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REVOLUTIONARY KIND OF EXPROPRIATION

ASSOC. OF SMALL LANDOWNERS v. HON. SEC.


In ancient mythology, Antaeus was a terrible giant who blocked and
challenged Hercules for his life on his way to Mycenae after performing
his eleventh labor. The two wrestled mightily and Hercules flung his
adversary to the ground thinking him dead, but Antaeus rose even
stronger to resume their struggle. This happened several times to
Hercules' increasing amazement. Finally, as they continued grappling,
it dawned on Hercules that Antaeus was the son of Gaea and could
never die as long as any part of his body was touching his Mother
Earth. Thus forewarned, Hercules then held Antaeus up in the air,
beyond the reach of the sustaining soil, and crushed him to
death.chanroblesvirtualawlibrary chanrobles virtual law library
Mother Earth. The sustaining soil. The giver of life, without whose
invigorating touch even the powerful Antaeus weakened and
died.chanroblesvirtualawlibrary chanrobles virtual law library
The cases before us are not as fanciful as the foregoing tale. But they
also tell of the elemental forces of life and death, of men and women
who, like Antaeus need the sustaining strength of the precious earth to
stay alive.chanroblesvirtualawlibrary chanrobles virtual law library
"Land for the Landless" is a slogan that underscores the acute
imbalance in the distribution of this precious resource among our
people. But it is more than a slogan. Through the brooding centuries, it
has become a battle-cry dramatizing the increasingly urgent demand of
the dispossessed among us for a plot of earth as their place in the
sun.chanroblesvirtualawlibrary chanrobles virtual law library
Recognizing this need, the Constitution in 1935 mandated the policy of
social justice to "insure the well-being and economic security of all the
people,"
1
especially the less privileged. In 1973, the new Constitution
affirmed this goal adding specifically that "the State shall regulate the
acquisition, ownership, use, enjoyment and disposition of private
property and equitably diffuse property ownership and
profits."
2
Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed at
emancipating the tenant from the bondage of the soil."
3
chanrobles
virtual law library
The Constitution of 1987 was not to be outdone. Besides echoing
these sentiments, it also adopted one whole and separate Article XIII
on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people.
These include a call in the following words for the adoption by the
State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are
landless, to own directly or collectively the lands they till or, in the case
of other farmworkers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just distribution
of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations and subject to the
payment of just compensation. In determining retention limits, the State
shall respect the right of small landowners. The State shall further
provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural
Land Reform Code, had already been enacted by the Congress of the
Philippines on August 8, 1963, in line with the above-stated principles.
This was substantially superseded almost a decade later by P.D. No.
27, which was promulgated on October 21, 1972, along with martial
law, to provide for the compulsory acquisition of private lands for
distribution among tenant-farmers and to specify maximum retention
limits for landowners.chanroblesvirtualawlibrary chanrobles virtual law
library
The people power revolution of 1986 did not change and indeed even
energized the thrust for agrarian reform. Thus, on July 17, 1987,
President Corazon C. Aquino issued E.O. No. 228, declaring full land
ownership in favor of the beneficiaries of P.D. No. 27 and providing for
the valuation of still unvalued lands covered by the decree as well as
the manner of their payment. This was followed on July 22, 1987 by
Presidential Proclamation No. 131, instituting a comprehensive
agrarian reform program (CARP), and E.O. No. 229, providing the
mechanics for its
Implementation.chanroblesvirtualawlibrary chanrobles virtual law
library
Subsequently, with its formal organization, the revived Congress of the
Philippines took over legislative power from the President and started
its own deliberations, including extensive public hearings, on the
improvement of the interests of farmers. The result, after almost a year
of spirited debate, was the enactment of R.A. No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988, which
President Aquino signed on June 10, 1988. This law, while
considerably changing the earlier mentioned enactments, nevertheless
gives them suppletory effect insofar as they are not inconsistent with
its provisions.
4
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The above-captioned cases have been consolidated because they
involve common legal questions, including serious challenges to the
constitutionality of the several measures mentioned above. They will
be the subject of one common discussion and resolution, The different
antecedents of each case will require separate treatment, however,
and will first be explained
hereunder.chanroblesvirtualawlibrary chanrobles virtual law library
G.R. No. 79777 chanrobles virtual law library
Squarely raised in this petition is the constitutionality of P.D. No. 27,
E.O. Nos. 228 and 229, and R.A. No.
6657.chanroblesvirtualawlibrary chanrobles virtual law library
The subjects of this petition are a 9-hectare riceland worked by four
tenants and owned by petitioner Nicolas Manaay and his wife and a 5-
hectare riceland worked by four tenants and owned by petitioner
Augustin Hermano, Jr. The tenants were declared full owners of these
lands by E.O. No. 228 as qualified farmers under P.D. No.
27.chanroblesvirtualawlibrary chanrobles virtual law library
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and
229 on grounds inter alia of separation of powers, due process, equal
protection and the constitutional limitation that no private property shall
be taken for public use without just
compensation.chanroblesvirtualawlibrary chanrobles virtual law library
They contend that President Aquino usurped legislative power when
she promulgated E.O. No. 228. The said measure is invalid also for
violation of Article XIII, Section 4, of the Constitution, for failure to
provide for retention limits for small landowners. Moreover, it does not
conform to Article VI, Section 25(4) and the other requisites of a valid
appropriation.chanroblesvirtualawlibrary chanrobles virtual law library
In connection with the determination of just compensation, the
petitioners argue that the same may be made only by a court of justice
and not by the President of the Philippines. They invoke the recent
cases of EPZA v. Dulay
5
and Manotok v. National Food
Authority.
6
Moreover, the just compensation contemplated by the Bill
of Rights is payable in money or in cash and not in the form of bonds
or other things of value.chanroblesvirtualawlibrary chanrobles virtual
law library
In considering the rentals as advance payment on the land, the
executive order also deprives the petitioners of their property rights as
protected by due process. The equal protection clause is also violated
because the order places the burden of solving the agrarian problems
on the owners only of agricultural lands. No similar obligation is
imposed on the owners of other
properties.chanroblesvirtualawlibrary chanrobles virtual law library
The petitioners also maintain that in declaring the beneficiaries under
P.D. No. 27 to be the owners of the lands occupied by them, E.O. No.
228 ignored judicial prerogatives and so violated due process. Worse,
the measure would not solve the agrarian problem because even the
small farmers are deprived of their lands and the retention rights
guaranteed by the Constitution.chanroblesvirtualawlibrary chanrobles
virtual law library
In his Comment, the Solicitor General stresses that P.D. No. 27 has
already been upheld in the earlier cases of Chavez v. Zobel,
7
Gonzales
v. Estrella,
8
and Association of Rice and Corn Producers of the
Philippines, Inc. v. The National Land Reform Council.
9
The
determination of just compensation by the executive authorities
conformably to the formula prescribed under the questioned order is at
best initial or preliminary only. It does not foreclose judicial intervention
whenever sought or warranted. At any rate, the challenge to the order
is premature because no valuation of their property has as yet been
made by the Department of Agrarian Reform. The petitioners are also
not proper parties because the lands owned by them do not exceed
the maximum retention limit of 7
hectares.chanroblesvirtualawlibrary chanrobles virtual law library
Replying, the petitioners insist they are proper parties because P.D.
No. 27 does not provide for retention limits on tenanted lands and that
in any event their petition is a class suit brought in behalf of
landowners with landholdings below 24 hectares. They maintain that
the determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases invoked by the
public respondent, the constitutionality of P.D. No. 27 was merely
assumed in Chavez, while what was decided in Gonzales was the
validity of the imposition of martial
law.chanroblesvirtualawlibrary chanrobles virtual law library
In the amended petition dated November 22, 1588, it is contended that
P.D. No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have
been impliedly repealed by R.A. No. 6657. Nevertheless, this statute
should itself also be declared unconstitutional because it suffers from
substantially the same infirmities as the earlier
measures.chanroblesvirtualawlibrary chanrobles virtual law library
A petition for intervention was filed with leave of court on June 1, 1988
by Vicente Cruz, owner of a 1. 83- hectare land, who complained that
the DAR was insisting on the implementation of P.D. No. 27 and E.O.
No. 228 despite a compromise agreement he had reached with his
tenant on the payment of rentals. In a subsequent motion dated April
10, 1989, he adopted the allegations in the basic amended petition that
the above- mentioned enactments have been impliedly repealed by
R.A. No. 6657.chanroblesvirtualawlibrary chanrobles virtual law library
G.R. No. 79310 chanrobles virtual law library
The petitioners herein are landowners and sugar planters in the
Victorias Mill District, Victorias, Negros Occidental. Co-petitioner
Planters' Committee, Inc. is an organization composed of 1,400
planter-members. This petition seeks to prohibit the implementation of
Proc. No. 131 and E.O. No. 229.chanroblesvirtualawlibrary chanrobles
virtual law library
The petitioners claim that the power to provide for a Comprehensive
Agrarian Reform Program as decreed by the Constitution belongs to
Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was
convened, she could do so only to enact emergency measures during
the transition period. At that, even assuming that the interim legislative
power of the President was properly exercised, Proc. No. 131 and E.O.
No. 229 would still have to be annulled for violating the constitutional
provisions on just compensation, due process, and equal
protection.chanroblesvirtualawlibrary chanrobles virtual law library
They also argue that under Section 2 of Proc. No. 131 which
provides: chanrobles virtual law library
Agrarian Reform Fund.-There is hereby created a special fund, to be
known as the Agrarian Reform Fund, an initial amount of FIFTY
BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of
the Comprehensive Agrarian Reform Program from 1987 to 1992
which shall be sourced from the receipts of the sale of the assets of the
Asset Privatization Trust and Receipts of sale of ill-gotten wealth
received through the Presidential Commission on Good Government
and such other sources as government may deem appropriate. The
amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in
this Proclamation the amount appropriated is in futuro, not in esse. The
money needed to cover the cost of the contemplated expropriation has
yet to be raised and cannot be appropriated at this
time.chanroblesvirtualawlibrary chanrobles virtual law library
Furthermore, they contend that taking must be simultaneous with
payment of just compensation as it is traditionally understood, i.e., with
money and in full, but no such payment is contemplated in Section 5 of
the E.O. No. 229. On the contrary, Section 6, thereof provides that the
Land Bank of the Philippines "shall compensate the landowner in an
amount to be established by the government, which shall be based on
the owner's declaration of current fair market value as provided in
Section 4 hereof, but subject to certain controls to be defined and
promulgated by the Presidential Agrarian Reform Council." This
compensation may not be paid fully in money but in any of several
modes that may consist of part cash and part bond, with interest,
maturing periodically, or direct payment in cash or bond as may be
mutually agreed upon by the beneficiary and the landowner or as may
be prescribed or approved by the
PARC.chanroblesvirtualawlibrary chanrobles virtual law library
The petitioners also argue that in the issuance of the two measures, no
effort was made to make a careful study of the sugar planters'
situation. There is no tenancy problem in the sugar areas that can
justify the application of the CARP to them. To the extent that the
sugar planters have been lumped in the same legislation with other
farmers, although they are a separate group with problems exclusively
their own, their right to equal protection has been
violated.chanroblesvirtualawlibrarychanrobles virtual law library
A motion for intervention was filed on August 27,1987 by the National
Federation of Sugarcane Planters (NASP) which claims a membership
of at least 20,000 individual sugar planters all over the country. On
September 10, 1987, another motion for intervention was filed, this
time by Manuel Barcelona, et al., representing coconut and riceland
owners. Both motions were granted by the
Court.chanroblesvirtualawlibrary chanrobles virtual law library
NASP alleges that President Aquino had no authority to fund the
Agrarian Reform Program and that, in any event, the appropriation is
invalid because of uncertainty in the amount appropriated. Section 2 of
Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an
initial appropriation of fifty billion pesos and thus specifies the minimum
rather than the maximum authorized amount. This is not allowed.
Furthermore, the stated initial amount has not been certified to by the
National Treasurer as actually
available.chanroblesvirtualawlibrary chanrobles virtual law library
Two additional arguments are made by Barcelona, to wit, the failure to
establish by clear and convincing evidence the necessity for the
exercise of the powers of eminent domain, and the violation of the
fundamental right to own
property.chanroblesvirtualawlibrary chanrobles virtual law library
The petitioners also decry the penalty for non-registration of the lands,
which is the expropriation of the said land for an amount equal to the
government assessor's valuation of the land for tax purposes. On the
other hand, if the landowner declares his own valuation he is unjustly
required to immediately pay the corresponding taxes on the land, in
violation of the uniformity rule.chanroblesvirtualawlibrary chanrobles
virtual law library
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O. No.
229. He also justifies the necessity for the expropriation as explained in
the "whereas" clauses of the Proclamation and submits that, contrary
to the petitioner's contention, a pilot project to determine the feasibility
of CARP and a general survey on the people's opinion thereon are not
indispensable prerequisites to its
promulgation.chanroblesvirtualawlibrary chanrobles virtual law library
On the alleged violation of the equal protection clause, the sugar
planters have failed to show that they belong to a different class and
should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and
scheduling the expropriation of private agricultural lands later. From
this viewpoint, the petition for prohibition would be
premature.chanroblesvirtualawlibrary chanrobles virtual law library
The public respondent also points out that the constitutional prohibition
is against the payment of public money without the corresponding
appropriation. There is no rule that only money already in existence
can be the subject of an appropriation law. Finally, the earmarking of
fifty billion pesos as Agrarian Reform Fund, although denominated as
an initial amount, is actually the maximum sum appropriated. The word
"initial" simply means that additional amounts may be appropriated
later when necessary.chanroblesvirtualawlibrary chanrobles virtual law
library
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a
petition on his own behalf, assailing the constitutionality of E.O. No.
229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP; chanrobles
virtual law library
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title; chanrobles virtual law library
(3) The power of the President to legislate was terminated on July 2,
1987; and chanrobles virtual law library
(4) The appropriation of a P50 billion special fund from the National
Treasury did not originate from the House of Representatives.
G.R. No. 79744 chanrobles virtual law library
The petitioner alleges that the then Secretary of Department of
Agrarian Reform, in violation of due process and the requirement for
just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were
subsequently issued to the private respondents, who then refused
payment of lease rentals to him.chanroblesvirtualawlibrary chanrobles
virtual law library
On September 3, 1986, the petitioner protested the erroneous
inclusion of his small landholding under Operation Land transfer and
asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on
December 24, 1986, his petition was denied without hearing. On
February 17, 1987, he filed a motion for reconsideration, which had not
been acted upon when E.O. Nos. 228 and 229 were issued. These
orders rendered his motion moot and academic because they directly
effected the transfer of his land to the private
respondents.chanroblesvirtualawlibrary chanrobles virtual law library
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the
Philippines.chanroblesvirtualawlibrary chanrobles virtual law library
(2) The said executive orders are violative of the constitutional
provision that no private property shall be taken without due process or
just compensation.chanroblesvirtualawlibrary chanrobles virtual law
library
(3) The petitioner is denied the right of maximum retention provided for
under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229
shortly before Congress convened is anomalous and arbitrary, besides
violating the doctrine of separation of powers. The legislative power
granted to the President under the Transitory Provisions refers only to
emergency measures that may be promulgated in the proper exercise
of the police power.chanroblesvirtualawlibrary chanrobles virtual law
library
The petitioner also invokes his rights not to be deprived of his property
without due process of law and to the retention of his small parcels of
riceholding as guaranteed under Article XIII, Section 4 of the
Constitution. He likewise argues that, besides denying him just
compensation for his land, the provisions of E.O. No. 228 declaring
that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the
land.
is an unconstitutional taking of a vested property right. It is also his
contention that the inclusion of even small landowners in the program
along with other landowners with lands consisting of seven hectares or
more is undemocratic.chanroblesvirtualawlibrary chanrobles virtual law
library
In his Comment, the Solicitor General submits that the petition is
premature because the motion for reconsideration filed with the
Minister of Agrarian Reform is still unresolved. As for the validity of the
issuance of E.O. Nos. 228 and 229, he argues that they were enacted
pursuant to Section 6, Article XVIII of the Transitory Provisions of the
1987 Constitution which reads: chanrobles virtual law library
The incumbent president shall continue to exercise legislative powers
until the first Congress is
convened.chanroblesvirtualawlibrary chanrobles virtual law library
On the issue of just compensation, his position is that when P.D. No.
27 was promulgated on October 21. 1972, the tenant-farmer of
agricultural land was deemed the owner of the land he was tilling. The
leasehold rentals paid after that date should therefore be considered
amortization payments.chanroblesvirtualawlibrary chanrobles virtual
law library
In his Reply to the public respondents, the petitioner maintains that the
motion he filed was resolved on December 14, 1987. An appeal to the
Office of the President would be useless with the promulgation of E.O.
Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.chanroblesvirtualawlibrary chanrobles virtual law
library
G.R. No. 78742 chanrobles virtual law library
The petitioners in this case invoke the right of retention granted by P.D.
No. 27 to owners of rice and corn lands not exceeding seven hectares
as long as they are cultivating or intend to cultivate the same. Their
respective lands do not exceed the statutory limit but are occupied by
tenants who are actually cultivating such
lands.chanroblesvirtualawlibrary chanrobles virtual law library
According to P.D. No. 316, which was promulgated in implementation
of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and
corn shall be ejected or removed from his farmholding until such time
as the respective rights of the tenant- farmers and the landowner shall
have been determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable
to enjoy their right of retention because the Department of Agrarian
Reform has so far not issued the implementing rules required under
the above-quoted decree. They therefore ask the Court for a writ of
mandamus to compel the respondent to issue the said
rules.chanroblesvirtualawlibrary chanrobles virtual law library
In his Comment, the public respondent argues that P.D. No. 27 has
been amended by LOI 474 removing any right of retention from
persons who own other agricultural lands of more than 7 hectares in
aggregate area or lands used for residential, commercial, industrial or
other purposes from which they derive adequate income for their
family. And even assuming that the petitioners do not fall under its
terms, the regulations implementing P.D. No. 27 have already been
issued, to wit, the Memorandum dated July 10, 1975 (Interim
Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21,
1978, (Implementation Guidelines of LOI No. 474), Memorandum
Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines
on Coverage of P.D. No. 27 and Retention by Small Landowners), and
DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off
Date for Landowners to Apply for Retention and/or to Protest the
Coverage of their Landholdings under Operation Land Transfer
pursuant to P.D. No. 27). For failure to file the corresponding
applications for retention under these measures, the petitioners are
now barred from invoking this
right.chanroblesvirtualawlibrary chanrobles virtual law library
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency of their
appeal to the President of the Philippines. Moreover, the issuance of
the implementing rules, assuming this has not yet been done, involves
the exercise of discretion which cannot be controlled through the writ
ofmandamus. This is especially true if this function is entrusted, as in
this case, to a separate department of the
government.chanroblesvirtualawlibrary chanrobles virtual law library
In their Reply, the petitioners insist that the above-cited measures are
not applicable to them because they do not own more than seven
hectares of agricultural land. Moreover, assuming arguendo that the
rules were intended to cover them also, the said measures are
nevertheless not in force because they have not been published as
required by law and the ruling of this Court in Tanada v. Tuvera.
10
As
for LOI 474, the same is ineffective for the additional reason that a
mere letter of instruction could not have repealed the presidential
decree.chanroblesvirtualawlibrary chanrobles virtual law library
I chanrobles virtual law library
Although holding neither purse nor sword and so regarded as the
weakest of the three departments of the government, the judiciary is
nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the
doctrine of judicial supremacy. Even so, this power is not lightly
assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of their
functions and of their respect for the other departments, in striking
down the acts of the legislative and the executive as unconstitutional.
The policy, indeed, is a blend of courtesy and caution. To doubt is to
sustain. The theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the President, or
both, to insure that the Constitution would not be
breached.chanroblesvirtualawlibrary chanrobles virtual law library
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence of
a majority of the members of the Supreme Court who took part in the
deliberations and voted on the issue during their session en
banc.
11
And as established by judge made doctrine, the Court will
assume jurisdiction over a constitutional question only if it is shown
that the essential requisites of a judicial inquiry into such a question
are first satisfied. Thus, there must be an actual case or controversy
involving a conflict of legal rights susceptible of judicial determination,
the constitutional question must have been opportunely raised by the
proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself.
12
chanrobles virtual law
library
With particular regard to the requirement of proper party as applied in
the cases before us, we hold that the same is satisfied by the
petitioners and intervenors because each of them has sustained or is
in danger of sustaining an immediate injury as a result of the acts or
measures complained of.
13
And even if, strictly speaking, they are not
covered by the definition, it is still within the wide discretion of the
Court to waive the requirement and so remove the impediment to its
addressing and resolving the serious constitutional questions
raised.chanroblesvirtualawlibrary chanrobles virtual law library
In the first Emergency Powers Cases,
14
ordinary citizens and
taxpayers were allowed to question the constitutionality of several
executive orders issued by President Quirino although they were
invoking only an indirect and general interest shared in common with
the public. The Court dismissed the objection that they were not proper
parties and ruled that "the transcendental importance to the public of
these cases demands that they be settled promptly and definitely,
brushing aside, if we must, technicalities of procedure." We have since
then applied this exception in many other cases.
15
chanrobles virtual
law library
The other above-mentioned requisites have also been met in the
present petitions.chanroblesvirtualawlibrary chanrobles virtual law
library
In must be stressed that despite the inhibitions pressing upon the
Court when confronted with constitutional issues like the ones now
before it, it will not hesitate to declare a law or act invalid when it is
convinced that this must be done. In arriving at this conclusion, its only
criterion will be the Constitution as God and its conscience give it the
light to probe its meaning and discover its purpose. Personal motives
and political considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as
intimidation.chanroblesvirtualawlibrary chanrobles virtual law library
For all the awesome power of the Congress and the Executive, the
Court will not hesitate to "make the hammer fall, and heavily," to use
Justice Laurel's pithy language, where the acts of these departments,
or of any public official, betray the people's will as expressed in the
Constitution.chanroblesvirtualawlibrary chanrobles virtual law library
It need only be added, to borrow again the words of Justice Laurel, that
-
... when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does not
in reality nullify or invalidate an act of the Legislature, but only asserts
the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which properly is the
power of judicial review under the Constitution.
16

The cases before us categorically raise constitutional questions that
this Court must categorically resolve. And so we
shall.chanroblesvirtualawlibrary chanrobles virtual law library
IIchanrobles virtual law library
We proceed first to the examination of the preliminary issues before
resolving the more serious challenges to the constitutionality of the
several measures involved in these
petitions.chanroblesvirtualawlibrary chanrobles virtual law library
The promulgation of P.D. No. 27 by President Marcos in the exercise
of his powers under martial law has already been sustained
in Gonzales v. Estrella and we find no reason to modify or reverse it on
that issue. As for the power of President Aquino to promulgate Proc.
No. 131 and E.O. Nos. 228 and 229, the same was authorized under
Section 6 of the Transitory Provisions of the 1987 Constitution, quoted
above.chanroblesvirtualawlibrary chanrobles virtual law library
The said measures were issued by President Aquino before July 27,
1987, when the Congress of the Philippines was formally convened
and took over legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because E.O. No. 228
was issued on July 17, 1987, and the other measures, i.e., Proc. No.
131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it
correct to say that these measures ceased to be valid when she lost
her legislative power for, like any statute, they continue to be in force
unless modified or repealed by subsequent law or declared invalid by
the courts. A statute does not ipso facto become inoperative simply
because of the dissolution of the legislature that enacted it. By the
same token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when and as
long as she possessed it.chanroblesvirtualawlibrary chanrobles virtual
law library
Significantly, the Congress she is alleged to have undercut has not
rejected but in fact substantially affirmed the challenged measures and
has specifically provided that they shall be suppletory to R.A. No. 6657
whenever not inconsistent with its provisions.
17
Indeed, some portions
of the said measures, like the creation of the P50 billion fund in Section
2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, have
been incorporated by reference in the CARP Law.
18
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That fund, as earlier noted, is itself being questioned on the ground
that it does not conform to the requirements of a valid appropriation as
specified in the Constitution. Clearly, however, Proc. No. 131 is not an
appropriation measure even if it does provide for the creation of said
fund, for that is not its principal purpose. An appropriation law is one
the primary and specific purpose of which is to authorize the release of
public funds from the treasury.
19
The creation of the fund is only
incidental to the main objective of the proclamation, which is agrarian
reform.chanroblesvirtualawlibrary chanrobles virtual law library
It should follow that the specific constitutional provisions invoked, to
wit, Section 24 and Section 25(4) of Article VI, are not applicable. With
particular reference to Section 24, this obviously could not have been
complied with for the simple reason that the House of Representatives,
which now has the exclusive power to initiate appropriation measures,
had not yet been convened when the proclamation was issued. The
legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of
Congress.chanroblesvirtualawlibrary chanrobles virtual law library
The argument of some of the petitioners that Proc. No. 131 and E.O.
No. 229 should be invalidated because they do not provide for
retention limits as required by Article XIII, Section 4 of the Constitution
is no longer tenable. R.A. No. 6657 does provide for such limits now in
Section 6 of the law, which in fact is one of its most controversial
provisions. This section declares:
Retention Limits. - Except as otherwise provided in this Act, no person
may own or retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but
in no case shall retention by the landowner exceed five (5) hectares.
Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen (15)
years of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep
the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement
that a bill shall have only one subject, to be expressed in its title,
deserves only short attention. It is settled that the title of the bill does
not have to be a catalogue of its contents and will suffice if the matters
embodied in the text are relevant to each other and may be inferred
from the title.
20
chanrobles virtual law library
The Court wryly observes that during the past dictatorship, every
presidential issuance, by whatever name it was called, had the force
and effect of law because it came from President Marcos. Such are the
ways of despots. Hence, it is futile to argue, as the petitioners do in
G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27
because the former was only a letter of instruction. The important thing
is that it was issued by President Marcos, whose word was law during
that time.chanroblesvirtualawlibrary chanrobles virtual law library
But for all their peremptoriness, these issuances from the President
Marcos still had to comply with the requirement for publication as this
Court held in Tanada v. Tuvera.
21
Hence, unless published in the
Official Gazette in accordance with Article 2 of the Civil Code, they
could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was
published, though, in the Official Gazette dated November
29,1976.) chanrobles virtual law library
Finally, there is the contention of the public respondent in G.R. No.
78742 that the writ of mandamus cannot issue to compel the
performance of a discretionary act, especially by a specific department
of the government. That is true as a general proposition but is subject
to one important qualification. Correctly and categorically stated, the
rule is that mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be exercised.
In other words, mandamus can issue to require action only but not
specific action.
Whenever a duty is imposed upon a public official and an unnecessary
and unreasonable delay in the exercise of such duty occurs, if it is a
clear duty imposed by law, the courts will intervene by the
extraordinary legal remedy of mandamus to compel action. If the duty
is purely ministerial, the courts will require specific action. If the duty is
purely discretionary, the courts bymandamus will require action only.
For example, if an inferior court, public official, or board should, for an
unreasonable length of time, fail to decide a particular question to the
great detriment of all parties concerned, or a court should refuse to
take jurisdiction of a cause when the law clearly gave it jurisdiction
mandamus will issue, in the first case to require a decision, and in the
second to require that jurisdiction be taken of the cause.
22

