessee from
employing a tenant on the land subject matter of the lease
agreement? Otherwise stated, can petitioners civil law lessee, Fr. Flores,
install tenants on the subject premises without express authority to do so
under Art. 1649 of the Civil Code, more so when the lessee is expressly
prohibited from doing so, as in the instant case?

Contrary to the impression of private respondents, Sec. 6 of R.A.
No. 3844, as amended, does not automatically authorize a civil law lessee
to employ a tenant without the consent of the landowner. The lessee must
be so specifically authorized. For the right to hire a tenant is basically
a personal right of a landowner, except as may be provided by law. But
certainly nowhere in Sec. 6 does it say that a civil law lessee of a
landholding is automatically authorized to install a tenant thereon. A
different interpretation would create a perverse and absurd situation where
a person who wants to be a tenant, and taking advantage of this perceived
ambiguity in the law, asks a third person to become a civil law lessee of
the landowner. Incredibly, this tenant would technically have a better right
over the property than the landowner himself. This tenant would then gain
security of tenure, and eventually become owner of the land by operation
of law. This is most unfair to the hapless and unsuspecting landowner
who entered into a civil law lease agreement in good faith only to realize
later on that he can no longer regain possession of his property due to the
installation of a tenant by the civil law lessee.

On the other hand, under the express provision of Art. 1649 of the
Civil Code, the lessee cannot assign the lease without the consent of
the lessor, unless there is a stipulation to the contrary. In the case before
us, not only is there no stipulation to the contrary; the lessee is expressly
prohibited from subleasing or encumbering the land, which includes
installing a leasehold tenant thereon since the right to do so is an attribute
of ownership. Plainly stated therefore, a contract of civil law lease can
prohibit a civil law lessee from employing a tenant on the land subject
matter of the lease agreement. x x x
[36]


Here, petitioner never intended to install respondents as tenants. As in Valencia,
the contract of lease petitioner executed with David Jimenez expressly prohibits the
lessees to sublet the property, nor allow any person, firm or corporation to occupy the
same in whole or in part, nor shall the lessee assign in whole or in part any of their right
under this contract.
[37]
It is elementary that possession can be limited by express
agreement of the parties.
[38]
In the case before Us, the lessees were expressly
prohibited from subleasing or encumbering the land in any manner. Of course, this
includes the installation of tenants on the subject property.

The Court notes that in Joya v. Pareja
[39]
and again in Ponce
v. Guevarra,
[40]
agricultural leasehold tenancy relations were affirmed despite a similar
prohibition in the lease agreement. However, in the said cases, the landowners were
deemed to have consented to, and ratified the, installation of the tenants. The
landowners there extended the terms of the lease and negotiated for better terms with
the tenants themselves. They were thus held in estoppel and the tenants
considered de jure occupants.

In the case under review, the record is bereft of any indication that petitioner
dealt with respondents in the same manner. As adverted to earlier, petitioners were
consistent that they contracted only with their civil law lessees. They were not privy to
the transactions entered into by its lessee with respondents.

Second. A stream cannot rise higher than its source. The civil law lessee, David
Jimenez, was not authorized to enter into a tenancy relationship with respondents.

The DARAB and the CA ruled that Section 6 of R.A. No. 3844 authorizes a legal
possessor, such as David Jimenez, to employ a tenant even without the consent of the
landowner.

Again, they are mistaken. The Court, in Valencia, traced the origin and outlined
the rationale of the polemical provision. Said the Court:

When Sec. 6 provides that the agricultural leasehold relations shall
be limited to the person who furnishes the landholding, either as owner,
civil law lessee, usufructuary, or legal possessor, and the person who
personally cultivates the same, it assumes that there is already an existing
agricultural leasehold relation, i.e., a tenant or agricultural lessee already
works the land. The epigraph of Sec. 6 merely states who are Parties to
Agricultural Leasehold Relations, which assumes that there is already a
leasehold tenant on the land; not until then. This is precisely what we are
still asked to determine in the instant proceedings.

To better understand Sec.6, let us refer to its precursor, Sec. 8 of
R.A. No. 1199, as amended. Again, Sec. 8 of R.A. No. 1199 assumes the
existence of a tenancy relation. As its epigraph suggests, it is a
Limitation of Relation, and the purpose is merely to limit the tenancy to
the person who furnishes the land, either as owner, lessee, usufructuary,
or legal possessor, and to the person who actually works the land himself
with the aid of labor available from within his immediate farm
household. Once the tenancy relation is established, the parties to that
relation are limited to the persons therein stated. Obviously, inherent in
the right of landholders to install a tenant is their authority to do so;
otherwise, without such authority, civil law lessees as landholders cannot
install a tenant on the landholding. Neither Sec. 6 of R.A. No. 3844 nor
Sec. 8 of R.A. No. 1199 automatically authorizes the persons named
therein to employ a tenant on the landholding.

According to Mr. Justice Guillermo S. Santos and CAR Executive
Judge Artemio C. Macalino, respected authorities on agrarian reform, the
reason for Sec. 6 of R.A. No. 3844 and Sec. 8 of R.A No. 1199 in limiting
the relationship to the lessee and the lessor is to discourage absenteeism
on the part of the lessor and the custom of co-tenancy under which the
tenant (lessee) employs another to do the farm work for him, although it is
he with whom the landholder (lessor) deals directly. Thus, under this
practice, the one who actually works the land gets the short end of the
bargain, for the nominal or capitalist lessee hugs for himself a major
portion of the harvest. This breeds exploitation, discontent and confusion
x x x. The kasugpong, kasapi, or katulong also works at the pleasure of
the nominal tenant. When the new law, therefore, limited tenancy relation
to the landholder and the person who actually works the land himself with
the aid of labor available from within his immediate farm household, it
eliminated the nominal tenant or middleman from the picture.

Another noted authority on land return,
Dean Jeremias U. Montemayor, explains the rationale for Sec. 8 of R.A.
No. 1199, the precursor of Sec. 6 of R.A. No. 3844:

Since the law establishes a special relationship in
tenancy with important consequences, it properly pinpoints
the persons to whom said relationship shall apply. The spirit
of the law is to prevent both landholder absenteeism and
tenant absenteeism. Thus, it would seem that the
discretionary powers and important duties of the landholder,
like the choice of crop or seed, cannot be left to the will or
capacity of an agent or overseer, just as the cultivation of the
land cannot be entrusted by the tenant to some other
people. Tenancy relationship has been held to be of a
personal character.

Section 6 as already stated simply enumerates who are the parties
to an existing contract of agricultural tenancy, which presupposes that a
tenancy already exists. It does not state that those who furnish the
landholding, i.e., either as owner, civil law lessee, usufructuary, or legal
possessor, are automatically authorized to employ a tenant on the
landholding. The reason is obvious. The civil lease agreement may be
restrictive. Even the owner himself may not be free to install a tenant, as
when his ownership or possession is encumbered or is subject to a lien or
condition that he should not employ a tenant thereon. This contemplates
a situation where the property may be intended for some other specific
purpose allowed by law, such as, its conversion into an industrial estate or
a residential subdivision.

x x x x

From the foregoing discussion, it is reasonable to conclude that a
civil law lessee cannot automatically institute tenants on the property
under Sec. 6 of R.A. No. 3844. The correct view that must necessarily be
adopted is that the civil law lessee, although a legal possessor, may not
install tenants on the property unless expressly authorized by
the lessor. And if a prohibition exists or is stipulated in the contract of
lease the occupants of the property are merely civil law sublessees whose
rights terminate upon the expiration of the civil law lease agreement.
[41]


Evidently, securing the consent of the landowner is a condition sine qua non for
the installation of tenants. Here, petitioners consent was not obtained prior to the
engagement of respondents by the civil law lessee, David Jimenez. Worse, the lease
agreement expressly prohibited the assignment of the lease to third persons. Verily,
respondents can acquire no better right than their predecessor-in-interest, David
Jimenez.

Third. The compulsory acquisition of petitioners landholding pursuant to the
agrarian reform program was held in abeyance pending evaluation by its application for
exemption.

The records unveil that on September 26, 1989, petitioner applied for exemption
from the coverage of the agrarian reform program.
[42]
On November 10, 1989, the DAR,
speaking through Justice Milagros A. German, Senior Special Consultant and Adviser in
Legal Affairs,
[43]
acted favorably on petitioners application for exemption. Along this
line, the MARO of Masinloc, Zambales, was advised to observe the status quo and
defer the inclusion of petitioners fishpond in the compulsory acquisition program.

In sum, respondents claim of security of tenure founded on their installation as
tenants of petitioners civil law lessee is without basis in law. Procedurally, fishponds
and prawn farms were expressly exempted from the coverage of the agrarian reform
program. Substantially, the civil law lessee was not authorized to enter into leasehold-
tenancy relations.

WHEREFORE, the appealed Decision is REVERSED AND SET ASIDE. A new
one is entered DISMISSING the complaint for maintenance of peaceful possession and
inclusion for compulsory CARP coverage of petitioners landholding for lack of
jurisdiction and lack of merit.



G.R. No. 133507 February 17, 2000
EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, petitioners,
vs.
THE HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA,
ROGELIO MACATULAD and MANUEL UMALI, respondents.
DE LEON, JR., J .:
Before us is a petition for review on certiorari of the Decision
1
of the Court of
Appeals
2
dated January 28, 1998 which denied the application of petitioner heirs of
Eudosia Daez for the retention of a 4.1685-hectare riceland pursuant to Republic Act
(R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law
3
,
thereby reversing the Decision
4
of then Executive Secretary Ruben D. Torres and the
Order
5
of then Deputy Executive Secretary Renato C. Corona, both of which had earlier
set aside the Resolution
6
and Order
7
of then Department of Agrarian Reform (DAR)
Secretary Ernesto D. Garilao denying exemption of the same riceland from coverage
under Presidential Decree (P.D.) No. 27.
The pertinent facts are:
Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay
Lawa, Meycauayan, Bulacan which was being cultivated by respondents Macario
Soriente, Rogelio Macatulad, Apolonio Mediana and Manuel Umali under a system of
share-tenancy. The said land was subjected to the Operation Land Transfer (OLT)
Program under Presidential Decree (P.D.) No. 27
8
as amended by Letter of Instruction
(LOI) No. 474
9
. Thus, the then Ministry of Agrarian Reform acquired the subject land
and issued Certificates of Land Transfer (CLT) on December 9, 1980 to private
respondents as beneficiaries.
However, on May 31, 1981, private respondents signed an affidavit, allegedly under
duress, stating that they are not share tenants but hired laborers
10
. Armed with such
document, Eudosia Daez applied for the exemption of said riceland from coverage of
P.D. No. 27 due to non-tenancy as well as for the cancellation of the CLTs issued to
private respondents.1wphi1.nt
In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared
ownership over 41.8064 hectares of agricultural lands located in Meycauayan, Bulacan
and fourteen (14) hectares of riceland, sixteen (16) hectares of forestland, ten (10)
hectares of "batuhan" and 1.8064 hectares of residential lands
11
in Penaranda, Nueva
Ecija. Included in their 41.8064-hectare landholding in Bulacan, was the subject 4,1685-
hectare riceland in Meycauayan.
On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying
Eudosia Daez's application for exemption upon finding that her subject land is covered
under LOI No. 474, petitioner being owner of the aforesaid agricultural lands exceeding
seven (7) hectares
12
.
On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong
requesting for reconsideration of Undersecretary Medina's order. But on January 16,
1992
13
Secretary Leong affirmed the assailed order upon finding private respondents to
be bonafide tenants of the subject land. Secretary Leong disregarded private
respondents' May 31, 1981 affidavit for having been executed under duress because he
found that Eudosia's son, Adriano, who was then the incumbent Vice-Mayor of
Meycauayan, pressured private respondents into signing the same.
Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of
Appeals via a petition forcertiorari. The Court of Appeals, however, sustained the order
of Secretary Leong in a decision dated April 29, 1992. Eudosia pursued her petition
before this court but we denied it in a minute resolution dated September 18, 1992. We
also denied her motion for reconsideration on November 9, 1992.
Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to
private respondents. Thereafter, the Register of Deeds of Bulacan issued the
corresponding Transfer Certificates of Title (TCTs).
Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally
denied her, Eudosia Daez next filed an application for retention of the same riceland,
this time under R.A. No. 6657.
In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo
allowed Eudosia Daez to retain the subject riceland but he denied the application of her
eight (8) children to retain three (3) hectares each for their failure to prove actual tillage
of the land or direct management thereof as required by law
14
. Aggrieved, they
appealed to the DAR.
On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of
Regional Director Bernardo in a Resolution,
15
the decretal portion of which reads, viz.:
WHEREFORE, premises considered, this Resolution is hereby issued setting
aside with FINALITY the Order dated March 22, 1994 of the Regional Director of
DAR Region III.
The records of this case is remanded to the Regional Office for immediate
implementation of the Order dated January 16, 1992 of this office as affirmed by
the Court of Appeals and the Supreme Court.
SO ORDERED.
Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19,
1995
16
.
She appealed Secretary Garilao's decision to the Office of the President which ruled in
her favor. The dispositive portion of the Decision
17
of then Executive Secretary reads:
WHEREFORE, the resolution and order appealed from are hereby SET ASIDE
and judgment is rendered authorizing the retention by Eudosia Daez or her heirs
of the 4.1685-hectare landholding subject thereof.
SO ORDERED.
18

Aggrieved, private respondents sought from the Court of Appeals, a review of the
decision of the Office of the President.
On January 28, 1999, the said Decision of the Office of the President was reversed. The
Court of Appeals ordered, thus:
WHEREFORE, the assailed decision of July 5, 1996 and Order dated October
23, 1996 of the public respondents are REVERSED AND SET ASIDE, and the
Resolution and Order of DAR Secretary Ernesto D. Garilao respectively dated
August 26, 1994 and January 19, 1995 are REINSTATED.
SO ORDERED.
Hence, this petition which assigns the following errors:
I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
DISTINCTION BETWEEN EXEMPTION FROM AGRARIAN REFORM COVERAGE
AND THE RIGHT OF RETENTION OF LANDOWNERS IS ONLY A MATTER OF
SEMANTICS THAT AN ADVERSE DECISION IN THE FORMER WILL FORECLOSE
FURTHER ACTION TO ENFORCE THE LATTER CONSIDERING THAT THEY
CONSTITUTE SEPARATE AND DISTINCT CAUSES OF ACTION AND, THEREFORE,
ENFORCEABLE SEPARATELY AND IN SEQUEL.
II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE
PRINCIPLE OF RES JUDICATA DESPITE THE FACT THAT THE PREVIOUS CASE
CITED (EXEMPTION FROM COVERAGE DUE TO NON-TENANCY) AND THE
PRESENT CASE (RETENTION RIGHT) ARE OF DIFFERENT CAUSES OF ACTION.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED/OPINED
THAT THERE WAS A CUT-OFF DATE (AUGUST 27, 1985) FOR LANDOWNERS TO
APPLY FOR EXEMPTION OR RETENTION UNDER PD 27 AND THOSE WHO
FAILED TO FILE THEIR APPLICATIONS/PETITIONS ARE DEEMED TO HAVE
WAIVED THEIR RIGHTS.
IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT
PETITIONERS (RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.
V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
LAND SUBJECT OF THIS CASE IS NO LONGER OWNED BY PETITIONERS SINCE
PRIVATE RESPONDENTS HAVE ALREADY BEEN ISSUED NOT ONLY THEIR
RESPECTIVE CERTIFICATES OF LAND TRANSFER BUT ALSO THEIR INDIVIDUAL
CERTIFICATES OF TITLE OVER THE DISPUTED AREA.
19