And while it is true that as a rule the writ will not be proper as long as
there is still a plain, speedy and adequate remedy available from the
administrative authorities, resort to the courts may still be permitted if
the issue raised is a question of law.
23
chanrobles virtual law library
IIIchanrobles virtual law library
There are traditional distinctions between the police power and the
power of eminent domain that logically preclude the application of both
powers at the same time on the same subject. In the case of City of
Baguio v. NAWASA,
24
for example, where a law required the transfer
of all municipal waterworks systems to the NAWASA in exchange for
its assets of equivalent value, the Court held that the power being
exercised was eminent domain because the property involved was
wholesome and intended for a public use. Property condemned under
the police power is noxious or intended for a noxious purpose, such as
a building on the verge of collapse, which should be demolished for the
public safety, or obscene materials, which should be destroyed in the
interest of public morals. The confiscation of such property is not
compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the
owner.chanroblesvirtualawlibrary chanrobles virtual law library
In the case of Pennsylvania Coal Co. v. Mahon,
25
Justice Holmes laid
down the limits of the police power in a famous aphorism: "The general
rule at least is that while property may be regulated to a certain extent,
if regulation goes too far it will be recognized as a taking." The
regulation that went "too far" was a law prohibiting mining which might
cause the subsidence of structures for human habitation constructed
on the land surface. This was resisted by a coal company which had
earlier granted a deed to the land over its mine but reserved all mining
rights thereunder, with the grantee assuming all risks and waiving any
damage claim. The Court held the law could not be sustained without
compensating the grantor. Justice Brandeis filed a lone dissent in
which he argued that there was a valid exercise of the police power.
He said:
Every restriction upon the use of property imposed in the exercise of
the police power deprives the owner of some right theretofore enjoyed,
and is, in that sense, an abridgment by the State of rights in property
without making compensation. But restriction imposed to protect the
public health, safety or morals from dangers threatened is not a taking.
The restriction here in question is merely the prohibition of a noxious
use. The property so restricted remains in the possession of its owner.
The state does not appropriate it or make any use of it. The state
merely prevents the owner from making a use which interferes with
paramount rights of the public. Whenever the use prohibited ceases to
be noxious - as it may because of further changes in local or social
conditions - the restriction will have to be removed and the owner will
again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a
mingling of the police power and the power of eminent domain, with
the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police
purpose has long been accepted.
26
As for the power of expropriation,
Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US
365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located the
Police and eminent domain powers on different planets. Generally
speaking, they viewed eminent domain as encompassing public
acquisition of private property for improvements that would be
available for public use," literally construed. To the police power, on the
other hand, they assigned the less intrusive task of preventing harmful
externalities a point reflected in the Euclid opinion's reliance on an
analogy to nuisance law to bolster its support of zoning. So long as
suppression of a privately authored harm bore a plausible relation to
some legitimate "public purpose," the pertinent measure need have
afforded no compensation whatever. With the progressive growth of
government's involvement in land use, the distance between the two
powers has contracted considerably. Today government often employs
eminent domain interchangeably with or as a useful complement to the
police power-- a trend expressly approved in the Supreme Court's
1954 decision in Berman v. Parker, which broadened the reach of
eminent domain's "public use" test to match that of the police power's
standard of "public purpose."
27
chanrobles virtual law library
The Berman case sustained a redevelopment project and the
improvement of blighted areas in the District of Columbia as a proper
exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's
Capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the
way.chanroblesvirtualawlibrary chanrobles virtual law library
Once the object is within the authority of Congress, the right to realize
it through the exercise of eminent domain is
clear.chanroblesvirtualawlibrary chanrobles virtual law library
For the power of eminent domain is merely the means to the
end.
28
chanrobles virtual law library
In Penn Central Transportation Co. v. New York City,
29
decided by a 6-
3 vote in 1978, the U.S Supreme Court sustained the respondent's
Landmarks Preservation Law under which the owners of the Grand
Central Terminal had not been allowed to construct a multi-story office
building over the Terminal, which had been designated a historic
landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the
owners of the Terminal would be deprived of the right to use the
airspace above it although other landowners in the area could do so
over their respective properties. While insisting that there was here no
taking, the Court nonetheless recognized certain compensatory rights
accruing to Grand Central Terminal which it said would "undoubtedly
mitigate" the loss caused by the regulation. This "fair compensation,"
as he called it, was explained by Prof. Costonis in this
wise: chanrobles virtual law library
In return for retaining the Terminal site in its pristine landmark status,
Penn Central was authorized to transfer to neighboring properties the
authorized but unused rights accruing to the site prior to the Terminal's
designation as a landmark - the rights which would have been
exhausted by the 59-story building that the city refused to countenance
atop the Terminal. Prevailing bulk restrictions on neighboring sites
were proportionately relaxed, theoretically enabling Penn Central to
recoup its losses at the Terminal site by constructing or selling to
others the right to construct larger, hence more profitable buildings on
the transferee sites.
30
chanrobles virtual law library
The cases before us present no knotty complication insofar as the
question of compensable taking is concerned. To the extent that the
measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation
of private property in accordance with the Constitution. But where, to
carry out such regulation, it becomes necessary to deprive such
owners of whatever lands they may own in excess of the maximum
area allowed, there is definitely a taking under the power of eminent
domain for which payment of just compensation is imperative. The
taking contemplated is not a mere limitation of the use of the land.
What is required is the surrender of the title to and the physical
possession of the said excess and all beneficial rights accruing to the
owner in favor of the farmer-beneficiary. This is definitely an exercise
not of the police power but of the power of eminent
domain.chanroblesvirtualawlibrary chanrobles virtual law library
Whether as an exercise of the police power or of the power of eminent
domain, the several measures before us are challenged as violative of
the due process and equal protection
clauses.chanroblesvirtualawlibrary chanrobles virtual law library
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the
ground that no retention limits are prescribed has already been
discussed and dismissed. It is noted that although they excited many
bitter exchanges during the deliberation of the CARP Law in Congress,
the retention limits finally agreed upon are, curiously enough, not being
questioned in these petitions. We therefore do not discuss them here.
The Court will come to the other claimed violations of due process in
connection with our examination of the adequacy of just compensation
as required under the power of
expropriation.chanroblesvirtualawlibrary chanrobles virtual law library
The argument of the small farmers that they have been denied equal
protection because of the absence of retention limits has also become
academic under Section 6 of R.A. No. 6657. Significantly, they too
have not questioned the area of such limits. There is also the
complaint that they should not be made to share the burden of agrarian
reform, an objection also made by the sugar planters on the ground
that they belong to a particular class with particular interests of their
own. However, no evidence has been submitted to the Court that the
requisites of a valid classification have been
violated.chanroblesvirtualawlibrary chanrobles virtual law library
Classification has been defined as the grouping of persons or things
similar to each other in certain particulars and different from each other
in these same particulars.
31
To be valid, it must conform to the
following requirements: (1) it must be based on substantial distinctions;
(2) it must be germane to the purposes of the law; (3) it must not be
limited to existing conditions only; and (4) it must apply equally to all
the members of the class.
32
The Court finds that all these requisites
have been met by the measures here challenged as arbitrary and
discriminatory.chanroblesvirtualawlibrary chanrobles virtual law library
Equal protection simply means that all persons or things similarly
situated must be treated alike both as to the rights conferred and the
liabilities imposed.
33
The petitioners have not shown that they belong to
a different class and entitled to a different treatment. The argument
that not only landowners but also owners of other properties must be
made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes
of owners that is clearly visible except to those who will not see. There
is no need to elaborate on this matter. In any event, the Congress is
allowed a wide leeway in providing for a valid classification. Its decision
is accorded recognition and respect by the courts of justice except only
where its discretion is abused to the detriment of the Bill of
Rights.chanroblesvirtualawlibrary chanrobles virtual law library
It is worth remarking at this juncture that a statute may be sustained
under the police power only if there is a concurrence of the lawful
subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class
require the interference of the State and, no less important, the means
employed are reasonably necessary for the attainment of the purpose
sought to be achieved and not unduly oppressive upon
individuals.
34
As the subject and purpose of agrarian reform have been
laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional
goal.chanroblesvirtualawlibrary chanrobles virtual law library
One of the basic principles of the democratic system is that where the
rights of the individual are concerned, the end does not justify the
means. It is not enough that there be a valid objective; it is also
necessary that the means employed to pursue it be in keeping with the
Constitution. Mere expediency will not excuse constitutional shortcuts.
There is no question that not even the strongest moral conviction or
the most urgent public need, subject only to a few notable exceptions,
will excuse the bypassing of an individual's rights. It is no exaggeration
to say that a, person invoking a right guaranteed under Article III of the
Constitution is a majority of one even as against the rest of the nation
who would deny him that right.chanroblesvirtualawlibrary chanrobles
virtual law library
That right covers the person's life, his liberty and his property under
Section 1 of Article III of the Constitution. With regard to his property,
the owner enjoys the added protection of Section 9, which reaffirms the
familiar rule that private property shall not be taken for public use
without just compensation.chanroblesvirtualawlibrary chanrobles virtual
law library
This brings us now to the power of eminent
domain.chanroblesvirtualawlibrary chanrobles virtual law library
IV
Eminent domain is an inherent power of the State that enables it to
forcibly acquire private lands intended for public use upon payment of
just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties.
35
It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions offered
by the vendee, that the power of eminent domain will come into play to
assert the paramount authority of the State over the interests of the
property owner. Private rights must then yield to the irresistible
demands of the public interest on the time-honored justification, as in
the case of the police power, that the welfare of the people is the
supreme law.
But for all its primacy and urgency, the power of expropriation is by no
means absolute (as indeed no power is absolute). The limitation is
found in the constitutional injunction that "private property shall not be
taken for public use without just compensation" and in the abundant
jurisprudence that has evolved from the interpretation of this principle.
Basically, the requirements for a proper exercise of the power are: (1)
public use and (2) just
compensation.chanroblesvirtualawlibrary chanrobles virtual law library
Let us dispose first of the argument raised by the petitioners in G.R.
No. 79310 that the State should first distribute public agricultural lands
in the pursuit of agrarian reform instead of immediately disturbing
property rights by forcibly acquiring private agricultural lands.
Parenthetically, it is not correct to say that only public agricultural lands
may be covered by the CARP as the Constitution calls for "the just
distribution of all agricultural lands." In any event, the decision to
redistribute private agricultural lands in the manner prescribed by the
CARP was made by the legislative and executive departments in the
exercise of their discretion. We are not justified in reviewing that
discretion in the absence of a clear showing that it has been
abused.chanroblesvirtualawlibrary chanrobles virtual law library
A becoming courtesy admonishes us to respect the decisions of the
political departments when they decide what is known as the political
question. As explained by Chief Justice Concepcion in the case
of Taada v. Cuenco:
36

The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those questions
which, under the Constitution, are to be decided by the people in their
sovereign capacity; or in regard to which full discretionary authority has
been delegated to the legislative or executive branch of the
government." It is concerned with issues dependent upon the wisdom,
not legality, of a particular measure.
It is true that the concept of the political question has been constricted
with the enlargement of judicial power, which now includes the
authority of the courts "to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government."
37
Even so,
this should not be construed as a license for us to reverse the other
departments simply because their views may not coincide with
ours.chanroblesvirtualawlibrary chanrobles virtual law library
The legislature and the executive have been seen fit, in their wisdom,
to include in the CARP the redistribution of private landholdings (even
as the distribution of public agricultural lands is first provided for, while
also continuing apace under the Public Land Act and other cognate
laws). The Court sees no justification to interpose its authority, which
we may assert only if we believe that the political decision is not
unwise, but illegal. We do not find it to be
so.chanroblesvirtualawlibrary chanrobles virtual law library
In U.S. v. Chandler-Dunbar Water Power Company,
38
it was held:
Congress having determined, as it did by the Act of March 3,1909 that
the entire St. Mary's river between the American bank and the
international line, as well as all of the upland north of the present ship
canal, throughout its entire length, was "necessary for the purpose of
navigation of said waters, and the waters connected therewith," that
determination is conclusive in condemnation proceedings instituted by
the United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been
settled for us by the Constitution itself No less than the 1987 Charter
calls for agrarian reform, which is the reason why private agricultural
lands are to be taken from their owners, subject to the prescribed
maximum retention limits. The purposes specified in P.D. No. 27, Proc.
No. 131 and R.A. No. 6657 are only an elaboration of the constitutional
injunction that the State adopt the necessary measures "to encourage
and undertake the just distribution of all agricultural lands to enable
farmers who are landless to own directly or collectively the lands they
till." That public use, as pronounced by the fundamental law itself, must
be binding on us.chanroblesvirtualawlibrary chanrobles virtual law
library
The second requirement, i.e., the payment of just compensation,
needs a longer and more thoughtful
examination.chanroblesvirtualawlibrary chanrobles virtual law library
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator.
39
It has been
repeatedly stressed by this Court that the measure is not the taker's
gain but the owner's loss.
40
The word "just" is used to intensify the
meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample.
41
chanrobles virtual law library
It bears repeating that the measures challenged in these petitions
contemplate more than a mere regulation of the use of private lands
under the police power. We deal here with an actual taking of private
agricultural lands that has dispossessed the owners of their property
and deprived them of all its beneficial use and enjoyment, to entitle
them to the just compensation mandated by the
Constitution.chanroblesvirtualawlibrary chanrobles virtual law library
As held in Republic of the Philippines v. Castellvi,
42
there is
compensable taking when the following conditions concur: (1) the
expropriator must enter a private property; (2) the entry must be for
more than a momentary period; (3) the entry must be under warrant or
color of legal authority; (4) the property must be devoted to public use
or otherwise informally appropriated or injuriously affected; and (5) the
utilization of the property for public use must be in such a way as to
oust the owner and deprive him of beneficial enjoyment of the property.
All these requisites are envisioned in the measures before
us.chanroblesvirtualawlibrary chanrobles virtual law library
Where the State itself is the expropriator, it is not necessary for it to
make a deposit upon its taking possession of the condemned property,
as "the compensation is a public charge, the good faith of the public is
pledged for its payment, and all the resources of taxation may be
employed in raising the amount."
43
Nevertheless, Section 16(e) of the
CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in
case of rejection or no response from the landowner, upon the deposit
with an accessible bank designated by the DAR of the compensation in
cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper
Register of Deeds to issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just
compensation, which it is claimed is entrusted to the administrative
authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or
disregard by the owner of the offer of the government to buy his land-
... the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the landowner,
the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of
the notice. After the expiration of the above period, the matter is
deemed submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function
addressed to the courts of justice and may not be usurped by any
other branch or official of the government.EPZA v. Dulay
44
resolved a
challenge to several decrees promulgated by President Marcos
providing that the just compensation for property under expropriation
should be either the assessment of the property by the government or
the sworn valuation thereof by the owner, whichever was lower. In
declaring these decrees unconstitutional, the Court held through Mr.
Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile in a matter which
under this Constitution is reserved to it for final
determination.chanroblesvirtualawlibrary chanrobles virtual law library
Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for the
property, following the applicable decrees, its task would be relegated
to simply stating the lower value of the property as declared either by
the owner or the assessor. As a necessary consequence, it would be
useless for the court to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the due process clause in
the taking of private property is seemingly fulfilled since it cannot be
said that a judicial proceeding was not had before the actual taking.
However, the strict application of the decrees during the proceedings
would be nothing short of a mere formality or charade as the court has
only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The
court cannot exercise its discretion or independence in determining
what is just or fair. Even a grade school pupil could substitute for the
judge insofar as the determination of constitutional just compensation
is concerned.chanroblesvirtualawlibrary chanrobles virtual law library
x x x chanrobles virtual law library
In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor decrees,
still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to
appoint commissioners for such
purpose.chanroblesvirtualawlibrary chanrobles virtual law library
This time, we answer in the affirmative.
x x x
It is violative of due process to deny the owner the opportunity to prove
that the valuation in the tax documents is unfair or wrong. And it is
repulsive to the basic concepts of justice and fairness to allow the
haphazard work of a minor bureaucrat or clerk to absolutely prevail
over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been
judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does
not suffer from the arbitrariness that rendered the challenged decrees
constitutionally objectionable. Although the proceedings are described
as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real
value of the property. But more importantly, the determination of the
just compensation by the DAR is not by any means final and
conclusive upon the landowner or any other interested party, for
Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the
court of proper jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless
accepted by all parties concerned. Otherwise, the courts of justice will
still have the right to review with finality the said determination in the
exercise of what is admittedly a judicial
function.chanroblesvirtualawlibrary chanrobles virtual law library
The second and more serious objection to the provisions on just
compensation is not as easily
resolved.chanroblesvirtualawlibrary chanrobles virtual law library
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. - The LBP shall
compensate the landowner in such amount as may be agreed upon by
the landowner and the DAR and the LBP, in accordance with the
criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.chanroblesvirtualawlibrary chanrobles
virtual law library
The compensation shall be paid in one of the following modes, at the
option of the landowner: chanrobles virtual law library
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage
is concerned - Twenty-five percent (25%) cash, the balance to be paid
in government financial instruments negotiable at any
time.chanroblesvirtualawlibrary chanrobles virtual law library
(b) For lands above twenty-four (24) hectares and up to fifty (50)
hectares - Thirty percent (30%) cash, the balance to be paid in
government financial instruments negotiable at any
time.chanroblesvirtualawlibrary chanrobles virtual law library
(c) For lands twenty-four (24) hectares and below - Thirty-five percent
(35%) cash, the balance to be paid in government financial instruments
negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations,
LBP preferred shares, physical assets or other qualified investments in
accordance with guidelines set by the PARC; chanrobles virtual law
library
(3) Tax credits which can be used against any tax liability; chanrobles
virtual law library
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten
percent (10%) of the face value of the bonds shall mature every year
from the date of issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash portion, whether in full
or in part, he shall be paid correspondingly in LBP bonds; chanrobles
virtual law library
(b) Transferability and negotiability. Such LBP bonds may be used by
the landowner, his successors-in- interest or his assigns, up to the
amount of their face value, for any of the following: chanrobles virtual
law library
(i) Acquisition of land or other real properties of the government,
including assets under the Asset Privatization Program and other
assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid are
situated; chanrobles virtual law library
(ii) Acquisition of shares of stock of government-owned or controlled
corporations or shares of stock owned by the government in private
corporations; chanrobles virtual law library
(iii) Substitution for surety or bail bonds for the provisional release of
accused persons, or for performance bonds; chanrobles virtual law
library
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an economic
enterprise, preferably in a small and medium- scale industry, in the
same province or region as the land for which the bonds are
paid; chanrobles virtual law library
(v) Payment for various taxes and fees to government: Provided, That
the use of these bonds for these purposes will be limited to a certain
percentage of the outstanding balance of the financial instruments;
Provided, further, That the PARC shall determine the percentages
mentioned above; chanrobles virtual law library
(vi) Payment for tuition fees of the immediate family of the original
bondholder in government universities, colleges, trade schools, and
other institutions; chanrobles virtual law library
(vii) Payment for fees of the immediate family of the original
bondholder in government hospitals; and chanrobles virtual law library
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above
provision is unconstitutional insofar as it requires the owners of the
expropriated properties to accept just compensation therefor in less
than money, which is the only medium of payment allowed. In support
of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the
property expropriated is entitled to a just compensation, which should
be neither more nor less, whenever it is possible to make the
assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation .
45
(Emphasis
supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,
46
this Court held:
It is well-settled that just compensation means the equivalent for the
value of the property at the time of its taking. Anything beyond that is
more, and anything short of that is less, than just compensation. It
means a fair and full equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain would accrue to the
expropriating entity. The market value of the land taken is the just
compensation to which the owner of condemned property is entitled,
the market value being that sum of money which a person desirous,
but not compelled to buy, and an owner, willing, but not compelled to
sell, would agree on as a price to be given and received for such
property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject
has been derived, the weight of authority is also to the effect that just
compensation for property expropriated is payable only in money and
not otherwise. Thus -
The medium of payment of compensation is ready money or cash. The
condemnor cannot compel the owner to accept anything but money,
nor can the owner compel or require the condemnor to pay him on any
other basis than the value of the property in money at the time and in
the manner prescribed by the Constitution and the statutes. When the
power of eminent domain is resorted to, there must be a standard
medium of payment, binding upon both parties, and the law has fixed
that standard as money in cash.
47
(Emphasis supplied.)chanrobles
virtual law library
Part cash and deferred payments are not and cannot, in the nature of
things, be regarded as a reliable and constant standard of
compensation.
48

"Just compensation" for property taken by condemnation means a fair
equivalent in money, which must be paid at least within a reasonable
time after the taking, and it is not within the power of the Legislature to
substitute for such payment future obligations, bonds, or other valuable
advantage.
49
(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for
the payment of just compensation is money and no other. And so,
conformably, has just compensation been paid in the past solely in that
medium. However, we do not deal here with the traditional excercise of
the power of eminent domain. This is not an ordinary expropriation
where only a specific property of relatively limited area is sought to be
taken by the State from its owner for a specific and perhaps local
purpose.chanroblesvirtualawlibrary chanrobles virtual law library
What we deal with here is a revolutionary kind of
expropriation.chanroblesvirtualawlibrary chanrobles virtual law library
The expropriation before us affects all private agricultural lands
whenever found and of whatever kind as long as they are in excess of
the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular
community or of a small segment of the population but of the entire
Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the
whole territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the vision
and the sacrifice of the present generation of Filipinos. Generations yet
to come are as involved in this program as we are today, although
hopefully only as beneficiaries of a richer and more fulfilling life we will
guarantee to them tomorrow through our thoughtfulness today. And,
finally, let it not be forgotten that it is no less than the Constitution itself
that has ordained this revolution in the farms, calling for "a just
distribution" among the farmers of lands that have heretofore been the
prison of their dreams but can now become the key at least to their
deliverance.chanroblesvirtualawlibrary chanrobles virtual law library
Such a program will involve not mere millions of pesos. The cost will
be tremendous. Considering the vast areas of land subject to
expropriation under the laws before us, we estimate that hundreds of
billions of pesos will be needed, far more indeed than the amount of
P50 billion initially appropriated, which is already staggering as it is by
our present standards. Such amount is in fact not even fully available
at this time.chanroblesvirtualawlibrary chanrobles virtual law library
We assume that the framers of the Constitution were aware of this
difficulty when they called for agrarian reform as a top priority project of
the government. It is a part of this assumption that when they
envisioned the expropriation that would be needed, they also intended
that the just compensation would have to be paid not in the orthodox
way but a less conventional if more practical method. There can be no
doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to
pay in cash and in full for the lands they wanted to be distributed
among the farmers. We may therefore assume that their intention was
to allow such manner of payment as is now provided for by the CARP
Law, particularly the payment of the balance (if the owner cannot be
paid fully with money), or indeed of the entire amount of the just
compensation, with other things of value. We may also suppose that
what they had in mind was a similar scheme of payment as that
prescribed in P.D. No. 27, which was the law in force at the time they
deliberated on the new Charter and with which they presumably
agreed in principle.chanroblesvirtualawlibrary chanrobles virtual law
library
The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just compensation as
applied to the comprehensive agrarian reform program being
contemplated. There was the suggestion to "fine tune" the requirement
to suit the demands of the project even as it was also felt that they
should "leave it to Congress" to determine how payment should be
made to the landowner and reimbursement required from the farmer-
beneficiaries. Such innovations as "progressive compensation" and
"State-subsidized compensation" were also proposed. In the end,
however, no special definition of the just compensation for the lands to
be expropriated was reached by the Commission.
50
chanrobles virtual
law library
On the other hand, there is nothing in the records either that militates
against the assumptions we are making of the general sentiments and
intention of the members on the content and manner of the payment to
be made to the landowner in the light of the magnitude of the
expenditure and the limitations of the
expropriator.chanroblesvirtualawlibrary chanrobles virtual law library
With these assumptions, the Court hereby declares that the content
and manner of the just compensation provided for in the afore- quoted
Section 18 of the CARP Law is not violative of the Constitution. We do
not mind admitting that a certain degree of pragmatism has influenced
our decision on this issue, but after all this Court is not a cloistered
institution removed from the realities and demands of society or
oblivious to the need for its enhancement. The Court is as acutely
anxious as the rest of our people to see the goal of agrarian reform
achieved at last after the frustrations and deprivations of our peasant
masses during all these disappointing decades. We are aware that
invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization
and resurrecting the spectre of discontent and dissent in the restless
countryside. That is not in our view the intention of the Constitution,
and that is not what we shall decree
today.chanroblesvirtualawlibrary chanrobles virtual law library
Accepting the theory that payment of the just compensation is not
always required to be made fully in money, we find further that the
proportion of cash payment to the other things of value constituting the
total payment, as determined on the basis of the areas of the lands
expropriated, is not unduly oppressive upon the landowner. It is noted
that the smaller the land, the bigger the payment in money, primarily
because the small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds and other things
of value. No less importantly, the government financial instruments
making up the balance of the payment are "negotiable at any time."
The other modes, which are likewise available to the landowner at his
option, are also not unreasonable because payment is made in shares
of stock, LBP bonds, other properties or assets, tax credits, and other
things of value equivalent to the amount of just
compensation.chanroblesvirtualawlibrary chanrobles virtual law library
Admittedly, the compensation contemplated in the law will cause the
landowners, big and small, not a little inconvenience. As already
remarked, this cannot be avoided. Nevertheless, it is devoutly hoped
that these countrymen of ours, conscious as we know they are of the
need for their forebearance and even sacrifice, will not begrudge us
their indispensable share in the attainment of the ideal of agrarian
reform. Otherwise, our pursuit of this elusive goal will be like the quest
for the Holy Grail.chanroblesvirtualawlibrarychanrobles virtual law
library
The complaint against the effects of non-registration of the land under
E.O. No. 229 does not seem to be viable any more as it appears that
Section 4 of the said Order has been superseded by Section 14 of the
CARP Law. This repeats the requisites of registration as embodied in
the earlier measure but does not provide, as the latter did, that in case
of failure or refusal to register the land, the valuation thereof shall be
that given by the provincial or city assessor for tax purposes. On the
contrary, the CARP Law says that the just compensation shall be
ascertained on the basis of the factors mentioned in its Section 17 and
in the manner provided for in Section
16.chanroblesvirtualawlibrary chanrobles virtual law library
The last major challenge to CARP is that the landowner is divested of
his property even before actual payment to him in full of just
compensation, in contravention of a well- accepted principle of eminent
domain.chanroblesvirtualawlibrary chanrobles virtual law library
The recognized rule, indeed, is that title to the property expropriated
shall pass from the owner to the expropriator only upon full payment of
the just compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions.
Thus: chanrobles virtual law library
Title to property which is the subject of condemnation proceedings
does not vest the condemnor until the judgment fixing just
compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act,
or the commissioner's report under the Local Improvement Act, is
filed.
51
chanrobles virtual law library
... although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the
owner until payment is actually made.
52
(Emphasis
supplied.) chanrobles virtual law library
In Kennedy v. Indianapolis,
53
the US Supreme Court cited several
cases holding that title to property does not pass to the condemnor
until just compensation had actually been made. In fact, the decisions
appear to be uniformly to this effect. As early as 1838, in Rubottom v.
McLure,
54
it was held that "actual payment to the owner of the
condemned property was a condition precedent to the investment of
the title to the property in the State" albeit "not to the appropriation of it
to public use." In Rexford v. Knight,
55
the Court of Appeals of New
York said that the construction upon the statutes was that the fee did
not vest in the State until the payment of the compensation although
the authority to enter upon and appropriate the land was complete prior
to the payment. Kennedy further said that "both on principle and
authority the rule is ... that the right to enter on and use the property is
complete, as soon as the property is actually appropriated under the
authority of law for a public use, but that the title does not pass from
the owner without his consent, until just compensation has been made
to him." chanrobles virtual law library
Our own Supreme Court has held in Visayan Refining Co. v. Camus
and Paredes,
56
that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the method
of expropriation adopted in this jurisdiction is such as to afford absolute
reassurance that no piece of land can be finally and irrevocably taken
from an unwilling owner until compensation is paid ... . (Emphasis
supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of
tenant-farmer as October 21, 1972 and declared that he shall "be
deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually
issued to him unless and until he had become a full-fledged member of
a duly recognized farmers' cooperative." It was understood, however,
that full payment of the just compensation also had to be made first,
conformably to the constitutional
requirement.chanroblesvirtualawlibrary chanrobles virtual law library
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the
said decree, after proof of full-fledged membership in the farmers'
cooperatives and full payment of just compensation. Hence, it was also
perfectly proper for the Order to also provide in its Section 2 that the
"lease rentals paid to the landowner by the farmer- beneficiary after
October 21, 1972 (pending transfer of ownership after full payment of
just compensation), shall be considered as advance payment for the
land."chanrobles virtual law library
The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner
of the corresponding payment or the deposit by the DAR of the
compensation in cash or LBP bonds with an accessible bank. Until
then, title also remains with the landowner.
57
No outright change of
ownership is contemplated
either.chanroblesvirtualawlibrary chanrobles virtual law library
Hence, the argument that the assailed measures violate due process
by arbitrarily transferring title before the land is fully paid for must also
be rejected.chanroblesvirtualawlibrary chanrobles virtual law library
It is worth stressing at this point that all rights acquired by the tenant-
farmer under P.D. No. 27, as recognized under E.O. No. 228, are
retained by him even now under R.A. No. 6657. This should counter-
balance the express provision in Section 6 of the said law that "the
landowners whose lands have been covered by Presidential Decree
No. 27 shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of
the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead." chanrobles virtual law library
In connection with these retained rights, it does not appear in G.R. No.
78742 that the appeal filed by the petitioners with the Office of the
President has already been resolved. Although we have said that the
doctrine of exhaustion of administrative remedies need not preclude
immediate resort to judicial action, there are factual issues that have
yet to be examined on the administrative level, especially the claim that
the petitioners are not covered by LOI 474 because they do not own
other agricultural lands than the subjects of their
petition.chanroblesvirtualawlibrary chanrobles virtual law library
Obviously, the Court cannot resolve these issues. In any event,
assuming that the petitioners have not yet exercised their retention
rights, if any, under P.D. No. 27, the Court holds that they are entitled
to the new retention rights provided for by R.A. No. 6657, which in fact
are on the whole more liberal than those granted by the
decree.chanroblesvirtualawlibrary chanrobles virtual law library
V chanrobles virtual law library
The CARP Law and the other enactments also involved in these cases
have been the subject of bitter attack from those who point to the
shortcomings of these measures and ask that they be scrapped
entirely. To be sure, these enactments are less than perfect; indeed,
they should be continuously re-examined and rehoned, that they may
be sharper instruments for the better protection of the farmer's rights.
But we have to start somewhere. In the pursuit of agrarian reform, we
do not tread on familiar ground but grope on terrain fraught with pitfalls
and expected difficulties. This is inevitable. The CARP Law is not a
tried and tested project. On the contrary, to use Justice Holmes's
words, "it is an experiment, as all life is an experiment," and so we
learn as we venture forward, and, if necessary, by our own mistakes.
We cannot expect perfection although we should strive for it by all
means. Meantime, we struggle as best we can in freeing the farmer
from the iron shackles that have unconscionably, and for so long,
fettered his soul to the soil.chanroblesvirtualawlibrary chanrobles
virtual law library
By the decision we reach today, all major legal obstacles to the
comprehensive agrarian reform program are removed, to clear the way
for the true freedom of the farmer. We may now glimpse the day he will
be released not only from want but also from the exploitation and
disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the
farm on which he toils will be his farm. It will be his portion of the
Mother Earth that will give him not only the staff of life but also the joy
of living. And where once it bred for him only deep despair, now can he
see in it the fruition of his hopes for a more fulfilling future. Now at last
can he banish from his small plot of earth his insecurities and dark
resentments and "rebuild in it the music and the dream." chanrobles
virtual law library
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and
229 are SUSTAINED against all the constitutional objections raised in
the herein petitions.chanroblesvirtualawlibrary chanrobles virtual law
library
2. Title to all expropriated properties shall be transferred to the State
only upon full payment of compensation to their respective
owners.chanroblesvirtualawlibrary chanrobles virtual law library
3. All rights previously acquired by the tenant- farmers under P.D. No.
27 are retained and recognized.chanroblesvirtualawlibrary chanrobles
virtual law library
4. Landowners who were unable to exercise their rights of retention
under P.D. No. 27 shall enjoy the retention rights granted by R.A. No.
6657 under the conditions therein
prescribed.chanroblesvirtualawlibrarychanrobles virtual law library
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.

RA 3844
LANDS COVERED, BENEFICIARIES, AGRICULTURAL
LEASEHOLD
PO, et. al. v. DAMPAL
On December 19, 1984, two farm lots located in Manolo Fortich,
Bukidnon which were covered by OCT No. P-4146 and OCT No. 4147,
with an approximate area of 2.5773 and 2.0651 hectares, respectively,
were mortgaged for P33,000.00 by the spouses Florencio and Ester
Causin, through their attorney-in-fact Manuel Causin, to the now-
defunct Rural Bank of Tagoloan, Inc.
For failure to pay the obligation, the bank foreclosed the mortgage and
sold the lots at public auction on July 8, 1992 to petitioner Susan G. Po
(Susan) who was the highest bidder. OCT No. P-4146 and OCT No.
4147 were subsequently cancelled and TCT No. T-39280 and TCT No.
39281 were, in their stead, issued in Susan's favor, following the
spouses Causin's failure to redeem the property.
On September 13, 1993, Susan sold the lot covered by TCT No. 39281
to her herein co-petitioner Lilia G. Mutia (Lilia) who was issued TCT
No. T-40193.
On September 29, 1994, the spouses Causin and their tenant-herein
respondent Omero Dampal (Dampal) filed with the Regional Trial Court
of Manolo Fortich a complaint against the bank forAnnulment of the
Real Estate Mortgage and Sale, docketed as Civil Case No. 94-280
(the civil case).
While the civil case was pending or on June 16, 1997, Dampal filed a
complaint against Susan and Lilia before the Department of Agrarian
Reform Adjudication Board (DARAB) Region X, for Legal Redemption
with Preliminary Mandatory Injunction, docketed as DARAB Case No.
X-05-361.
By Decision
1
of September 16, 1997, the Regional Adjudicator of
DARAB Region X disallowed the redemption prayed for on the ground
of prescription, albeit he declared that Dampal is entitled to security of
tenure as a tenant; and that although Dampal was not given notice in
writing of the public auction sale, he was deemed to have knowledge
thereof because of the civil case for annulment, hence, there was
substantial compliance with the rules.
Dampal's motion for reconsideration having been denied by
Order
2
dated October 28, 1997, he appealed to the DARAB Central
Office where it was docketed as DARAB Case No. 7315.
By Decision
3
of October 19, 2004, the DARAB Central
Office reversed the Adjudicator's ruling. It held that Dampal, as a
tenant, had the right to redeem the mortgage in the amount
of P40,000.00 plus interest; and that the right had not prescribed,
owing to the lack of written notice to him and to the DAR of the sale. It
accordingly ordered the cancellation of the title issued in favor of
Susan and that of Lilia and the issuance of new ones in Dampal's
favor, upon his payment of the redemption amount. Susan and Lilia's
motion for reconsideration of the said Decision was denied by
Resolution
4
of July 7, 2005, hence, they appealed via certiorari to the
Court of Appeals.
By Resolution
5
of October 19, 2005, the appellate court, holding that
petitioners should have appealed the DARAB Decision via Rule 43,
instead of Rule 65, dismissed petitioners' petition forcertiorari .
Petitioners thereupon filed before the appellate court a Motion for
Leave to Amend Petition and for Admission of Amended Petition,
which motion was denied by Resolution
6
of March 28, 2006. In denying
the motion, the appellate court held that dismissal due to error in the
mode of appeal cannot be reconsidered by the mere expediency of
filing an amended petition. Moreover, it noted that it was filed out of
time.
Petitioners moved for reconsideration of the appellate court's March
28, 2006 Resolution, alleging that their error in the choice of remedy
was excusable as they relied on Sec. 1, Rule XIV of the DARAB
Revised Rules of Procedure, reading:
Sec. 1. Appeal to the Board. - An appeal may be taken to the Board
from a resolution, decision or final order of the Adjudicator that
completely disposes of the case by either or both of the parties within a
period of fifteen (15) days from receipt of the resolution/decision/final
order appealed from or of the denial of the movant's motion for
reconsideration in accordance with section 12, Rule X by:
1.1 filing a Notice of Appeal with the Adjudicator who rendered the
decision or final order appealed from;
1.2 furnishing copies of said Notice of Appeal to all parties and the
Board; andcralawlibrary
1.3 paying an appeal fee of Seven Hundred Pesos (Php700.00) to the
DAR Cashier where the Office of the Adjudicator is situated or through
postal money order, payable to the DAR Cashier where the Office of
the Adjudicator is situated, at the option of the appellant.
A pauper litigant shall be exempt from the payment of the appeal fee.
Proof of service of Notice of Appeal to the affected parties and to the
Board and payment of appeal fee shall be filed, within the
reglementary period, with the Adjudicator a quo and shall form part of
the records of the case.
Non-compliance with the foregoing shall be a ground for dismissal of
the appeal. (underscoring supplied)
By Resolution
7
of May 22, 2006, the appellate court denied the motion
for reconsideration, holding that nothing in the above-quoted Sec. 1 of
Rule XIV states that the remedy of an aggrieved party from an adverse
decision of the DARAB is by certiorari, and that the applicable rule is
Sec. 1, Rule XV of the 2003 DARAB Revised Rules of Procedure.
On petitioners' attribution of the faux pas to their counsel, the appellate
court held that they are bound thereby. Hence, this petition.
Petitioners assert that the appellate court, in dismissing their petition
due to technicality, denied them the opportunity to establish the merits
of their case. They maintain that Dampal's right of redemption has
prescribed, he having admitted Susan's acquisition of title to the
property as early as 1993 but that it was only in 1997 that he filed the
action for redemption before the DARAB. They thus conclude that the
need for sending him notice in writing could be dispensed with; and
that Dampal's inaction estopped him from asserting his right as a
tenant.
The petition is bereft of merit.
The earlier-quoted Sec. 1 of Rule XIV of the DARAB Revised Rules of
Procedure dwells on howappeals to the DARAB Board from the
decisions, resolutions or final orders of the Adjudicator are to be
taken. How petitioners could have been misled to file their appeal from
the DARAB's Decision to the Court of Appeals via certiorari escapes
comprehension.
Under Rule 43 of the Rules of Court, appeals from the decisions of the
DARAB should be filed with the Court of Appeals by verified Petition
for Review . Thus, Sec. 1 of Rule 43 provides:
SECTION 1. Scope. - This Rule shall apply to appeals from judgments
or final orders of the Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or authorized by any quasi-
judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the Civil Service Commission, Central Board of
Assessment Appeals, Securities and Exchange Commission, Office of
the President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks
and Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board, Insurance
Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and
voluntary arbitrators authorized by law.???r?bl?
STA. ANA v. SPS. CARPO
Before this Court is a Petition for Review on Certiorari
1
under Rule 45
of the Rules of Civil Procedure seeking the reversal of the Court of
Appeals (CA) Decision
2
dated March 5, 2004 which reversed and set
aside the Decision
3
of the Department of Agrarian Reform Adjudication
Board (DARAB) dated June 24, 1998 and reinstated the Decision
4
of
the Provincial Agrarian Reform Adjudicator (PARAD) of Laguna dated
October 12, 1993.
The Facts
Respondent Leon Carpo
5
(Leon) and his brother Francisco G. Carpo
are the registered co-owners of a parcel of land designated as Lot No.
2175 of the Santa Rosa Estate Subdivision, situated at Sta. Rosa,
Laguna, covered by Transfer Certificate of Title (TCT) No. T-17272
6
of
the Register of Deeds of Laguna, with an area of 91,337 square
meters, more or less. A portion thereof, consisting of 3.5 hectares,
pertained to Leon and his wife, respondent Aurora Carpo. It was
devoted to rice and corn production (subject land) and was tenanted by
one Domingo Pastolero (Domingo), husband of Adoracion Pastolero
(Adoracion).
7
When Domingo passed away, Adoracion together with
her son Elpidio Pastolero, assumed the tenancy rights of Domingo
over the subject land.
However, on December 29, 1983, Adoracion, by executing a notarized
Pinanumpaang Salaysay
8
with the conformity of Leon, and for a
consideration of P72,500.00, transferred her rights in favor of petitioner
Otilia Sta. Ana
9
(petitioner) who, together with her husband, Marciano
de la Cruz (Marciano), became the new tenants of the subject land.
At the outset, the parties had a harmonious tenancy
relationship.
10
Unfortunately, circumstances transpired which abraded
the relationship. The Department of Agrarian Reform (DAR) mediated
in order to amicably settle the controversy, but no settlement was
reached by the parties. Thus, the instant case.
In their Complaint for Ejectment due to Non-Payment of Lease
Rentals
11
dated December 1, 1989, respondents alleged that it was
their agreement with petitioner and Marciano to increase the existing
rentals from 36 cavans to 45 cavans, and that, if respondents wanted
to repossess the property, they only had to pay the petitioner the
amount of P72,500.00, the same amount paid by the latter to
Adoracion. Respondents further averred that despite repeated
demands, petitioner refused to pay the actual rentals from July 1985 to
September 1989, in violation of Presidential Decree (P.D.) No. 817;
and that the subject land had been declared, upon the
recommendation of the Human Settlements Committee, suitable for
commercial and industrial purposes, per Zoning Ordinance of 1981 of
the Municipality of Sta. Rosa, Laguna. Respondents prayed that
petitioner be ejected from the subject land and be directed to
pay P75,016.00 as unpaid rentals.
In their Answer
12
dated January 26, 1990, petitioner and Marciano
denied that there was an agreement to increase the existing rental
which was already fixed at 36 cavans of palay, once or twice a year
depending on the availability of irrigation water; that neither was there
an agreement as to the future surrender of the land in favor of the
respondents; that they did not refuse to pay the rentals because they
even sent verbal and written notices to the respondents, advising them
to accept the same; and that in view of the latter's failure to respond,
petitioner and Marciano were compelled to sell the harvest and to
deposit the proceeds thereof in Savings Account No. 9166 with the
Universal Savings Bank at Sta. Rosa, Laguna under the names of
Leon and Marciano. As their special affirmative defense, petitioner and
Marciano claimed that Marciano is a farmer-beneficiary of the subject
land pursuant to P.D. 27. Petitioner and Marciano prayed for the
outright dismissal of the complaint and for the declaration of Marciano
as full owner of the subject land.
Thereafter, trial on the merits ensued.
The PARAD's Ruling
On October 12, 1993, the PARAD ruled that petitioner and Marciano
deliberately defaulted in the payment of the rentals due the
respondents. The PARAD found that the deposit made with Republic
Planters Bank was actually in the names of petitioner and Marciano,
hence, personal to them. The PARAD also found that it was only
during the hearing that petitioner and Marciano deposited the amount
of P40,000.00 with the Universal Savings Bank for the unpaid rentals.
As such the PARAD considered the deposits as late payments and as
implied admission that indeed petitioner and Marciano did not pay the
past rentals when they fell due. The PARAD further held and disposed
thus:
The intent of the defendant to subject the said area under PD 27
should pass the criteria set. Foremost is the determination of the
aggregate riceland of plaintiff. He must have more than seven (7)
hectares of land principally devoted to the planting of palay. Area over
seven (7) hectares shall be the one to be covered by PD 27 on
Operation Land Transfer (OLT). In the case at bar, defendants failed to
prove that plaintiff has more than the required riceland. In fact the
subject 3.5 hectares are jointly owned by two. Hence, coverage for
OLT is remote.
Defendant claimed that plaintiff is covered by LOI 474, and therefore,
he is zero retention of area. In reference to said law, wherein it
provides landowner with other agricultural land of more than 7
hectares, or have other industrial lands from where he and his family
derived resources, then, the owner cannot retain any riceland.
However, this is not applicable in the instant case, as the defendant
failed to prove that plaintiff has other source of income from where they
will derive their sustenance.
WHEREFORE, in view of the foregoing, Judgment is hereby rendered:
a) Ordering the ejectment of defendant from the subject landholding for
non-payment of lease rentals;
b) Ordering the defendant Marciano de la Cruz to surrender the
possession and cultivation of the subject land to herein plaintiffs;
c) Ordering the defendant to pay as actual damage the amount
ofP75,016.00 corresponding to the unpaid rentals from July 18, 1985
up to September 16, 1989[; and]
d) [D]eclaring the subject land not covered by Presidential Decree No.
27, Republic Act [No.] 6657, and Executive Order No. 228.
SO ORDERED.
Petitioner and Marciano sought relief from the DARAB.
13

The DARAB's Ruling
On June 24, 1998, the DARAB held:
It is a fundamental rule in this jurisdiction that for non-payment of lease
rentals to warrant the dispossession and ejectment of a tenant, the
same must be made in a willful and deliberate manner (Cabero v.
Caturna, et al., CA-G.R. 05886-R, March 10, 1977). For a valid ouster
or ejectment of a farmer-tenant, the willful and deliberate intent not to
pay lease rentals and/or share can be ascertained when there is a
determination of will not to do a certain act.
Considering the circumstances obtaining in this case, it cannot be
concluded that the defendants-appellants deliberately failed or refused
to pay their lease rentals. It was not the fault of defendants-appellants
herein that the rentals did not reach the plaintiffs-appellees because
the latter choose to lend a deaf ear to the notices sent to them. Clearly,
therefore plaintiffs-appellees failed to show by substantial evidence
that the defendants-appellants deliberately failed or refused to pay
their lease rentals. It has been held that the mere failure of a tenant to
pay the landowner's share does not necessarily give the latter the right
to eject the former when there is lack of deliberate intent on the part of
the tenant to pay (Roxas y Cia v. Cabatuando, 1 SCRA 1106).
Thus:
WHEREFORE, finding the appeal interposed by the defendants-
appellants to be meritorious, the Decision appealed from is
hereby SET ASIDE and another judgment issued as follows:
1. Enjoining plaintiffs-appellees to respect the peaceful possession and
cultivation of the land in suit by the defendants-appellants;
andcralawlibrary
2. Directing the MARO of Sta. Rosa, Laguna to assist the parties in the
proper accounting of lease rentals to be paid by the defendants-
appellants to the plaintiffs-appellees.
No costs.
SO ORDERED.
Aggrieved, respondents appealed to the CA. On April 16, 2003,
Marciano passed away.
14

The CA's Ruling
On March 5, 2004, the CA affirmed the factual findings of the PARAD
that petitioner and Marciano failed to pay the rentals and that there
was no valid tender of payment. The CA added that this failure to pay
was tainted with bad faith and deliberate intent. Thus, petitioner and
Marciano did not legally comply with their duties as tenants. Moreover,
the CA held that the subject land was not covered by P.D. 27, Republic
Act (R.A.) No. 6657 and Executive Order (E.O.) No. 228, since the
same had become a residential, commercial and industrial land, to wit:
In the case at bar, We opted to give more weight to the petitioners
contention that the "subject landholding is for residential, commercial,
and industrial purposes as declared by zoning ordinance of 1981 of the
town of Sta. Rosa, Laguna upon recommendation of the Human
Settlement Committee xxx." The vicinity map of the subject landholding
shows that it is almost beside Nissan Motors Technopa[r]k and
surrounded by the South Expressway and several companies such as
the Coca-Cola Bottlers Philippines, Inc. and Toyota Motors Philippines
along the Pulong Santa Cruz, National Road. The vicinity map shows
therefore that the subject landholding is a residential, commercial, and
industrial area exempted from the coverage of P.D. No. 27, Republic
Act. No. 6657 and Executive Order No. 228.
The CA ruled in favor of the respondents in this wise:
WHEREFORE, premises considered and pursuant to applicable law
and jurisprudence on the matter, the present Petition is
hereby GRANTED. Accordingly, the decision of the Department of
Agrarian Reform Adjudication Board-Central Office, Elliptical Road,
Diliman, Quezon City (promulgated on June 24, 1998) is
hereby REVERSED and SET ASIDE and a new one entered -
REINSTATING the decision of the Department of Agrarian Reform
Adjudication Board-Region IV, Office of the Provincial Adjudicator, Sta.
Cruz, Laguna (dated October 12, 1993). No pronouncement as to
costs.
SO ORDERED.
Petitioner filed a Motion for Reconsideration
15
assailing the
aforementioned Decision which the CA, however, denied in its
Resolution
16
dated June 28, 2004.
Hence, this Petition based on the following grounds:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
ARROGATING UPON ITSELF WHAT IS OTHERWISE DAR'S
POWER TO DETERMINE WHETHER THE SUBJECT
AGRICULTURAL LAND HAS
BECOME RESIDENTIAL/INDUSTRIAL/COMMERCIAL.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT EQUATED "LAND RECLASSIFICATION" WITH "LAND
CONVERSION" FOR PURPOSES OF DETERMINING THE
PROPRIETY OF EJECTMENT OF AN AGRICULTURAL LESSEE.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT FAILED TO NOTE THAT AN EJECTMENT SUIT BASED
ON A CLAIM OF NON-PAYMENT OF LEASE RENTAL
ISDIAMETRICALLY ANTITHETICAL TO THE CLAIM THAT THE
SUBJECT LAND IS NO LONGER AGRICULTURAL BUT "A
RESIDENTIAL, COMMERCIAL AND INDUSTRIAL AREA EXEMPTED
FROM THE COVERAGE OF P.D. NO. 27, REPUBLIC ACT NO. 6657
AND EXECUTIVE ORDER NO. 228.
THE DECISION DATED MARCH 5, 2004 - -INSOFAR AS IT
ADOPTED THE FINDING OF DARAB-REGION IV, OFFICE OF THE
PROVINCIAL ADJUDICATOR, STA. CRUZ, LAGUNA INSTEAD OF
THAT OF THE DARAB-CENTRAL - -IS VIOLATIVE OF SEC. 14, ART.
VIII OF THE 1987 CONSTITUTION FOR HAVING DECIDED
WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY
THE FACTS AND THE LAW ON WHICH SAID DECISION IS BASED.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
RESORTING TO SURMISES AND CONJECTURES WHEN IT RULED
THAT THE FAILURE OF THE HEREIN PETITIONER AND HER
DECEASED HUSBAND TO DELIVER THE LEASE RENTALS TO
HEREIN RESPONDENTS, WAS DONE SO IN BAD FAITH AND WITH
DELIBERATE INTENT TO DEPRIVE THE LAND OWNERS
THEREOF.
Petitioner asseverates that there is no evidence to support
respondents' claim that the failure to pay the lease rentals was tainted
with malevolence, as the records are replete with acts indicative of
good faith on the part of the petitioner and Marciano and bad faith on
the part of respondents.
Moreover, petitioner claimed that the power to determine whether or
not the subject land is non-agricultural, hence, exempt from the
coverage of the Comprehensive Agrarian Reform Law (CARL), lies
with the DAR, and not with the courts; that mere reclassification by way
of a zoning ordinance does not warrant the dispossession of a tenant
but conversion does, and entitles the tenant to payment of disturbance
compensation; the legal concepts of reclassification and conversion
are separate and distinct from each other; that respondents' complaint
before the PARAD alleged and established the fact that the subject
land is a riceland, therefore, agricultural; that the CA failed to explain
why it upheld the findings of the PARAD on the issue of non-payment
of lease rentals; and that though the issue of non-payment of lease
rentals is a question of fact, due to the conflict of the factual findings of
the PARAD and CA with those of the DARAB, petitioner asks that this
Court review the evidence on record, and pursuant to the CA decision
in Cabero v. Caturna, et al.,
17
rule on whether petitioner willfully and
deliberately refused to pay lease rentals as to warrant her
dispossession from the subject land.
18

On the other hand, respondents aver that petitioner and her family are
wealthy, as they own numerous properties in Sta. Rosa, Laguna
including a luxurious house;
19
that, as such, petitioner cannot be
considered as a landless tenant deserving the protection of agrarian
reform laws; that the DARAB negated the highest degree of respect
the factual findings of the PARAD deserved; that petitioner's claims
that Marciano repeatedly made verbal and written notices
20
for Leon to
accept their lease rentals were fraudulent designs to disguise the
deliberate intent of petitioner not to pay the lease rentals; that when
Leon went to petitioner's residence, petitioner did not pay
the P10,000.00 due as lease rentals; that during the hearing before the
PARAD, when respondents' counsel requested that they be furnished
a bank certificate as to the existence of said bank deposits in Republic
Planters Bank as of April 20, 1987 and October 1, 1987, petitioner
herself commented, "Nagdeposito ho talaga kami sa
pangalan namin";
21
that the statement of petitioner is an admission that
bank deposits, if any, were made, not in the name of Leon as
contained in the written notices, but rather in the names of petitioner
and Marciano; that such certificate was not introduced in evidence and
that upon inquiry, said deposits do not actually exist; that per recent
inquiry, the bank deposit in Universal Savings Bank only
contains P1,020.19 due to previous withdrawals made by Marciano;
that the foregoing circumstances indicate a pattern of fraudulent
misrepresentations by the petitioner to mislead the DARAB into
believing that petitioner and Marciano did not deliberately refuse to pay
the lease rentals; that from July 18, 1985 up to the present, petitioner
failed to pay the lease rentals showing again, the deliberate refusal to
pay; that this default on the part of the petitioner has been recurring for
several years already, thus depriving the respondents as landowners
of their share of the subject land in violation of the principle of social
justice; that as raised in respondents Omnibus Supplemental Motion
for Reconsideration
22
before the DARAB and as found by the CA
based on its vicinity map,
23
the subject land is of a residential,
commercial and industrial character, exempted from agrarian reform
coverage; and that the DARAB erred in not finding the sale of the
tenancy rights of Adoracion to petitioner and Marciano for P72,500.00
violative of P.D. 27 even if the same was with Leon's consent. The
sale, respondents contend was therefore, null and void ab initio, not
susceptible of any ratification.
24

Our Ruling
Before we resolve this case on the merits, a procedural issue must be
disposed of.
Respondents strongly argue that the instant Petition was filed out of
time because, while petitioner originally claimed to have received her
copy of the CA Resolution
25
dated June 28, 2004, denying her Motion
for Reconsideration,
26
on July 12, 2004, petitioner eventually admitted,
after respondents showed proof to the contrary, that she actually
received the said Resolution on July 7, 2004.
27
Thus, petitioner had
only up to July 22, 2004 to appeal the CA's ruling to this Court. In this
case, petitioner filed her Motion
28
for Extension of Time to File Petition
for Review on Certiorari (Motion) on July 23, 2004. As such, there was
no more period to extend. Further, the instant Petition was filed on
August 27, 2004, or three (3) days beyond the thirty-day extended
period. Hence, respondents submit that the CA decision had already
become final and executory.
29

Petitioner alleges that on July 15, 2004, she met with her counsel to
engage the latter's legal services. During said meeting, counsel asked
petitioner about the date of receipt of the assailed CA Resolution.
Petitioner replied that she received her copy on July 12, 2004. On July
20, 2004, counsel filed an Entry of Appearance with the CA.
30
On July
23, 2004, petitioner through counsel filed the Motion for Extension of
Time to File Petition for Review. On August 11, 2004, petitioner
received a copy of respondents' Opposition to the Motion. Thereafter,
upon verification, petitioner admitted that she received the copy of the
CA Resolution on July 7, 2004. Thus, her Motion was admittedly filed
one day late. Petitioner begs the indulgence of this Court for her
oversight and mistake, attributing the same to her lack of education
and old age.
Rules of procedure are merely tools designed to facilitate the
attainment of justice. If the application of the Rules would tend to
frustrate rather than to promote justice, it is always within our power to
suspend the rules or except a particular case from their operation. Law
and jurisprudence grant to courts the prerogative to relax compliance
with the procedural rules, even the most mandatory in character,
mindful of the duty to reconcile the need to put an end to litigation
speedily and the parties' right to an opportunity to be heard.
31

Our recent ruling in Tanenglian v. Lorenzo
32
is instructive:
We have not been oblivious to or unmindful of the extraordinary
situations that merit liberal application of the Rules, allowing us,
depending on the circumstances, to set aside technical infirmities and
give due course to the appeal. In cases where we dispense with the
technicalities, we do not mean to undermine the force and effectivity of
the periods set by law. In those rare cases where we did not stringently
apply the procedural rules, there always existed a clear need to
prevent the commission of a grave injustice. Our judicial system and
the courts have always tried to maintain a healthy balance between the
strict enforcement of procedural laws and the guarantee that every
litigant be given the full opportunity for the just and proper disposition
of his cause.
In this case, petitioner was one day late in filing her Motion for
Extension. To deny the Petition on this ground alone is too harsh a
penalty for a day's delay, taking into consideration the time, resources
and effort spent by petitioner and even by the respondents, in order to
pursue this case all the way to this Court. Thus, we dispense with the
apparent procedural defect and resolve this case on the merits. The
ends of justice are better served when cases are determined on the
merits - with all parties given full opportunity to ventilate their causes
and defenses - rather than on technicality or some procedural
imperfections.
33

The Petition is impressed with merit.
In sum, there are two (2) ultimate issues that require resolution in this
case:
1) Whether the CA erred in ruling that the subject land had already
become residential, commercial and/or industrial, thus, excluded from
the coverage of our laws on agrarian reform; andcralawlibrary
2) Whether the petitioner, as an agricultural tenant, failed to pay her
lease rentals when the same fell due as to warrant her dispossession
of the subject land.
On the first issue, we rule in the affirmative.
To recapitulate, the instant case sprang from a Complaint for
Ejectment based on Non-Payment of lease rentals. Though an
allegation was made by the respondents that the land had been
declared, upon the recommendation of the Human Settlements
Committee, suitable for commercial and industrial purposes, per
Zoning Ordinance of 1981 of the Municipality of Sta. Rosa, no
argument was advanced by respondents to support such allegation, in
the same way that no prayer for the ejectment of the tenants was
raised based on that allegation. The PARAD held that petitioner should
be ejected for non-payment of lease rentals. It also ruled that the
subject land is not covered by P.D. No. 27, R.A. No. 6657, and E.O.
No. 228, not on the basis of the allegation in the complaint, but on the
respondents' right of retention.
On appeal, the DARAB concentrated on the issue of petitioner's failure
to pay lease rentals. When the DARAB ruled that petitioner and
Marciano did not deliberately fail to pay said rentals, respondents
raised a new issue in their Omnibus Motion that the transaction
between Adoracion and petitioner was void in violation of P.D. No. 27,
despite the conformity of Leon. This issue was not resolved by the
DARAB.
Finally, when the case reached the CA, the appellate court affirmed the
findings of the PARAD that petitioner and Marciano deliberately and in
bad faith did not pay the lease rentals. The CA, however, also held that
the subject land had already become a residential, commercial and
industrial area based on the vicinity map showing that the land was
surrounded by commercial and industrial establishments.
Without doubt, the PARAD acted without jurisdiction when it held that
the subject land was no longer covered by our agrarian laws because
of the retention rights of the respondents. The CA likewise acted
without jurisdiction when it ruled that the land had become non-
agricultural based on a zoning ordinance of 1981 on the strength of
a mere vicinity map. These rulings violated the doctrine of primary
jurisdiction.
The doctrine of primary jurisdiction precludes the courts from resolving
a controversy over which jurisdiction has initially been lodged in an
administrative body of special competence. For agrarian reform cases,
jurisdiction is vested in the Department of Agrarian Reform (DAR);
more specifically, in the Department of Agrarian Reform Adjudication
Board (DARAB). Executive Order 229 vested the DAR with (1) quasi-
judicial powers to determine and adjudicate agrarian reform matters;
and (2) jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive original
jurisdiction of the Department of Agriculture and the Department of
Environment and Natural Resources.
34