We grant the petition.
First. Exemption and retention in agrarian reform are two (2) distinct concepts.
P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers
tenanted rice or corn lands. The requisites for coverage under the OLT program are the
following: (1) the land must be devoted to rice or corn crops; and (2) there must be a
system of share-crop or lease-tenancy obtaining therein. If either requisite is absent, a
landowner may apply for exemption. If either of these requisites is absent, the land is
not covered under OLT. Hence, a landowner need not apply for retention where his
ownership over the entire landholding is intact and undisturbed.
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the
land is irrigated, a three (3)-hectare lot constituting a family size farm. However, said
law allows a covered landowner to retain not more than seven (7) hectares of his land if
his aggregate landholding does not exceed twenty-four (24) hectares. Otherwise, his
entire landholding is covered without him being entitled to any retention right
20
.
Consequently, a landowner may keep his entire covered landholding if its aggregate
size does not exceed the retention limit of seven (7) hectares. In effect, his land will not
be covered at all by the OLT program although all requisites for coverage are present.
LOI No. 474 clarified the effective coverage of OLT to include tenanted rice or corn
lands of seven (7) hectares or less, if the landowner owns other agricultural lands of
more than seven (7) hectares. The term "other agricultural lands" refers to lands other
than tenanted rice or corn lands from which the landowner derives adequate income to
support his family.
Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted
to rice or corn crops even if it is tenanted; or (2) the land is untenanted even though it is
devoted to rice or corn crops.
On the other hand, the requisites for the exercise by the landowner of his right of
retention are the following: (1) the land must be devoted to rice or corn crops; (2) there
must be a system of share-crop or lease-tenancy obtaining therein; and (3) the size of
the landholding must not exceed twenty-four (24) hectares, or it could be more than
twenty-four (24) hectares provided that at least seven (7) hectares thereof are covered
lands and more than seven (7) hectares of it consist of "other agricultural lands".
Clearly, then, the requisites for the grant of an application for exemption from coverage
of OLT and those for the grant of an application for the exercise of a landowner's right of
retention, are different.
Hence, it is incorrect to posit that an application for exemption and an application for
retention are one and the same thing. Being distinct remedies, finality of judgment in
one does not preclude the subsequent institution of the other. There was, thus, no
procedural impediment to the application filed by Eudosia Daez for the retention of the
subject 4.1865-hectare riceland, even after her appeal for exemption of the same land
was denied in a decision that became final and executory.
Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the
subject 4.1685 riceland.
The right of retention is a constitutionally guaranteed right, which is subject to
qualification by the legislature
21
. 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
22
. A retained area, as its name denotes, is land which is not supposed to
anymore leave the landowner's dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would
be a pointless process.
In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary
of Agrarian Reform
23
, we held that landowners who have not yet exercised their
retention rights under P.D. No. 27 are entitled to the new retention rights under R.A. No.
6657
24
. We disregarded the August 27, 1985 deadline imposed by DAR Administrative
Order No. 1, series of 1985 on landowners covered by OLT. However, if a landowner
filed his application for retention after August 27, 1985 but he had previously filed the
sworn statements required by LOI Nos. 41, 45 and 52, he is still entitled to the retention
limit of seven (7) hectares under P.D. No. 27
25
. Otherwise, he is only entitled to retain
five (5) hectares under R.A. No. 6657.
Sec. 6 of R.A. No. 6657, which provides, viz.:
Sec. 6. Retention Limits Except as otherwise provided in this Act, no person
may own or retain, directly or indirectly, any public or private agricultural land, the
size of which shall vary according to factors governing a viable family-size, such
as commodity produced, terrain, infrastructure, and soil fertility as determined by
the Presidential Agrarian Reform Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed five (5) hectares. Three (3)
hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided, That landowners
whose land have been covered by Presidential Decree No. 27 shall be allowed to
keep the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact or
contiguous, shall pertain to the landowner. Provided, however, That in case the
area selected for retention by the landowner is tenanted, the tenant shall have
the option to choose whether to remain therein or be a beneficiary in the same or
another agricultural land with similar or comparable features. In case the tenant
chooses to remain in the retained area, he shall be considered a leaseholder and
shall lose his right to be a beneficiary under this Act. In case the tenant chooses
to be a beneficiary in another agricultural land, he loses his right as a lease-
holder to the land retained by the landowner. The tenant must exercise this
option within a period of one (1) year from the time the landowner manifests his
choice of the area for retention.
In all cases, the security of tenure of the farmers or farmworkers on the land prior
to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract
or transfer of possession of private lands executed by the original landowner in
violation of this Act shall be null and void; Provided,however, That those
executed prior to this Act shall be valid only when registered with the Register of
Deeds within a period of three (3) months after the effectivity of this Act.
Thereafter, all Register of Deeds shall inform the DAR within thirty (3) days of
any transaction involving agricultural lands in excess of five (5) hectares
26
.
defines the nature and incidents of a landowner's right of retention. For as long as the
area to be retained is compact or contiguous and it does not exceed the retention
ceiling of five (5) hectares, a landowner's choice of the area to be retained, must prevail.
Moreover, Administrative Order No. 4, series of 1991,
27
which supplies the details for
the exercise of a landowner's retention rights, likewise recognizes no limit to the
prerogative of the landowner, although he is persuaded to retain other lands instead to
avoid dislocation of farmers.
Without doubt, this right of retention may be exercised over tenanted land despite even
the issuance of Certificate of Land Transfer (CLT) to farmer-beneficiaries.
28
What must
be protected, however, is the right of the tenants to opt to either stay on the land chosen
to be retained by the landowner or be a beneficiary in another agricultural land with
similar or comparable features.
29

Finally. Land awards made pursuant to the government's agrarian reform program are
subject to the exercise by a landowner, who is so qualified, of his right of retention.
Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands.
Thereafter, they are issued Emancipation Patents (EPs) after compliance with all
necessary conditions. Such EPs, upon their presentation to the Register of Deeds,
result in the issuance of the corresponding transfer certificates of title (TCT) in favor of
the beneficiaries mentioned therein
30
.
Under R.A. No. 6657, the procedure has been simplified
31
. Only Certificates of Land
Ownership Award (CLOAs) are issued, in lieu of EPs, after compliance with all
prerequisites. Thereafter, upon presentation of the CLOAs to the Register of Deeds,
TCTs are issued to the designated beneficiaries. CLTs are no longer issued.
The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner
from retaining the area covered thereby. Under Administrative Order No. 2, series of
1994
32
, an EP or CLOA may be cancelled if the land covered is later found to be part of
the landowner's retained area.
A certificate of title accumulates in one document a comprehensive statement of the
status of the fee held by the owner of a parcel of land.
33
As such, it is a mere evidence
of ownership and it does not constitute the title to the land itself. It cannot confer title
where no title has been acquired by any of the means provided by law
34
.
Thus, we had, in the past, sustained the nullification of a certificate of title issued
pursuant to a homestead patent because the land covered was not part of the public
domain and as a result, the government had no authority to issue such patent in the first
place
35
. Fraud in the issuance of the patent, is also a ground for impugning the validity
of a certificate of title
36
. In other words, the invalidity of the patent or title is sufficient
basis for nullifying the certificate of title since the latter is merely an evidence of the
former.
In the instant case, the CLTs of private respondents over the subject 4.1685-hectare
riceland were issued without Eudosia Daez having been accorded her right of choice as
to what to retain among her landholdings. The transfer certificates of title thus issued on
the basis of those CLTs cannot operate to defeat the right of the heirs of deceased
Eudosia Daez to retain the said 4.1685 hectares of riceland.
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of
Appeals, dated January 28, 1998, is REVERSED and SET ASIDE and the Decision of
the Office of the President, dated July 5, 1996, is hereby REINSTATED. In the
implementation of said decision, however, the Department of Agrarian Reform is hereby
ORDERED to fully accord to private respondents their rights under Section 6 of R.A.
No. 6657.1wphi1.nt
No costs.
SO ORDERED.


G.R. No. 36213 June 29, 1989
FELIX GONZALES & CARMEN GONZALES, petitioners,
vs.
HON. COURT OF APPEALS, DECEASED SPOUSES ANDRES AGCAOILE &
LEONORA AGCAOILE, substituted by LUCIA A. SISON, respondents.
Tomas A. Leonardo for private respondent.

GRINO-AQUINO, J .:
The issue in this case is whether an agricultural tenancy relationship can be created
over land embraced in an approved residential subdivision. The petitioners leased a lot
in the subdivision on which they built their house, and, by tolerance of the subdivision
owner, they cultivated some vacant adjoining lots. The Court of Agrarian Relations, as
well as the Court of Appeals, ruled that "the plaintiffs are not de jure agricultural
tenants." (p. 66, Rollo.) That ruling is assailed in this appeal by certiorari.
On October 26, 1988, Lucia A. Sison filed a motion to be substituted in lieu of the
private respondents Andres Agcaoile (who died on May 20, 1976) and Leonora
Agcaoile (who died on March 22, 1979) as she inherited, and is now the registered
owner of, nine (9) unsold lots in the subdivision covered by TCT Nos. 20397 and 20398
of the Agcaoile spouses, now registered in her name under TCT Nos. T-98.096 up to T-
98.104 (pp. 117-130, Rollo).
On February 22, 1989, this Court granted her motion. The facts of this case are not
disputed and are recited in the appealed decision dated December 6, 1972 of the Court
of Appeals in CA-G.R. No. 00253-R, as follows:
Defendants spouses are the owners of two parcels of land registered in
their names under T.C.T. Nos. 20397 and 20398, with an area of 43,383
square meters, located in Barrio Bagbaguin, Sta. Maria, Bulacan. At the
time defendants purchased the land in 1937, Maximo Cruz was the tenant
who was planting palay thereon. Maximo continued as tenant until he was
succeeded upon his death by his son, Fidel Cruz. After tenanting the land
for four years, Fidel was succeeded by Pascual Gonzales, father of
plaintiff Felix Gonzales. In 1954, Pascual ceased to be a tenant because
the land was proposed to be converted into a residential subdivision. The
following year, or on May 3, 1955, the land became an approved
subdivision. It was subdivided into twenty-six (26) residential lots.
Sometime in 1956, the plaintiffs spouses offered to pay a rental for Lot No.
1285-M of the subdivision on which they were to build a house. Defendant
Leonora Agcaoile agreed to a rental of P 20.00 a month. Plaintiffs also
offered to act as agents for the subdivision. Leonora agreed. Plaintiffs
were able to sell a lot to one Clements Bernabe, and they received the
corresponding commission of P 300.00. A number of other lots were sold
by defendants to different buyers. While plaintiffs were renting a portion of
the subdivision, they requested to be allowed to plant palay on the lots
that have not yet been sold. Leonora acquiesced because she pitied the
plaintiff who have many children. No specific agreement was concluded
with regard to the sharing of harvests, but plaintiffs delivered part of the
yield to Federico Mateo, defendants' overseer. When plaintiffs defaulted
renting Lot 1285-M, defendants sent the letter dated September 12, 1968
asking them to pay the accrued rentals or to vacate the premises (Exh. 1).
Plaintiffs countered with an action to elect the leasedhold system of
tenancy, docketed as CAR Case No. 2169 Bulacan '68. Said case was
dismissed on August 7, 1969.
On November 18, 1969, plaintiff filed the present action seeking to elect
the leasehold system and praying for a reliquidation of past harvests
embracing the agricultural years 1961-1962 to 1967-1968, inclusive.
Before summons could be served on defendants, they initiated an action
against the plaintiffs for recovery of possession, in the Court of First
Instance of Bulacan, where said action was docketed as Civil Case No.
SM-329. Then defendants answered the complaint in the present case,
alleging that the property subject of the action is residential land. On
October 29, 1970, the Bulacan CFI rendered a decision in Civil Case SM-
329 favorably to the plaintiffs therein. On May 14, 1971, the judgment
subject of the present appeal was rendered. (pp. 15-16, Rollo).
Upon the evidence, the Court of Appeals upheld the decision of the Agrarian Court. It
ruled:
... Upon the evidence, it appears that in 1955 the property subject of the
action ceased to be agricultural or farmland, it having been converted as
of that year into a homesite or residential subdivision. When plaintiffs,
therefore, gained possession of a portion of the land in 1956, upon
acquiescence of defendants, they were not installed as agricultural
tenants on a piece of agricultural land. Agricultural tenancy cannot be
created on a homesite or residential subdivision. Republic Act No. 1199,
invoked by the appellants, does not apply to such property. And neither
are the rights to elect leasehold and to reliquidate the harvests assertible
in respect to a residential subdivision or homesite. (p. 16, Rollo).
After deliberating on the petition and arguments in the briefs of the parties, We resolved
to deny the petition for review.
There is no merit in the petitioners' argument that inasmuch as residential and
commercial lots may be considered "agricultural" (Krivenko vs. Register of Deeds, 79
Phil. 461) an agricultural tenancy can be established on land in a residential subdivision.
The Krivenko decision interpreting the constitutional prohibition against transferring
private agricultural land to individuals, corporations, or associations not qualified to
acquire or hold lands of the public domain, save in the case of hereditary succession
(Art. XIII Sec. 5, 1935 Constitution; later Art. XIV, Sec. 14, 1973 Constitution; Art. XII,
Sec. 7, 1987 Constitution) has nothing to do with agricultural tenancy. An agricultural
leasehold cannot be established on land which has ceased to be devoted to cultivation
or farming because of its conversion into a residential subdivision.
Petitioners may not invoke Section 36(l) of Republic Act No. 3844 which provides that
"when the lessor-owner fails to substantially carry out the conversion of his agricultural
land into a subdivision within one year after the dispossession of the lessee, the lessee
shall be entitled to reinstatement and damages," for the petitioners were not agricultural
lessees or tenants of the land before its conversion into a residential subdivision in
1955. Not having been dispossessed by the conversion of the land into a residential
subdivision, they may not claim a right to reinstatement.
Furthermore, their admission that: (1) they leased from the respondents a lot (No. 1285-
M) in the subdivision on which they built their house; (2) that as commission agents for
the respondents, they were able to sell a subdivision lot to Clemente Bernabe, and
received a P 300-commission on the sale; and (3) that "a number of other lots were sold
by respondents to different buyers," (p. 51, Rollo) refutes the petitioners' contention that
the development of the subdivision was a mere "scheme" to dispossess the previous
tenant.
On the other hand, the petitioners' tactic of entering the subdivision as lessee of a
homelot and thereafter cultivating some unsold lots ostensibly for temporary use as a
home garden, but covertly for the purpose of later claiming the land as "tenanted" farm
lots, recalls the fable of the camel that sought shelter inside its master's tent during a
storm, and once inside, kicked its master out of the tent. Here, the private respondents'
tolerance of the petitioners' supposedly temporary use of some vacant lots in the
subdivision was seized by the latter as a weapon to deprive the respondents of their
land.
WHEREFORE, finding no reversible error in the decision of the Court of Appeals, We
deny the petition for review for lack of merit.
SO ORDERED.


G.R. No. L-54106 February 16, 1982
LUCRECIO PATRICIO, SEGUNDO DALIGDIG, FRANCISCO DALIGDIG,
FLORENCIO ARELLANO and EPIFANIO DALIGDIG, petitioners,
vs.
ISABELO BAYOG, CONRADA, PEDRO, EMILIO, ALFONSO, DIONISIO and
ARSENIO, all surnamed MENDEZ, and COURT OF APPEALS, respondents.