In Department of Agrarian Reform v. Abdulwahid,
35
we held:
As held by this Court in Centeno v. Centeno [343 SCRA 153], "the
DAR is vested with the primary jurisdiction to determine and adjudicate
agrarian reform matters and shall have the exclusive jurisdiction over
all matters involving the implementation of the agrarian reform
program." The DARAB has primary, original and appellate jurisdiction
"to determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of
the Comprehensive Agrarian Reform Program under R.A. No. 6657,
E.O. Nos. 229, 228 and 129-A, R.A. No. 3844 as amended by R.A. No.
6389, P.D. No. 27 and other agrarian laws and their implementing
rules and regulations."
Under Section 3 (d) of R.A. No. 6657 (CARP Law), "agrarian dispute"
is defined to include "(d) . . . any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship or otherwise
over lands devoted to agriculture, including disputes concerning
farmworkers associations or representation of persons in negotiating,
fixing, maintaining, changing or seeking to arrange terms or conditions
of such tenurial arrangements. It includes any controversy relating to
compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to farmworkers,
tenants and other agrarian reform beneficiaries, whether the disputants
stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee."
Simply put, agrarian disputes, as defined by law and settled in
jurisprudence, are within the primary and exclusive original jurisdiction
of the PARAD and the DARAB, while issues of retention and non-
coverage of a land under agrarian reform, among others, are within the
domain of the DAR Secretary.
Thus, Section 3, Rule II of the 2003 DARAB Rules of Procedure
provides:
SECTION 3. Agrarian Law Implementation Cases. - The Adjudicator or
the Board shall have no jurisdiction over matters involving the
administrative implementation of RA No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL) of 1988 and other
agrarian laws as enunciated by pertinent rules and administrative
orders, which shall be under the exclusive prerogative of and
cognizable by the Office of the Secretary of the DAR in accordance
with his issuances, to wit:
3.1 Classification and identification of landholdings for coverage under
the agrarian reform program and the initial issuance of CLOAs and
EPs, including protests or oppositions thereto and petitions for lifting of
such coverage;
3.2 Classification, identification, inclusion, exclusion, qualification, or
disqualification of potential/actual farmer-beneficiaries;
3.3 Subdivision surveys of land under CARP;
3.4 Recall, or cancellation of provisional lease rentals, Certificates of
Land Transfers (CLTs) and CARP Beneficiary Certificates (CBCs) in
cases outside the purview of Presidential Decree (PD) No. 816,
including the issuance, recall, or cancellation of EPs or CLOAs not yet
registered with the Register of Deeds;
3.5 Exercise of the right of retention by the landowner;
3.6 Application for exemption from coverage under Section 10 of RA
6657;
3.7 Application for exemption pursuant to Department of Justice (DOJ)
Opinion No. 44 (1990);
3.8 Exclusion from CARP coverage of agricultural land used for
livestock, swine, and poultry raising;
3.9 Cases of exemption/exclusion of fish pond and prawn farms from
the coverage of CARP pursuant to RA 7881;
3.10 Issuance of Certificate of Exemption for land subject of Voluntary
Offer to Sell (VOS) and Compulsory Acquisition (CA) found unsuitable
for agricultural purposes;
3.11 Application for conversion of agricultural land to residential,
commercial, industrial, or other non-agricultural uses and purposes
including protests or oppositions thereto;
3.12 Determination of the rights of agrarian reform beneficiaries to
homelots;
3.13 Disposition of excess area of the tenants/farmer-beneficiary's
landholdings;
3.14 Increase in area of tillage of a tenant/farmer-beneficiary;
3.15 Conflict of claims in landed estates administered by DAR and its
predecessors; or
3.16 Such other agrarian cases, disputes, matters or concerns referred
to it by the Secretary of the DAR.
Verily, there is an established tenancy relationship between petitioner
and respondents in this case. An action for Ejectment for Non-Payment
of lease rentals is clearly an agrarian dispute, cognizable at the initial
stage by
the PARAD and thereafter by the DARAB.
36
But issues with respect to
the retention rights of the respondents as landowners and the
exclusion/exemption of the subject land from the coverage of agrarian
reform are issues not cognizable by the PARAD and the DARAB, but
by the DAR Secretary because, as aforementioned, the same are
Agrarian Law Implementation (ALI) Cases.
It has not escaped our notice that, as this case progressed and
reached a higher level in the hierarchy of tribunals, the respondents
would, invariably, proffer an additional theory or defense, in order to
effect petitioner's eviction from the land. As a consequence, the simple
issue of ejectment based on non-payment of rentals has been
muddled.
Proof necessary for the resolution of the issue of the land being
covered by, or excluded/exempted from, P.D. No. 27, R.A. No. 6657,
and other pertinent agrarian laws, as well as of the issue of the right of
retention of the respondents, was not offered in evidence. Worse, the
PARAD resolved the issue of retention even if it was not raised by the
respondents at that level, and even if the PARAD had no jurisdiction
over the same.
Likewise, the CA ruled that the land had ceased being agricultural on
the basis of a mere vicinity map, in open disregard of the Doctrine of
Primary Jurisdiction, since the issue was within the province of the
Secretary of DAR.
We take this opportunity to remind the PARAD and the CA that "courts
of justice have no power to decide a question not in issue." A judgment
that goes beyond the issues, and purports to adjudicate something on
which the parties were not heard, is extra-judicial, irregular and invalid.
This norm applies not only to courts of justice, but also to quasi-judicial
bodies such as the PARAD. Accordingly, premature and irregular were
the PARAD ruling on the retention rights of the respondents, and the
CA decision on the non-agricultural character of the land subject of this
controversy - - these issues not having passed the scrutiny of the DAR
Secretary - - are premature and irregular.
37

Thus, we cannot allow ourselves to fall into the same error as that
committed by the PARAD and the CA, and resolve the issue of the
non-agricultural nature of the subject land by receiving, at this stage,
pieces of evidence and evaluating the same, without the respondents
having first introduced them in the proper forum. The Office of the DAR
Secretary is in a better position to resolve the issues on retention and
exclusion/exemption from agrarian reform coverage, being the agency
lodged with such authority inasmuch it possesses the necessary
expertise on the matter.
38

Likewise, we refrain from entertaining the issue raised by respondents
that petitioner and her family are not landless tenants and are therefore
not deserving of any protection under our laws on agrarian reform,
because fairness and due process dictate that issues not raised in the
proceedings below should not be raised for the first time on appeal.
39

On the second issue, we rule in the negative.
Under Section 37 of Republic Act No. 3844,
40
as amended, coupled
with the fact that the respondents are the complainants themselves,
the burden of proof to show the existence of a lawful cause for the
ejectment of the petitioner as an agricultural lessee rests upon the
respondents as agricultural lessors.
41
This proceeds from the principle
that a tenancy relationship, once established, entitles the tenant to
security of tenure. Petitioner can only be ejected from the agricultural
landholding on grounds provided by law.
42
Section 36 of the same law
pertinently provides:
Sec. 36. Possession of Landholding; Exceptions. - Notwithstanding
any agreement as to the period or future surrender, of the land, an
agricultural lessee shall continue in the enjoyment and possession of
his landholding except when his dispossession has been authorized by
the Court in a judgment that is final and executory if after due hearing it
is shown that:
x x x
(6) The agricultural lessee does not pay the lease rental when it falls
due: Provided, That if the non-payment of the rental shall be due to
crop failure to the extent of seventy-five per centum as a result of a
fortuitous event, the non-payment shall not be a ground for
dispossession, although the obligation to pay the rental due that
particular crop is not thereby extinguished;
x x x
Respondents failed to discharge such burden. The agricultural tenant's
failure to pay the lease rentals must be willful and deliberate in order to
warrant his dispossession of the land that he tills.
Petitioner's counsel opines that there appears to be no decision by this
Court on the matter; he thus submits that we should use the CA
decision in Cabero v. Caturna. This is not correct. In an En Banc
Decision by this Court in Roxas y Cia v. Cabatuando, et al.,
43
we held
that under our law and jurisprudence, mere failure of a tenant to pay
the landholder's share does not necessarily give the latter the right to
eject the former when there is lack of deliberate intent on the part of
the tenant to pay. This ruling has not been overturned.
The term "deliberate" is characterized by or results from slow, careful,
thorough calculation and consideration of effects and
consequences.
44
The term "willful," on the other hand, is defined as
one governed by will without yielding to reason or without regard to
reason.
45

We agree with the findings of the DARAB that it was not the fault of
petitioner that the lease rentals did not reach the respondents because
the latter chose to ignore the notices sent to them. To note, as early as
November 10, 1986, Marciano executed an Affidavit
46
stating that Leon
refused to receive the respective lease rentals consisting of 37 cavans
for November 1985 and July 1986. For 1987, Marciano wrote Leon two
letters
47
informing him of the availability of the lease rentals for April
and October of the same year. On April 27, 1988, Marciano sought
DAR intervention and mediation with respect to the execution of a
leasehold contract and the fixing of the leasehold rentals.
48
Meetings
were set but respondents failed to attend.
49
The dispute was referred to
the barangay but the parties failed to amicably settle.
50

These factual circumstances negate the PARAD findings of Marciano's
and petitioner's deliberate and willful intent not to pay lease rentals.
Good faith was clearly demonstrated by Marciano and petitioner when,
because respondents refused to accept the proffered payment, they
even went to the point of seeking government intervention in order to
address their problems with respondents. Absent such deliberate and
willful refusal to pay lease rentals, petitioner's ejectment from the
subject land is not justified.
WHEREFORE, the instant Petition is GRANTED. The assailed
Decision of the Court of Appeals in CA-G.R. SP No. 60640 is
hereby REVERSED and SET ASIDE. The Decision of the Department
of Agrarian Reform Adjudication Board (DARAB) dated June 24, 1998
in DARAB Case No. 2203 isREINSTATED without prejudice to the
rights of respondent-spouses Leon and Aurora Carpo to seek recourse
from the Office of the Department of Agrarian Reform (DAR) Secretary
on the other issues they raised. No costs.
SO ORDERED.

GROUNDS TO DISPOSSESS A LESSEE / LIABILITIES OF A
LESSOR / RENTAL
NATIVIDAD v. MARIANO
We resolve in this Rule 45 petition for review on certiorari
1
the
challenge to the November 28, 2006 decision
2
of the Court of
Appeals (CA) in CA-G.R. SP No. 89365. The assailed decision
affirmed the February 21, 2005 decision
3
of the Department of Agrarian
Reform Adjudication Board (DARAB) in DARAB Case No. 10051. The
DARAB ruling, in turn, reversed the decision
4
dated October 27, 1999
of the Provincial Agrarian Reform Adjudicator (PARAD) of Nueva Ecija
granting the petition for ejectment and collection of back lease rentals
filed by petitioner Emesto L. Natividad against respondents Fernando
Mariano, Andres Mariano and Doroteo Garcia.


The Factual Antecedents

At the core of the dispute in this case is a 66,997 square meter parcel
of agricultural land (subject property) situated in Sitio Balanti, Gapan,
Nueva Ecija, owned and registered in the name of Esperanza Yuzon
under Transfer Certificate of Title No. NT-15747. The respondents are
the tenants of the subject property.
5
chanroblesvirtuallawlibrary

On December 23, 1998, Ernesto filed with the PARAD a petition
6
for
ejectment and collection of back lease rentals against the respondents.
In his petition, Ernesto alleged that he purchased the subject property
in a public auction held on July 17, 1988. Immediately after the
purchase, he verballydemanded that the respondents pay the lease
rentals. Despite his repeated demands, the respondents refused to
pay, prompting him to orally request the respondents to vacate the
subject property. He filed the petition when the respondents refused
his demand to vacate.

Although duly served with summons, the respondents failed to answer
Ernesto's petition and were deemed to have waived their right to
present evidence. The PARAD allowed the case to proceed ex parte.

The PARAD granted Ernesto's petition in its October 27, 1999
decision, and ordered the respondents to vacate the subject property
and to pay the lease rentals in arrears. The PARAD found merit in
Ernesto's unrebutted allegations.

The respondents did not appeal the decision despite due notice.
7
Thus,
the PARAD's decision became final and executory, and on April 6,
2000, the PARAD granted Ernesto's motion for the issuance of a writ of
execution.
8
chanroblesvirtuallawlibrary

On May 4, 2000, the respondents, through a private law firm, filed an
Appearance and Petition for Relief from Judgment
9
(first petition) on the
ground of excusable negligence. The respondents claimed that their
inexperience and lack of knowledge of agrarian reform laws and the
DARAB Rules of Procedure prevented them from appearing before the
PARAD in due course; these also led to their belated discovery of the
approved Barangay Committee for Land Production (BCLP) valuation.
They cited these reasons as their excusable negligence justifying the
grant of the relief from judgment prayed for.

In answer to Ernesto's allegations, the respondents denied knowledge
of Ernesto's purchase of the subject property and, alternatively,
disputed the validity of the purchase. They averred that they had been
paying lease rentals to the landowner. In support of their position, the
respondents attached copies of rental payment receipts
10
for the crop
years 1988-1998 issued by Corazon Quiambao and Laureano
Quiambao, the authorized representatives of Aurora Yuzon.
11
They
added that Diego Mariano, the father of respondents Andres and
Fernando, and respondent Doroteo were issued Certificates of Land
Transfer (CLTs) on July 28, 1973.
12
Andres and Fernando added that,
as heirs of Diego, they are now the new beneficiaries or allocatees of
the lots covered by Diego's CLT.
13
Finally, the respondents pointed out
that as of the year 2000, they have an approved valuation report
issued by the BCLP.

On June 7, 2000, the PARAD denied the respondents' first petition,
finding no sufficient basis for its grant.
14
The PARAD declared that
none of the grounds for the grant of a petition for relief exists and can
be invoked against its October 27, 1999 decision, or could have
prevented the respondents from taking an appeal. The records show
that the respondents were duly notified of the scheduled hearing date
and of the issuance of its decision; despite due notices, the
respondents failed to appear and to appeal, for which reasons the
decision became final. Lastly, the PARAD considered that the
respondents' petition had been filed out of time. On July 13, 2000, the
PARAD denied
15
the respondents' motion for reconsideration of the
June 7, 2000 order.
16
chanroblesvirtuallawlibrary

On June 23, 2000, the respondents, this time represented by the
Agrarian Legal Assistance, Litigation Division of the Department of
Agrarian Reform (DAR), filed a second Petition for Relief from
Judgment (second petition).
17
The respondents repeated the
allegations in their first petition, but added lack of sufficient financial
means as the reason that prevented them from seeking appropriate
legal assistance.

On July 20, 2000, the PARAD denied the respondents' second petition
based on technical grounds. When the PARAD denied their
subsequent motion for reconsideration,
18
the respondents appealed to
the DARAB.
19
chanroblesvirtuallawlibrary

The Ruling of the DARAB

On February 21, 2005, the DARAB granted the respondents' appeal
and reversed the PARAD's October 27, 1999 decision.
20
The DARAB
ordered Ernesto to maintain the respondents in the peaceful
possession and cultivation of the subject property, and at the same
time ordered the respondents to pay the rentals in arrears as
computed by the Municipal Agrarian Reform Officer(MARO). Unlike the
PARAD, the DARAB found the evidence insufficient to support
Ernesto's allegation that the respondents did not pay the lease rentals.
The respondents' respective receipts of payment, the DARAB noted,
controverted Ernesto's claim.

Ernesto appealed the February 21, 2005 DARAB decision to the
CA via a petition for review under Rule 43 of the Rules of
Court.
21
chanroblesvirtuallawlibrary

The Ruling of the CA

In its November 28, 2006 decision, the CA denied Ernesto's petition for
review for lack of merit.
22
The CA declared that Ernesto failed to prove
by clear, positive and convincing evidence the respondents' failure to
pay the lease rentals and, in fact, never repudiated the authority of
Corazon and Laureano to receive rental payments from the
respondents. The CA ruled that under Section 7 of Republic
Act (R.A.) No. 3844, once a leasehold relationship is established, the
landowner-lessor is prohibited from ejecting a tenant-lessee unless
authorized by the court for causes provided by law. While non-payment
of lease rentals is one of the enumerated causes, the landowner
(Ernesto) bears the burden of proving that: (1) the tenant did not pay
the rentals; and (2) the tenant did not suffer crop failure pursuant to
Section 36 of R.A. No. 3844. As Ernesto failed to prove these
elements, no lawful cause existed for the ejectment of the respondents
as tenants.

The CA also declared that the DARAB did not err in taking cognizance
of the respondents' appeal and in admitting mere photocopies of the
respondents' receipts of their rental payments. The CA held that the
DARAB Rules of Procedure and the provisions of R. A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988) specifically authorize
the DARAB to ascertain the facts of every case and to decide on the
merits without regard to the law's technicalities. The CA added that the
attendant facts and the respondents' substantive right to security of
tenure except the case from the application of the doctrine of
immutability of judgments.

Finally, the CA noted that the issues Ernesto raised were factual in
nature. It was bound by these findings since the findings of the DARAB
were supported by substantial evidence.

Ernesto filed the present petition after the CA denied his motion for
reconsideration23 in its August 10, 2007
resolution.
24
chanroblesvirtuallawlibrarycralaw lawlibrary


The Petition

Ernesto imputes on the CA the following reversible errors: first, the
finding that he authorized Corazon and Laureano to receive the
respondents' lease rentals on his behalf; second, the conclusion that
the respondents cannot be ejected since they were excused from
paying lease rentals to him for lack of knowledge of the legality of the
latter's acquisition of the subject property; and third, the ruling that the
final and fully executed decision of the PARAD could still be reopened
or modified.

Ernesto argues that the respondents' admission in their pleadings and
the rental receipts, which they submitted to prove payment, evidently
show that the respondents paid the lease rentals to Corazon and
Laureano as representatives of Esperanza and not as his
representatives.
25
chanroblesvirtuallawlibrary

Ernesto further insists that the respondents cannot deny knowledge of
the legality of his acquisition of the subject property and are, therefore,
not excused from paying the lease rentals to him. He claims that the
respondents had long since known that he is the new owner of the
subject property when the petition for the annulment of the levy and
execution sale, which the respondents filed against him, was decided
in his favor.
26
chanroblesvirtuallawlibrary

Finally, Ernesto claims that the CA erred in disregarding the doctrine of
immutability of final judgments simply on the respondents' feigned
ignorance of the rules of procedure and of the free legal assistance
offered by the DARAB. Ernesto maintains that despite due receipt of
their respective copies of the PARAD's decision, the respondents
nevertheless still failed to seek reconsideration of or to appeal the
PARAD's decision. Ernesto concludes that the respondents' inaction
rendered the PARAD's decision final and fully executed, barring its
reopening or modification.
27
chanroblesvirtuallawlibrarycralaw lawlibrary


The Case for the Respondents

In their comment,
28
the respondents maintain that Ernesto's purchase
of the subject property is null and void. The respondents contend that
both Diego and Doroteo acquired rights over the subject property when
they were granted a CLT in 1973.
29
Ernesto's subsequent purchase of
the subject property via the execution sale cannot work to defeat such
rights as any sale of property covered by a CLT violates the clear and
express mandate of Presidential Decree (P.D.) No. 27, i.e., that title to
land acquired pursuant to the Act is not transferable.
30
In fact, when -
through the PARAD's final decision - he ejected the respondents from
the subject property, Ernesto also violated R.A. No.
6657.
31
chanroblesvirtuallawlibrary

The respondents further contend that the doctrine of immutability of
judgments does not apply where substantive rights conferred by law
are impaired, such as the situation obtaining in this case. The courts'
power to suspend or disregard rules justified the action taken by the
DARAB (as well as the CA in affirming the former) in altering the
decision of the PARAD although it had been declared
final.
32
chanroblesvirtuallawlibrary

Lastly, the respondents posit that the CA did not err in upholding the
DARAB's ruling since the findings of facts of quasi-judicial bodies,
when supported by substantial evidence, as in this case, bind the
CA.
33
chanroblesvirtuallawlibrarycralaw lawlibrary


The Issue

The case presents to us the core issue of whether Ernesto had
sufficient cause to eject the respondents from the subject
property.cralaw lawlibrary


The Court's Ruling


We DENY the petition.

Preliminary considerations

As a preliminary matter, we reiterate the rule that a petition for review
on certiorari under Rule 45 of the Rules of Court shall raise only
questions of law.
34
A question that invites a review of the factual
findings of the lower tribunals or bodies is beyond the scope of this
Court's power of review
35
and generally justifies the dismissal of the
petition.

The Court, as a rule, observes this Rule 45 proscription as this Court is
not a trier of facts.
36
The resolution of factual issues is the function of
the lower tribunals or bodies whose findings, when duly supported by
substantial evidence and affirmed by the CA, bind this
Court.
37
chanroblesvirtuallawlibrary

The reviewable question sanctioned by a Rule 45 petition is one that
lies solely on what the law provides on the given set of
circumstances.
38
In the present petition, Ernesto essentially argues that
the CA erred in ruling that he failed to sufficiently prove any cause to
eject the respondents from the subject property. In effect, Ernesto asks
this Court to re-examine and re-evaluate the probative weight of the
evidence on record. These are factual inquiries beyond the reach of
this petition.
39
chanroblesvirtuallawlibrary

Under exceptional circumstances, however, we have deviated from the
above rules. In the present case, the PARAD gave credit to Ernesto's
claim that the respondents did not pay the lease rentals. The DARAB,
in contrast, found Ernesto's claim unsubstantiated. This conflict in the
factual conclusions of the PARAD and the DARAB on the alleged non-
payment by the respondents of the lease rentals is one such exception
to the rule that only questions of law are to be resolved in a Rule 45
petition.
40
Thus, we set aside the above rules under the circumstances
of this case, and resolve it on the merits.

On the issue of the DARAB's grant of the respondents'
appeal;nadcralavvonlinelawlibrary
Doctrine of immutability of judgments

We cannot blame Ernesto for insisting that the PARAD decision can no
longer be altered. The doctrine of immutability of final judgments,
grounded on the fundamental principle of public policy and sound
practice, is well settled. Indeed, once a decision has attained finality, it
becomes immutable and unalterable and may no longer be modified in
any respect,
41
whether the modification is to be made by the court that
rendered it or by the highest court of the land.
42
The doctrine holds true
even if the modification is meant to correct erroneous conclusions of
fact and law.
43
The judgment of courts and the award of quasi-judicial
agencies must, on some definite date fixed by law, become final even
at the risk of occasional errors.
44
The only accepted exceptions to this
general rule are the correction of clerical errors, the so-called nunc pro
tunc entries which cause no prejudice to any party, void judgments,
and whenever circumstances transpire after the finality of the decision
which render its execution unjust and
inequitable.
45
chanroblesvirtuallawlibrary

This doctrine of immutability of judgments notwithstanding, we are not
persuaded that the DARAB and the CA erred in reopening, and ruling
on the merits of the case. The broader interests of justice and equity
demand that we set aside procedural rules as they are, after all,
intended to promote rather than defeat substantial justice.
46
If the rigid
and pedantic application of procedural norms would frustrate rather
than promote justice, the Court always has the power to suspend the
rules or except a particular case from its operation,
47
particularly if
defects of jurisdiction appear to be present. This is the precise situation
that we presently find before this Court.

In the present petition, the DARAB granted the respondents' appeal,
despite the lapse of ten months from the respondents' notice of the
PARAD's decision, because the PARAD denied the respondents'
petition for relief from judgment simply on a sweeping declaration that
none of the grounds for the grant of the petition exists and that the
petition had been filed out of time. The records, however, sufficiently
contradict the PARAD's reasons for denying the respondents' petition
for relief; not only do we find justifiable grounds for its grant, we also
find that the respondents filed their petition well within the prescriptive
period. Thus, the PARAD effectively and gravely abused its discretion
and acted without jurisdiction in denying the petition for relief from
judgment.

A petition for relief from the judgment of the PARAD is governed by
Section 4, Rule IX of the 1994 DARAB Rules of Procedure
48
(the
governing DARAB rules at the time Ernesto filed his complaint). It
reads in part:chanroblesvirtualawlibrary


SECTION 4. Relief from Judgment. A petition for relief from judgment
must be verified and must be based on grounds of fraud, accident,
mistake and excusable neglect x x x; Provided, that the petition is
filed with the Adjudicator a quo within three (3) months from the
time the fraud, accident, mistake or excusable neglect was
discovered and six (6) months from notice of order, resolution
ordecision from which relief is sought[.] [italics supplied; emphasis
ours]

A reading of Section 4 shows that four grounds justify the grant of the
petition for relief from judgment, namely: fraud, accident, mistake and
excusable negligence. The same provision also presents two periods
that must be observed for such grant 90 days and six months.

In their first and second petitions, the respondents invoked the ground
of excusable negligence. They alleged that they failed to appear before
the PARAD due to their inexperience and ignorance of agrarian reform
laws and of the DARAB Rules of Procedure, as well as indigence.
These circumstances their averred ignorance coupled with financial
constraints if not outright poverty - taken altogether sufficiently
convince us that the respondents' negligence is more than excusable
and constitutes a justifiable ground for the grant of their petition for
relief.

We are also convinced that the respondents complied with the twin
period requirement set by Section 4, Rule IX of the 1994 DARAB Rules
of Procedure. First, the records show that the respondents received a
copy of the PARAD's October 27, 1999 decision on December 10,
1999, at the earliest; they filed their first petition on May 4, 2000 or five
months after. Second, following our above discussion that the
respondents had sufficiently shown grounds for the grant of their
petition, we perforce count the 90-day period from the respondents'
discovery of their excusable negligence. We construe this date as the
time when the respondents discovered the adverse consequence of
their failure to answer, seek reconsideration or appeal the PARAD's
decision, which was when they were evicted from the subject property
on June 9, 2000
49
or 35 days before they filed their first petition.
Clearly, the respondents filed their petition well within 6 months from
their notice of the PARAD's decision and within 90 days from the
discovery of their excusable negligence.

Based on these considerations, we are convinced that the DARAB did
not err in granting the respondents' appeal despite the procedural
lapses. Under Section 3, Rule I of the 1994 DARAB Rules of
Procedure,
50
the DARAB and its adjudicators "shall not be bound by
technical rules of procedure and evidence as prescribed in the Rules of
Court, but shall proceed to hear and decide all agrarian cases,
disputes or controversies in a most expeditious manner, employing all
reasonable means to ascertain the facts of every case in accordance
with justice and equity." The same provision is essentially embodied in
R.A. No. 3844 upon which Ernesto heavily relied. In our view,
considerations of equity, justice and jurisdiction surround this case,
justifying the relaxation of the rules and the DARAB's grant of the
respondents' appeal.

In sum, we rule that the DARAB correctly allowed the respondents'
appeal despite the lapse of the reglementary period. Accordingly, we
cannot impute error on the CA in not reversing the DARAB's decision
simply under the doctrine of immutability of judgments.

Non-payment of lease rentals as ground for eviction of
tenants;nadcralavvonlinelawlibrary
Landowner with burden to prove sufficient cause for eviction

Section 7 of R.A. No. 3844 ordains that once the tenancy relationship
is established, a tenant or agricultural lessee is entitled to security of
tenure.
51
Section 36 of R.A. No. 3844 strengthens this right by
providing that the agricultural lessee has the right to continue the
enjoyment and possession of the landholding and shall not be
disturbed in such possession except only upon court authority in a final
and executory judgment, after due notice and hearing, and only for the
specifically enumerated causes.
52
The subsequent R.A. No. 6657
further reiterates, under its Section 6, that the security of tenure
previously acquired shall be respected. Finally, in order to protect this
right, Section 37 of R.A. No. 3844 rests the burden of proving the
existence of a lawful cause for the ejectment of the agricultural lessee
on the agricultural lessor.
53
chanroblesvirtuallawlibrary

Ernesto's petition for ejectment against the respondents was anchored
precisely on the latter's alleged non-payment of the lease rentals
beginning 1988 until 1998 despite his repeated verbal demands. When
confronted with the respondents' defense of due payment with
supporting documentary evidence of it, Ernesto countered that their
payments should not be considered as he did not authorize Corazon
and Laureano to receive the payments on his behalf.

These allegations pose to us three essential points that we need to
address. First, whether Ernesto indeed made demands on the
respondents for the payment of the lease rentals; second, assuming
that Ernesto made such demands, whether the respondents
deliberately failed or continuously refuse to pay the lease rentals;
and third, whether the lease rentals paid by the respondents to
Corazon and Laureano are valid.

We rule in the NEGATIVE on the first point.

Our review of the records shows that Ernesto did not present any
evidence, such as the affidavit of the person or persons present at that
time, to prove that he demanded from the respondents the payment of
the lease rentals. We, therefore, cannot accord any merit to his claim
that he made such demands. His allegation, absent any supporting
evidence, is nothing more than a hollow claim under the rule that he
who alleges a fact has the burden of proving it as mere allegation is
not evidence.
54
Thus, Ernesto should be deemed to have made his
demand only at the time he filed the petition for ejectment before the
PARAD. At this point, the respondents were not yet in delay55 and
could not be deemed to have failed in the payment of their lease
rentals.

We again rule in the NEGATIVE on the second point.

Non-payment of the lease rentals whenever they fall due is a ground
for the ejectment of an agricultural lessee under paragraph 6, Section
36 of R.A. No. 3844.
56
In relation to Section 2 of Presidential Decree
(P.D.) No. 816,
57
deliberate refusal or continued refusal to pay the lease
rentals by the agricultural lessee for a period of two (2) years shall,
upon hearing and final judgment, result in the cancellation of the CLT
issued in the agricultural lessee's favor.

The agricultural lessee's failure to pay the lease rentals, in order to
warrant his dispossession of the landholding, must be willful and
deliberate and must have lasted for at least two (2) years. The term
"deliberate" is characterized by or results from slow, careful, thorough
calculation and consideration of effects and consequences, while the
term "willful" is defined, as one governed by will without yielding to
reason or without regard to reason.
58
Mere failure of an agricultural
lessee to pay the agricultural lessor's share does not necessarily give
the latter the right to eject the former absent a deliberate intent on the
part of the agricultural lessee to pay.
59
chanroblesvirtuallawlibrary

In the present petition, we do not find the respondents' alleged non-
payment of the lease rentals sufficient to warrant their dispossession of
the subject property. The respondents' alleged non-payment did not
last for the required two-year period. To reiterate our discussion above,
the respondents' rental payments were not yet due and the
respondents were not in default at the time Ernesto filed the petition for
ejectment as Ernesto failed to prove his alleged prior verbal demands.
Additionally, assumingarguendo that the respondents failed to pay the
lease rentals, we do not consider the failure to be deliberate or willful.
The receipts on record show that the respondents had paid the lease
rentals for the years 1988-1998. To be deliberate or willful, the non-
payment of lease rentals must be absolute, i.e., marked by complete
absence of any payment. This cannot be said of the respondents'
case. Hence, without any deliberate and willful refusal to pay lease
rentals for two years, the respondents' ejectment from the subject
property, based on this ground, is baseless and unjustified.

Finally, we rule in the AFFIRMATIVE on the third point.

Ernesto purchased the subject property in 1988. However, he only
demanded the payment of the lease rentals in 1998. All the while, the
respondents had been paying the lease rentals to Corazon and
Laureano. With no demand coming from Ernesto for the payment of
the lease rentals for ten years, beginning from the time he purchased
the subject property, the respondents thus cannot be faulted for
continuously paying the lease rentals to Corazon and Laureano.
Ernesto should have demanded from the respondents the payment of
the lease rental soon after he purchased the subject property. His
prolonged inaction, whether by intention or negligence, in demanding
the payment of the lease rentals or asserting his right to receive such
rentals, at the very least, led the respondents to consider Corazon and
Laureano to still be the authorized payees of the lease rentals, given
the absence of any objection on his part.

Import of the respondents' CLT

Diego and respondent Doroteo were undoubtedly awarded CLTs over
the subject property pursuant to P.D. No. 27. Thus, we agree with their
position that they have acquired rights over the subject property and
are in fact deemed owners of it.

A CLT is a document that evidences an agricultural lessee's inchoate
ownership of an agricultural land primarily devoted to rice and corn
production.
60
It is the provisional title of ownership
61
issued to facilitate
the agricultural lessee's acquisition of ownership over the landholding.
The transfer of the landholding to the agricultural lessee under P.D.
No. 27 is accomplished in two stages: (1) issuance of a CLT to a
farmer-beneficiary as soon as the DAR transfers the landholding to the
farmer-beneficiary in recognition that said person is a "deemed owner";
and (2) issuance of an Emancipation Patent as proof of full ownership
of the landholding upon full payment of the annual amortizations or
lease rentals by the farmer- beneficiary.
62
chanroblesvirtuallawlibrary

The CLTs of Diego and of respondent Doroteo were issued in 1973.
Thus, as of 1973, Diego and respondent Doroteo were deemed the
owners of the subject property pursuant to P.D. No. 27, but subject to
the compliance with certain conditions and requirements, one of which
was the full payment of the monthly amortization or lease rentals to
acquire absolute ownership.
63
chanroblesvirtuallawlibrary

In the event the tenant-farmer defaults in the payment of the
amortization, P.D. No. 27 ordains that the amortization due shall be
paid by the farmer's cooperative where the defaulting tenant-farmer is
a member, with the cooperative having a right of recourse against the
farmer. Thus, if the tenant-farmer defaults, the landowner is assured of
payment since the farmers' cooperative will assume the obligation. In
the present petition, the records show that the respondents were
members of a Samahang Nayon. Pursuant to P.D. No. 27, Ernesto
should have claimed the unpaid lease rentals or amortizations from the
respondents' Samahang Nayon.

Executive Order (E.O.) No. 228, issued on July 17, 1987, modified
P.D. No. 27 on the manner of payment and provided for different
modes of payment of the value of the land to the landowner. The
pertinent portion reads:chanroblesvirtualawlibrary


SECTION 3. Compensation shall be paid to the landowners in any of
the following modes, at the option of the
landowners:chanroblesvirtualawlibrary

(a) Bond payment over ten (10) years, with ten percent (10%) of the
value of the land payable immediately in cash, and the balance in the
form of LBP bonds[;]

(b) Direct payment in cash or in kind by the farmer-beneficiaries with
the terms to be mutually agreed upon by the beneficiaries and
landowners and subject to the approval of the Department of Agrarian
Reform; and

(c) Other modes of payment as may be prescribed or approved by the
Presidential Agrarian Reform Council. [emphases supplied]

In the event a dispute arises between the landowner and the tenant-
farmer on the amount of the lease rentals, Section 2 of E.O. No. 228
provides that the DAR and the concerned BCLP shall resolve the
dispute. In any case, the Land Bank of the Philippines shall still
process the payment of the landowner's compensation claim, which it
shall hold in trust for the landowner, pending resolution of the dispute.
Thus, under this scheme, as with P.D. No. 27, the landowner is
assured of payment of the full value of the land under E.O. No. 228.

With the enactment of R.A. No. 6657 on June 10, 1988, the manner
and the mode of payment were further modified with the options
available to the landowner, provided as follows:


"SECTION 18. Valuation and Mode of Compensation. x x x

x x x x

(1) Cash payment, x x x;nadcralavvonlinelawlibrary

(2) Shares of stock in government-owned or controlled corporations,
LBP preferred shares, physical assets or other qualified investments in
accordance with guidelines set by the
PARC;nadcralavvonlinelawlibrary

(3) Tax credits which can be used against any tax
liability;nadcralavvonlinelawlibrary

(4) LBP bonds[.]" (emphases ours; italics supplied)

Following these guarantees to the landowner under P.D. No. 27 and
E.O No. 228, as well as R.A. No. 6657, the clear rule is that
notwithstanding the non-payment of the amortization to the landowner,
the tenant-farmer retains possession of the landholding.
64
In addition,
we point out that under P.D. No. 27 and R.A. No. 6657, the transfer or
waiver of the landholding acquired by virtue of P.D. No. 27 is
prohibited, save only by hereditary succession or to the Government;
effectively, reversion of the landholding to the landholder is absolutely
proscribed. In light of this decree, we hold that the DARAB correctly
reversed the decision of the PARAD, which ordered the respondents to
surrender the possession of the subject property to Ernesto as this was
in clear contravention of the objectives of the agrarian reform laws.

Nevertheless, we cannot agree with the DARAB's ruling that the
MARO should assist the parties in executing a new leasehold contract.
To recall, Diego and respondent Doroteo are valid holders of CLTs.
Also, as of the year 2000, the concerned BCLP has already issued an
approved valuation for the subject property. Under these
circumstances, the proper procedure is for Ernesto and the DAR to
agree on the manner of processing the compensation payment for the
subject property. Hence, pursuant to R.A. No. 6657, E.O. No. 228, in
relation to Department Memorandum Circular No. 26, series of 1973,
and the related issuances and regulation of the DAR, we must remand
the case to the DAR for the proper determination of the manner and
mode of payment of the full value of the subject property to Ernesto.

As a final note, we observe that on April 11, 1988, Diego waived his
right over the 3-hectare.lot covered by his CLT (which formed part of
the subject property) in favor of his two sons, Andres and Fernando,
with each obtaining an equal half interest. This arrangement directly
contravenes Ministry Memorandum Circular No.19, series of 1978.
This memorandum circular specifically proscribes the partition of the
landholding; should the farmer-beneficiary have several heirs, as in
this case, the ownership and cultivation of the landholding must
ultimately be consolidated in one heir who possesses the requisite
qualifications.
65
Thus, under paragraph 2 of the memorandum circular,
Andres and Fernando must agree on one of them to be the sole owner
and cultivator of the lot covered by Diego's CLT.

WHEREFORE, in view of these considerations,
we AFFIRM with MODIFICATION the decision dated November 28,
2006 and the resolution dated August 10, 2007 of the Court of Appeals
in CA-G.R. Sp No. 89365. Petitioner Ernesto L. Natividad
is ORDERED to immediately surrender possession of the subject
property to the respondents, and the DARAB is directed to ensure the
immediate restoration of possession of the subject property to the
respondents. We REMAND the case to the Department of Agrarian
Reform for the: (1) proper determination of the manner and mode of
payment of the full value of the land to petitioner Emesto L. Natividad
in accordance with R.A. No. 6657, Executive Order No. 228,
Department Memorandum Circular No. 26, series of 1973, and other
related issuances and regulation of the Department of Agrarian
Reform; and (2) proper determination of the successor-in-interest of
Diego Mariano as the farmer-beneficiary to the landholding covered by
his CLT, in accordance with the provisions of Ministry Memorandum
Circular No. 19, series of 1978. No costs.

SO ORDERED.



SUPPLETORY EFFECT
REYES v. REYES
This petition assails the decision 1 dated September 20, 1999 of the
Court of Appeals in CA-G.R. SP No. 47033, which reversed that of the
Department of Agrarian Reform Adjudication Board (DARAB-Central
Office) in DARAB Case No. 3625. The DARAB-Central Office had
affirmed the ruling of the Provincial Adjudicator, DARAB-Region III in
Case No. 249-Bul-91, declaring petitioner Dionisia L. Reyes the lawful
agricultural lessee of a parcel of land in Bulacan owned by the late
Marciano Castro, and thus she is entitled to security of
tenure.chanrob1es virtua1 1aw 1ibrary

After a thorough review of the records including the memoranda of the
parties, we find this petition meritorious.

The parties are among the nine children of the late Felizardo J. Reyes,
who prior to his death was the agricultural tenant of the land subject of
this uncivil dispute over tenancy rights. The core question in this
petition is, who among the parties should be considered the lawful and
rightful tenant of the Castro property? The DARAB ruled in favor of
petitioner, the appellate court held otherwise.

As disclosed by the record, the instant case stemmed from a complaint
for reinstatement with damages filed with the DARAB Region III Office
by Dionisia Reyes on April 22, 1991 against her four younger brothers,
herein respondents. She alleged that her father, the late Felizardo
Reyes, was the tenant of a two-hectare agricultural lot in Parulan,
Plaridel, Bulacan, owned by Marciano Castro. After her fathers death
on February 17, 1989, she and Marciano Castro, through the latters
son and attorney-in-fact, Ramon R. Castro, executed a leasehold
contract naming her as the agricultural lessee of the property.
However, sometime before the start of the planting of the dry season
crop in 1989, herein respondents forcibly entered the area and
occupied a one-hectare portion of the property. They claimed to be the
tenants thereof. Respondents then paid rent to the Castros overseer,
Armando Duran, and continued to occupy half of the property to
petitioners damage and prejudice.

In their answer, respondents denied Dionisias claim that she was the
bona fide leasehold tenant. They claimed that they inherited the lease
rights to the property from their deceased father. Respondents pointed
out that petitioner was a woman who could not possibly work or till the
land by herself. They likewise averred that they were the ones actually
cultivating the portion occupied by them. Hence, petitioners claim to
be the lawful agricultural lessee had no basis, either in fact or in law.

After attempts to amicably solve the dispute failed, the DARAB
Provincial Adjudicator (PARAD) ruled for petitioner, thus:chanrob1es
virtual 1aw library

WHEREFORE, premises considered, judgment is hereby rendered as
follows:chanrob1es virtual 1aw library

1. Ordering respondents Ricardo Reyes, Lazaro Reyes, Narciso Reyes
and Marcelo Reyes to respect the tenurial status of herein petitioner
Dionisia Reyes over the disputed landholding;

2. Ordering respondents to return the one-hectare portion which had
been taken forcibly and to cease and desist from molesting, interfering,
occupying petitioners peaceful possession over the disputed
landholding;

3. No pronouncement as to costs.

SO ORDERED. 2

Respondents then seasonably appealed the PARADs judgment to the
DARAB-Central Office. In its decision of September 1, 1997, however,
the DARAB-Central Office disposed of the appeal as
follows:chanrob1es virtual 1aw library

WHEREFORE, premises considered, the instant appeal is hereby
DISMISSED for lack of merit and the subject decision AFFIRMED.

SO ORDERED. 3

In affirming the ruling of the PARAD, the DARAB Central Office found
that pursuant to the agricultural lease contract entered into between
Dionisia and the Castros, the former was designated by the latter to
substitute the late Felizardo Reyes as tenant. It held:chanrob1es virtual
1aw library

When an agricultural tenant dies, the choice for the substitute tenant is
given to the land owner. It is the latter who has the option to place a
new tenant of his choice on the land. That choice is, however, not
absolute as it shall be exercised from among the surviving compulsory
heirs of the deceased tenant. Hence, the surviving heirs cannot
preempt that choice by deciding among themselves who shall take-
over the cultivation or opting to cultivate the land collectively. It is only
when the landowner fails to exercise such right, or waive the same,
that the survivors may agree among themselves regarding the
cultivation. The law is specific on the matter as so provided in Section
9, Republic Act No. 3844 4 . . .

x x x


Neither is their argument that Plaintiff-Appellee, being a woman, is not
capable of discharging the demands of farming, valid. This Board finds
said argument anachronistic with the changing times of great
awareness of the potentials of women. Women today are found
manning our commerce and industry, and agriculture is no exceptions.
5

In accordance with Section 54 of the Comprehensive Agrarian Reform
Law (R. A. No. 6657), 6 respondents elevated the case to the Court of
Appeals, which docketed their appeal as CA-G.R. SP No. 47033. On
appeal, respondents changed their theory. They abandoned their
argument that they had inherited the tenancy rights of their late father
and instead postulated that an "implied tenancy" had been created
when the Castros overseer accepted rentals totaling 40 cavans of
palay from them on behalf of the owner. As earlier stated, the appellate
court reversed the decision of the DARAB-Central Office. The decretal
portion of its decision reads:chanrob1es virtual 1aw library

WHEREFORE, premises considered, the. petition is hereby
GRANTED. The respondent is ordered to respect the tenurial status of
petitioners over the one (1) hectare portion of the two (2) hectare-
property of Ramon R. Castro situated in Barangay Parulan, Plaridel,
Bulacan.

No costs.

SO ORDERED. 7

The Court of Appeals held that an "implied tenancy" existed between
herein respondents and the landowner because:chanrob1es virtual
1aw library

. . . In point of time, Ricardo Reyes actual possession and cultivation
of the subject property came earlier than the possession of respondent
Dionisia Reyes by virtue of the said leasehold contract executed on
November 6, 1989. Further, Armando Duran testified that he served as
the overseer of the subject property from the period 1967 to 1993,
since the time of Antonio Castro, after which, during the time of
Marciano Castro up to the time of the administration of the subject
property by Ramon R. Castro who inherited the same (TSN July 12,
1994, pp. 3, 9; Rollo, pp. 98, 104). In effect, Armando Duran was still
the overseer of the subject property after the death of Felizardo Reyes
on February 17, 1989 and was still the overseer of the subject property
when he allowed petitioners to continue the tenancy thereof left by the
late Felizardo. The fact that Armando Duran was the overseer for a
period of sixteen (16) years, the petitioners were made to believe of his
authority from the Castro family relative to the administration of the
subject property. On this account, the acquiescence of Duran in
allowing or permitting petitioner Ricardo Reyes to possess and
cultivate of the one (1) hectare subject property immediately after the
death of Felizardo is binding to the Castro family including Ramon
Castro, the new landowner. 8

The appellate court then went on to rule that by virtue of this "implied
tenancy" created in favor of herein respondents, the leasehold contract
between the Castros and petitioner could be made effective only on
the other one-hectare portion of the disputed property.

Hence, the instant petition, anchored on the following assignment of
errors:chanrob1es virtual 1aw library

A.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF
LAW IN DISREGARDING THE SUBSTANTIAL EVIDENCE RULE BY
OVERTURNING THE BINDING FINDINGS OF FACT OF THE DARAB
PROVINCIAL ADJUDICATOR AND THE NATIONAL DARAB ITSELF.

B.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF
LAW IN HOLDING, WITHOUT BASIS IN FACT AND LAW, BUT
MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT HEREIN
RESPONDENTS WERE MADE TO BELIEVE THAT THE OVERSEER
HAD AUTHORITY FROM THE LANDOWNER TO INSTITUTE
TENANT/S FOR THE LAND, UPON THE BARE PREMISE THAT THE
OVERSEER WAS SUCH FOR 16 YEARS.

C.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF
LAW IN HOLDING, WITHOUT BASIS IN FACT AND LAW, BUT
MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT THE ACQUIESCENCE
OF THE OVERSEER TO RICARDO REYES POSSESSION AND
CULTIVATION OF THE 1-HECTARE PORTION OF THE LAND
IMMEDIATELY AFTER THE DEATH OF THE ORIGINAL TENANT IS
BINDING ON THE LANDOWNER.

D.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF
LAW IN HOLDING WITHOUT BASIS IN FACT AND LAW, BUT
MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE THAT AN IMPLIED
TENANCY WAS ESTABLISHED BETWEEN THE LANDOWNER AND
HEREIN RESPONDENTS RICARDO L. REYES, ET AL., UPON THE
BARE PREMISE THAT THE OVERSEER HAD ALLOWED THEM TO
CONTINUE THE LEASEHOLD RELATION LEFT BY THE ORIGINAL
TENANT AS TO THE 1-HECTARE PORTION OF THE LAND.

E.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF
LAW IN HOLDING, WITHOUT BASIS IN FACT AND LAW, BUT
MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT HEREIN PETITIONER
DIONISIA L. REYES CANNOT BE CONSIDERED A TENANT EVEN
IF SO DESIGNATED IN A WRITTEN CONTRACT, UPON THE BARE
PREMISE THAT THE 1-HECTARE PORTION OF THE LAND WAS IN
THE ACTUAL POSSESSION OF HEREIN RESPONDENTS
RICARDO L. REYES, ET AL.

F.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF
LAW IN HOLDING, WITHOUT BASIS IN FACT AND LAW, BUT
MERELY ON THE BASIS OF ILLOGICAL SURMISE AND
MANIFESTLY MISTAKEN INFERENCE, THAT HEREIN
RESPONDENTS RICARDO L. REYES, ET AL. HAVE SQUARELY
MET THE REQUIREMENTS OF THE LAW FOR THE EXISTENCE OF
A TENANCY RELATIONSHIP BETWEEN THEM AND THE
LANDOWNER. 9

The grounds relied upon by petitioner can be reduced to only two
issues, to wit:chanrob1es virtual 1aw library

(1) Did the Court of Appeals err in disregarding the substantial
evidence rule with respect to the DARAB findings?

(2) Did the appellate court commit a reversible error of law in finding
that respondents had satisfactorily met the requirements of a tenancy
relationship?

At the outset, respondents are reminded of the time-honored rule that
in the interests of fair play and substantial justice, a party is barred
from changing his theory of the case on appeal.

On the first issue, petitioner pleads that in agrarian cases, the power of
appellate review is limited to questions of law and findings of fact of the
DARAB, when supported by substantial evidence, shall be binding
upon the Court of Appeals. Hence, the appellate court cannot make its
own findings of fact and substitute the same in lieu of the findings of
the DARAB, unless there was grave abuse of discretion on the part of
the DARAB. Consequently, it was error for the appellate court to make
its own finding that respondent Ricardo Reyes assumed possession
and cultivation of the land from the time Felizardo died. Petitioner
points out that this finding by the Court of Appeals contradicted the
finding of the DARAB that petitioner Dionisia Reyes took over the
cultivation of the property after their fathers death. Petitioner further
stresses that the finding by the appellate court of Ricardos previous
possession runs counter to the finding of the DARAB that Ricardo was
a mere usurper who forcibly took over the disputed one-hectare
portion. The appellate court also erred in finding that Ricardo and other
respondents were made to believe that overseer Duran had authority
to bind the Castro family to allow them to possess and cultivate the lot.
This is because the DARAB found that Durans authority was limited
only to collecting rentals from tenants duly appointed by the Castros,
and Duran was in bad faith in accepting two rentals from Ricardo and
his co-respondents.

Respondents argue that Duran being the overseer of the landowner is
an extension of the latters personality as an agent of the Castros.
Ramon Castro, who succeeded after Marciano Castros death, in
allowing his overseer to accept agricultural rentals from respondents is
now estopped from denying that the latter are his tenants. Moreover,
they should be given the opportunity to work the land since this is after
all what their late father, Felizardo, wanted before his demise.

In Malate v. Court of Appeals, we held that:chanrob1es virtual 1aw
library

In appeals in agrarian cases, the only function required of the Court of
Appeals is to determine whether the findings of fact of the Court of
Agrarian Relations are supported by substantial evidence. And
substantial evidence has been defined to be such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion
and its absence is not shown by stressing that there is contrary
evidence on record, direct or circumstantial, and where the findings of
fact of the agrarian court are supported by substantial evidence, such
findings are conclusive and binding on the appellate court. 10

Stated differently, the appellate court cannot make its own findings of
fact and substitute the same for the findings of fact of the DARAB.

A perusal of the assailed decision clearly shows that nowhere did the
Court of Appeals rule that the findings of fact of the DARAB Region III
Provincial Adjudicator or the DARAB-Central Office were unsupported
by substantial evidence. Nor did the appellate court hold that said
findings were made with grave abuse of discretion on the part of the
agrarian quasi-judicial agencies. An examination of the record
categorically shows that the findings of fact of the DARAB were
supported by substantial evidence. Perforce, the Malate ruling must
apply to the instant case. The finding of the DARAB that petitioner, by
virtue of the contract of agricultural leasehold entered into between her
and the Castros, is the substitute tenant of the latter in lieu of her
deceased father, is binding upon the appellate court and this Court.
Equally conclusive upon the court a quo and this Court is the finding by
the DARAB that respondents were mere usurpers who failed to
present any proof as to the existence of a tenancy relationship
between them and the Castro family.

On the second issue, the appellate court found that an implied tenancy
was created when Duran, the ex-overseer of the Castros, acquiesced
in the taking over and cultivation of a one-hectare portion of the land. It
went on to rule that the Castros were estopped from denying this
implied tenancy in view of the fact that they had allowed Duran, as
their agent, to accept rentals from respondents.

Before us, petitioner asserts that Duran cannot be deemed an implied
agent of the Castros under Article 1869 of the Civil Code 11 since
there are neither acts nor omissions of either Marciano Castro or
Ramon Castro from which to imply an agency. She also submits that
there is no estoppel to bind the Castros to the acts of Duran, since the
former had no knowledge of the assumption by Duran of their
authority. Furthermore, the landowners made no false representations
or deception vis-a-vis respondents. Hence, the elements of estoppel
are not present in this instance.

Respondents aver that an implied tenancy existed in view of the fact
that Duran was undisputably the overseer of the landowner. They add
that Duran, as overseer, accepted 20 cavans of palay as rentals on
October 17, 1990 and another 20 cavans on April 1, 1991 from
Ricardo. Receipt of these rentals was properly documented. 12 Duran
then delivered the rentals to Elena Castro, sister of Ramon, who in turn
delivered the rentals to the latter. An implied tenancy was created
between respondents and Ramon, said the respondents, since Duran
as overseer of the landholding was the extension of the personality of
the landowner. They aver that in effect, a delivery of rentals to Duran
was a delivery to an agent of the landowner. They argue that having
accepted the rental payments made to his agent, Ramon is now
estopped from denying the existence of an implied tenancy between
him and respondents.

We find respondents contentions far from persuasive.

The present dispute involves an agricultural leasehold. The governing
law is R.A. No. 3844, 13 which, except for Section 35 thereof, was not
specifically repealed by the passage of the Comprehensive Agrarian
Reform Law of 1988 (R.A. No. 6657), but was intended to have
suppletory effect to the latter law. 14 Under R.A. 3844, two modes are
provided for in the establishment of an agricultural leasehold relation:
(1) by operation of law in accordance with Section 4 of the said act; or
(2) by oral or written agreement, either express or implied. 15 By
operation of law simply means the abolition of the agricultural share
tenancy system and the conversion of share tenancy relations into
leasehold relations. The other method is the agricultural leasehold
contract, which may either be oral or in writing. In the instant case, it is
not disputed that an agricultural leasehold contract was entered into
between petitioner and Ramon Castro. Respondents, however, insist
that an agricultural leasehold contract over a one-hectare portion of the
landholding arose as a result of the actions of Ramons overseer, who
must be viewed as the latters agent. They conclude that because of
this implied leasehold, the application off the contract between
petitioner and the landowner should be limited to the remaining portion
of the property.

Respondents reasoning is flawed. While undoubtedly Duran was an
agent of Ramon, he was not a general agent of the latter with respect
to the landholding. The record shows that as overseer, Durans duties
and responsibilities were limited to "issu(ing) receipt(s), selling
mangoes and bamboo trees and all other things saleable." 16 Thus, by
his own admission, Duran was a special agent under Article 1876 of
the Civil Code. 17 Durans duties and responsibilities as a special
agent do not include the acceptance of rentals from persons other than
the tenant so designated by the landowner. Durans authority as a
special agent likewise excludes the power to appoint tenants or
successor-tenants. Clearly, Duran acted beyond the limits of his
authority as an agent. We cannot agree with the Court of Appeals did
that since Duran had been the overseer of the Castros for 16 years, he
thereby made respondents believe he had full authority from the
Castro family relative to the administration of the subject property.
Regardless of the number of years that Duran had been the overseer
of the Castros, there is absolutely no showing that he was ever
authorized to appoint tenants or successor-tenants for the Castros, nor
to accept rentals from the persons he would appoint. Absent
substantial evidence to show Durans authority from the Castros to
give consent to the creation of a tenancy relationship, his actions could
not give rise to an implied tenancy. In fact, Duran admitted that he was
aware of the existence of the leasehold contract between petitioner
and the Castros, naming the former as the successor-tenant to the
property. 18 Since an implied tenancy between the same landowners
and respondents is incompatible with this express and written
leasehold contract and given the absolute lack of substantial evidence
to support the existence of an implied tenancy, the express tenancy
contract must be maintained.

Respondents contend, however, that Ramon Castro, having received
the 40 cavans from Duran, is now estopped to deny the existence of
an implied tenancy. We find nothing in the records, however, to
support respondents stance. Duran testified that he did not deliver the
palay rentals to Ramon, but to his sister, who in turn told him that she
had forwarded the palay to Ramon. 19 Duran had no personal
knowledge that Ramon received the rentals which the former had
allegedly delivered to the latters sister. His testimony with respect to
the receipt by Ramon of the rentals is hearsay and has no probative
value. The receipts issued to respondents do not bear the name and
signature of Ramon Castro. Given these circumstances, Ramon
Castro cannot be deemed estopped from denying the existence of a
tenancy relationship between him and respondents.

One final note. Respondents original stance before the DARAB that
they had inherited or succeeded to the tenancy rights of their late
father is likewise erroneous. As correctly found by the
DARAB:chanrob1es virtual 1aw library

Defendants-Appellants should not confuse the law on succession
provided for in the Civil Code of the Philippines with succession in
agrarian cases. In the former, (the) statute spreads the estate of the
deceased throughout his heirs; while in agrarian laws, the security of
tenure of the deceased tenant shall pass on to only one (1) heir in the
manner provided for in Section 9 . . . 20

We are thus constrained to conclude that respondents original stance
as well as new theory of implied tenancy is without merit.

WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals in CA-G.R. SP No. 47033 is REVERSED and SET ASIDE.
The judgment of the DARAB in DARAB Case No. 3625 affirming the
decision of the Provincial Adjudicator of DARAB Region III in DARAB
Case No. 249-Bul-91 is hereby REINSTATED. No pronouncement as
to costs.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.