AQUINO, J .:
The legal issue in this case is whether the tenants hired by the purchaser of a
homestead planted to coconuts and bananas may be ejected by the homesteader's
heirs who were allowed by the Court of Appeals to repurchase the homestead and who
desire to personally possess and till the land.
As factual background, it should be stated that in 1934 Policarpio Mendez obtained a
patent and Torrens title for a homestead with an area of about twenty-three hectares
located at Sitio Badiangon, Barrio Dalipuga, Iligan City. He and his wife, Petra Macaliag
and their nine children lived on the land, cleared it and planted coconuts thereon.
In 1956, Mendez sold the homestead to the spouses Eugenio Lamberang and Ester
Fuentes. In 1958, Mendez and his children filed an action to annul the sale. Lamberang
countered with an ejectment suit. On March 20, 1961, Mendez and his children filed an
action against the Lamberang spouses for the reconveyance of the homestead.
The three cases reached the Court of Appeals which in a decision dated January 3,
1977 ordered Lamberang to reconvey the homestead to the Mendezes "free of all liens
and encumbrances " upon their payment to Lamberang of P19,411.28 as redemption
price. That judgment became final and executory.
The Court of Appeals also held that upon the execution of the deed of reconveyance
and the delivery of the redemption price to the Lamberang spouses, the Mendezes
Would be "entitled to the possession and occupancy" of the homestead. (Mendez vs.
Lamberang, Lamberang vs. Bayug, and Mendez vs. Fuentes-Lamberang CA-G.R. Nos.
50819-81-R.)
The Mendezes paid the redemption price and the Lamberang spouses reconveyed the
homestead. Pursuant to a writ of possession, a deputy sheriff placed Isabelo Bayog, the
representative of the Mendez family in possession of the homestead after ejecting the
tenants of the Lamberang spouses named Lucrecio Patricio, Florencio Arellano,
Epifanio Daligdig, Francisco Daligdig and Segundo Daligdig, now the petitioners herein.
However, the tenants reentered the homestead allegedly upon instruction of Bernardino
O. Nuez, a trial attorney of the Bureau of Agrarian Legal Assistant. Hence, the
Mendezes filed a motion to declare them and Nuez in contempt of court.
Before that contempt incident could be resolved, or on April 10, 1979, the tenants,
represented by Nuez, filed in the Court of Agrarian Relations at Iligan City a complaint
for damages against the heirs of Policarpio Mendez named Isabelo Bayog and
Conrada, Pedro, Emilio, Alfonso, Dionisio and Arsenio, all surnamed Mendez (CAR
Case No. 92), now private respondents.
By reason of an agreement between the parties at the hearing on October 22, 1979, the
said tenants vacated the land. They are now not in possession of the land (p. 5, Rollo).
The Agrarian Court in its decision of December 12, 1979 held that the plaintiffs were
"tenants of the landholding in question" and ordered their reinstatement therein. The
lower court directed the Mendezes to pay them their "unrealized shares" in the
coconuts.
The Agrarian Court concluded that the plaintiffs became the tenants of the Mendezes
because the Lamberangs, with whom they established a tenancy relationship, were not
illegal possessors of the land, having acquired it through a sale. The court said that
under Section 10 of the Code of Agrarian Reform tenants are entitled to security of
tenure and that under section 36 of that Code, personal cultivation by the landowner is
no longer a ground for terminating tenancy. The Agrarian Court noted that Presidential
Decree No. 152 dated March 13, 1973, which prohibits the employment or use of share
tenants in complying with the requirements regarding entry, occupation and cultivation
of public lands, is not applicable to the case.
The Mendezes appealed to the Court of Appeals which on May 8, 1980 reversed the
decision of the Agrarian Court and declared that the Mendezes are "entitled to the
homestead without the gravamen of plaintiffs' tenancies"because the purpose of
granting homesteads is "to distribute disposable agricultural lots of the State to land
destitute citizens for their home and cultivation" (Pascua vs. Talens, 80 Phil. 792, 793).
That policy would be defeated " if the buter can install permanents tenants in the
homestead who would even have the right of preemption" (Patricio vs. Bayog, CA-G. R.
No. 10611-CAR ).
The tenants appealed to this Court. They contend (a) that under section 118 of the
Public Land Law, share tenancy may be constituted in homestead after five years from
the grant of the patent because section 119 of the same law does not prohibit any
encumbrance on the homestead after that period and (b) that they cannot be ejected
because they were not parties in any of the cases involving the Mendezes and
Lamberang.
This is a case where two competing interests have to be weighed against each other:
the tenant's right to security of tenure as against the right of the homesteader or his
heirs to own a piece of land for their residence and livelihood.
We hold that the more paramount and superior policy consideration is to uphold the
right of the homesteader and his heirs to own and cultivate personally the land acquired
from the State without being encumbered by tenancy relations. *
This holding is consistent with the intention of the Code of Agrarian Reform to abolish
agricultural share tenancy, "to establish owner-cultivatorship and the economic family-
size farm as the basis of Philippine agriculture and "to achieve a dignified existence for
the small farmers free from pernicious institutional restraints and practices" (Sec. 2).
WHEREFORE, the judgment of the Court of Appeals is affirmed. No costs.
SO ORDERED.

G.R. No. 127876 December 17, 1999
ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM,
SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION
IV, MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS and
DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD,respondents.

PUNO, J .:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and
the validity of the acquisition of these haciendas by the government under Republic Act
No. 6657, the Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three
haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the
Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is
registered under Transfer Certificate of Title (TCT) No. 985. This land is covered by Tax
Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050
hectares in area, registered under TCT No. 924 and covered by Tax Declaration Nos.
0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in area and is
registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency of then President Corazon C.
Aquino. In February 1986, President Aquino issued Proclamation No. 3 promulgating a
Provisional Constitution. As head of the provisional government, the President
exercised legislative power "until a legislature is elected and convened under a new
Constitution."
1
In the exercise of this legislative power, the President signed on July 22,
1987, Proclamation No. 131 instituting a Comprehensive Agrarian Reform Program and
Executive Order No. 229 providing the mechanisms necessary to initially implement the
program.
On July 27, 1987, the Congress of the Philippines formally convened and took over
legislative power from the President.
2
This Congress passed Republic Act No. 6657,
the Comprehensive Agrarian Reform Law (CARL) of 1988. The Act was signed by the
President on June 10, 1988 and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a
voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229.
Haciendas Palico and Banilad were later placed under compulsory acquisition by
respondent DAR in accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian
Reform Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to
Parties" to petitioner. The Invitation was addressed to "Jaime Pimentel, Hda.
Administrator, Hda. Palico."
3
Therein, the MARO invited petitioner to a conference on
October 6, 1989 at the DAR office in Nasugbu to discuss the results of the DAR
investigation of Hacienda Palico, which was "scheduled for compulsory acquisition this
year under the Comprehensive Agrarian Reform Program."
4

On October 25, 1989, the MARO completed three (3) Investigation Reports after
investigation and ocular inspection of the Hacienda. In the first Report, the MARO found
that 270 hectares under Tax Declaration Nos. 465, 466, 468 and 470 were "flat to
undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers of
sugarcane.
5
In the second Report, the MARO identified as "flat to undulating"
approximately 339 hectares under Tax Declaration No. 0234 which also had several
actual occupants and tillers of sugarcane;
6
while in the third Report, the MARO found
approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating" with 33
actual occupants and tillers also of sugarcane.
7

On October 27, 1989, a "Summary Investigation Report" was submitted and signed
jointly by the MARO, representatives of the Barangay Agrarian Reform Committee
(BARC) and Land Bank of the Philippines (LBP), and by the Provincial Agrarian Reform
Officer (PARO). The Report recommended that 333.0800 hectares of Hacienda Palico
be subject to compulsory acquisition at a value of P6,807,622.20.
8
The following day,
October 28, 1989, two (2) more Summary Investigation Reports were submitted by the
same officers and representatives. They recommended that 270.0876 hectares and
75.3800 hectares be placed under compulsory acquisition at a compensation of
P8,109,739.00 and P2,188,195.47, respectively.
9

On December 12, 1989, respondent DAR through then Department Secretary Miriam D.
Santiago sent a "Notice of Acquisition" to petitioner. The Notice was addressed as
follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.
10

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were
subject to immediate acquisition and distribution by the government under the CARL;
that based on the DAR's valuation criteria, the government was offering compensation
of P3.4 million for 333.0800 hectares; that whether this offer was to be accepted or
rejected, petitioner was to inform the Bureau of Land Acquisition and Distribution
(BLAD) of the DAR; that in case of petitioner's rejection or failure to reply within thirty
days, respondent DAR shall conduct summary administrative proceedings with notice to
petitioner to determine just compensation for the land; that if petitioner accepts
respondent DAR's offer, or upon deposit of the compensation with an accessible bank if
it rejects the same, the DAR shall take immediate possession of the land.
11

Almost two years later, on September 26, 1991, the DAR Regional Director sent to the
LBP Land Valuation Manager three (3) separate Memoranda entitled "Request to Open
Trust Account." Each Memoranda requested that a trust account representing the
valuation of three portions of Hacienda Palico be opened in favor of the petitioner in
view of the latter's rejection of its offered value.
12

Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion
of Haciendas Palico and Banilad from agricultural to non-agricultural lands under the
provisions of the CARL.
13
On July 14, 1993, petitioner sent a letter to the DAR Regional
Director reiterating its request for conversion of the two haciendas.
14

Despite petitioner's application for conversion, respondent DAR proceeded with the
acquisition of the two Haciendas. The LBP trust accounts as compensation for
Hacienda Palico were replaced by respondent DAR with cash and LBP bonds.
15
On
October 22, 1993, from the mother title of TCT No. 985 of the Hacienda, respondent
DAR registered Certificate of Land Ownership Award (CLOA) No. 6654. On October 30,
1993, CLOA's were distributed to farmer beneficiaries.
16

Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu,
Batangas, sent a notice to petitioner addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas
17

The MARO informed Pimentel that Hacienda Banilad was subject to compulsory
acquisition under the CARL; that should petitioner wish to avail of the other
schemes such as Voluntary Offer to Sell or Voluntary Land Transfer, respondent
DAR was willing to provide assistance thereto.
18

On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel
inviting the latter to attend a conference on September 21, 1989 at the MARO Office in
Nasugbu to discuss the results of the MARO's investigation over Hacienda Banilad.
19

On September 21, 1989, the same day the conference was held, the MARO submitted
two (2) Reports. In his first Report, he found that approximately 709 hectares of land
under Tax Declaration Nos. 0237 and 0236 were "flat to undulating (0-8% slope)." On
this area were discovered 162 actual occupants and tillers of sugarcane.
20
In the
second Report, it was found that approximately 235 hectares under Tax Declaration No.
0390 were "flat to undulating," on which were 92 actual occupants and tillers of
sugarcane.
21

The results of these Reports were discussed at the conference. Present in the
conference were representatives of the prospective farmer beneficiaries, the BARC, the
LBP, and Jaime Pimentel on behalf of the landowner.
22
After the meeting, on the same
day, September 21, 1989, a Summary Investigation Report was submitted jointly by the
MARO, representatives of the BARC, LBP, and the PARO. They recommended that
after ocular inspection of the property, 234.6498 hectares under Tax Declaration No.
0390 be subject to compulsory acquisition and distribution by CLOA.
23
The following
day, September 22, 1989, a second Summary Investigation was submitted by the same
officers. They recommended that 737.2590 hectares under Tax Declaration Nos. 0236
and 0237 be likewise placed under compulsory acquisition for distribution.
24

On December 12, 1989, respondent DAR, through the Department Secretary, sent to
petitioner two (2) separate "Notices of Acquisition" over Hacienda Banilad. These
Notices were sent on the same day as the Notice of Acquisition over Hacienda Palico.
Unlike the Notice over Hacienda Palico, however, the Notices over Hacienda Banilad
were addressed to:
Roxas y Cia. Limited
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila.
25

Respondent DAR offered petitioner compensation of P15,108,995.52 for
729.4190 hectares and P4,428,496.00 for 234.6498 hectares.
26

On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation
Manager a "Request to Open Trust Account" in petitioner's name as compensation for
234.6493 hectares of Hacienda Banilad.
27
A second "Request to Open Trust Account"
was sent on November 18, 1991 over 723.4130 hectares of said Hacienda.
28

On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and
P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for
petitioner's land in Hacienda Banilad.
29

On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and
Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988
before the effectivity of the CARL. The Hacienda has a total area of 867.4571 hectares
and is covered by four (4) titles TCT Nos. T-44662, T-44663, T-44664 and T-44665.
On January 12, 1989, respondent DAR, through the Regional Director for Region IV,
sent to petitioner two (2) separate Resolutions accepting petitioner's voluntary offer to
sell Hacienda Caylaway, particularly TCT Nos. T-44664 and T-44663.
30
The
Resolutions were addressed to:
Roxas & Company, Inc.
7th Flr. Cacho-Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M
31

On September 4, 1990, the DAR Regional Director issued two separate Memoranda to
the LBP Regional Manager requesting for the valuation of the land under TCT Nos. T-
44664 and T-44663.
32
On the same day, respondent DAR, through the Regional
Director, sent to petitioner a "Notice of Acquisition" over 241.6777 hectares under TCT
No. T-44664 and 533.8180 hectares under TCT No. T-44663.
33
Like the Resolutions of
Acceptance, the Notice of Acquisition was addressed to petitioner at its office in Makati,
Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas,
sent a letter to the Secretary of respondent DAR withdrawing its VOS of Hacienda
Caylaway. The Sangguniang Bayan of Nasugbu, Batangas allegedly authorized the
reclassification of Hacienda Caylaway from agricultural to non-agricultural. As a result,
petitioner informed respondent DAR that it was applying for conversion of Hacienda
Caylaway from agricultural to other
uses.
34

In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner
that a reclassification of the land would not exempt it from agrarian reform. Respondent
Secretary also denied petitioner's withdrawal of the VOS on the ground that withdrawal
could only be based on specific grounds such as unsuitability of the soil for agriculture,
or if the slope of the land is over 18 degrees and that the land is undeveloped.
35

Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993,
petitioner filed its application for conversion of both Haciendas Palico and Banilad.
36
On
July 14, 1993, petitioner, through its President, Eduardo Roxas, reiterated its request to
withdraw the VOS over Hacienda Caylaway in light of the following:
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge,
Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg., Diliman,
Quezon City dated March 1, 1993 stating that the lands subject of
referenced titles "are not feasible and economically sound for further
agricultural development.
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas
approving the Zoning Ordinance reclassifying areas covered by the
referenced titles to non-agricultural which was enacted after extensive
consultation with government agencies, including [the Department of
Agrarian Reform], and the requisite public hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas
dated March 8, 1993 approving the Zoning Ordinance enacted by the
Municipality of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the
Municipal Planning & Development, Coordinator and Deputized Zoning
Administrator addressed to Mrs. Alicia P. Logarta advising that the
Municipality of Nasugbu, Batangas has no objection to the conversion of
the lands subject of referenced titles to non-agricultural.
37

On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent
DAR Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by
respondent DAR in the name of several persons. Petitioner alleged that the Municipality
of Nasugbu, where the haciendas are located, had been declared a tourist zone, that
the land is not suitable for agricultural production, and that the Sangguniang Bayan of
Nasugbu had reclassified the land to non-agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that the case involved
the prejudicial question of whether the property was subject to agrarian reform, hence,
this question should be submitted to the Office of the Secretary of Agrarian Reform for
determination.
38

On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484.
It questioned the expropriation of its properties under the CARL and the denial of due
process in the acquisition of its landholdings.
Meanwhile, the petition for conversion of the three haciendas was denied by the MARO
on November 8, 1993.
Petitioner's petition was dismissed by the Court of Appeals on April 28,
1994.
39
Petitioner moved for reconsideration but the motion was denied on January 17,
1997 by respondent court.
40

Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER'S CAUSE OF ACTION IS PREMATURE
FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW
OF THE PATENT ILLEGALITY OF THE RESPONDENTS' ACTS, THE
IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL ACTS, AND THE
ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW ALL OF WHICH ARE EXCEPTIONS
TO THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER'S LANDHOLDINGS ARE SUBJECT TO
COVERAGE UNDER THE COMPREHENSIVE AGRARIAN REFORM
LAW, IN VIEW OF THE UNDISPUTED FACT THAT PETITIONER'S
LANDHOLDINGS HAVE BEEN CONVERTED TO NON-AGRICULTURAL
USES BY PRESIDENTIAL PROCLAMATION NO. 1520 WHICH
DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A
TOURIST ZONE, AND THE ZONING ORDINANCE OF THE
MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN PORTIONS
OF PETITIONER'S LANDHOLDINGS AS NON-AGRICULTURAL, BOTH
OF WHICH PLACE SAID LANDHOLDINGS OUTSIDE THE SCOPE OF
AGRARIAN REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER
TO APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT
DAR.
C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT
DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS,
CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED
THE PROCEDURE FOR THE ACQUISITION OF PRIVATE LANDS
UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO GIVE DUE
NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE
SPECIFIC AREAS SOUGHT TO BE ACQUIRED.
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND
ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST
COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID
JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY
STRIPPED OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF
CLOA'S TO ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF
R.A. 6657.
41

The assigned errors involve three (3) principal issues: (1) whether this Court can take
cognizance of this petition despite petitioner's failure to exhaust administrative
remedies; (2) whether the acquisition proceedings over the three haciendas were valid
and in accordance with law; and (3) assuming the haciendas may be reclassified from
agricultural to non-agricultural, whether this court has the power to rule on this issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that respondent Court of Appeals gravely
erred in finding that petitioner failed to exhaust administrative remedies. As a general
rule, before a party may be allowed to invoke the jurisdiction of the courts of justice, he
is expected to have exhausted all means of administrative redress. This is not absolute,
however. There are instances when judicial action may be resorted to immediately.
Among these exceptions are: (1) when the question raised is purely legal; (2) when the
administrative body is in estoppel; (3) when the act complained of is patently illegal; (4)
when there is urgent need for judicial intervention; (5) when the respondent acted in
disregard of due process; (6) when the respondent is a department secretary whose
acts, as an alter ego of the President, bear the implied or assumed approval of the
latter; (7) when irreparable damage will be suffered; (8) when there is no other plain,
speedy and adequate remedy; (9) when strong public interest is involved; (10) when the
subject of the controversy is private land; and (11) in quo warranto proceedings.
42

Petitioner rightly sought immediate redress in the courts. There was a violation of its
rights and to require it to exhaust administrative remedies before the DAR itself was not
a plain, speedy and adequate remedy.
Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer
beneficiaries over portions of petitioner's land without just compensation to petitioner. A
Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a
beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law of
1988.
43
Before this may be awarded to a farmer beneficiary, the land must first be
acquired by the State from the landowner and ownership transferred to the former. The
transfer of possession and ownership of the land to the government are conditioned
upon the receipt by the landowner of the corresponding payment or deposit by the DAR
of the compensation with an accessible bank. Until then, title remains with the
landowner.
44
There was no receipt by petitioner of any compensation for any of the
lands acquired by the government.
The kind of compensation to be paid the landowner is also specific. The law provides
that the deposit must be made only in "cash" or "LBP bonds."
45
Respondent DAR's
opening of trust account deposits in petitioner' s name with the Land Bank of the
Philippines does not constitute payment under the law. Trust account deposits are not
cash or LBP bonds. The replacement of the trust account with cash or LBP bonds did
not ipso facto cure the lack of compensation; for essentially, the determination of this
compensation was marred by lack of due process. In fact, in the entire acquisition
proceedings, respondent DAR disregarded the basic requirements of administrative due
process. Under these circumstances, the issuance of the CLOA's to farmer beneficiaries
necessitated immediate judicial action on the part of the petitioner.
II. The Validity of the Acquisition Proceedings Over the Haciendas.
Petitioner's allegation of lack of due process goes into the validity of the acquisition
proceedings themselves. Before we rule on this matter, however, there is need to lay
down the procedure in the acquisition of private lands under the provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL),
provides for two (2) modes of acquisition of private land: compulsory and voluntary. The
procedure for the compulsory acquisition of private lands is set forth in Section 16 of
R.A. 6657, viz:
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 landowner,
his administrator or representative shall inform the DAR of
his acceptance or rejection of the offer.
c) If the landowner accepts the offer of the DAR, the LBP
shall pay the landowner the purchase price of the land within
thirty (30) days after he executes and delivers a deed of
transfer in favor of the Government and 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 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 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.
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 the land acquisition to
hasten the implementation of the Comprehensive Agrarian Reform Program
(CARP).
46
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 or 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 masterlist of all agricultural lands covered
under the CARP in his area of responsibility. The masterlist
shall include such information as required under the
attached CARP Masterlist Form which shall include the
name of the landowner, landholding area, TCT/OCT number,
and tax declaration number.
2. Prepare 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.
47
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.
48
From this point, the provisions of
Section 16 of R.A. 6657 then apply.
49

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.
50
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.
51
The Bill of Rights provides that "[n]o person shall be
deprived of life, liberty or property without due process of law."
52
The CARL was not
intended to take away property without due process of law.
53
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/recomm
endations 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).
xxx xxx xxx
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.
54
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
before the scheduled date and invites them to attend the same. The MARO, LBP or
BARC conducts the ocular inspection and investigation by identifying the land and
landowner, determining the suitability of the land for agriculture and productivity,
interviewing and screening prospective farmer beneficiaries. Based on its investigation,
the MARO, LBP or BARC prepares the Field Investigation Report which shall be signed
by all parties concerned. In addition to the field investigation, a boundary or subdivision
survey of the land may also be conducted by a Survey Party of the Department of
Environment and Natural Resources (DENR) to be assisted by the MARO.
55
This
survey shall delineate the areas covered by Operation Land Transfer (OLT), areas
retained by the landowner, areas with infrastructure, and the areas subject to VOS and
CA. After the survey and field investigation, the MARO sends a "Notice of Coverage" to
the landowner or his duly authorized representative inviting him to a conference or
public hearing with the farmer beneficiaries, representatives of the BARC, LBP, DENR,
Department of Agriculture (DA), non-government organizations, 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 thereto, inputs to the
valuation of the subject landholding, and other comments and recommendations by all
parties concerned. The Minutes of the conference/public hearing shall form part of the
VOCF or CACF which files shall be forwarded by the MARO to the PARO. The PARO
reviews, evaluates and validates the Field Investigation Report and other documents in
the VOCF/CACF. He then forwards the records to the RARO for another review.
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR
A.O. No. 1, Series of 1993 provided, among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/
Agency/Unit Document
(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP
to LO by personal delivery Form No. 2
with proof of service, or
registered mail with return
card, informing him that his
property is now under CARP
coverage and for LO to select
his retention area, if he desires
to avail of his right of retention;
and at the same time invites him
to join the field investigation to
be conducted on his property
which should be scheduled at
least two weeks in advance of
said notice.
A copy of said Notice shall CARP
be posted for at least one Form No. 17
week on the bulletin board of
the municipal and barangay
halls where the property is
located. LGU office concerned
notifies DAR about compliance
with posting requirements thru
return indorsement on CARP
Form No. 17.
6 DARMO Send notice to the LBP, CARP
BARC, DENR representatives Form No. 3
and prospective ARBs of the schedule of the field investigation
to be conducted on the subject
property.
7 DARMO With the participation of CARP
BARC the LO, representatives of Form No. 4
LBP the LBP, BARC, DENR Land Use
DENR and prospective ARBs, Map
Local Office conducts the investigation on
subject property to identify
the landholding, determines
its suitability and productivity;
and jointly prepares the Field
Investigation Report (FIR)
and Land Use Map. However,
the field investigation shall
proceed even if the LO, the
representatives of the DENR and
prospective ARBs are not available
provided, they were given due
notice of the time and date of
investigation to be conducted.
Similarly, if the LBP representative
is not available or could not come
on the scheduled date, the field
investigation shall also be conducted,
after which the duly accomplished
Part I of CARP Form No. 4 shall
be forwarded to the LBP
representative for validation. If he agrees
to the ocular inspection report of DAR,
he signs the FIR (Part I) and
accomplishes Part II thereof.
In the event that there is a
difference or variance between
the findings of the DAR and the
LBP as to the propriety of
covering the land under CARP,
whether in whole or in part, on
the issue of suitability to agriculture,
degree of development or slope,
and on issues affecting idle lands,
the conflict shall be resolved by
a composite team of DAR, LBP,
DENR and DA which shall jointly
conduct further investigation
thereon. The team shall submit its
report of findings which shall be
binding to both DAR and LBP,
pursuant to Joint Memorandum
Circular of the DAR, LBP, DENR
and DA dated 27 January 1992.
8 DARMO Screen prospective ARBs
BARC and causes the signing of CARP
the Application of Purchase Form No. 5
and Farmer's Undertaking
(APFU).
9 DARMO Furnishes a copy of the CARP
duly accomplished FIR to Form No. 4
the landowner by personal
delivery with proof of
service or registered mail
will return card and posts
a copy thereof for at least
one week on the bulletin
board of the municipal
and barangay halls where
the property is located.
LGU office concerned CARP
notifies DAR about Form No. 17
compliance with posting
requirement thru return
endorsement on CARP
Form No. 17.
B. Land Survey
10 DARMO Conducts perimeter or Perimeter
And/or segregation survey or
DENR delineating areas covered Segregation
Local Office by OLT, "uncarpable Survey Plan
areas such as 18% slope
and above, unproductive/
unsuitable to agriculture,
retention, infrastructure.
In case of segregation or
subdivision survey, the
plan shall be approved
by DENR-LMS.
C. Review and Completion
of Documents
11. DARMO Forward VOCF/CACF CARP
to DARPO. Form No. 6
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the
number of government agencies involved in the identification and delineation of the land
subject to acquisition.
56
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
requirements. Representatives of the DAR Municipal Office (DARMO) must send the
Notice of Coverage to the landowner by "personal delivery with proof of service, or by
registered mail with return card," informing him that his property is under CARP
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
the field investigation to be scheduled at least two weeks from notice. The field
investigation is for the purpose of identifying the landholding and determining its
suitability for agriculture and its productivity. A copy of the Notice of Coverage shall be
posted for at least one week on the bulletin board of the municipal and barangay 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 prospective
farmer beneficiaries. The field investigation shall be conducted on the date set with the
participation of the landowner and the various representatives. If the landowner and
other representatives are absent, the field investigation shall proceed, provided they
were duly notified thereof. Should there be a variance between the findings of the DAR
and the LBP as to whether the land be placed under agrarian 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 which shall jointly
conduct further investigation. The team's findings shall be binding on both DAR and
LBP. After the field investigation, the DAR Municipal Office shall prepare the Field
Investigation Report and Land Use Map, a copy of which shall be furnished the
landowner "by personal delivery with proof of service or registered mail with return
card." Another copy of the Report and Map shall likewise be posted for at least one
week in the municipal or barangay halls where the property is located.
Clearly then, the notice requirements under the CARL are not confined to the Notice of
Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage
first laid down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR
A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of
Coverage does not merely notify the landowner that his property shall be placed under
CARP and that he is entitled to exercise his retention right; it also notifies him, pursuant
to DAR A.O. No. 9, Series of 1990, that a public hearing, shall be conducted where he
and representatives of the concerned sectors of society may attend to discuss the
results of the field investigation, the land valuation and other pertinent matters. Under
DAR A.O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner
that a field investigation of his landholding shall be conducted where he and the other
representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and Banilad
In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano,
sent a letter of invitation entitled "Invitation to Parties" dated September 29, 1989 to
petitioner corporation, through Jaime Pimentel, the administrator of Hacienda
Palico.
57
The invitation was received on the same day it was sent as indicated by a
signature and the date received at the bottom left corner of said invitation. With regard
to Hacienda Banilad, respondent DAR claims that Jaime Pimentel, administrator also of
Hacienda Banilad, was notified and sent an invitation to the conference. Pimentel
actually attended the conference on September 21, 1989 and signed the Minutes of the
meeting on behalf of petitioner corporation.
58
The Minutes was also signed by the
representatives of the BARC, the LBP and farmer beneficiaries.
59
No letter of invitation
was sent or conference meeting held with respect to Hacienda Caylaway because it
was subject to a Voluntary Offer to Sell to respondent DAR.
60

When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to
the various parties the Notice of Coverage and invitation to the conference, DAR A.O.
No. 12, Series of 1989 was already in effect more than a month earlier. The Operating
Procedure in DAR Administrative Order No. 12 does not specify how notices or letters
of invitation shall be sent to the landowner, the representatives of the BARC, the LBP,
the farmer beneficiaries and other interested parties. The procedure in the sending of
these notices is important to comply with the requisites of due process especially when
the owner, as in this case, is a juridical entity. Petitioner is a domestic
corporation,
61
and therefore, has a personality separate and distinct from its
shareholders, officers and employees.
The Notice of Acquisition in Section 16 of the CARL is required to be sent to the
landowner by "personal delivery or registered mail." Whether the landowner be a natural
or juridical person to whose address the Notice may be sent by personal delivery or
registered mail, the law does not distinguish. The DAR Administrative Orders also do
not distinguish. In the proceedings before the DAR, the distinction between natural and
juridical persons in the sending of notices may be found in the Revised Rules of
Procedure of the DAR Adjudication Board (DARAB). Service of pleadings before the
DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure.
Notices and pleadings are served on private domestic corporations or partnerships in
the following manner:
Sec. 6. Service upon Private Domestic Corporation or Partnership. If
the defendant is a corporation organized under the laws of the Philippines
or a partnership duly registered, service may be made on the president,
manager, secretary, cashier, agent, or any of its directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:
Sec. 13. Service upon private domestic corporation or partnership. If
the defendant is a corporation organized under the laws of the Philippines
or a partnership duly registered, service may be made on the president,
manager, secretary, cashier, agent, or any of its directors.
Summonses, pleadings and notices in cases against a private domestic corporation
before the DARAB and the regular courts are served on the president, manager,
secretary, cashier, agent or any of its directors. These persons are those through whom
the private domestic corporation or partnership is capable of action.
62

Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner
corporation. Is he, as administrator of the two Haciendas, considered an agent of the
corporation?
The purpose of all rules for service of process on a corporation is to make it reasonably
certain that the corporation will receive prompt and proper notice in an action against
it.
63
Service must be made on a representative so integrated with the corporation as to
make it a priori supposable that he will realize his responsibilities and know what he
should do with any legal papers served on him,
64
and bring home to the corporation
notice of the filing of the action.
65
Petitioner's evidence does not show the official duties
of Jaime Pimentel as administrator of petitioner's haciendas. The evidence does not
indicate whether Pimentel's duties is so integrated with the corporation that he would
immediately realize his responsibilities and know what he should do with any legal
papers served on him. At the time the notices were sent and the preliminary conference
conducted, petitioner's principal place of business was listed in respondent DAR's
records as "Soriano Bldg., Plaza Cervantes, Manila,"
66
and "7th Flr. Cacho-Gonzales
Bldg., 101 Aguirre St., Makati, Metro Manila."
67
Pimentel did not hold office at the
principal place of business of petitioner. Neither did he exercise his functions in Plaza
Cervantes, Manila nor in Cacho-Gonzales Bldg., Makati, Metro Manila. He performed
his official functions and actually resided in the haciendas in Nasugbu, Batangas, a
place over two hundred kilometers away from Metro Manila.
Curiously, respondent DAR had information of the address of petitioner's principal place
of business. The Notices of Acquisition over Haciendas Palico and Banilad were
addressed to petitioner at its offices in Manila and Makati. These Notices were sent
barely three to four months after Pimentel was notified of the preliminary
conference.
68
Why respondent DAR chose to notify Pimentel instead of the officers of
the corporation was not explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the
notices and letters of invitation were validly served on petitioner through him, there is no
showing that Pimentel himself was duly authorized to attend the conference meeting
with the MARO, BARC and LBP representatives and farmer beneficiaries for purposes
of compulsory acquisition of petitioner's landholdings. Even respondent DAR's evidence
does not indicate this authority. On the contrary, petitioner claims that it had no
knowledge of the letter-invitation, hence, could not have given Pimentel the authority to
bind it to whatever matters were discussed or agreed upon by the parties at the
preliminary conference or public hearing. Notably, one year after Pimentel was informed
of the preliminary conference, DAR A.O. No. 9, Series of 1990 was issued and this
required that the Notice of Coverage must be sent "to the landowner concerned or his
duly authorized representative."
69