PD 27
DIFFERENCES BETWEEN PD 27 LANDS AND RA 6657
SIGRE v. CA
In a not-so-novel attempt to challenge the long-settled constitutionality
of Presidential Decree No. 27, private respondent Lilia Y. Gonzales, as
co-administratrix of the Estate of Matias Yusay, filed with the Court of
Appeals on September 15, 1992, a petition for prohibition and
mandamus docketed as CA-G.R. SP No. 28906, seeking to prohibit
the Land Bank of the Philippines (LBP) from accepting the leasehold
rentals from Ernesto Sigre (predecessor of petitioner Rolando Sigre),
and for LBP to turn over to private respondent the rentals previously
remitted to it by Sigre. It appears that Ernesto Sigre was private
respondents tenant in an irrigated rice land located in Barangay Naga,
Pototan, Iloilo. He was previously paying private respondent a lease
rental of sixteen (16) cavans per crop or thirty-two (32) cavans per
agricultural year. In the agricultural year of 1991-1992, Sigre stopped
paying his rentals to private respondent and instead, remitted it to the
LBP pursuant to the Department of Agrarian Reforms Memorandum
Circular No. 6, Series of 1978, which set the guidelines in the payment
of lease rental/partial payment by farmer-beneficiaries under the land
transfer program of P.D. No. 27. The pertinent provision of the DAR
Memorandum Circular No. 6 reads:chanrob1es virtua1 1aw 1ibrary

"A. Where the value of the land has already been established.

"The value of the land is established on the date the Secretary or his
authorized representative has finally approved the average gross
production data established by the BCLP or upon the signing of the
LTPA by landowners and tenant farmers concerned heretofore
authorized.

"Payment of lease rentals to landowners covered by OLT shall
terminate on the date the value of the land is established. Thereafter,
the tenant-farmers shall pay their lease rentals/amortizations to the
LBP or its authorized agents: provided that in case where the value of
the land is established during the month the crop is to be harvested,
the cut-off period shall take effect on the next harvest season. With
respect to cases where lease rentals paid may exceed the value of the
land, the tenant-farmers may no longer be bound to pay such rental,
but it shall be his duty to notify the landowner and the DAR Team
Leader concerned of such fact who shall ascertain immediately the
veracity of the information and thereafter resolve the matter
expeditiously as possible. If the landowner shall insist after positive
ascertainment that the tenant-farmer is to pay rentals to him, the
amount equivalent to the rental insisted to be paid shall be deposited
by the tenant-farmer with the LBP or its authorized agent in his name
and for his account to be withdrawn only upon proper written
authorization of the DAR District Officer based on the result of
ascertainment or investigation." 1 (Emphasis ours)

According to private respondent, she had no notice that the DAR had
already fixed the 3-year production prior to October 1972 at an
average of 119.32 cavans per hectare, 2 and the value of the land was
pegged at Thirteen Thousand Four Hundred Five Pesos and Sixty-
Seven Centavos (P13,405.67). 3 Thus, the petition filed before the
Court of Appeals, assailing, not only the validity of Memorandum
Circular No. 6, but also the constitutionality of P.D. 27.

The appellate court, in its decision dated March 22, 1993, gave due
course to the petition and declared Memorandum Circular No. 6 null
and void. 4 The LBP was directed to return to private respondent the
lease rentals paid by Sigre, while Sigre was directed to pay the rentals
directly to private Respondent. 5 In declaring Memorandum Circular
No. 6 as null and void, the appellate court ruled that there is nothing in
P.D. 27 which sanctions the contested provision of the circular; 6 that
said circular is in conflict with P.D. 816 which provides that payments
of lease rentals shall be made to the landowner, and the latter, being a
statute, must prevail over the circular; 7 that P.D. 27 is unconstitutional
in laying down the formula for determining the cost of the land as it
sets limitations on the judicial prerogative of determining just
compensation; 8 and that it is no longer applicable, with the enactment
of Republic Act No. 6657. 9

Hence, this present recourse, which is a consolidation of the separate
petitions for review filed by Rolando Sigre (who substituted his
predecessor Ernesto Sigre), docketed as G.R. No. 109568 and the
LBP, docketed as G.R. No. 113454.

Petitioner Sigre, in G.R. No. 109568, alleges that:chanrob1es virtual
1aw library

"I


"PUBLIC RESPONDENT COURT OF APPEALS ACTED WITH
GRAVE ABUSE OF DISCRETION IN RULING THAT DAR
MEMORANDUM CIRCULAR NO. 6, SERIES OF 1978 RUNS
COUNTER TO PRESIDENTIAL DECREE NO. 816.

"II


"PUBLIC RESPONDENT ERRED IN RULING THAT DAR
MEMORANDUM CIRCULAR NO. 6, SERIES OF 1978 AMENDS OR
EXPANDS PRESIDENTIAL DECREE NO. 27.

"III


"PUBLIC RESPONDENT ERRED IN RULING THAT PROVISION OF
PRESIDENTIAL DECREE NO. 27 ON THE FORMULA FOR
DETERMINING THE COST OF THE LAND IS UNCONSTITUTIONAL.

"IV


"PUBLIC RESPONDENT ERRED IN RULING THAT THE PROVISION
OF PRESIDENTIAL DECREE NO. 27 ON FIXING THE JUST
COMPENSATION OF THE LAND HAS BEEN REPEALED BY
REPUBLIC ACT NO. 6657." 10

Petitioner LBP, in G.R. No. 113454, claims that:jgc:chanrobles.com.ph

"A

"THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING
THAT MAR CIRCULAR NO. 6 IS A VALID PIECE OF
ADMINISTRATIVE RULES AND REGULATION COVERING A
SUBJECT GERMANE TO THE OBJECTS AND PURPOSES OF
PRESIDENTIAL DECREE NO. 27, CONFORMING TO THE
STANDARDS OF SAID LAW AND RELATING SOLELY TO
CARRYING INTO EFFECT THE GENERAL PROVISIONS OF SAID
LAW.

"B

"THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT
MAR CIRCULAR NO. 6 IS INVALID IN THAT IT SUFFERS
IRRECONCILABLE CONFLICT WITH PRESIDENTIAL DECREE NO.
816, THUS GROSSLY DISREGARDING THE APPLICABLE
DECISION OF THE SUPREME COURT THAT THERE IS NO
INCONSISTENCY OR INCOMPATIBILITY BETWEEN MAR
CIRCULAR NO. 6 AND P.D. 816.

"C

"THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT
P.D. 27, INSOFAR AS IT SETS FORT (sic) THE FORMULA FOR
DETERMINING THE VALUE OF THE RICE/CORN LAND, IS
UNCONSTITUTIONAL, THUS GROSSLY DISREGARDING THE
EXISTING JURISPRUDENCE THAT CONSISTENTLY RULED THAT
P.D. 27 IS SUSTAINED AGAINST ALL CONSTITUTIONAL
OBJECTIONS RAISED AGAINST IT.

"D

"THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
P.D. 27 HAS BEEN IMPLIEDLY REPEALED BY REPUBLIC ACT NO.
6657." 11

Presidential Decree No. 27, 12 issued on October 21, 1972 by then
Pres. Ferdinand E. Marcos, proclaimed the entire country as a "land
reform area" and decreed the emancipation of tenants from the
bondage of the soil, transferring to them the ownership of the land they
till. To achieve its purpose, the decree laid down a system for the
purchase by tenant-farmers, long recognized as the backbone of the
economy, of the lands they were tilling. Owners of rice and corn lands
that exceeded the minimum retention area were bound to sell their
lands to qualified farmers at liberal terms and subject to conditions. 13
It was pursuant to said decree that the DAR issued Memorandum
Circular No. 6, series of 1978.chanrob1es virtua1 1aw 1ibrary

The Court of Appeals held that P.D. No. 27 does not sanction said
Circular, particularly, the provision stating that payment of lease rentals
to landowners shall terminate on the date the value of the land is
established, after which the tenant-farmer shall pay their lease
rentals/amortizations to the LBP or its authorized agents.

We disagree. The power of subordinate legislation allows
administrative bodies to implement the broad policies laid down in a
statute by "filling in" the details. All that is required is that the regulation
should be germane to the objects and purposes of the law; that the
regulation be not in contradiction to but in conformity with the
standards prescribed by the law. 14 One such administrative regulation
is DAR Memorandum Circular No. 6. As emphasized in De Chavez v.
Zobel, 15 emancipation is the goal of P.D. 27., i.e., freedom from the
bondage of the soil by transferring to the tenant-farmers the ownership
of the land theyre tilling. As noted, however, in the whereas clauses of
the Circular, problems have been encountered in the expeditious
implementation of the land reform program, thus necessitating its
promulgation, viz.:jgc:chanrobles.com.ph

"1. Continued payment of lease rentals directly to landowners by
tenant-farmers may result to situations wherein payments made may
even exceed the actual value of the land. . .

"2. There is difficulty in recording lease rental payments made by
tenant-farmers to landowners specifically in cases where landowners
concerned refuse to issue acknowledgment/official receipts for
payments made;

"3. Payments made by tenant-farmers to landowners after the
establishment of Farmer Amortization Schedule (FAS) through the
National Computer Center were found to be ineffectively captured or
accounted for. . . .

"4. The prolonged disagreement between parties concerned on the
total payments made by the tenant-farmers has delayed program
implementations."cralaw virtua1aw library

The rationale for the Circular was, in fact, explicitly recognized by the
appellate court when it stated that" (T)he main purpose of the circular
is to make certain that the lease rental payments of the tenant-farmer
are applied to his amortizations on the purchase price of the land. . . .
The circular was meant to remedy the situation where the tenant-
farmers lease rentals to landowner were not credited in his favor
against the determined purchase price of the land, thus making him a
perpetual obligor for said purchase price." 16 Since the assailed
Circular essentially sought to accomplish the noble purpose of P.D. 27,
it is therefore valid. 17 Such being the case, it has the force of law and
is entitled to great respect. 18

The Court cannot see any "irreconcilable conflict" between P.D. No.
816 19 and DAR Memorandum Circular No. 6. Enacted in 1975, P.D.
No. 816 provides that the tenant-farmer (agricultural lessee) shall pay
lease rentals to the landowner until the value of the property has been
determined or agreed upon by the landowner and the DAR. On the
other hand, DAR Memorandum Circular No. 6, implemented in 1978,
mandates that the tenant-farmer shall pay to LBP the lease rental after
the value of the land has been determined.

In Curso v. Court of Appeals, 20 involving the same Circular and P.D.
816, it was categorically ruled that there is no incompatibility between
these two. Thus:jgc:chanrobles.com.ph

"Actually, we find no inconsistency nor incompatibility between them.
Of significance are the two whereas clauses of P.D. 816 quoted
hereunder:chanrob1es virtual 1aw library

x x x


Clearly, under P.D. No. 816, rentals are to be paid to the landowner by
the agricultural lessee until and after the valuation of the property shall
have been determined.

In the same vein, the MAR Circular provides:chanrob1es virtual 1aw
library

x x x


In other words, the MAR Circular merely provides guidelines in the
payment of lease rentals/amortizations in implementation of P.D. 816.
Under both P.D. 816 and the MAR Circular, payment of lease rentals
shall terminate on the date the value of the land is established.
Thereafter, the tenant farmers shall pay amortizations to the Land
Bank (LBP). The rentals previously paid are to be credited as partial
payment of the land transferred to tenant-farmers." 21

Private respondent, however, "splits hairs," so to speak, and contends
that the Curso case is premised on the assumption that the Circular
implements P.D. 816, whereas it is expressly stated in the Circular that
it was issued in implementation of P.D. 27. 22 Both Memorandum
Circular No. 6 and P.D. 816 were issued pursuant to and in
implementation of P.D. 27. These must not be read in isolation, but
rather, in conjunction with each other. Under P.D. 816, rental payments
shall be made to the landowner. After the value of the land has been
determined/established, then the tenant-farmers shall pay their
amortizations to the LBP, as provided in DAR Circular No. 6. 23
Clearly, there is no inconsistency between them. Au contraire, P.D.
816 and DAR Circular No. 6 supplement each other insofar as it sets
the guidelines for the payments of lease rentals on the agricultural
property.chanrob1es virtua1 1aw 1ibrary

Further, that P.D. 27 does not suffer any constitutional infirmity is a
judicial fact that has been repeatedly emphasized by this Court in a
number of cases. As early as 1974, in the aforecited case of De
Chavez v. Zobel, 24 P.D. 27 was assumed to be constitutional, and
upheld as part and parcel of the law of the land,
viz.:jgc:chanrobles.com.ph

"There is no doubt then, as set forth expressly therein, that the goal is
emancipation. What is more, the decree is now part and parcel of the
law of the land according to the revised Constitution itself. Ejectment
therefore of petitioners is simply out of the question. That would be to
set at naught an express mandate of the Constitution. Once it has
spoken, our duty is clear; obedience is unavoidable. This is not only so
because of the cardinal postulate of constitutionalism, the supremacy
of the fundamental law. It is also because any other approach would
run the risk of setting at naught this basic aspiration to do away with all
remnants of a feudalistic order at war with the promise and the hope
associated with an open society. To deprive petitioners of the small
landholdings in the face of a presidential decree considered ratified by
the new Constitution and precisely in accordance with its avowed
objective could indeed be contributory to perpetuating the misery that
tenancy had spawned in the past as well as the grave social problems
thereby created. There can be no justification for any other decision
then whether predicated on a juridical norm or on the traditional role
assigned to the judiciary of implementing and not thwarting
fundamental policy goals."25cralaw:red

Thereafter, in Gonzales v. Estrella, 26 which incidentally involves
private respondent and counsel in the case at bench, the Court
emphatically declared that "Presidential Decree No. 27 has survived
the test of constitutionality." 27

Then, in 1982, P.D. 27, once again, was stamped with judicial
imprimatur in Association of Rice & Corn Producers of the Philippines,
Inc. v. The National Land Reform Council, 28 to
wit:jgc:chanrobles.com.ph

". . . If as pointed out in the opening paragraph, the validity of
Presidential Decree No. 27 was assumed as early as 1974, on the first
anniversary of the present constitution, in De Chavez v. Zobel and
specifically upheld in Gonzales v. Estrella five years later, there cannot
be any justification for holding that it is unconstitutional on its face
without any factual foundation." 29

Further, in Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform, 30 involving the constitutionality of P.D.
27, E.O. Nos. 228 31 and 229, 32 and R.A. 6657, 33 any other assault
on the validity of P.D. 27 was ultimately foreclosed when it was
declared therein that "R.A. No. 6657, P.D. No. 27, Proc. No. 131, and
E.O. Nos. 228 and 229 are SUSTAINED against all the constitutional
objections raised in the herein petition." 34

The objection that P.D. 27 is unconstitutional as it sets limitations on
the judicial prerogative of determining just compensation is bereft of
merit. P.D. 27 provides:jgc:chanrobles.com.ph

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

E.O. 228 supplemented such provision, viz.:jgc:chanrobles.com.ph

"SEC. 2. Henceforth, the valuation of rice and corn lands covered by
P.D. 27 shall be based on the average gross production determined by
the Barangay Committee on Land Production in accordance with
Department Memorandum Circular No. 26, series of 1973 and related
issuances and regulation of the Department of Agrarian Reform. The
average gross production per hectare shall be multiplied by two and a
half (2.5), the product of which shall be multiplied by Thirty Five Pesos
(P35.00), the government support price for one cavan of 50 kilos of
palay on October 21, 1972, or Thirty One Pesos (P31.00), the
government support price for one cavan of 50 kilos of corn on October
21, 1972, and the amount arrived at shall be the value of the rice and
corn land, as the case may be, for the purpose of determining its cost
to the farmer and compensation to the landowner."cralaw virtua1aw
library

The determination of just compensation under P.D. No. 27, like in
Section 16 (d) of R.A. 6657 or the CARP Law, is not final or
conclusive. 35 This is evident from the succeeding paragraph of
Section 2 of E.O. 228:jgc:chanrobles.com.ph

". . . In the event of dispute with the landowner regarding the amount of
lease rental paid by the farmer beneficiary, the Department of Agrarian
Reform and the Barangay Committee on Land Production concerned
shall resolve the dispute within thirty (30) days from its submission
pursuant to Department of Agrarian Reform Memorandum Circular No.
26, series of 1973, and other pertinent issuances. In the event a party
questions in court the resolution of the dispute, the landowners
compensation shall still be processed for payment and the proceeds
shall be held in trust by the Trust Department of the Land Bank in
accordance with the provisions of Section 5 hereof, pending the
resolution of the dispute before the court."cralaw virtua1aw library

Clearly therefrom, unless both the landowner and the tenant-farmer
accept the valuation of the property by the Barrio Committee on Land
Production and the DAR, the parties may bring the dispute to court in
order to determine the appropriate amount of compensation, a task
unmistakably within the prerogative of the court.cralaw : red

Finally, the Court need not belabor the fact that R.A. 6657 or the CARP
Law operates distinctly from P.D. 27. R.A. 6657 covers all public and
private agricultural land including other lands of the public domain
suitable for agriculture as provided for in Proclamation No. 131 and
Executive Order No. 229; 36 while, P.D. 27 covers rice and corn lands.
On this score, E.O. 229, which provides for the mechanism of the
Comprehensive Agrarian Reform Program, specifically states:"
(P)residential Decree No. 27, as amended, shall continue to operate
with respect to rice and corn lands, covered thereunder. . . 37 It cannot
be gainsaid, therefore, that R.A. 6657 did not repeal or supersede, in
any way, P.D. 27. And whatever provisions of P.D. 27 that are not
inconsistent with R.A. 6657 shall be suppletory to the latter, 38 and all
rights acquired by the tenant-farmer under P.D. 27 are retained even
with the passage of R.A. 6657. 39

WHEREFORE, the consolidated petitions filed by Rolando Sigre and
the Land Bank of the Philippines are hereby GRANTED. The assailed
Decision of the Court of Appeals is hereby NULLIFIED and SET
ASIDE and the petition in CA-G.R. SP No. 28906 is DISMISSED for
lack of merit.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

TITLED ACQUIRED UNDER PD 27 NOT TRANSFERABLE,
EXCEPTIONS
ESTOLAS v. MABALOT
Agrarian laws must be interpreted liberally in favor of the grantee, in
order to give full force and effect to their clear intent, which is "to
achieve a dignified existence for the small farmers" and to make them
"more independent, self-reliant and responsible citizens, and a source
of genuine strength in our democratic society." chanrob1es virtua1 1aw
1ibrary

The Case


Before us is a Petition for Review on Certiorari assailing the April 7,
1998 Decision 1 of the Court of Appeals 2 (CA) in CA-G.R. SP No.
38268. The decretal portion of the assailed Decision reads
thus:jgc:chanrobles.com.ph

"WHEREFORE, in view of the foregoing, the Petition is hereby
DENIED DUE COURSE and consequently, DISMISSED. No
pronouncement as to costs." 3

The Facts


The facts of the case are summarized by the CA as
follows:jgc:chanrobles.com.ph

"On November 11, 1973, a Certificate of Land Transfer (hereinafter
referred to as CLT) was issued in favor of respondent over a 5,000
square meter lot (hereinafter referred to as subject land) located in
Barangay Samon, Sta. Maria, Pangasinan. Sometime in May, 1978,
needing money for medical treatment, respondent passed on the
subject land to the petitioner for the amount of P5,800.00 and P200.00
worth of rice. According to respondent, there was only a verbal
mortgage; while according to petitioner, a sale had taken place. Acting
on the transfer, the DAR officials in Sta. Maria, Pangasinan authorized
the survey and issuance of an Emancipation Patent, leading to the
issuance of a Transfer Certificate of Title No. 3736 on December 4,
1987, in favor of the petitioner.

"Sometime in May, 1988, respondent filed a Complaint against the
petitioner before the Barangay Lupon in Pangasinan for the purpose of
redeeming the subject land. When no amicable settlement was
reached, the case was referred to the Department of Agrarian
Reforms (hereinafter referred to as DAR) regional office at Pilar, Sta.
Maria, Pangasinan.

"On July 8, 1988, Atty. Linda F. Peralta of the DARs District Office
submitted her investigation report finding that respondent merely gave
the subject land to petitioner as guarantee for the payment of a loan he
had incurred from the latter; and recommending that the CLT remain in
the name of respondent and that the money loan be returned to
petitioner.

"Meanwhile, in a letter, dated September 20, 1988, petitioner insisted
that the subject land had been sold to him by respondent and
requested the DAR to cancel the CLT in respondents name. Another
investigation was conducted on the matter which led to the Order
dated March 9, 1989, issued by DAR Regional Director Antonio M.
Nuesa. In the said Order, the DAR found the act of respondent in
surrendering the subject land in favor of petitioner as constituting
abandonment thereof, and denied respondents prayer for redemption
of the subject land. Respondents request for reinvestigation was
denied in a Resolution, dated April 11, 1989.

"Thus, on May 3, 1989, respondent appealed the case to the DAR
Central Office which, on August 28, 1990, issued an Order reversing
the assailed Order of DAR Regional Director Antonio M. Nuesa and
ordering the petitioner to return the subject land to Respondent.
Petitioners Motion for Reconsideration was denied on June 8, 1992.
He filed an Appeal with the Office of the President which was
dismissed in a Decision dated August 29, 1994. Petitioners Motion for
Reconsideration of the said Decision was also denied in an Order
dated November 28, 1994. Likewise, petitioners second Motion for
Reconsideration was denied in an Order dated July 5, 1995." 4

Ruling of the Court of Appeals


The appellate court ruled that the subject land had been acquired by
respondent by virtue of Presidential Decree (PD) No. 27. This law
prohibits the transfer of the land except by hereditary succession to the
heirs or by other legal modes to the government. Hence, the transfer of
the subject land to petitioner is void; it should be returned
to Respondent.

The CA further held that respondent had not effectively abandoned the
property, because he tried to redeem it in 1981 and 1983. The effort,
however, failed because petitioner had demanded P15,000 for it. The
appellate court also noted that respondent continued to hold on to the
Certificate of Land Transfer (CLT) covering the subject land, and that
he "would not have even thought of bringing an action for the recovery
of the same if he honestly believed that he had already given it up in
favor of [petitioner]." 5

Hence, this recourse. 6

Issues


In his anemic 6-page Memorandum, 7 petitioner raises the following
issues:jgc:chanrobles.com.ph

"A. Whether or not in law there is a valid abandonment made by
Respondent Mabalot.

B. Whether the act of Respondent Mabalot in conveying to petitioner
the right to possess and cultivate the disputed parcel of land
constitutes a valid abandonment thereby rendering the property
available for transfer to other bona-fide farmers.

C. Whether the continuous possession and cultivation by petitioner
since 1976 up to the present has ripened into ownership over the five
thousand (5,000) square meters parcel in dispute.chanrob1es virtua1
1aw 1ibrary

D. Whether the issuance of an emancipation patent and thereafter a
transfer certificate of title in the name of petitioner has validated and
legitimized possession and ownership over the disputed property." 8

The main issue may be worded as follows: did respondent abandon
the subject property, thereby making it available to other qualified
farmer-grantees?

The Courts Ruling


The Petition has no merit.

Main Issue:chanrob1es virtual 1aw library

Abandonment

The subject property was awarded to respondent by virtue of PD 27.
On November 11, 1973, 9 a CLT was issued in his favor. PD 27
specifically provides that when private agricultural land whether
classified as landed estate or not is primarily devoted to rice and
corn under a system of sharecrop or lease tenancy, the tenant farmers
thereof shall be deemed owners of a portion constituting a family-size
farm of five (5) hectares if not irrigated, and three (3) hectares if
irrigated.

Petitioner avers that respondent neither protested when the former had
the subject land surveyed and planted with 40 mango trees, nor
attempted to return the money he had borrowed from petitioner in
1976. Because the lot has been abandoned by respondent, the
beneficiary, and because PD 27 does not prohibit the transfer of
properties acquired under it, petitioner theorizes that the Department of
Agrarian Reform (DAR) may award the land to another qualified
farmer-grantee. 10

Non-transferability of

Land Awarded Under PD 27

We do not agree. PD 27 specifically provides that title to land acquired
pursuant to its mandate or to that of the Land Reform Program of the
government shall not be transferable except to the grantees heirs by
hereditary succession, or back to the government by other legal
means. The law is clear and leaves no room for interpretation.

Upon the promulgation of PD 27, farmer-tenants were deemed owners
of the land they were tilling. Their emancipation gave them the rights to
possess, cultivate and enjoy the landholding for themselves. These
rights were granted by the government to them as the tillers and to no
other. Thus, to insure their continuous possession and enjoyment of
the property, they could not, under the law, effect any transfer except
back to the government or, by hereditary succession, to their
successors. 11

Furthermore, this Court has always ruled that agrarian laws must be
interpreted liberally in favor of the grantees in order to give full force
and effect to the clear intent of such laws: "to achieve a dignified
existence for the small farmers" ; and to make them "more
independent, self-reliant and responsible citizens, and a source of
genuine strength in our democratic society." 12

Neither are we convinced that an award under PD 27 may be
transferred to another in case the grantee abandons it. The law is
explicit. Title acquired pursuant to PD 27 shall not be transferable
except to the grantees heirs by hereditary succession, or back to the
government by other legal means.

If a statute is clear, plain and free from ambiguity, it must be given its
literal meaning and applied without any interpretation. 13 This rule
rests on the presumption that the words employed by the legislature
correctly express its intent and preclude the courts from construing the
law differently. 14 Similarly, a statute should be so construed as to
effectuate its intent, advance the remedy and suppress any mischief
contemplated by the framers. 15

This Court is not unaware of the various subterfuges resorted to by
unscrupulous individuals, who have sought to deprive grantees of their
land by taking advantage of loopholes in the law and the ignorance of
poor beneficiaries. Consequently, the farmers who were intended to be
protected and uplifted by these laws find themselves back to where
they started, sometimes worse. This vicious cycle must be stopped.
16

No Abandonment

The CA correctly opined that respondent has not abandoned the
subject land. It said:chanrob1es virtua1 1aw 1ibrary

". . . It appears that respondent tried to pay off the loan and redeem the
subject land in 1981 and in 1983, but did not succeed because of
petitioners demands for the payment of P15,000.00 (see Petition,
Annex G, p. 1; Rollo, p. 29). It likewise appears that respondent did
not deliver to petitioner his CLT which remains in his possession to
date (see Comment, p. 5; Rollo, p. 48a). Finally; respondent would not
have even thought of bringing an action for the recovery of the same if
he honestly believed that he had already given it up in favor of
(petitioner); he would not waste his time, effort and money, especially if
he is poor, to prosecute an unworthy action." 17

For abandonment to exist, the following requisites must be proven: (a)
a clear and absolute intention to renounce a right or claim or to desert
a right or property and (b) an external act by which that intention is
expressed or carried into effect. There must be an actual, not merely a
projected, relinquishment; otherwise, the right or claim is not vacated
or waived and, thus, susceptible of being appropriated by another. 18
Administrative Order No. 2, issued on March 7, 1994, defines
abandonment or neglect as a "willful failure of the agrarian reform
beneficiary, together with his farm household, to cultivate, till or
develop his land to produce any crop, or to use the land for any
specific economic purpose continuously for a period of two calendar
years." In the present case, no such "willful failure" has been
demonstrated. Quite the contrary, respondent has continued to claim
dominion over the land.

No Valid

Reallocation

Furthermore, even if respondent did indeed abandon his right to
possess and cultivate the subject land, any transfer of the property
may only be made in favor of the government. In Corpuz v. Grospe, 19
the Court held that there was a valid transfer of the land after the
farmer-grantee had signed his concurrence to the Samahang Nayon
Resolution surrendering his possession of the landholding. This
voluntary surrender to the Samahang Nayon constituted a surrender or
transfer to the government itself.chanrob1es virtua1 1aw 1ibrary

Such action forms part of the mechanism for the disposition and the
reallocation of farmholdings of tenant-farmers who refuse to become
beneficiaries of PD 27. Under Memorandum Circular No. 8-80 of the
then Ministry of Agrarian Reform, the Samahan shall, upon notice from
the agrarian reform team leader, recommend other tenant-farmers who
shall be substituted to all rights and obligations of the abandoning or
surrendering tenant-farmer. Such cooperative or samahan is
established precisely to provide a strong social and economic
organization that will ensure that farmers will reap and enjoy the
benefits of agrarian reform. 20

In the present case, there was no valid transfer in favor of the
government. It was petitioner himself who requested the DAR to cancel
respondents CLT and to issue another one in his favor. 21 Unlike in
the above-cited case, respondents land was not turned over to the
government or to any entity authorized by the government to reallocate
the farmholdings of tenant-farmers who refuse to become beneficiaries
of PD 27. Petitioner cannot, by himself, take over a farmer-
beneficiarys landholding, allegedly on the ground that it was
abandoned. The proper procedure for reallocation must be followed to
ensure that there was indeed an abandonment, and that the
subsequent beneficiary is a qualified farmer-tenant as provided by law.

WHEREFORE, the Petition is hereby DENIED and the assailed
Decision AFFIRMED. Costs against petitioner.