Assuming further that petitioner was duly notified of the CARP coverage of its
haciendas, the areas found actually subject to CARP were not properly identified before
they were taken over by respondent DAR. Respondents insist that the lands were
identified because they are all registered property and the technical description in their
respective titles specifies their metes and bounds. Respondents admit at the same time,
however, that not all areas in the haciendas were placed under the comprehensive
agrarian reform program invariably by reason of elevation or character or use of the
land.
70

The acquisition of the landholdings did not cover the entire expanse of the two
haciendas, but only portions thereof. Hacienda Palico has an area of 1,024 hectares
and only 688.7576 hectares were targetted for acquisition. Hacienda Banilad has an
area of 1,050 hectares but only 964.0688 hectares were subject to CARP. The
haciendas are not entirely agricultural lands. In fact, the various tax declarations over
the haciendas describe the landholdings as "sugarland," and "forest, sugarland, pasture
land, horticulture and woodland."
71

Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically
requires that the land subject to land reform be first identified. The two haciendas in the
instant case cover vast tracts of land. Before Notices of Acquisition were sent to
petitioner, however, the exact areas of the landholdings were not properly segregated
and delineated. Upon receipt of this notice, therefore, petitioner corporation had no idea
which portions of its estate were subject to compulsory acquisition, which portions it
could rightfully retain, whether these retained portions were compact or contiguous, and
which portions were excluded from CARP coverage. Even respondent DAR's evidence
does not show that petitioner, through its duly authorized representative, was notified of
any ocular inspection and investigation that was to be conducted by respondent DAR.
Neither is there proof that petitioner was given the opportunity to at least choose and
identify its retention area in those portions to be acquired compulsorily. The right of
retention and how this right is exercised, is guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. . . . .
The right to choose the area to be retained, which shall be compact or
contiguous, shall pertain to the landowner; Provided, however, That in
case the area selected for retention by the landowner is tenanted, the
tenant shall have the option to choose whether to remain therein or be a
beneficiary in the same or another agricultural land with similar or
comparable features. In case the tenant chooses to remain in the retained
area, he shall be considered a leaseholder and shall lose his right to be a
beneficiary under this Act. In case the tenant chooses to be a beneficiary
in another agricultural land, he loses his right as a leaseholder to the land
retained by the landowner. The tenant must exercise this option within a
period of one (1) year from the time the landowner manifests his choice of
the area for retention.
Under the law, a landowner may retain not more than five hectares out of the total area
of his agricultural land subject to CARP. The right to choose the area to be retained,
which shall be compact or contiguous, pertains to the landowner. If the area chosen for
retention is tenanted, the tenant shall have the option to choose whether to remain on
the portion or be a beneficiary in the same or another agricultural land with similar or
comparable features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the
subject of a Voluntary Offer to Sell (VOS). The VOS in the instant case was made on
May 6, 1988,
72
before the effectivity of R.A. 6657 on June 15, 1988. VOS transactions
were first governed by DAR Administrative Order No. 19, series of 1989,
73
and under
this order, all VOS filed before June 15, 1988 shall be heard and processed in
accordance with the procedure provided for in Executive Order No. 229, thus:
III. All VOS transactions which are now pending before the DAR and for
which no payment has been made shall be subject to the notice and
hearing requirements provided in Administrative Order No. 12, Series of
1989, dated 26 July 1989, Section II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL,
shall be heard and processed in accordance with the procedure provided
for in Executive Order No. 229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. The government shall purchase all
agricultural lands it deems productive and suitable to farmer cultivation
voluntarily offered for sale to it at a valuation determined in accordance
with Section 6. Such transaction shall be exempt from the payment of
capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the identification of private land
as set forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates
the procedure of acquisition in Section 16, R.A. 6657. In other words, the E.O. is silent
as to the procedure for the identification of the land, the notice of coverage and the
preliminary conference with the landowner, representatives of the BARC, the LBP and
farmer beneficiaries. Does this mean that these requirements may be dispensed with
regard to VOS filed before June 15, 1988? The answer is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land,
landowner and beneficiaries of the land subject to agrarian reform be identified before
the notice of acquisition should be issued.
74
Hacienda Caylaway was voluntarily offered
for sale in 1989. The Hacienda has a total area of 867.4571 hectares and is covered by
four (4) titles. In two separate Resolutions both dated January 12, 1989, respondent
DAR, through the Regional Director, formally accepted the VOS over the two of these
four
titles.
75
The land covered by two titles has an area of 855.5257 hectares, but only
648.8544 hectares thereof fell within the coverage of R.A. 6657.
76
Petitioner claims it
does not know where these portions are located.
Respondent DAR, on the other hand, avers that surveys on the land covered by the four
titles were conducted in 1989, and that petitioner, as landowner, was not denied
participation therein, The results of the survey and the land valuation summary report,
however, do not indicate whether notices to attend the same were actually sent to and
received by petitioner or its duly authorized representative.
77
To reiterate, Executive
Order No. 229 does not lay down the operating procedure, much less the notice
requirements, before the VOS is accepted by respondent DAR. Notice to the landowner,
however, cannot be dispensed with. It is part of administrative due process and is an
essential requisite to enable the landowner himself to exercise, at the very least, his
right of retention guaranteed under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not subject to agrarian reform
because they have been declared for tourism, not agricultural
purposes.
78
In 1975, then President Marcos issued Proclamation No. 1520 declaring
the municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including the
subject haciendas, were allegedly reclassified as non-agricultural 13 years before the
effectivity of R. A. No. 6657.
79
In 1993, the Regional Director for Region IV of the
Department of Agriculture certified that the haciendas are not feasible and sound for
agricultural development.
80
On March 20, 1992, pursuant to Proclamation No. 1520, the
Sangguniang Bayan of Nasugbu, Batangas adopted Resolution No. 19 reclassifying
certain areas of Nasugbu as non-agricultural.
81
This Resolution approved Municipal
Ordinance No. 19, Series of 1992, the Revised Zoning Ordinance of Nasugbu
82
which
zoning ordinance was based on a Land Use Plan for Planning Areas for New
Development allegedly prepared by the University of the Philippines.
83
Resolution No.
19 of the Sangguniang Bayan was approved by the Sangguniang Panlalawigan of
Batangas on March 8, 1993.
84

Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in
1991 when it approved conversion of 1,827 hectares in Nasugbu into a tourist area
known as the Batulao Resort Complex, and 13.52 hectares in Barangay Caylaway as
within the potential tourist belt.
85
Petitioner present evidence before us that these areas
are adjacent to the haciendas subject of this petition, hence, the haciendas should
likewise be converted. Petitioner urges this Court to take cognizance of the conversion
proceedings and rule accordingly.
6

We do not agree. Respondent DAR's failure to observe due process in the acquisition of
petitioner's landholdings does not ipso facto give this Court the power to adjudicate over
petitioner's application for conversion of its haciendas from agricultural to non-
agricultural. The agency charged with the mandate of approving or disapproving
applications for conversion is the DAR.
At the time petitioner filed its application for conversion, the Rules of Procedure
governing the processing and approval of applications for land use conversion was the
DAR A.O. No. 2, Series of 1990. Under this A.O., the application for conversion is filed
with the MARO where the property is located. The MARO reviews the application and
its supporting documents and conducts field investigation and ocular inspection of the
property. The findings of the MARO are subject to review and evaluation by the
Provincial Agrarian Reform Officer (PARO). The PARO may conduct further field
investigation and submit a supplemental report together with his recommendation to the
Regional Agrarian Reform Officer (RARO) who shall review the same. For lands less
than five hectares, the RARO shall approve or disapprove applications for conversion.
For lands exceeding five hectares, the RARO shall evaluate the PARO Report and
forward the records and his report to the Undersecretary for Legal Affairs. Applications
over areas exceeding fifty hectares are approved or disapproved by the Secretary of
Agrarian Reform.
The DAR's mandate over applications for conversion was first laid down in Section 4 (j)
and Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the
CARL and Memorandum Circular No. 54, Series of 1993 of the Office of the President.
The DAR's jurisdiction over applications for conversion is provided as follows:
A. The Department of Agrarian Reform (DAR) is mandated
to "approve or disapprove applications for conversion,
restructuring or readjustment of agricultural lands into non-
agricultural uses," pursuant to Section 4 (j) of Executive
Order No. 129-A, Series of 1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR,
exclusive authority to approve or disapprove applications for
conversion of agricultural lands for residential, commercial,
industrial and other land uses.
C. Sec. 65 of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, likewise
empowers the DAR to authorize under certain conditions,
the conversion of agricultural lands.
D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of
the Office of the President, provides that "action on
applications for land use conversion on individual
landholdings shall remain as the responsibility of the DAR,
which shall utilize as its primary reference, documents on the
comprehensive land use plans and accompanying
ordinances passed upon and approved by the local
government units concerned, together with the National
Land Use Policy, pursuant to R.A. No. 6657 and E.O. No.
129-A.
87

Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990
entitled "Revised Rules and Regulations Governing Conversion of Private Agricultural
Lands and Non-Agricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled "Rules
of Procedure Governing the Processing and Approval of Applications for Land Use
Conversion." These A.O.'s and other implementing guidelines, including Presidential
issuances and national policies related to land use conversion have been consolidated
in DAR A.O. No. 07, Series of 1997. Under this recent issuance, the guiding principle in
land use conversion is:
to preserve prime agricultural lands for food production while, at the same
time, recognizing the need of the other sectors of society (housing,
industry and commerce) for land, when coinciding with the objectives of
the Comprehensive Agrarian Reform Law to promote social justice,
industrialization and the optimum use of land as a national resource for
public welfare.
88

"Land Use" refers to the manner of utilization of land, including its allocation,
development and management. "Land Use Conversion" refers to the act or process of
changing the current use of a piece of agricultural land into some other use as approved
by the DAR.
89
The conversion of agricultural land to uses other than agricultural
requires field investigation and conferences with the occupants of the land. They involve
factual findings and highly technical matters within the special training and expertise of
the DAR. DAR A.O. No. 7, Series of 1997 lays down with specificity how the DAR must
go about its task. This time, the field investigation is not conducted by the MARO but by
a special task force, known as the Center for Land Use Policy Planning and
Implementation (CLUPPI-DAR Central Office). The procedure is that once an
application for conversion is filed, the CLUPPI prepares the Notice of Posting. The
MARO only posts the notice and thereafter issues a certificate to the fact of posting. The
CLUPPI conducts the field investigation and dialogues with the applicants and the
farmer beneficiaries to ascertain the information necessary for the processing of the
application. The Chairman of the CLUPPI deliberates on the merits of the investigation
report and recommends the appropriate action. This recommendation is transmitted to
the Regional Director, thru the Undersecretary, or Secretary of Agrarian Reform.
Applications involving more than fifty hectares are approved or disapproved by the
Secretary. The procedure does not end with the Secretary, however. The Order
provides that the decision of the Secretary may be appealed to the Office of the
President or the Court of Appeals, as the case may be, viz:
Appeal from the decision of the Undersecretary shall be made to the
Secretary, and from the Secretary to the Office of the President or the
Court of Appeals as the case may be. The mode of appeal/motion for
reconsideration, and the appeal fee, from Undersecretary to the Office of
the Secretary shall be the same as that of the Regional Director to the
Office of the Secretary.
90

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto
itself authority to resolve a controversy the jurisdiction over which is initially lodged with
an administrative body of special competence.
91
Respondent DAR is in a better position
to resolve petitioner's application for conversion, being primarily the agency possessing
the necessary expertise on the matter. The power to determine whether Haciendas
Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of
the CARL lies with the DAR, not with this Court.
Finally, we stress that the failure of respondent DAR to comply with the requisites of due
process in the acquisition proceedings does not give this Court the power to nullify the
CLOA's already issued to the farmer beneficiaries. To assume the power is to short-
circuit the administrative process, which has yet to run its regular course. Respondent
DAR must be given the chance to correct its procedural lapses in the acquisition
proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer beneficiaries
in 1993.
92
Since then until the present, these farmers have been cultivating their
lands.
93
It goes against the basic precepts of justice, fairness and equity to deprive
these people, through no fault of their own, of the land they till. Anyhow, the farmer
beneficiaries hold the property in trust for the rightful owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over
the three haciendas are nullified for respondent DAR's failure to observe due process
therein. In accordance with the guidelines set forth in this decision and the applicable
administrative procedure, the case is hereby remanded to respondent DAR for proper
acquisition proceedings and determination of petitioner's application for conversion.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Purisima, Buena, Gonzaga-
Reyes and De Leon, Jr., JJ., concur.
Melo, J., please see concurring and dissenting opinion.
Ynares-Santiago, J., concurring and dissenting opinion.
Kapunan, J., I join in the concurring and dissenting opinion of Justice C. Y. Santiago.
Quisumbing, J., I join the in the concurring and dissenting opinion of J. Santiago.
Pardo, J., I join the concurring and dissenting opinion of J. Santiago.
Separate Opinions
MELO, J ., concurring and dissenting opinion;
I concur in the ponencia of Justice Ynares-Santiago, broad and exhaustive as it is in its
treatment of the issues. However, I would like to call attention to two or three points
which I believe are deserving of special emphasis.
The apparent incongruity or shortcoming in the petition is DAR's disregard of a law
which settled the non-agricultural nature of the property as early as 1975. Related to
this are the inexplicable contradictions between DAR's own official issuances and its
challenged actuations in this particular case.
Presidential Proclamation No. 1520 has the force and effect of law unless repealed.
This law declared Nasugbu, Batangas as a tourist zone.
Considering the new and pioneering stage of the tourist industry in 1975, it can safely
be assumed that Proclamation 1520 was the result of empirical study and careful
determination, not political or extraneous pressures. It cannot be disregarded by DAR or
any other department of Government.
In Province of Camarines Sur, et al. vs. Court of Appeals, et al. (222 SCRA 173, 182
[1993]), we ruled that local governments need not obtain the approval of DAR to
reclassify lands from agricultural to non-agricultural use. In the present case, more than
the exercise of that power, the local governments were merely putting into effect a law
when they enacted the zoning ordinances in question.
Any doubts as to the factual correctness of the zoning reclassifications are answered by
the February 2, 1993 certification of the Department of Agriculture that the subject
landed estates are not feasible and economically viable for agriculture, based on the
examination of their slope, terrain, depth, irrigability, fertility, acidity, and erosion
considerations.
I agree with the ponencia's rejection of respondent's argument that agriculture is not
incompatible and may be enforced in an area declared by law as a tourist zone.
Agriculture may contribute to the scenic views and variety of countryside profiles but the
issue in this case is not the beauty of ricefields, cornfields, or coconut groves. May land
found to be non-agricultural and declared as a tourist zone by law, be withheld from the
owner's efforts to develop it as such? There are also plots of land within Clark Field and
other commercial-industrial zones capable of cultivation but this does not subject them
to compulsory land reform. It is the best use of the land for tourist purposes, free trade
zones, export processing or the function to which it is dedicated that is the determining
factor. Any cultivation is temporary and voluntary.
The other point I wish to emphasize is DAR's failure to follow its own administrative
orders and regulations in this case.
The contradictions between DAR administrative orders and its actions in the present
case may be summarized:
1. DAR Administrative Order No. 6, Series of 1994, subscribes to Department of Justice
Opinion No. 44, Series of 1990 that lands classified as non-agricultural prior to June 15,
1988 when the CARP Law was passed are exempt from its coverage. By what right can
DAR now ignore its own Guidelines in this case of land declared as forming a tourism
zone since 1975?
2. DAR Order dated January 22, 1991 granted the conversion of the adjacent and
contiguous property of Group Developers and Financiers, Inc. (GDFI) into the Batulao
Tourist Resort. Why should DAR have a contradictory stance in the adjoining property
of Roxas and Co., Inc. found to be similar in nature and declared as such?
3. DAR Exemption Order, Case No. H-9999-050-97 dated May 17, 1999 only recently
exempted 13.5 hectares of petitioner's property also found in Caylaway together, and
similarly situated, with the bigger parcel (Hacienda Caylaway) subject of this petition
from CARL coverage. To that extent, it admits that its earlier blanket objections are
unfounded.
4. DAR Administrative Order No. 3, Series of 1996 identifies the land outside of CARP
coverage as:
(a) Land found by DAR as no longer suitable for agriculture
and which cannot be given appropriate valuation by the Land
Bank;
(b) Land where DAR has already issued a conversion order;
(c) Land determined as exempt under DOJ Opinions Nos. 44
and 181; or
(d) Land declared for non-agricultural use by Presidential
Proclamation.
It is readily apparent that the land in this case falls under all the above categories
except the second one. DAR is acting contrary to its own rules and regulations.
I should add that DAR has affirmed in a Rejoinder (August 20, 1999) the issuance and
effectivity of the above administrative orders.
DAR Administrative Order No. 3, Series of 1996, Paragraph 2 of Part II, Part III and Part
IV outlines the procedure for reconveyance of land where CLOAs have been improperly
issued. The procedure is administrative, detailed, simple, and speedy. Reconveyance is
implemented by DAR which treats the procedure as "enshrined . . . in Section 50 of
Republic Act No. 6657" (Respondent's Rejoinder). Administrative Order No. 3, Series of
1996 shows there are no impediments to administrative or judicial cancellations of
CLOA's improperly issued over exempt property. Petitioner further submits, and this
respondent does not refute, that 25 CLOAs covering 3,338 hectares of land owned by
the Manila Southcoast Development Corporation also found in Nasugbu, Batangas,
have been cancelled on similar grounds as those in the case at bar.
The CLOAs in the instant case were issued over land declared as non-agricultural by a
presidential proclamation and confirmed as such by actions of the Department of
Agriculture and the local government units concerned. The CLOAs were issued over
adjoining lands similarly situated and of like nature as those declared by DAR as
exempt from CARP coverage. The CLOAs were surprisingly issued over property which
were the subject of pending cases still undecided by DAR. There should be no question
over the CLOAs having been improperly issued, for which reason, their cancellation is
warranted.

YNARES-SANTIAGO, J ., concurring and dissenting opinion;
I concur in the basic premises of the majority opinion. However, I dissent in its final
conclusions and the dispositive portion.
With all due respect, the majority opinion centers on procedure but unfortunately
ignores the substantive merits which this procedure should unavoidably sustain.
The assailed decision of the Court of Appeals had only one basic reason for its denial of
the petition, i.e., the application of the doctrine of non-exhaustion of administrative
remedies. This Court's majority ponencia correctly reverses the Court of Appeals on this
issue. The ponencia now states that the issuance of CLOA's to farmer beneficiaries
deprived petitioner Roxas & Co. of its property without just compensation. It rules that
the acts of the Department of Agrarian Reform are patently illegal. It concludes that
petitioner's rights were violated, and thus to require it to exhaust administrative
remedies before DAR was not a plain, speedy, and adequate remedy. Correctly,
petitioner sought immediate redress from the Court of Appeals to this Court.
However, I respectfully dissent from the judgment which remands the case to the DAR.
If the acts of DAR are patently illegal and the rights of Roxas & Co. violated, the wrong
decisions of DAR should be reversed and set aside. It follows that the fruits of the
wrongful acts, in this case the illegally issued CLOAs, must be declared null and void.
Petitioner Roxas & Co. Inc. is the registered owner of three (3) haciendas located in
Nasugbu, Batangas, namely: Hacienda Palico comprising of an area of 1,024 hectares
more or less, covered by Transfer Certificate of Title No. 985 (Petition, Annex
"G"; Rollo, p. 203); Hacienda Banilad comprising an area of 1,050 hectares and covered
by TCT No. 924 (Petition, Annex "I"; Rollo, p. 205); and Hacienda Caylaway comprising
an area of 867.4571 hectares and covered by TCT Nos. T-44655 (Petition, Annex
"O"; Rollo, p. 216), T-44662 (Petition, Annex "P"; Rollo, p. 217), T-44663 (Petition,
Annex "Q"; Rollo, p. 210) and T-44664 (Petition, Annex "R"; Rollo, p. 221).
Sometime in 1992 and 1993, petitioner filed applications for conversion with DAR.
Instead of either denying or approving the applications, DAR ignored and sat on them
for seven (7) years. In the meantime and in acts of deceptive lip-service, DAR excluded
some small and scattered lots in Palico and Caylaway from CARP coverage. The
majority of the properties were parceled out to alleged farmer-beneficiaries, one at a
time, even as petitioner's applications were pending and unacted upon.
The majority ponencia cites Section 16 of Republic Act No. 6657 on the procedure for
acquisition of private lands.
The ponencia cites the detailed procedures found in DAR Administrative Order No. 12,
Series of 1989 for the identification of the land to be acquired. DAR did not follow its
own prescribed procedures. There was no valid issuance of a Notice of Coverage and a
Notice of Acquisition.
The procedure on the evaluation and determination of land valuation, the duties of the
Municipal Agrarian Reform Officer (MARO), the Barangay Agrarian Reform Committee
(BARC), Provincial Agrarian Reform Officer (PARO) and the Bureau of Land Acquisition
and Distribution (BLAD), the documentation and reports on the step-by-step process,
the screening of prospective Agrarian Reform Beneficiaries (ARBs), the land survey and
segregation survey plan, and other mandatory procedures were not followed. The
landowner was not properly informed of anything going on.
Equally important, there was no payment of just compensation. I agree with
the ponencia that due process was not observed in the taking of petitioner's properties.
Since the DAR did not validly acquire ownership over the lands, there was no acquired
property to validly convey to any beneficiary. The CLOAs were null and void from the
start.
Petitioner states that the notices of acquisition were sent by respondents by ordinary
mail only, thereby disregarding the procedural requirement that notices be served
personally or by registered mail. This is not disputed by respondents, but they allege
that petitioner changed its address without notifying the DAR. Notably, the procedure
prescribed speaks of only two modes of service of notices of acquisition personal
service and service by registered mail. The non-inclusion of other modes of service can
only mean that the legislature intentionally omitted them. In other words, service of a
notice of acquisition other than personally or by registered mail is not valid. Casus
omissus pro omisso habendus est. The reason is obvious. Personal service and service
by registered mail are methods that ensure the receipt by the addressee, whereas
service by ordinary mail affords no reliable proof of receipt.
Since it governs the extraordinary method of expropriating private property, the CARL
should be strictly construed. Consequently, faithful compliance with its provisions,
especially those which relate to the procedure for acquisition of expropriated lands,
should be observed. Therefore, the service by respondent DAR of the notices of
acquisition to petitioner by ordinary mail, not being in conformity with the mandate of
R.A. 6657, is invalid and ineffective.
With more reason, the compulsory acquisition of portions of Hacienda Palico, for which
no notices of acquisition were issued by the DAR, should be declared invalid.
The entire ponencia, save for the last six (6) pages, deals with the mandatory
procedures promulgated by law and DAR and how they have not been complied with.
There can be no debate over the procedures and their violation. However, I respectfully
dissent in the conclusions reached in the last six pages. Inspite of all the violations, the
deprivation of petitioner's rights, the non-payment of just compensation, and the
consequent nullity of the CLOAs, the Court is remanding the case to the DAR for it to
act on the petitioner's pending applications for conversion which have been unacted
upon for seven (7) years.
Petitioner had applications for conversion pending with DAR. Instead of deciding them
one way or the other, DAR sat on the applications for seven (7) years. At that same time
it rendered the applications inutile by distributing CLOAs to alleged tenants. This action
is even worse than a denial of the applications because DAR had effectively denied the
application against the applicant without rendering a formal decision. This kind of action
preempted any other kind of decision except denial. Formal denial was even
unnecessary. In the case of Hacienda Palico, the application was in fact denied on
November 8, 1993.
There are indisputable and established factors which call for a more definite and clearer
judgment.
The basic issue in this case is whether or not the disputed property is agricultural in
nature and covered by CARP. That petitioner's lands are non-agricultural in character is
clearly shown by the evidence presented by petitioner, all of which were not disputed by
respondents. The disputed property is definitely not subject to CARP.
The nature of the land as non-agricultural has been resolved by the agencies with
primary jurisdiction and competence to decide the issue, namely (1) a Presidential
Proclamation in 1975; (2) Certifications from the Department of Agriculture; (3) a Zoning
Ordinance of the Municipality of Nasugbu, approved by the Province of Batangas; and
(4) by clear inference and admissions, Administrative Orders and Guidelines
promulgated by DAR itself.
The records show that on November 20, 1975 even before the enactment of the CARP
law, the Municipality of Nasugbu, Batangas was declared a "tourist zone" in the
exercise of lawmaking power by then President Ferdinand E. Marcos under
Proclamation No. 1520 (Rollo, pp. 122-123). This Presidential Proclamation is
indubitably part of the law of the land.
On 20 March 1992 the Sangguniang Bayan of Nasugbu promulgated its Resolution No.
19, a zonification ordinance (Rollo, pp. 124-200), pursuant to its powers under Republic
Act No. 7160, i.e., the Local Government Code of 1991. The municipal ordinance was
approved by the Sangguniang Panlalawigan of Batangas (Rollo, p. 201). Under this
enactment, portions of the petitioner's properties within the municipality were re-zonified
as intended and appropriate for non-agricultural uses. These two issuances, together
with Proclamation 1520, should be sufficient to determine the nature of the land as non-
agricultural. But there is more.
The records also contain a certification dated March 1, 1993 from the Director of Region
IV of the Department of Agriculture that the disputed lands are no longer economically
feasible and sound for agricultural purposes (Rollo, p. 213).
DAR itself impliedly accepted and determined that the municipality of Nasugbu is non-
agricultural when it affirmed the force and effect of Presidential Proclamation 1520. In
an Order dated January 22, 1991, DAR granted the conversion of the adjoining and
contiguous landholdings owned by Group Developer and Financiers, Inc. in Nasugbu
pursuant to the Presidential Proclamation. The property alongside the disputed
properties is now known as "Batulao Resort Complex". As will be shown later, the
conversion of various other properties in Nasugbu has been ordered by DAR, including
a property disputed in this petition, Hacienda Caylaway.
Inspite of all the above, the Court of Appeals concluded that the lands comprising
petitioner's haciendas are agricultural, citing, among other things, petitioner's acts of
voluntarily offering Hacienda Caylaway for sale and applying for conversion its lands
from agricultural to non-agricultural.
Respondents, on the other hand, did not only ignore the administrative and executive
decisions. It also contended that the subject land should be deemed agricultural
because it is neither residential, commercial, industrial or timber. The character of a
parcel of land, however, is not determined merely by a process of elimination. The
actual use which the land is capable of should be the primordial factor.
RA 6657 explicitly limits its coverage thus:
The Comprehensive Agrarian Reform Law of 1998 shall cover, regardless
of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive
Order No. 229, including other lands of the public domain suitable for
agriculture.
More specifically, the following lands are covered by the Comprehensive
Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or
suitable for agriculture. No reclassification of forest or mineral lands to
agricultural lands shall be undertaken after the approval of this Act until
Congress, taking into account, ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the
public domain;
(b) All lands of the public domain in excess of the specific limits as
determined by Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for
agriculture; and
(d) All private lands devoted to or suitable for a agriculture regardless of
the agricultural products raised or that can be raised thereon." (RA 6657,
Sec. 4; emphasis provided)
In Luz Farms v. Secretary of the Department of Agrarian Reform and Natalia Realty,
Inc. v. Department of Agrarian Reform, this Court had occasion to rule that agricultural
lands are only those which are arable and suitable.
It is at once noticeable that the common factor that classifies land use as agricultural,
whether it be public or private land, is its suitability for agriculture. In this connection, RA
6657 defines "agriculture" as follows:
Agriculture, Agricultural Enterprises or Agricultural Activity means the
cultivation of the soil, planting of crops, growing of fruit trees, raising of
livestock, poultry or fish, including the harvesting of such farm products,
and other farm activities, and practices performed by a farmer in
conjunction with such farming operations done by persons whether natural
or juridical. (RA 6657, sec. 3[b])
In the case at bar, petitioner has presented certifications issued by the Department of
Agriculture to the effect that Haciendas Palico, Banilad and Caylaway are not feasible
and economically viable for agricultural development due to marginal productivity of the
soil, based on an examination of their slope, terrain, depth, irrigability, fertility, acidity,
and erosion factors (Petition, Annex "L", Rollo, p. 213; Annex "U", Rollo, p. 228). This
finding should be accorded respect considering that it came from competent authority,
said Department being the agency possessed with the necessary expertise to
determine suitability of lands to agriculture. The DAR Order dated January 22, 1991
issued by respondent itself stated that the adjacent land now known as the Batulao
Resort Complex is hilly, mountainous, and with long and narrow ridges and deep
gorges. No permanent sites are planted. Cultivation is by kaingin method. This confirms
the findings of the Department of Agriculture.
Parenthetically, the foregoing finding of the Department of Agriculture also explains the
validity of the reclassification of petitioner's lands by the Sangguniang Bayan of
Nasugbu, Batangas, pursuant to Section 20 of the Local Government Code of 1991. It
shows that the condition imposed by respondent Secretary of Agrarian Reform on
petitioner for withdrawing its voluntary offer to sell Hacienda Caylaway, i.e., that the soil
be unsuitable for agriculture, has been adequately met. In fact, the DAR in its Order in
Case No. A-9999-050-97, involving a piece of land also owned by petitioner and
likewise located in Caylaway, exempted it from the coverage of CARL (Order dated May
17, 1999; Annex "D" of Petitioner's Manifestation), on these grounds.
Furthermore, and perhaps more importantly, the subject lands are within an area
declared in 1975 by Presidential Proclamation No. 1520 to be part of a tourist zone.
This determination was made when the tourism prospects of the area were still for the
future. The studies which led to the land classification were relatively freer from
pressures and, therefore, more objective and open-minded. Respondent, however,
contends that agriculture is not incompatible with the lands' being part of a tourist zone
since "agricultural production, by itself, is a natural asset and, if properly set, can
command tremendous aesthetic value in the form of scenic views and variety of
countryside profiles." (Comment, Rollo, 579).
The contention is untenable. Tourist attractions are not limited to scenic landscapes and
lush greeneries. Verily, tourism is enhanced by structures and facilities such as hotels,
resorts, rest houses, sports clubs and golf courses, all of which bind the land and render
it unavailable for cultivation. As aptly described by petitioner:
The development of resorts, golf courses, and commercial centers is
inconsistent with agricultural development. True, there can be limited
agricultural production within the context of tourism development.
However, such small scale farming activities will be dictated by, and
subordinate to the needs or tourism development. In fact, agricultural use
of land within Nasugbu may cease entirely if deemed necessary by the
Department of Tourism (Reply, Rollo, p. 400).
The lands subject hereof, therefore, are non-agricultural. Hence, the voluntary offer to
sell Hacienda Caylaway should not be deemed an admission that the land is
agricultural. Rather, the offer was made by petitioner in good faith, believing at the time
that the land could still be developed for agricultural production. Notably, the offer to sell
was made as early as May 6, 1988, before the soil thereon was found by the
Department of Agriculture to be unsuitable for agricultural development (the
Certifications were issued on 2 February 1993 and 1 March 1993). Petitioner's
withdrawal of its voluntary offer to sell, therefore, was not borne out of a whimsical or
capricious change of heart. Quite simply, the land turned out to be outside of the
coverage of the CARL, which by express provision of RA 6657, Section 4, affects only
public and private agricultural lands. As earlier stated, only on May 17, 1999, DAR
Secretary Horacio Morales, Jr. approved the application for a lot in Caylaway, also
owned by petitioner, and confirmed the seven (7) documentary evidences proving the
Caylaway area to be non-agricultural (DAR Order dated 17 May 1999, in Case No. A-
9999-050-97, Annex "D" Manifestation).
The DAR itself has issued administrative circulars governing lands which are outside of
CARP and may not be subjected to land reform. Administrative Order No. 3, Series of
1996 declares in its policy statement what landholdings are outside the coverage of
CARP. The AO is explicit in providing that such non-covered properties shall be
reconveyed to the original transferors or owners.
These non-covered lands are:
a. Land, or portions thereof, found to be no longer suitable
for agriculture and, therefore, could not be given appropriate
valuation by the Land Bank of the Philippines (LBP);
b. Those were a Conversion Order has already been issued
by the DAR allowing the use of the landholding other than for
agricultural purposes in accordance with Section 65 of R.A.
No. 6657 and Administrative Order No. 12, Series of 1994;
c. Property determined to be exempted from CARP
coverage pursuant to Department of Justice Opinion Nos. 44
and 181; or
d. Where a Presidential Proclamation has been issued
declaring the subject property for certain uses other than
agricultural. (Annex "F", Manifestation dated July 23, 1999)
The properties subject of this Petition are covered by the first, third, and fourth
categories of the Administrative Order. The DAR has disregarded its own issuances
which implement the law.
To make the picture clearer, I would like to summarize the law, regulations, ordinances,
and official acts which show beyond question that the disputed property is non-
agricultural, namely:
(a) The Law. Proclamation 1520 dated November 20, 1975 is part of the
law of the land. It declares the area in and around Nasugbu, Batangas, as
a Tourist Zone. It has not been repealed, and has in fact been used by
DAR to justify conversion of other contiguous and nearby properties of
other parties.
(b) Ordinances of Local Governments. Zoning ordinance of the
Sangguniang Bayan of Nasugbu, affirmed by the Sangguniang
Panlalawigan of Batangas, expressly defines the property as tourist, not
agricultural. The power to classify its territory is given by law to the local
governments.
(c) Certification of the Department of Agriculture that the property is not
suitable and viable for agriculture. The factual nature of the land, its
marginal productivity and non-economic feasibility for cultivation, are
described in detail.
(d) Acts of DAR itself which approved conversion of contiguous or
adjacent land into the Batulao Resorts Complex. DAR described at length
the non-agricultural nature of Batulao and of portion of the disputed
property, particularly Hacienda Caylaway.
(e) DAR Circulars and Regulations. DAR Administrative Order No. 6,
Series of 1994 subscribes to the Department of Justice opinion that the
lands classified as non-agricultural before the CARP Law, June 15, 1988,
are exempt from CARP. DAR Order dated January 22, 1991 led to the