SO ORDERED.
SUPPLETORY APPLICATION ON JUST COMPENSATION
LAND BANK OF THE PHIL v. HEIRS OF ELUETERIO CRUZ
G.R. No. 175175 [Land Bank of the Philippines v. Heirs of Eleuterio
Cruz, et al] - This treats of petitioner Land Bank's motion for
reconsideration of the Court's Decision dated 29 September 2008,
which dismissed the petition for review on certiorari and ordered the
remand of the case to the Special Agrarian Court for the fixing of just
compensation strictly in accordance with DAR A.O. No. 5, series of
1998.

In the instant motion for reconsideration, petitioner reiterates its
position that just compensation for the subject agricultural lands
acquired for the agrarian reform program should be based on the
formula set forth in Presidential Decree (P.D.) No. 27 and Executive
Order (E.O.) No. 228 because they were acquired pursuant to P.D. No.
27. Petitioner relies on the more recent pronouncement in Gabatin v.
Land Bank of the Philippines
[1]
in claiming that the values at the time of
taking should be used determining just compensation.

Gabatin is inapplicable because the factual milieu therein is different
from that of the instant case. Here, while the subject lands were
acquired under P.D. No. 27, which became effective on 21 October
1972, the process of agrarian reform remained incomplete, that is, the
payment of just compensation has yet to be made even after the
passage of Republic Act (R.A.) No. 6657. In view of the effectivity of
R.A. No. 6657 pending the determination of just compensation, the
parameters set forth in R.A. No. 6657, as implemented in DAR A.O.
No. 5, series of 1998 should be used in fixing just compensation. To
peg the prices at the 1972 values when P.D. No. 27 became operative
would be inequitable to the landowner who has been deprived of the
use of the subject lands without the being compensated for the long
period of deprivation.

In any case, the motion contains a mere reiteration or rehash of
arguments already submitted to the Court and found to be without
merit. Petitioner fails to raise any new and substantial arguments, and
no cogent reason exists to warrant a reconsideration of the Court's
Resolution. It would be a useless ritual for the Court to reiterate itself.

In view of the foregoing, the instant Motion for Reconsideration is
DENIED with FINALITY.

LBP v. SPS. ROKAYA
Before the Court is a Petition for Review on Certiorari
1
rll filed by the
Land Bank of the Philippines (LBP) alleging error on the part of the
appellate court in reversing the finding of the Regional Trial Court
(RTC) of Puerto Princesa City, Pal a wan, sitting as Special Agrarian
Court, that the land subject of this case was under the coverage of
R.A. 6657 or the Comprehensive Agrarian Reform Law of 1988 and
not under P.D. No. 27.
2
rll
LBP is appealing the Decision
3
rll of the Ninth Division of the Court
of Appeals (CA) in CA-G.R. SP No. 90907 dated 21 May 2007 and the
Resolution of the said Division dated 4 December 2007 which resulted
in the reversal of the Decision of the aforementioned Special Agrarian
Court.
The dispositive portion of the assailed decision
reads:chanroblesvirtuallawlibrary
WHEREFORE in view of the foregoing, the instant petition for review is
DISMISSED. The assailed Decision dated October 11, 2004 is
REVERSED and SET ASIDE. The instant case is REMANDED to the
Regional Trial Court sitting as Special Agrarian Court for further
proceedings.
4
rll
On the basis of settled rulings, we sustain the decision of the appellate
court and therefore, deny the petition.
The Facts
Rokaya Narrazid-Bona (Rokaya) is the owner by succession of a
parcel of land with an area of 338.2826 hectares located at Bataraza,
Palawan covered by TCT No. T-7193. She inherited this property from
her mother Bautan Narrazid who also inherited the same from her
husband who traces his roots back to Sultan Narrazid, a former Sultan
of Palawan.
5
rll
LBP is the financial intermediary for the Comprehensive Agrarian
Reform Program (CARP) as designated under Section 64 of R.A.
6657.
The Department of Agrarian Reform (DAR) on the other hand, is the
lead implementing agency of the CARP. It undertakes land tenure
improvement and development of program beneficiaries.
From 4 December 1989 until 5 November 1990, several emancipation
patents under TCT No.T-231 up to TCT No. T-429 were issued to
different farmer-beneficiaries under the Operation Land Transfer (OLT)
that covered the land of Rokaya.
6
rll A total area of 76.2380
hectares of the property was covered by the TCTs. Rokaya contested
these patents asserting that they were issued without her consent and
knowledge. She alleged that the farmers were not qualified to become
beneficiaries because they were not her tenants but were merely
squatter-farmers.
7
rll
Meanwhile, on 12 December 1989, then Secretary Miriam Defensor
Santiago of the DAR sent a Notice of Acquisition addressed to Bautan
Narrazid, the mother of Rokaya, placing an area of 168.8379 hectares
of the property under CARP. In the Notice, the land was valued in the
amount of P3,866.36 per hectare for a total compensation of
P652,788.87.
8
rll
On 16 January 1990, Rokaya, through a letter to the Bureau of Land
Acquisition and Distribution, DAR, objected to the offered price for
being too low.
9
rll In October 1993, Rokaya filed a complaint before
the RTC of Puerto Princessa City, Palawan but the same was
dismissed for lack of merit.
10
rll
Following the dismissal, Rokaya sent a letter to Provincial Agrarian
Reform Officer (PARO) Homer P. Tobias requesting for a re-evaluation
based on the Average Annual Production per hectare of the land.
In a Decision dated 8 November 1993, Regional Adjudicator for DAR
Region IV Isidro Carrasca Gumtang fixed the amount of just
compensation at P14,084.50 per hectare for a 121.5212 hectare-
portion
11
rll of the property.
On 7 December 1998, Rokaya agreed to a higher valuation and
accepted LBPs payment of P98,633.00 per hectare or a total of
P11,986, 001.00.
12
rll
On 14 July 2000, Rokaya filed another complaint
13
rll before the
RTC of Puerto Princesa City, Palawan praying that the just
compensation for the 76.2380 hectare-portion previously distributed to
the farmer-beneficiaries, be fixed in the amount not less than the value
of the 121.5212 hectare-portion.
14
rll
During trial, Rokaya testified that she signed a Deed of Assignment,
Warranties and Undertaking (DAWU) containing the provision that she
received a partial payment for the contested 76.2380 hectares
amounting to P668,680.12 on 8 March 2001.
15
rll To quote:
x x x
1. That the amount of SIX HUNDRED SIXTY EIGHT THOUSAND SIX
HUNDRED EIGHTY PESOS AND 12/100 (P668,680.12) in cash and
bonds is understood to be not full compensation for the area covered
by Presidential Decree No. 27 but the initial government
valuation.
16
rll
x x x
She also admitted that LBP paid her P98,633.00 per hectare for the
121.52 hectare-portion as per Memorandum dated 7 December
1998.
17
rll
To support her claim of higher valuation for the 76.2380 hectares, she
presented Municipal Agrarian Reform Officer of Bataraza, Palawan
Rogelio Madarcos who testified that the value of the contested portion
is P104, 384.52 per hectare.
18
rll
For its part, LBP presented its Landowners Compensation Department
Officer Christina Austria. Austria testified that among her duties were
the determination and approval of the list of claims transmitted by
DAR. She processed the claim of Rokaya for the 76.2380 hectare-
portion of her property covered by the Land Transfer Claim Transmittal
dated 21 February 1992,
19
rll together with its various attachments
such as the Orders of Placement,
20
rll all dated 16 June
1984.
21
rll She explained that if the acquisition of the land is under
P.D. No. 27, it is DARs duty to make a valuation; if under R.A. 6657, it
is the banks obligation to make one. She clarified that the list of claims
will only be referred to the bank after DARs classification and
identification of the land to be transferred to the farmer-beneficiaries.
After the transmittal and processing of claims, the bank pays the
landowner and collects the amortization payments of the farmer-
beneficiaries.
22
rll
She added that the bank paid Rokaya the sum of P668,680.12 and an
increment of P647,107.83 as evidenced by a certified photocopy of the
acknowledgment receipt.
The Trial Courts Ruling
On 11 October 2004, the trial court rejected the prayer for higher
valuation in its decision
23
rll which reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered
ordering fixing the just compensation due for the 76.2380 hectares
property subject of this case in the amount of Fifty Six Thousand Two
Hundred Fifty pesos (P56,250.00) per hectare or a total amount of
Four Million Two Hundred Eighty Eight Thousand Three Hundred
Eighty Seven Pesos and 5/100 (4,288, 387.05) for the whole property.
The sum of Fifteen Thousand Pesos (P15,000.00) as Attorneys fees is
hereby awarded in favor of the plaintiffs.
24
rll
It ruled that the 76.2380 hectare-portion was completely acquired
through the OLT in 1989. Pursuant to the governing law, P.D. No. 27,
and the ruling in Land Bank v. Court of Appeals,
25
rll the agrarian
court recomputed the value of the land using the formula "Land Value
= 2.5 x Annual Gross Production
26
rll x P300.00."
27
rll
Discontented, LBP filed an appeal before the CA.
The argument of the LBP in its Petition for Review,
28
rll centered on
the alleged violation of the applicable laws, P.D. No. 27 and E.O. 228,
and settled jurisprudence when the trial court valued the annual gross
production of the subject land at seventy five (75) cavans per hectare
and the government support price at P300.00. It also averred error in
awarding attorneys fees in favor of Rokaya.
29
rll
The Court of Appeals Ruling
The appellate court reversed and set aside the decision of the trial
court. It overturned the finding that the subject lands are under the
coverage of P.D. No. 27 and E.O. 228. It even cast doubts on the
authenticity of the Orders of Placement. The materiality of the Notice of
Acquisition sent to Rokaya dated 12 December 1989 was stressed and
was relied upon by the CA as evidence that the lands were not
acquired under P.D. No. 27, reasoning that there was no need to file
such a Notice if indeed the lands were acquired under the old law and
not under compulsory acquisition via R.A. 6657.
30
rll
In its petition
31
rll before this Court, LBP insists that the lands were
covered by the OLT Program under P.D. No. 27 and not by
compulsory acquisition under R.A. 6657.
In its Memorandum,
32
rll LBP added the argument that the DAWU
embodies the assent of Rokaya that the land was placed under the
OLT Program and its genuineness and due execution had already
been judicially admitted.
33
rll
The Courts Ruling
LBP is steadfast in its contention that the applicable laws are P.D. No.
27 and E.O. 228. To establish its position, LBP presented the different
Orders of Placement of DAR to prove that the lands were under the
OLT. It also pointed that the DAWU signed by Rokaya is an
acknowledgement that the lands were under OLT. It is further posited
that applying R.A. 6657 to the P.D. No. 27-acquired properties will
result in the retroactive application of R.A. 6657.
We agree with LBP that the land was acquired under the OLT;
however, we do not agree that the computation of the just
compensation is still based on the old formula and that the application
of R.A. 6657 will result in the retroactivity of the law.
We explain.
Upon review of the complaint of Rokaya before the agrarian court, we
find an apparent contradiction in the prayers:
1. That the JUST COMPENSATION for the above-described property
76.2380 hectare-portion should be fixed in the amount not less than
the value of the land subject of CACF No. RAC98-169 121.52 hectare-
portion, per Memorandum dated December 7, 1998, xxx.
x x x
5. To Order the Department of Agrarian Reform and the Register of
Deeds to cancel the Emancipation Patent/OLT issued and
listed/encumbered in the memorandum of encumbrances
xxx.
34
rll (Underlining supplied)
Evidently, her prayer for fixing the just compensation visis her request
for cancellation of patents, shows that if the valuation of the 121.5212
hectare-portion of her property is not applied to the 76.2380 hectare
property already covered by Emancipation Patents, such patents
should be cancelled. Rokaya thus admitted the acquisition of the
76.2380 hectare-portion under P.D. No. 27.
Further, the different Orders of Placement all dated 16 June 1984
issued by the DAR and signed by its Regional Director Benjamin R.
Estrellado, prove that the portion comprising the 76.238 hectares was
acquired during the effectivity of P.D. No. 27.
35
rll The Court takes
judicial Notice
36
rll of these orders as issued by DAR pursuant to the
Memorandum Circular No. 2, Series of 1978
37
rll involving the
inclusion of landholding tenanted after 21 October 1972 within the
coverage of P.D. No. 27.
Finally, the DAWU itself signed by Rokaya showed her
acknowledgment of the acquisition under P.D. No. 27 of the portion of
her land in question. Her signature
38
rll signifying her assent
indicates her acceptance of the fact. To restate the pertinent
provision:chanroblesvirtuallawlibrary
WHEREAS, the area of SEVENTY SIX AND 2380/10000 (76.2380)
hectares appearing in the said title has been actually transferred to the
tenant farmer/s therein, pursuant to Presidential Decree No. 27 as
shown in the list of beneficiaries who were awarded Certificates of land
Transfer, copy of which is hereto attached as Annex A and forming an
integral part hereof, the said area transferred is subject of Land
Transfer Claim No. EO-92-039 Amd. For settlement/compensation in
the Land Bank of the Philippines.
39
rll (Underlining supplied)
However, acquisition of the property under OLT or P.D. No. 27 does
not necessarily mean that the determination of just compensation
therefor must be under the same decree.
To determine the applicable formula, it is important to determine
whether on 15 June 1988, which is the effectivity date of R.A. 6657,
there has already been payment of just compensation, which payment
completes the agrarian reform process. If on such date just
compensation remains unpaid, the agrarian reform process remains
incomplete even if started under P.D. No. 27. Under R.A. 6657, just
compensation will have to be computed in accordance with Section
17
40
rll or Determination of Just Compensation in relation to the
formula under Administrative Order No. 5, Series of 1998.
The Court in Paris v. Alfeche
41
rll ruled that the passage of R.A.
6657 before the completion of agrarian reform process over the lands
acquired under P.D. No. 27 should, for compensation purposes now be
completed under the said law, with P.D. No. 27 and E.O. 228 having
suppletory effect, thus:chanroblesvirtuallawlibrary
Section 75. Suppletory Application of Existing Legislation. The
provisions of Republic Act No. 3844 as amended, Presidential Decree
Nos. 27 and 266 as amended, Executive Order Nos. 228 and 229,
both Series of 1987; and other laws not inconsistent with this Act shall
have suppletory effect.
42
rll
In Land Bank of the Philippines v. Hon. Natividad,
43
rll this Court
ruled that seizure of landholdings or properties covered by P.D. No. 27
did not take place on 21 October 1972, but upon the payment of just
compensation.Taking into account the passage in 1988 of R.A. 6657
pending the settlement of just compensation, this Court concluded that
it is R.A. 6657 which is the applicable law, with P.D. No. 27 and E.O.
228 having only suppletory effect.
The same interpretation was arrived at in the subsequent decisions in
Land Bank of the Philippines v. Estanislao;
44
rll Land Bank of the
Philippines v. Heirs of Eleuterio Cruz;
45
rll LBP v. J. L. Jocson and
Sons;
46
rll in Land Bank of the Philippines v. Ferrer;
47
rll and
more recently in the Land Bank of the Philippines v. Araneta.
48
rll
We here reiterate our consolidated ruling in DAR v. Manuel Goduco
and Land Bank v. Goduco,
49
rllthat when the reform process is still
incomplete because the payment has not been settled yet and
considering the passage of R.A. 6657, just compensation should be
determined and the process concluded under the said law. As we so
rule, we also repeat what was there said:chanroblesvirtuallawlibrary
One final but important point: As we at the outset clarified, the
repeated rulings that the land reform process is completed only upon
payment of just compensation relate to the issue of the applicable law
on just compensation. The disposition that the seizure of the
landholding would take effect on the payment of just compensation
since it is only at that point that the land reform process is completely
refers to property acquired under P.D. No. 27 but which remained
unpaid until the passage of R.A. 6657. We said that in such a situation
R.A. 6657 is the applicable law. But if the seizure is during the
effectivity of R.A. 6657, the time of taking should follow the general rule
in expropriation cases where the "time of taking" is the time when the
State took possession of the same and deprived the landowner of the
use and enjoyment of his property xxx. We here repeat Land Bank of
the Philippines v. Livioco.
50
rll
Finally, we rule on the applicable formula.
The provision on the determination of just compensation is provided
under Section 17 of R.A. No. 6657.
51
rll We
quote:chanroblesvirtuallawlibrary
SECTION 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of
the like properties, its nature, actual use and income, the sworn
valuation by the owner, the tax declarations, and the assessment
made by government assessors shall be considered. The social and
economic benefits contributed by the farmers and the farmworkers and
by the Government to the property as well as the non-payment of taxes
or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its
valuation.
Pursuant to this provision and the rule-making power of DAR under
Section 49 of R.A. 6657, a formula was outlined in DAR Administrative
Order No. 5, Series of 1998 in computing just compensation
52
rll for
lands subject of acquisition whether under voluntary offer to sell (VOS)
or compulsory acquisition (CA),
53
rll to wit:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present,
relevant and applicable.
A1. When the CS factor is not present and CNI and MV are applicable,
the formula shall be:chanroblesvirtuallawlibrary
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are
applicable, the formula shall be:chanroblesvirtuallawlibrary
LV= (CS X 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MY is
applicable, the formula shall be:chanroblesvirtuallawlibrary
LV= MV x 2
In no case shall the value of the land using the formula MV x 2 exceed
the lowest value of land within the same estate under consideration or
within the same barangay or municipality (in that order) approved by
LBP within one ( 1) year from receipt of claimfolder.
xxxx
WHEREFORE, premises considered, the Court hereby RESOLVES:
1. To PARTIALLY DENY the APPEAL of Land Bank of the Philippines;
and
2. To ORDER the remand of the case to the trial court for the
computation of the just compensation based on the formula under
Section 17, R.A. No. 6657 and Administrative Order No. 5, Series of
1998.
SO ORDERED.

ABANDONMENT
GUA-AN, et. al. v. QUIRINO
Assailed in the instant Petition for Review on Certiorari under Rule 45
of the Rules of Court are the Decision
1
rll dated February 25, 2011
and Resolution
2
rll dated September 15, 2011 rendered by the
Court of Appeals (CA) in CA-G.R. SP. No. 00589-MIN which set aside
the December 29, 2004 Decision
3
rll of the Department of Agrarian
Reform Adjudication Board (DARAB) and afforded respondent the
preferential right of redemption over the subject landholdings.
The Factual Antecedents
Subject of the instant case is a 2.8800 hectare agricultural land
situated in Batangan, Valencia, Bukidnon known as Lot 0899, covered
by Certificate of Land Transfer (CLT) No. 0-025227 in the name of
Prisco Quirino, Sr.+ (Prisco+) issued by the Ministry (now Department)
of Agrarian
Reform on October 16, 1979 pursuant to Presidential Decree (P.D.)
No. 27. On February 27, 1985, Prisco+ executed a Deed of Conditional
Sale (deed) covering the subject landholding to Ernesto Bayagna
(Ernesto) under the following conditions:chanroblesvirtuallawlibrary
x x x that the condition of this sale is that I, Prisco Quirino, Sr. and my
heirs hereby [reserve our] right to redeem or repurchase the herein
subject parcel of land by returning to Ernesto Bayagna or his heirs the
same amount of Forty thousand Pesos (P40,000.00), Philippine
currency, after the lapse of eight (8) years from the date of execution of
this instrument and if the subject land is not redeemed or repurchased
after the said eight years, there shall be an automatic extension of four
(4) years from the date the [eighth] year expires, and if after the 4 term
expires, and I, Prisco Quirino, Sr., or my heirs still [fail] to redeem or
repurchase the herein subject land, Ernesto Bayagna or his heirs shall
continue to possess and enjoy the subject land until it is finally
redeemed or repurchased. After the P40,000.00 is returned to Ernesto
Bayagna or his heirs, the latter shall be obligated to return peacefully
the subject land without any tenant or lessee.
4
rll
Ernesto thereupon possessed and cultivated the subject land for more
than 10 years before Prisco+ offered to redeem the same in 1996,
which was refused. Instead, Ernesto allowed the former owner of the
land, petitioner Aurelia Gua-An (Aurelia), through her daughter,
petitioner Sonia Gua-An Mamon (Sonia), to redeem the lot.
Subsequently, Prisco+ passed away.
On January 30, 1998, respondent Gertrudes Quirino, Prisco's widow,
represented by their son, Elmer, filed before the Office of the Agrarian
Reform Regional Adjudicator (RARAD) a Complaint for Specific
Performance, Redemption, Reinstatement and Damages with
Application for Writ of Preliminary Injunction and TRO against Ernesto
and petitioners.
In their Answer, petitioners averred that Prisco's+ right over the subject
land was merely inchoate for failure to establish payment of just
compensation to the landowner; the deed was null and void for being
violative of the law and public policy; and that the failure to consign the
redemption money effectively bars the redemption prayed for.
For his part, Ernesto averred that he allowed petitioners to redeem the
lot because Prisco+ failed to appear on the agreed date for redemption
and on the information that the subject land was erroneously awarded
to the latter.
On May 6, 1998, the RARAD dismissed the complaint for lack of merit.
The DARAB Ruling
In the Decision
5
rll dated December 29, 2004, the DARAB denied
respondent's appeal and declared Prisco+ to have violated agrarian
laws and of having abandoned the land by his failure to cultivate the
same continuously for a period of more than two (2) calendar years. It
canceled CLT No. 0-025227 in Prisco's+ name and ordered the
Municipal Agrarian Reform Officer (MARO) to reallocate the subject
landholding to a qualified beneficiary.
The CA Ruling
On petition for review, the CA reversed and set aside
6
rll the
DARAB's decision. It ruled that the pacto de retro sale between
Prisco+ and Ernesto was a mere equitable mortgage, hence, not a
prohibited transaction under P.D. 27, which is limited to "transfers or
conveyances of title to a landholding acquired under the Land Reform
Program of the Government." Having acquired the subject land as a
"qualified beneficiary," Prisco+ and his heirs possess security of tenure
thereon and could not be dispossessed thereof except for cause and
only through a final and executory judgment. Thus, the CA afforded the
heirs of Prisco+ the preferential right of redemption over the subject
landholding.
In the instant petition, petitioners insist that since respondent failed to
tender and consign the redemption money, the latter has no cause of
action against them. Moreover, considering that Prisco+ was not the
absolute owner of the subject property, he cannot validly mortgage the
same. Besides, Prisco+ had lost his rights as a farmer-beneficiary
when he transacted with Ernesto in violation of the provisions of
Section 73(f)
7
rll of Republic Act (R.A.) No. 6657, as amended
(Comprehensive Agrarian Reform Law of 1988).
Our Ruling
The petition is meritorious.
It bears to stress that upon the promulgation of P.D. 27, farmer-tenants
were deemed owners of the land they were tilling and given the rights
to possess, cultivate and enjoy the landholding for
themselves.
8
rll Thus, P.D. 27 specifically prohibited any transfer of
such landholding except to the government or by hereditary
succession. Section 27
9
rll of R.A. 6657 further allowed transfers to
the Land Bank of the Philippines (LBP) and to other qualified
beneficiaries. Consequently, any other transfer constitutes a violation
of the above proscription and is null and void for being contrary to
law.
10
rll Relevant on this point is Ministry of Agrarian Reform
Memorandum Circular No. 7, series of 1979 which
provides:chanroblesvirtuallawlibrary
"Despite the x x x prohibition, x x x many farmer-beneficiaries of P.D.
27 have transferred their ownership, rights and/or possession of their
farms/homelots to other persons or have surrendered the same to their
former landowners. All these transactions/surrenders are violative of
P.D. 27 and therefore null and void."
A perusal of the Deed of Conditional Sale reveals the real intention of
the parties not to enter into a contract of sale but merely to secure the
payment of the P40,000.00 loan of Prisco+. This is evident from the
fact that the latter was given the right to repurchase the subject
property even beyond the 12-year (original and extended) period,
allowing in the meantime the continued possession of Ernesto pending
payment of the consideration. Under these conditions and in
accordance with Article 1602
11
rllof the Civil Code, the CA did not
err in adjudging the pacto de retro sale to be in reality an equitable
mortgage.
However, contrary to the finding of the CA, the subject transaction is
covered by the prohibition under P.D. No. 27 and R.A. No. 6657 which
include transfer of possession of the landholding to the vendee a retro,
Ernesto, who, not being a qualified beneficiary, remained in
possession thereof for a period of eleven (11) years. Hence,
notwithstanding such possession, the latter did not acquire any valid
right or title thereto, especially since he failed to take any positive
measure to cause the cancellation of Prisco's+ CLT No. 0-025227
despite the long lapse of time.
On the other hand, the redemption made by petitioner Aurelia was
ineffective and void since reversion of the landholding to the former
owner is likewise proscribed under P.D. No. 27 in accordance with its
policy of holding such lands under trust for the succeeding generations
of farmers.
12
rll
However, while CLT No. 0-025227 remains in Prisco's+ name, the
Court cannot turn a blind eye to the fact that Prisco+ surrendered
possession and cultivation of the subject land to Ernesto, not for a
mere temporary period, but for a period of 11 years without any
justifiable reason. Such act constituted abandonment despite his
avowed intent to resume possession of the land upon payment of the
loan. As defined in DAR Administrative Order No. 2, series of 1994,
abandonment is a willful failure of the agrarian reform beneficiary,
together with his farm household, "to cultivate, till, or develop his land
to produce any crop, or to use the land for any specific economic
purpose continuously for a period of two calendar years." It is a ground
for cancellation by the DARAB of an award to the agrarian reform
beneficiary. Consequently, respondent and/or Prisco's+ heirs had lost
any right to redeem the subject landholding.
In fine, we find the DARAB Decision finding Prisco+ to have violated
agrarian laws, canceling his CLT and ordering the reallocation of the
subject land to be more in accord with the law and
jurisprudence.blrlllbrr
WHEREFORE, the assailed Decision dated February 25, 2011 and
Resolution dated September 15, 2011 of the Court of Appeals in CA-
G.R. SP. No. 00589-MIN are hereby SET ASIDE. The DARAB
Decision dated December 29, 2004 is REINSTATED.rllbrr
SO ORDERED.







































RA 6657
INDUSTRIALIZATION; PRIVATE CORPS.
CHAVEZ v. PEA
For resolution of the Court are the following motions: (1) Motion to
Inhibit and for Re-Deliberation filed by respondent Amari Coastal Bay
Development Corporation ("Amari" for brevity) on September 13, 2002;
(2) Motion to Set Case for Hearing on Oral Argument filed by Amari on
August 20, 2002; (3) Motion for Reconsideration and Supplement to
Motion for Reconsideration filed by Amari on July 26, 2002 and August
20, 2002, respectively; (4) Motion for Reconsideration and Supplement
to Motion for Reconsideration filed by respondent Public Estates
Authority ("PEA" for brevity) on July 26, 2002 and August 8, 2002,
respectively; and (5) Motion for Reconsideration and/or Clarification
filed by the Office of the Solicitor General on July 25, 2002. Petitioner
Francisco I. Chavez filed on November 13, 2002 his Consolidated
Opposition to the main and supplemental motions for
reconsideration.chanrob1es virtua1 1aw 1ibrary

To recall, the Courts decision of July 9, 2002 ("Decision" for brevity)
on the instant. case states in its summary:chanrob1es virtual 1aw
library

We can now summarize our conclusions as follows:chanrob1es virtual
1aw library

1. The 157.84 hectares of reclaimed lands comprising the Freedom
Islands, now covered by certificates of title in the name of PEA, are
alienable lands of the public domain. PEA may lease these lands to
private corporations but may not sell or transfer ownership of these
lands to private corporations. PEA may only sell these lands to
Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.

2. The 592.15 hectares of submerged areas of Manila Bay remain
inalienable natural resources of the public domain until classified as
alienable or disposable lands open to disposition and declared no
longer needed for public service. The government can make such
classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural
lands of the public domain, which are the only natural resources the
government can alienate. In their present state, the 592.15 hectares of
submerged areas are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private
corporation, ownership of 77.34 hectares of the Freedom Islands, such
transfer is void for being contrary to Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership
of 290.156 hectares of still submerged areas of Manila Bay, such
transfer is void for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural resources other
than agricultural lands of the public domain. PEA may reclaim these
submerged areas. Thereafter, the government can classify the
reclaimed lands as alienable or disposable, and further declare them
no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of
Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public
domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article
XII of the 1987 Constitution. Under Article 1409 of the Civil Code,
contracts whose "object or purpose is contrary to law," or whose
"object is outside the commerce of men," are "inexistent and void from
the beginning." The Court must perform its duty to defend and uphold
the Constitution, and therefore declares the Amended JVA null and
void ab initio.chanrob1es virtua1 1aw 1ibrary

Amari seeks the inhibition of Justice Antonio T. Carpio, ponente of the
Decision, on the ground that Justice Carpio, before his appointment to
the Court, wrote in his Manila Times column of July 1, 1997, "I have
always maintained that the law requires the public bidding of
reclamation projects." Justice Carpio, then a private law practitioner,
also stated in the same column, "The Amari-PEA reclamation contract
is legally flawed because it was not bid out by the PEA." Amari claims
that because of these statements Justice Carpio should inhibit himself
"on the grounds of bias and prejudgment" and that the instant case
should be "re-deliberated" after being assigned to a new ponente.