Batulao Tourist Area. DAR Order in Case No. H-9999-050-97, May 17,
1999, exempted 13.5 hectares of Caylaway, similarly situated and of the
same nature as Batulao, from coverage. DAR Administrative Order No. 3,
Series of 1996, if followed, would clearly exclude subject property from
coverage.
As earlier shown, DAR has, in this case, violated its own circulars, rules and
regulations.
In addition to the DAR circulars and orders which DAR itself has not observed, the
petitioner has submitted a municipal map of Nasugbu, Batangas (Annex "E",
Manifestation dated July 23, 1999). The geographical location of Palico, Banilad, and
Caylaway in relation to the GDFI property, now Batulao Tourist Resort, shows that the
properties subject of this case are equally, if not more so, appropriate for conversion as
the GDFI resort.
Petitioner's application for the conversion of its lands from agricultural to non-agricultural
was meant to stop the DAR from proceeding with the compulsory acquisition of the
lands and to seek a clear and authoritative declaration that said lands are outside of the
coverage of the CARL and can not be subjected to agrarian reform.
Petitioner assails respondent's refusal to convert its lands to non-agricultural use and to
recognize Presidential Proclamation No. 1520, stating that respondent DAR has not
been consistent in its treatment of applications of this nature. It points out that in the
other case involving adjoining lands in Nasugbu, Batangas, respondent DAR ordered
the conversion of the lands upon application of Group Developers and Financiers, Inc.
Respondent DAR, in that case, issued an Order dated January 22, 1991 denying the
motion for reconsideration filed by the farmers thereon and finding that:
In fine, on November 27, 1975, or before the movants filed their instant
motion for reconsideration, then President Ferdinand E. Marcos issued
Proclamation No. 1520, declaring the municipalities of Maragondon and
Ternate in the province of Cavite and the municipality of Nasugbu in the
province of Batangas as tourist zone. Precisely, the landholdings in
question are included in such proclamation. Up to now, this office is not
aware that said issuance has been repealed or amended (Petition, Annex
"W"; Rollo, p. 238).
The DAR Orders submitted by petitioner, and admitted by DAR in its Rejoinder
(Rejoinder of DAR dated August 20, 1999), show that DAR has been inconsistent to the
extent of being arbitrary.
Apart from the DAR Orders approving the conversion of the adjoining property now
called Batulao Resort Complex and the DAR Order declaring parcels of the Caylaway
property as not covered by CARL, a major Administrative Order of DAR may also be
mentioned.
The Department of Justice in DOJ Opinion No. 44 dated March 16, 1990 (Annex "A" of
Petitioner's Manifestation) stated that DAR was given authority to approve land
conversions only after June 15, 1988 when RA 6657, the CARP Law, became effective.
Following the DOJ Opinion, DAR issued its AO No. 06, Series of 1994 providing for the
Guidelines on Exemption Orders (Annex "B", Id.). The DAR Guidelines state that lands
already classified as non-agricultural before the enactment of CARL are exempt from its
coverage. Significantly, the disputed properties in this case were classified as tourist
zone by no less than a Presidential Proclamation as early as 1975, long before 1988.
The above, petitioner maintains, constitute unequal protection of the laws. Indeed, the
Constitution guarantees that "(n)o 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" (Constitution, Art. III, Sec. 1). Respondent DAR, therefore, has no alternative but
to abide by the declaration in Presidential Proclamation 1520, just as it did in the case of
Group Developers and Financiers, Inc., and to treat petitioners' properties in the same
way it did the lands of Group Developers, i.e., as part of a tourist zone not suitable for
agriculture.
On the issue of non-payment of just compensation which results in a taking of property
in violation of the Constitution, petitioner argues that the opening of a trust account in its
favor did not operate as payment of the compensation within the meaning of Section 16
(e) of RA 6657. In Land Bank of the Philippines v. Court of Appeals (249 SCRA 149, at
157 [1995]), this Court struck down as null and void DAR Administrative Circular No. 9,
Series of 1990, which provides for the opening of trust accounts in lieu of the deposit in
cash or in bonds contemplated in Section 16 (e) of RA 6657.
It is very explicit therefrom (Section 16 [e]) that the deposit must be made
only in "cash" or in "LBP bonds." Nowhere does it appear nor can it be
inferred that the deposit can be made in any other form. If it were the
intention to include a "trust account" among the valid modes of deposit,
that should have been made express, or at least, qualifying words ought to
have appeared from which it can be fairly deduced that a "trust account" is
allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to
warrant an expanded construction of the term "deposit."
xxx xxx xxx
In the present suit, the DAR clearly overstepped the limits of its powers to
enact rules and regulations when it issued Administrative Circular No. 9.
There is no basis in allowing the opening of a trust account in behalf of the
landowner as compensation for his property because, as heretofore
discussed, section 16(e) of RA 6657 is very specific that the deposit must
be made only in "cash" or in "LBP bonds." In the same vein, petitioners
cannot invoke LRA Circular Nos. 29, 29-A and 54 because these
implementing regulations cannot outweigh the clear provision of the law.
Respondent court therefore did not commit any error in striking down
Administrative Circular No. 9 for being null and void.
There being no valid payment of just compensation, title to petitioner's landholdings
cannot be validly transferred to the Government. A close scrutiny of the procedure laid
down in Section 16 of RA 6657 shows the clear legislative intent that there must first be
payment of the fair value of the land subject to agrarian reform, either directly to the
affected landowner or by deposit of cash or LBP bonds in the DAR-designated bank,
before the DAR can take possession of the land and request the register of deeds to
issue a transfer certificate of title in the name of the Republic of the Philippines. This is
only proper inasmuch as title to private property can only be acquired by the
government after payment of just compensation In Association of Small Landowners in
the Philippines v. Secretary of Agrarian Reform (175 SCRA 343, 391 [1989]), this Court
held:
The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt of the landowner of the
corresponding payment or the deposit by the DAR of the compensation in
cash or LBP bonds with an accessible bank. Until then, title also remains
with the landowner. No outright change of ownership is contemplated
either.
Necessarily, the issuance of the CLOAs by respondent DAR on October 30, 1993 and
their distribution to farmer-beneficiaries were illegal inasmuch as no valid payment of
compensation for the lands was as yet effected. By law, Certificates of Land Ownership
Award are issued only to the beneficiaries after the DAR takes actual possession of the
land (RA 6657, Sec. 24), which in turn should only be after the receipt by the landowner
of payment or, in case of rejection or no response from the landowner, after the deposit
of the compensation for the land in cash or in LBP bonds (RA 6657, Sec. 16[e]).
Respondents argue that the Land Bank ruling should not be made to apply to the
compulsory acquisition of petitioner's landholdings in 1993, because it occurred prior to
the promulgation of the said decision (October 6, 1995). This is untenable. Laws may be
given retroactive effect on constitutional considerations, where the prospective
application would result in a violation of a constitutional right. In the case at bar, the
expropriation of petitioner's lands was effected without a valid payment of just
compensation, thus violating the Constitutional mandate that "(p)rivate property shall not
be taken for public use without just compensation" (Constitution, Art. III, Sec. 9). Hence,
to deprive petitioner of the benefit of the Land Bank ruling on the mere expedient that it
came later than the actual expropriation would be repugnant to petitioner's fundamental
rights.
The controlling last two (2) pages of the ponencia state:
Finally, we stress that the failure of respondent DAR to comply with the
requisites of due process in the acquisition proceedings does not give this
Court the power to nullify the CLOA's already issued to the farmer
beneficiaries. To assume the power is to short-circuit the administrative
process, which has yet to run its regular course. Respondent DAR must
be given the chance to correct its procedural lapses in the acquisition
proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer
beneficiaries in 1993. Since then until the present, these farmers have
been cultivating their lands. It goes against the basic precepts of justice,
fairness and equity to deprive these people, through no fault of their own,
of the land they till. Anyhow, the farmer beneficiaries hold the property in
trust for the rightful owner of the land.
I disagree with the view that this Court cannot nullify illegally issued CLOA's but must
ask the DAR to first reverse and correct itself.
Given the established facts, there was no valid transfer of petitioner's title to the
Government. This being so, there was also no valid title to transfer to third persons; no
basis for the issuance of CLOAs.
Equally important, CLOAs do not have the nature of Torrens Title. Administrative
cancellation of title is sufficient to invalidate them.
The Court of Appeals said so in its Resolution in this case. It stated:
Contrary to the petitioner's argument that issuance of CLOAs to the
beneficiaries prior to the deposit of the offered price constitutes violation of
due process, it must be stressed that the mere issuance of the CLOAs
does not vest in the farmer/grantee ownership of the land described
therein.
At most the certificate merely evidences the government's recognition of
the grantee as the party qualified to avail of the statutory mechanisms for
the acquisition of ownership of the land. Thus failure on the part of the
farmer/grantee to comply with his obligations is a ground for forfeiture of
his certificate of transfer. Moreover, where there is a finding that the
property is indeed not covered by CARP, then reversion to the landowner
shall consequently be made, despite issuance of CLOAs to the
beneficiaries. (Resolution dated January 17, 1997, p. 6)
DAR Administrative Order 03, Series of 1996 (issued on August 8, 1996; Annex "F" of
Petitioner's Manifestation) outlines the procedure for the reconveyance to landowners of
properties found to be outside the coverage of CARP. DAR itself acknowledges that
they can administratively cancel CLOAs if found to be erroneous. From the detailed
provisions of the Administrative Order, it is apparent that there are no impediments to
the administrative cancellation of CLOAs improperly issued over exempt properties. The
procedure is followed all over the country. The DAR Order spells out that CLOAs are
not Torrens Titles. More so if they affect land which is not covered by the law under
which they were issued. In its Rejoinder, respondent DAR states:
3.2. And, finally, on the authority of DAR/DARAB to cancel erroneously
issued Emancipation Patents (EPs) or Certificate of Landownership
Awards (CLOAs), same is enshrined, it is respectfully submitted, in
Section 50 of Republic Act No. 6657.
In its Supplemental Manifestation, petitioner points out, and this has not been disputed
by respondents, that DAR has also administratively cancelled twenty five (25) CLOAs
covering Nasugbu properties owned by the Manila Southcoast Development
Corporation near subject Roxas landholdings. These lands were found not suitable for
agricultural purposes because of soil and topographical characteristics similar to those
of the disputed properties in this case.
The former DAR Secretary, Benjamin T. Leong, issued DAR Order dated January 22,
1991 approving the development of property adjacent and contiguous to the subject
properties of this case into the Batulao Tourist Resort. Petitioner points out that
Secretary Leong, in this Order, has decided that the land
1. Is, as contended by the petitioner GDFI "hilly, mountainous, and
characterized by poor soil condition and nomadic method of cultivation,
hence not suitable to agriculture."
2. Has as contiguous properties two haciendas of Roxas y Cia and found
by Agrarian Reform Team Leader Benito Viray to be "generally rolling, hilly
and mountainous and strudded (sic) with long and narrow ridges and deep
gorges. Ravines are steep grade ending in low dry creeks."
3. Is found in an. area where "it is quite difficult to provide statistics on rice
and corn yields because there are no permanent sites planted. Cultivation
is by Kaingin Method."
4. Is contiguous to Roxas Properties in the same area where "the people
entered the property surreptitiously and were difficult to stop because of
the wide area of the two haciendas and that the principal crop of the area
is sugar . . .." (emphasis supplied).
I agree with petitioner that under DAR AO No. 03, Series of 1996, and unlike lands
covered by Torrens Titles, the properties falling under improperly issued CLOAs are
cancelled by mere administrative procedure which the Supreme Court can declare in
cases properly and adversarially submitted for its decision. If CLOAs can under the
DAR's own order be cancelled administratively, with more reason can the courts,
especially the Supreme Court, do so when the matter is clearly in issue.
With due respect, there is no factual basis for the allegation in the motion for
intervention that farmers have been cultivating the disputed property.
The property has been officially certified as not fit for agriculture based on slope, terrain,
depth, irrigability, fertility, acidity, and erosion. DAR, in its Order dated January 22,
1991, stated that "it is quite difficult to provide statistics on rice and corn yields (in the
adjacent property) because there are no permanent sites planted. Cultivation is by
kaingin method." Any allegations of cultivation, feasible and viable, are therefore
falsehoods.
The DAR Order on the adjacent and contiguous GDFI property states that "(T)he people
entered the property surreptitiously and were difficult to stop . . .."
The observations of Court of Appeals Justices Verzola and Magtolis in this regard,
found in their dissenting opinion (Rollo, p. 116), are relevant:
2.9 The enhanced value of land in Nasugbu, Batangas, has attracted
unscrupulous individuals who distort the spirit of the Agrarian Reform
Program in order to turn out quick profits. Petitioner has submitted copies
of CLOAs that have been issued to persons other than those who were
identified in the Emancipation Patent Survey Profile as legitimate Agrarian
Reform beneficiaries for particular portions of petitioner's lands. These
persons to whom the CLOAs were awarded, according to petitioner, are
not and have never been workers in petitioner's lands. Petitioners say they
are not even from Batangas but come all the way from Tarlac. DAR itself
is not unaware of the mischief in the implementation of the CARL in some
areas of the country, including Nasugbu. In fact, DAR published a
"WARNING TO THE PUBLIC" which appeared in the Philippine Daily
Inquirer of April 15, 1994 regarding this malpractice.
2.10 Agrarian Reform does not mean taking the agricultural property of
one and giving it to another and for the latter to unduly benefit therefrom
by subsequently "converting" the same property into non-agricultural
purposes.
2.11 The law should not be interpreted to grant power to the State, thru
the DAR, to choose who should benefit from multi-million peso deals
involving lands awarded to supposed agrarian reform beneficiaries who
then apply for conversion, and thereafter sell the lands as non-agricultural
land.
Respondents, in trying to make light of this problem, merely emphasize that CLOAs are
not titles. They state that "rampant selling of rights", should this occur, could be
remedied by the cancellation or recall by DAR.
In the recent case of "Hon. Carlos O. Fortich, et. al. vs. Hon. Renato C. Corona, et. al."
(G.R. No. 131457, April 24, 1998), this Court found the CLOAs given to the respondent
farmers to be improperly issued and declared them invalid. Herein petitioner Roxas and
Co., Inc. has presented a stronger case than petitioners in the aforementioned case.
The procedural problems especially the need for referral to the Court of Appeals are not
present. The instant petition questions the Court of Appeals decision which acted on the
administrative decisions. The disputed properties in the present case have been
declared non-agricultural not so much because of local government action but by
Presidential Proclamation. They were found to be non-agricultural by the Department of
Agriculture, and through unmistakable implication, by DAR itself. The zonification by the
municipal government, approved by the provincial government, is not the only basis.
On a final note, it may not be amiss to stress that laws which have for their object the
preservation and maintenance of social justice are not only meant to favor the poor and
underprivileged. They apply with equal force to those who, notwithstanding their more
comfortable position in life, are equally deserving of protection from the courts. Social
justice is not a license to trample on the rights of the rich in the guise of defending the
poor, where no act of injustice or abuse is being committed against them. As we held
in Land Bank (supra.):
It has been declared that the duty of the court to protect the weak and the
underprivileged should not be carried out to such an extent as to deny
justice to the landowner whenever truth and justice happen to be on his
side. As eloquently stated by Justice Isagani Cruz:
. . . social justice or any justice for that matter is for the
deserving, whether he be a millionaire in his mansion or a
pauper in his hovel. It is true that, in case of reasonable
doubt, we are called upon to tilt the balance in favor of the
poor simply because they are poor, to whom the Constitution
fittingly extends its sympathy and compassion. But never is it
justified to prefer the poor simply because they are poor, or
to eject the rich simply because they are rich, for justice
must always be served, for poor and rich alike, according to
the mandate of the law.
IN THE LIGHT OF THE FOREGOING, I vote to grant the petition for certiorari; and to
declare Haciendas Palico, Banilad and Caylaway, all situated in Nasugbu, Batangas, to
be non-agricultural and outside the scope of Republic Act No. 6657. I further vote to
declare the Certificates of Land Ownership Award issued by respondent Department of
Agrarian Reform null and void and to enjoin respondents from proceeding with the
compulsory acquisition of the lands within the subject properties. I finally vote to DENY
the motion for intervention.


G.R. No. 78214 December 5, 1988
YOLANDA CABALLES, petitioner,
vs.
DEPARTMENT OF AGRARIAN REFORM, HON. HEHERSON T. ALVAREZ and
BIENVENIDO ABAJON,respondents.

SARMIENTO, J .:
Before us is a petition for certiorari seeking the annulment of an Order issued by the
public respondent Ministry of Agrarian Reform , now the Department of Agrarian Reform
(DAR), through its then Minister, the Hon. Heherson Alvarez, finding the existence of a
tenancy relationship between the herein petitioner and the private respondent and
certifying the criminal case for malicious mischief filed by the petitioner against the
private respondent as not proper for trial.
The facts as gathered by the MAR are as follows:
The landholding subject of the controversy, which consists of only sixty (60) square
meters (20 meters x 3 meters) was acquired by the spouses Arturo and Yolanda
Caballes, the latter being the petitioner herein, by virtue of a Deed of Absolute Sale
dated July 24, 1978 executed by Andrea Alicaba Millenes This landholding is part of Lot
No. 3109-C, which has a total area of about 500 square meters, situated at Lawaan
Talisay, Cebu. The remainder of Lot No. 3109-C was subseconsequently sold to the
said spouses by Macario Alicaba and the other members of the Millenes family, thus
consolidating ownership over the entire (500-square meter) property in favor of the
petitioner.
In 1975, before the sale in favor of the Caballes spouses, private respondent
Bienvenido Abajon constructed his house on a portion of the said landholding, paying a
monthly rental of P2.00 to the owner, Andrea Millenes. The landowner likewise allowed
Abajon to plant on a portion of the land, agreeing that the produce thereof would be
shared by both on a fitfy-fifty basis. From 1975-1977, Abajon planted corn and bananas
on the landholding. In 1978, he stopped planting corn but continued to plant bananas
and camote. During those four years, he paid the P2.00 rental for the lot occupied by his
house, and delivered 50% of the produce to Andrea Millenes.
Sometime in March 1979, after the property was sold, the new owners, Arturo and
Yolanda Caballes, told Abajon that the poultry they intended to build would be close to
his house and pursuaded him to transfer his dwelling to the opposite or southern portion
of the landholding. Abajon offered to pay the new owners rental on the land occupied by
his house, but his offer was not accepted. Later, the new owners asked Abajon to
vacate the premises, saying that they needed the property. But Abajon refused to leave.
The parties had a confrontation before the Barangay Captain of Lawaan in Talisay,
Cebu but failed to reach an agreement. All the efforts exerted by the landowners to oust
Abajon from the landholding were in vain as the latter simply refused to budge.
On April 1, 1982, the landowner, Yolanda Caballes, executed an Affidavit stating that
immediately after she reprimanded Abajon for harvesting bananas and jackfruit from the
property without her knowledge, the latter, with malicious and ill intent, cut down the
banana plants on the property worth about P50.00. A criminal case for malicious
mischief was filed against Abajon and which was docketed as Criminal Case No. 4003.
Obviously, all the planting on the property, including that of the banana plants, had been
done by Abajon. On September 30, 1982, upon motion of the defense in open court
pursuant to PD 1038, the trial court ordered the referral of the case to the Regional
Office No. VII of the then MAR for a preliminary determination of the relationship
between the parties. As a result, the Regional Director of MAR Regional VII, issued a
certification
1
dated January 24, 1 983, stating that said Criminal Case No. 4003 was not
proper for hearing on the bases of the following findings:
That herein accused is a bona-fide tenant of the land owned by the
complaining witness, which is devoted to bananas;
That thin case is filed patently to harass and/or eject the tenant from his
farmholding, which act is prohibited by law; and
That this arose out of or is connected with agrarian relations.
From the said certification, the petitioner appealed to the then MAR, now the
respondent DAR. Acting on said appeal, the respondent DAR, through its then Minister
Conrado Estrella, reversed the previous certification in its Order
2
of February 3, 1986,
declaring Criminal Case No. 4003 as proper for trial as "the land involved is a residential
lot consisting of only 60 square meters whereon the house of the accused is
constructed and within the industrial zone of the town as evinced from the Certification
issued by the Zoning Administrator of Talisay, Cebu."
Upon motion for reconsideration filed by Abajon, the respondent DAR, through its new
Minister, herein respondent Heherson Alvarez, issued an Orders dated November 15,
1986, setting aside the previous Order
3
dated February 3, 1986, and certifying said
criminal case as not proper for trial, finding the existence of a tenancy relationship
between the parties, and that the case was designed to harass the accused into
vacating his tillage.
In the summary investigation conducted by the DAR, the former landowner, Andrea
Millenes, testified that Bienvenido Abajon dutifully gave her 50% share of the produce of
the land under his cultivation. The grandson of Andrea Millenes, Roger Millenes,
corroborated the testimony of the former, stating that he received said share from
Abajon. Roger Millenes further testified that the present owners received in his
presence a bunch of bananas from the accused representing or 50% of the two
bunches of bananas gathered after Caballes had acquired the property.
4

From these factual findings, the DAR concluded that Abajon was a tenant of Andrea
Millenes, the former owner, who had testified that she shared the produce of the land
with Abajon as truer thereof.
5
Thus, invoking Sec. 10 of RA 3844, as amended, which
provides that "[T]he 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"; and that "(I)n
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," the MAR ruled that 'the new
owners are legally bound to respect the tenancy, notwithstanding their claim that the
portion tilled by Abajon was small, consisting merely of three (3) meters wide and
twenty (20) meters long, or a total of sixty (60) square meters."
6

Hence, this petition for certiorari alleging that:
I. Respondents DAR and Hon. Heherson T. Alvarez committed "grave abuse of power
and discretion amounting to lack of jurisdiction" in holding that private respondent
Abajon is an agricultural tenant even if he is cultivating only a 60-square meter (3 x 20
meters) portion of a commercial lot of the petitioner.
II. Public respondents gravely erred in holding that Criminal Case No. 4003 is not proper
for trial and hearing by the court.
7

We hold that the private respondent cannot avail of the benefits afforded by RA 3844,
as amended. To invest him with the status of a tenant is preposterous.
Section 2 of said law provides:
It is the policy of the State:
(1) To establish cooperative-cultivatorship among those who live and work
on the land as tillers, owner-cultivatorship and the economic family-size
farm as the basis of Philippine agriculture and, as a consequence, divert
landlord capital in agriculture to industrial development;
xxx xxx xxx
RA 3844, as amended, defines an economic family-size farm as "an area of farm land
that permits efficient use of labor and capital resources of the farm family and will
produce an income sufficient to provide a modest standard of living to meet a farm
family's needs for food, clothing, shelter, and education with possible allowance for
payment of yearly installments on the land, and reasonable reserves to absorb yearly
fluctuations in income."
8

The private respondent only occupied a miniscule portion (60 square meters) of the
500-square meter lot. Sixty square meters of land planted to bananas, camote, and corn
cannot by any stretch of the imagination be considered as an economic family-size
farm. Surely, planting camote, bananas, and corn on a sixty-square meter piece of land
can not produce an income sufficient to provide a modest standard of living to meet the
farm family's basic needs. The private respondent himself admitted that he did not
depend on the products of the land because it was too small, and that he took on
carpentry jobs on the side.
9
Thus, the order sought to be reviewed is patently contrary
to the declared policy of the law stated above.
The DAR found that the private respondent shared the produce of the land with the
former owner, Andrea Millenes. This led or misled, the public respondents to conclude
that a tenancy relationship existed between the petitioner and the private respondent
because, the public respondents continue, by operation of Sec. 10 of R.A. 3844, as
amended, the petitioner new owner is subrogated to the rights and substituted to the
obligations of the supposed agricultural lessor (the former owner).
We disagree.
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 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. This is so because unless a
person has established 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.
10

Therefore, the fact of sharing alone is not sufficient to establish a tenancy relationship.
Certainly, it is not unusual for a landowner to accept some of the produce of his land
from someone who plants certain crops thereon. This is a typical and
laudable provinciano trait of sharing or patikim, a native way of expressing gratitude for
favor received. This, however, does not automatically make the tiller-sharer a tenant
thereof specially when the area tilled is only 60, or even 500, square meters and located
in an urban area and in. the heart of an industrial or commercial zone at that. Tenancy
status arises only if an occupant of a parcel of land has been given its possession for
the primary purpose of agricultural production. The circumstances of this case indicate
that the private respondent's status is more of a caretaker who was allowed by the
owner out of benevolence or compassion to live in the premises and to have a garden
of some sort at its southwestern side rather than a tenant of the said portion.
Agricultural production as the primary purpose being absent in the arrangement, it is
clear that the private respondent was never a tenant of the former owner, Andrea
Millenes. Consequently, Sec. 10 of RA of 3844, as amended, does not apply. Simply
stated, the private respondent is not a tenant of the herein petitioner.
Anent the second assignment of error, the petitioner argues that since Abajon, is not an
agricultural tenant, the criminal case for malicious mischief filed against him should be
declared as proper for trial so that proceedings in the lower court can resume.
Notwithstanding our ruling that the private respondent is not a tenant of the petitioner,
we hold that the remand of the case to the lower court for the resumption of the criminal
proceedings is not in the interest of justice. Remand to the Municipal Court of Talisay,
Cebu, would not serve the ends of justice at all, nor is it necessary, because this High
Tribunal is in a position to resolve with finality the dispute before it. This Court, in the
public interest, and towards the expeditious administration of justice, has decided to act
on the merits and dispose of the case with finality.
11

The criminal case for malicious mischief filed by the petitioner against the private
respondent for allegedly cutting down banana trees worth a measly P50.00 will take up
much of the time and attention of the municipal court to the prejudice of other more
pressing cases pending therein. Furthermore, the private respondent will have to incur
unnecessary expenses to finance his legal battle against the petitioner if proceedings in
the court below were to resume. Court litigants have decried the long and unnecessary
delay in the resolution of their cases and the consequent costs of such litigations. The
poor, particularly, are victims of this unjust judicial dawdle, Impoverished that they are
they must deal with unjust legal procrastination which they can only interpret as
harassment or intimidation brought about by their poverty, deprivation, and despair. It
must be the mission of the Court to remove the misperceptions aggrieved people have
of the nature of the dispensation of justice. If justice can be meted out now, why wait for
it to drop gently from heaven? Thus, considering that this case involves a mere
bagatelle the Court finds it proper and compelling to decide it here and now, instead of
further deferring its final termination.
As found by the DAR, the case for malicious mischief stemmed from the petitioner's
affidavit stating that after she reprimanded private respondent Abajon for harvesting
bananas and jackfruit from the property without her knowledge, the latter, with ill intent,
cut the banana trees on the property worth about P50.00.
This was corroborated by a certain Anita Duaban, a friend of the petitioner, who likewise
executed an affidavit to the effect that she saw the private respondent indiscriminately
cutting the banana trees.
12

The Revised Penal Code, as amended, provides that "any person who shall deliberately
cause to the property of another any damage not falling within the terms of the next
preceding chapter shall be guilty of malicious mischief."
13

The elements of the crime of malicious mischief are:
1. The offender deliberately caused damage to the property of another;
2. The damage caused did not constitute arson or crimes involving
destruction;
3. The damage was caused maliciously by the offender.
After a review of the facts and circumstances of this case, we rule that the aforesaid
criminal case against the private respondent be dismissed.
The private respondent can not be held criminally liable for malicious mischief in cutting
the banana trees because, as an authorized occupant or possessor of the land, and as
planter of the banana trees, he owns said crops including the fruits thereof The private
respondent's possession of the land is not illegal or in bad faith because he was snowed
by the previous owners to enter and occupy the premises. In other words, the private
respondent worked the land in dispute with the consent of the previous and present
owners. Consequently, whatever the private respondent planted and cultivated on that
piece of property belonged to him and not to the landowner. Thus, an essential element
of the crime of malicious mischief, which is "damage deliberately caused to the property
of another," is absent because the private respondent merely cut down his own
plantings.
WHEREFORE, the Order of public respondents dated November 15, 1986 is SET
ASIDE and Criminal Case No. 4003, is hereby DISMISSED. Let a copy of this decision
be sent to the Municipal Trial Court of Talisay, Cebu for appropriate action. This
Decision is IMMEDIATELY EXECUTORY.
No costs.
SO ORDERED.