The motion to inhibit Justice Carpio must be denied for three reasons.
First, the motion to inhibit came after Justice Carpio had already
rendered his opinion on the merits of the case. The rule is that a
motion to inhibit must be denied if filed after a member of the Court
had already given an opinion on the merits of the case, 1 the rationale
being that "a litigant cannot be permitted to speculate upon the action
of the Court . . . (only to) raise an objection of this sort after a decision
has been rendered." Second, as can be readily gleaned from the
summary of the Decision quoted above, the absence of public bidding
is not one of the ratio decidendi of the Decision which is anchored on
violation of specific provisions of the Constitution. The absence of
public bidding was not raised as an issue by the parties. The absence
of public bidding was mentioned in the Decision only to complete the
discussion on the law affecting reclamation contracts for the guidance
of public officials. At any rate, the Office of the Solicitor General in its
Motion for Reconsideration concedes that the absence of public
bidding in the disposition of the Freedom Islands rendered the
Amended JVA null and void. 2 Third, judges and justices are not
disqualified from participating in a case just because they have written
legal articles on the law involved in the case. As stated by the Court in
Republic v. Cocofed, 3

The mere fact that, as a former columnist, Justice Carpio has written
on the coconut levy will not disqualify him, in the same manner that
jurists will not be disqualified just because they may have given their
opinions as textbook writers on the question involved in a case.

Besides, the subject and title of the column in question was "The CCP
reclamation project" and the column referred to the Amari-PEA
contract only in passing in one sentence.

Amaris motion to set the case for oral argument must also be denied
since the pleadings of the parties have discussed exhaustively the
issues involved in the case.

The motions for reconsideration reiterate mainly the arguments already
discussed in the Decision. We shall consider in this Resolution only the
new arguments raised by respondents.chanrob1es virtua1 1aw 1ibrary

In its Supplement to Motion for Reconsideration, Amari argues that the
Decision should be made to apply prospectively, not retroactively to
cover the Amended JVA. Amari argues that the existence of a statute
or executive order prior to its being adjudged void is an operative fact
to which legal consequences are attached, citing De Agbayani v. PNB,
4 thus:chanrob1es virtual 1aw library

. . .. It does not admit of doubt that prior to the declaration of nullity
such challenged legislative or executive act must have been in force
and had to be complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to obedience and
respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent
litigation regard be had to what has been done while such legislative or
executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely
to reflect awareness that precisely because the judiciary is the
governmental organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have
elapsed before it can exercise the power of judicial review that may
lead to a declaration of nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no recognition of what
had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual
existence of a statute, prior to such a determination [of
unconstitutionality], is an operative fact and may have consequences
which cannot justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, with
respect to particular relations, individual and corporate, and particular
conduct, private and official." This language has been quoted with
approval in a resolution in Araneta v. Hill and the decision in Manila
Motor Co., Inc. v. Flores. . . ..

x x x


. . . That before the decision they were not constitutionally infirm was
admitted expressly. There is all the more reason then to yield assent to
the now prevailing principle that the existence of a statute or executive
order prior to its being adjudged void is an operative fact to which legal
consequences are attached.

Amari now claims that "assuming arguendo that Presidential Decree
Nos. 1084 and 1085, and Executive Order Nos. 525 and 654 are
inconsistent with the 1987 Constitution, the limitation imposed by the
Decision on these decrees and executive orders should only be
applied prospectively from the finality of the Decision." chanrob1es
virtua1 1aw 1ibrary

Amari likewise asserts that a new doctrine of the Court cannot operate
retroactively if it impairs vested rights. Amari maintains that the new
doctrine embodied in the Decision cannot apply retroactively on those
who relied on the old doctrine in good faith, citing Spouses Benzonan
v. Court of Appeals, 5 thus:chanrob1es virtual 1aw library

At that time, the prevailing jurisprudence interpreting section 119 of
R.A. 141 as amended was that enunciated in Monge and Tupas cited
above. The petitioners Benzonan and respondent Pe and the DBP are
bound by these decisions for pursuant to Article 8 of the Civil Code
"judicial decisions applying or interpreting the laws or the Constitution
shall form a part of the legal system of the Philippines." But while our
decisions form part of the law of the land, they are also subject to
Article 4 of the Civil Code which provides that "laws shall have no
retroactive effect unless the contrary is provided." This is expressed in
the familiar legal maxim lex prospicit, non respicit, the law looks
forward not backward. The rationale against retroactivity is easy to
perceive. The retroactive application of a law usually divests rights that
have already become vested or impairs the obligations of contract and
hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]).

The same consideration underlies our rulings giving only prospective
effect to decisions enunciating new doctrines. Thus, we emphasized in
People v. Jabinal, 55 SCRA 607 [1974]." . . when a doctrine of this
Court is overruled and a different view is adopted, the new doctrine
should be applied prospectively and should not apply to parties who
had relied on the old doctrine and acted on the faith thereof.

There may be special cases where weighty considerations of equity
and social justice will warrant a retroactive application of doctrine to
temper the harshness of statutory law as it applies to poor farmers or
their widows and orphans. In the present petitions, however, we find no
such equitable considerations. Not only did the private respondent
apply for free agricultural land when he did not need it and he had no
intentions of applying it to the noble purposes behind the law, he would
now repurchase for only P327,995.00, the property purchased by the
petitioners in good faith for P1,650,000.00 in 1979 and which, because
of improvements and the appreciating value of land must be worth
more than that amount now.

The buyers in good faith from DBP had a right to rely on our rulings in
Monge and Tupas when they purchased the property from DBP in
1979 or thirteen (13) years ago. Under the rulings in these two cases,
the period to repurchase the disputed lot given to respondent Pe
expired on June 18, 1982. He failed to exercise his right. His lost right
cannot be revived by relying on the 1988 case of Belisario. The right of
petitioners over the subject lot had already become vested as of that
time and cannot be impaired by the retroactive application of the
Belisario ruling.

Amaris reliance on De Agbayani and Spouses Benzonan is misplaced.
These cases would apply if the prevailing law or doctrine at the time of
the signing of the Amended JVA was that a private corporation could
acquire alienable lands of the public domain, and the Decision
annulled the law or reversed this doctrine. Obviously, this is not the
case here.chanrob1es virtua1 1aw 1ibrary

Under the 1935 Constitution, private corporations were allowed to
acquire alienable lands of the public domain. But since the effectivity of
the 1973 Constitution, private corporations were banned from holding,
except by lease, alienable lands of the public domain. The 1987
Constitution continued this constitutional prohibition. The prevailing law
before, during and after the signing of the Amended JVA is that private
corporations cannot hold, except by lease, alienable lands of the public
domain. The Decision has not annulled or in any way changed the law
on this matter. The Decision, whether made retroactive or not, does
not change the law since the Decision merely reiterates the law that
prevailed since the effectivity of the 1973 Constitution. Thus, De
Agbayani, which refers to a law that is invalidated by a decision of the
Court, has no application to the instant case.

Likewise, Spouses Benzonan is inapplicable because it refers to a
doctrine of the Court that is overruled by a subsequent decision which
adopts a new doctrine. In the instant case, there is no previous
doctrine that is overruled by the Decision. Since the case of Manila
Electric Company v. Judge Castro-Bartolome, 6 decided on June 29,
1982, the Court has applied consistently the constitutional provision
that private corporations cannot hold, except by lease, alienable lands
of the public domain. The Court reiterated this in numerous cases, and
the only dispute in the application of this constitutional provision is
whether the land in question had already become private property
before the effectivity of the 1973 Constitution. 7 If the land was already
private land before the 1973 Constitution because the corporation had
possessed it openly, continuously, exclusively and adversely for at
least thirty years since June 12, 1945 or earlier, then the corporation
could apply for judicial confirmation of its imperfect title. But if the land
remained public land upon the effectivity of the 1973 Constitution, then
the corporation could never hold, except by lease, such public land.
Indisputably, the Decision does not overrule any previous doctrine of
the Court.

The prevailing doctrine before, during and after the signing of the
Amended JVA is that private corporations cannot hold, except by
lease, alienable lands of the public domain. This is one of the two main
reasons why the Decision annulled the Amended JVA. The other main
reason is that submerged areas of Manila Bay, being part of the sea,
are inalienable and beyond the commerce of man, a doctrine that has
remained immutable since the Spanish Law on Waters of 1886.
Clearly, the Decision merely reiterates, and does not overrule, any
existing judicial doctrine.chanrob1es virtua1 1aw 1ibrary

Even on the characterization of foreshore lands reclaimed by the
government, the Decision does not overrule existing law or doctrine.
Since the adoption of the Regalian doctrine in this jurisdiction, the sea
and its foreshore areas have always been part of the public domain.
And since the enactment of Act No. 1654 on May 18, 1907 until the
effectivity of the 1973 Constitution, statutory law never allowed
foreshore lands reclaimed by the government to be sold to private
corporations. The 1973 and 1987 Constitution enshrined and
expanded the ban to include any alienable land of the public domain.

There are, of course, decisions of the Court which, while recognizing a
violation of the law or Constitution, hold that the sale or transfer of the
land may no longer be invalidated because of "weighty considerations
of equity and social justice." 8 The invalidation of the sale or transfer
may also be superfluous if the purpose of the statutory or constitutional
ban has been achieved. But none of these cases apply to
Amari.chanrob1es virtua1 1aw 1ibrary

Thus, the Court has ruled consistently that where a Filipino citizen sells
land to an alien who later sells the land to a Filipino, the invalidity of the
first transfer is corrected by the subsequent sale to a citizen. 9
Similarly, where the alien who buys the land subsequently acquires
Philippine citizenship, the sale is validated since the purpose of the
constitutional ban to limit land ownership to Filipinos has been
achieved. 10 In short, the law disregards the constitutional
disqualification of the buyer to hold land if the land is subsequently
transferred to a qualified party, or the buyer himself becomes a
qualified party. In the instant case, however, Amari has not transferred
the Freedom Islands, or any portion of it, to any qualified party. In fact,
Amari admits that title to the Freedom Islands still remains with PEA.
11

The Court has also ruled consistently that a sale or transfer of the land
may no longer be questioned under the principle of res judicata,
provided the requisites for res judicata are present. 12 Under this
principle, the courts and the parties are bound by a prior final decision,
otherwise there will be no end to litigation. As the Court declared in
Toledo-Banaga v. Court of Appeals, 13 "once a judgment has become
final and executory, it can no longer be disturbed no matter how
erroneous it may be." In the instant case, there is no prior final decision
adjudicating the Freedom Islands to Amari.

There are, moreover, special circumstances that disqualify Amari from
invoking equity principles. Amari cannot claim good faith because even
before Amari signed the Amended JVA on March 30, 1999, petitioner
had already filed the instant case on April 27, 1998 questioning
precisely the qualification of Amari to acquire the Freedom Islands.
Even before the filing of this petition, two Senate Committees 14 had
already approved on September 16, 1997 Senate Committee Report
No. 560. This Report concluded, after a well-publicized investigation
into PEAS sale of the Freedom Islands, to Amari, that the Freedom
Islands are inalienable lands of the public domain. Thus, Amari signed
the Amended JVA knowing and assuming all the attendant risks,
including the annulment of the Amended JVA.chanrob1es virtua1 1aw
1ibrary

Amari has also not paid to PEA the full reimbursement cost incurred by
PEA in reclaiming the Freedom Islands. Amari states that it has paid
PEA only P300,000,000.00 15 out of the P1,894,129,200.00 total
reimbursement cost agreed upon in the Amended JVA. Moreover,
Amari does not claim to have even initiated the reclamation of the
592.15 hectares of submerged areas covered in the Amended JVA, or
to have started to construct any permanent infrastructure on the
Freedom Islands. In short, Amari does not claim to have introduced
any physical improvement or development on the reclamation project
that is the subject of the Amended JVA. And yet Amari claims that it
had already spent a "whopping P9,876,108,638.00" as its total
development cost as of June 30, 2002. 16 Amari does not explain how
it spent the rest of the P9,876,108,638.00 total project cost after paying
PEA P300,000,000.00. Certainly, Amari cannot claim to be an innocent
purchaser in good faith and for value.

In its Supplement to Motion for Reconsideration, PEA claims that it is
"similarly situated" as the Bases Conversion Development Authority
(BCDA) which under R.A. No. 7227 is tasked to sell portions of the
Metro Manila military camps and other military reservations. PEAs
comparison is incorrect. The Decision states as follows:chanrob1es
virtual 1aw library

As the central implementing agency tasked to undertake reclamation
projects nationwide, with authority to sell reclaimed lands, PEA took
the place of DENR as the government agency charged with leasing or
selling reclaimed lands of the public domain. The reclaimed lands
being leased or sold by PEA are not private lands, in the same manner
that DENR, when it disposes of other alienable lands, does not dispose
of private lands but alienable lands of the public domain. Only when
qualified private parties acquire these lands will the lands become
private lands. In the hands of the government agency tasked and
authorized to dispose of alienable or disposable lands of the public
domain, these lands are still public, not private lands.chanrob1es
virtua1 1aw 1ibrary

PEA is the central implementing agency tasked to undertake
reclamation projects nationwide. PEA took the place of Department of
Environment and Natural Resources ("DENR" for brevity) as the
government agency charged with leasing or selling all reclaimed lands
of the public domain. In the hands of PEA, which took over the leasing
and selling functions of DENR, reclaimed foreshore lands are public
lands in the same manner that these same lands would have been
public lands in the hands of DENR. BCDA is an entirely different
government entity. BCDA is authorized by law to sell specific
government lands that have long been declared by presidential
proclamations as military reservations for use by the different services
of the armed forces under the Department of National Defense.
BCDAs mandate is specific and limited in area, while PEAs mandate
is general and national. BCDA holds government lands that have been
granted to end-user government entities the military services of the
armed forces. In contrast, under Executive Order No. 525, PEA holds
the reclaimed public lands, not as an end-user entity, but as the
government agency "primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on behalf of the
National Government." chanrob1es virtua1 1aw 1ibrary

In Laurel v. Garcia, 17 cited in the Decision, the Court ruled that land
devoted to public use by the Department of Foreign Affairs, when no
longer needed for public use, may be declared patrimonial property for
sale to private parties provided there is a law authorizing such act.
Well-settled is the doctrine that public land granted to an end-user
government agency for a specific public use may subsequently be
withdrawn by Congress from public use and declared patrimonial
property to be sold to private parties. R.A. No. 7227 creating the BCDA
is a law that declares specific military reservations no longer needed
for defense or military purposes and reclassifies such lands as
patrimonial property for sale to private parties.

Government owned lands, as long they are patrimonial property, can
be sold to private parties, whether Filipino citizens or qualified private
corporations. Thus, the so-called Friar Lands acquired by the
government under Act No. 1120 are patrimonial property 18 which
even private corporations can acquire by purchase. Likewise,
reclaimed alienable lands of the public domain if sold or transferred to
a public or municipal corporation for a monetary consideration become
patrimonial property in the hands of the public or municipal corporation.
Once converted to patrimonial property, the land may be sold by the
public or municipal corporation to private parties, whether Filipino
citizens or qualified private corporations.

We reiterate what we stated in the Decision is the rationale for treating
PEA in the same manner as DENR with respect to reclaimed foreshore
lands, thus:chanrob1es virtual 1aw library

To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of
alienable land of the public domain. PEA will simply turn around, as
PEA has now done under the Amended JVA, and transfer several
hundreds of hectares of these reclaimed and still to be reclaimed lands
to a single private corporation in only one transaction. This scheme will
effectively nullify the constitutional ban in Section 3, Article XII of the
1987 Constitution which was intended to diffuse equitably the
ownership of alienable lands of the public domain among Filipinos,
now numbering over 80 million strong.

This scheme, if allowed, can even be applied to alienable agricultural
lands of the public domain since PEA can "acquire . . . any and all
kinds of lands." This will open the floodgates to corporations and even
individuals acquiring hundreds, if not thousands, of hectares of
alienable lands of the public domain under the guise that in the hands
of PEA these lands are private lands. This will result in corporations
amassing huge landholdings never before seen in this country
creating the very evil that the constitutional ban was designed to
prevent. This will completely reverse the clear direction of
constitutional development in this country. The 1935 Constitution
allowed private corporations to acquire not more than 1,024 hectares
of public lands. The 1973 Constitution prohibited private corporations
from acquiring any kind of public land, and the 1987 Constitution has
unequivocally reiterated this prohibition.

Finally, the Office of the Solicitor General and PEA argue that the cost
of reclaiming deeply submerged areas is "enormous" and "it would be
difficult for PEA to accomplish such project without the participation of
private corporations." 19 The Decision does not bar private
corporations from participating in reclamation projects and being paid
for their services in reclaiming lands. What the Decision prohibits,
following the explicit constitutional mandate, is for private corporations
to acquire reclaimed lands of the public domain. There is no prohibition
on the directors, officers and stockholders of private corporations, if
they are Filipino citizens, from acquiring at public auction reclaimed
alienable lands of the public domain. They can acquire not more than
12 hectares per individual, and the land thus acquired becomes private
land.

Despite the nullity of the Amended JVA, Amari is not precluded from
recovering from PEA in the proper proceedings, on a quantum meruit
basis, whatever Amari may have incurred in implementing the
Amended JVA prior to its declaration of nullity.

WHEREFORE, finding the Motions for Reconsideration to be without
merit, the same are hereby DENIED with FINALITY. The Motion to
Inhibit and for Re-Deliberation and the Motion to Set Case for Hearing
on Oral Argument are likewise DENIED.cralaw : red

SO ORDERED.

AGRICULTURE
LUZ FARMS v. HON. SEC.
This is a petition for prohibition with prayer for restraining order and/or
preliminary and permanent injunction against the Honorable Secretary
of the Department of Agrarian Reform for acting without jurisdiction in
enforcing the assailed provisions of R.A. No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law of 1988 and in
promulgating the Guidelines and Procedure Implementing Production
and Profit Sharing under R.A. No. 6657, insofar as the same apply to
herein petitioner, and further from performing an act in violation of the
constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is
as follows:
On June 10, 1988, the President of the Philippines approved R.A. No.
6657, which includes the raising of livestock, poultry and swine in its
coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated
the Guidelines and Procedures Implementing Production and Profit
Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p.
80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its
Rules and Regulations implementing Section 11 of R.A. No. 6657
(Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the
livestock and poultry business and together with others in the same
business allegedly stands to be adversely affected by the enforcement
of Section 3(b), Section 11, Section 13, Section 16(d) and 17 and
Section 32 of R.A. No. 6657 otherwise known as Comprehensive
Agrarian Reform Law and of the Guidelines and Procedures
Implementing Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and Regulations
Implementing Section 11 thereof as promulgated by the DAR on
January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines and rules
be declared unconstitutional. Meanwhile, it is also prayed that a writ of
preliminary injunction or restraining order be issued enjoining public
respondents from enforcing the same, insofar as they are made to
apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny,
among others, Luz Farms' prayer for the issuance of a preliminary
injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p.
98).
Later, however, this Court in its Resolution dated August 24, 1989
resolved to grant said Motion for Reconsideration regarding the
injunctive relief, after the filing and approval by this Court of an
injunction bond in the amount of P100,000.00. This Court also gave
due course to the petition and required the parties to file their
respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp.
131-168).
On December 22, 1989, the Solicitor General adopted his Comment to
the petition as his Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as
they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and
poultry)" in the definition of "Agricultural, Agricultural
Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private
agricultural lands devoted to commercial, livestock, poultry
and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a
production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of
Agrarian Reform the authority to summarily determine the
just compensation to be paid for lands covered by the
Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan
mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from
the production of such lands are distributed within sixty (60)
days of the end of the fiscal year as compensation to regular
and other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these
individuals or entities realize gross sales in excess of five
million pesos per annum unless the DAR, upon proper
application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within
ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b),
11, 13 and 32 of R.A. No. 6657 (the Comprehensive Agrarian Reform
Law of 1988), insofar as the said law includes the raising of livestock,
poultry and swine in its coverage as well as the Implementing Rules
and Guidelines promulgated in accordance therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII
x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of
all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe,
taking into account ecological, developmental, or equity
considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall
respect the rights of small landowners. The State shall
further provide incentives for voluntary land-sharing.
x x x"
Luz Farms contended that it does not seek the nullification of
R.A. 6657 in its entirety. In fact, it acknowledges the
correctness of the decision of this Court in the case of the
Association of Small Landowners in the Philippines, Inc.
vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989)
affirming the constitutionality of the Comprehensive Agrarian
Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the
Constitution, in including land devoted to the raising of
livestock, poultry and swine in its coverage (Rollo, p. 131).
Livestock or poultry raising is not similar to crop or tree
farming. Land is not the primary resource in this undertaking
and represents no more than five percent (5%) of the total
investment of commercial livestock and poultry raisers.
Indeed, there are many owners of residential lands all over
the country who use available space in their residence for
commercial livestock and raising purposes, under "contract-
growing arrangements," whereby processing corporations
and other commercial livestock and poultry raisers (Rollo, p.
10). Lands support the buildings and other amenities
attendant to the raising of animals and birds. The use of land
is incidental to but not the principal factor or consideration in
productivity in this industry. Including backyard raisers, about
80% of those in commercial livestock and poultry production
occupy five hectares or less. The remaining 20% are mostly
corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and
poultry raising is embraced in the term "agriculture" and the inclusion
of such enterprise under Section 3(b) of R.A. 6657 is proper. He cited
that Webster's International Dictionary, Second Edition (1954), defines
the following words:
"Agriculture the art or science of cultivating the ground
and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially for
profit.
Farm a plot or tract of land devoted to the raising of domestic or
other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary
task in constitutional construction is to ascertain and thereafter assure
the realization of the purpose of the framers in the adoption of the
Constitution (J.M. Tuazon & Co. vs. Land Tenure Administration, 31
SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution begins
with the language of the document itself. The words used in the
Constitution are to be given their ordinary meaning except where
technical terms are employed in which case the significance thus
attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which
are ambiguous or of doubtful meaning, the courts may consider the
debates in the constitutional convention as throwing light on the intent
of the framers of the Constitution. It is true that the intent of the
convention is not controlling by itself, but as its proceeding was
preliminary to the adoption by the people of the Constitution the
understanding of the convention as to what was meant by the terms of
the constitutional provision which was the subject of the deliberation,
goes a long way toward explaining the understanding of the people
when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of
1986 on the meaning of the word "agricultural," clearly show that it was
never the intention of the framers of the Constitution to include
livestock and poultry industry in the coverage of the constitutionally-
mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined
under Section 166 of R.A. 3844, as laud devoted to any growth,
including but not limited to crop lands, saltbeds, fishponds, idle and
abandoned land (Record, CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word
"agriculture." Commissioner Jamir proposed to insert the word
"ARABLE" to distinguish this kind of agricultural land from such lands
as commercial and industrial lands and residential properties because
all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because the
Committee contemplated that agricultural lands are limited to arable
and suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record, CONCOM,
August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme
Court Justice), posed several questions, among others, quoted as
follows:
x x x
"Line 19 refers to genuine reform program founded on the
primary right of farmers and farmworkers. I wonder if it
means that leasehold tenancy is thereby proscribed under
this provision because it speaks of the primary right of
farmers and farmworkers to own directly or collectively the
lands they till. As also mentioned by Commissioner Tadeo,
farmworkers include those who work in piggeries and poultry
projects.
I was wondering whether I am wrong in my appreciation that
if somebody puts up a piggery or a poultry project and for
that purpose hires farmworkers therein, these farmworkers
will automatically have the right to own eventually, directly or
ultimately or collectively, the land on which the piggeries and
poultry projects were constructed. (Record, CONCOM,
August 2, 1986, p. 618).
x x x
The questions were answered and explained in the
statement of then Commissioner Tadeo, quoted as follows:
x x x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi
kami nagkaunawaan. Ipinaaalam ko kay Commissioner
Regalado na hindi namin inilagay ang agricultural worker sa
kadahilanang kasama rito ang piggery, poultry at livestock
workers. Ang inilagay namin dito ay farm worker kaya hindi
kasama ang piggery, poultry at livestock workers (Record,
CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657
which includes "private agricultural lands devoted to commercial
livestock, poultry and swine raising" in the definition of "commercial
farms" is invalid, to the extent that the aforecited agro-industrial
activities are made to be covered by the agrarian reform program of
the State. There is simply no reason to include livestock and poultry
lands in the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in
Sections 13 and 32 of R.A. 6657 directing "corporate farms" which
include livestock and poultry raisers to execute and implement
"production-sharing plans" (pending final redistribution of their
landholdings) whereby they are called upon to distribute from three
percent (3%) of their gross sales and ten percent (10%) of their net
profits to their workers as additional compensation is unreasonable for
being confiscatory, and therefore violative of due process (Rollo, p.
21).:-cralaw
It has been established that this Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of
a judicial inquiry into such a question are first satisfied. Thus, there
must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination, the constitutional question
must have been opportunely raised by the proper party, and the
resolution of the question is unavoidably necessary to the decision of
the case itself (Association of Small Landowners of the Philippines,
Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo,
G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R.
79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when
confronted with constitutional issues, it will not hesitate to declare a law
or act invalid when it is convinced that this must be done. In arriving at
this conclusion, its only criterion will be the Constitution and God as its
conscience gives it in the light to probe its meaning and discover its
purpose. Personal motives and political considerations are
irrelevancies that cannot influence its decisions. Blandishment is as
ineffectual as intimidation, for all the awesome power of the Congress
and Executive, the Court will not hesitate "to make the hammer fall
heavily," where the acts of these departments, or of any official, betray
the people's will as expressed in the Constitution (Association of Small
Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform,
G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R.
79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of
its constitutional powers, it becomes the duty of the judiciary to declare
what the other branches of the government had assumed to do, as
void. This is the essence of judicial power conferred by the Constitution
"(I)n one Supreme Court and in such lower courts as may be
established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article
X, Section I of the 1973 Constitution and which was adopted as part of
the Freedom Constitution, and Article VIII, Section 1 of the 1987
Constitution) and which power this Court has exercised in many
instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED.
Sections 3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion
of the raising of livestock, poultry and swine in its coverage as well as
the Implementing Rules and Guidelines promulgated in accordance
therewith, are hereby DECLARED null and void for being
unconstitutional and the writ of preliminary injunction issued is hereby
MADE permanent.
SO ORDERED.

DAR v. SUTTON
This is a Petition for Review filed by the Department of Agrarian
Reform (DAR) of the Decision and Resolution of the Court of Appeals,
dated September 19, 2003 and February 4, 2004, respectively, which
declared DAR Administrative Order (A.O.) No. 9, series of 1993, null
and void for being violative of the Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by
respondents which has been devoted exclusively to cow and calf
breeding. On October 26, 1987, pursuant to the then existing agrarian
reform program of the government, respondents made a voluntary
offer to sell (VOS)
1
their landholdings to petitioner DAR to avail of
certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657,
also known as the Comprehensive Agrarian Reform Law (CARL) of
1988, took effect. It included in its coverage farms used for raising
livestock, poultry and swine.
On December 4, 1990, in an en banc decision in the case of Luz
Farms v. Secretary of DAR,
2
this Court ruled that lands devoted to
livestock and poultry-raising are not included in the definition of
agricultural land. Hence, we declared as unconstitutional certain
provisions of the CARL insofar as they included livestock farms in the
coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR
a formal request to withdraw their VOS as their landholding was
devoted exclusively to cattle-raising and thus exempted from the
coverage of the CARL.
3

On December 21, 1992, the Municipal Agrarian Reform Officer of
Aroroy, Masbate, inspected respondents' land and found that it was
devoted solely to cattle-raising and breeding. He recommended to the
DAR Secretary that it be exempted from the coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the
withdrawal of their VOS and requested the return of the supporting
papers they submitted in connection therewith.
4
Petitioner ignored their
request.
On December 27, 1993, DAR issued A.O. No. 9, series of
1993,
5
which provided that only portions of private agricultural lands
used for the raising of livestock, poultry and swine as of June 15, 1988
shall be excluded from the coverage of the CARL. In determining the
area of land to be excluded, the A.O. fixed the following retention
limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of land per 1 head of
animal shall be retained by the landowner), and a ratio of 1.7815
hectares for livestock infrastructure for every 21 heads of cattle shall
likewise be excluded from the operations of the CARL.
On February 4, 1994, respondents wrote the DAR Secretary and
advised him to consider as final and irrevocable the withdrawal of their
VOS as, under the Luz Farms doctrine, their entire landholding is
exempted from the CARL.
6

On September 14, 1995, then DAR Secretary Ernesto D. Garilao
issued an Order
7
partially granting the application of respondents for
exemption from the coverage of CARL. Applying the retention limits
outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of
respondents' land for grazing purposes, and a maximum of 102.5635
hectares for infrastructure. Petitioner ordered the rest of respondents'
landholding to be segregated and placed under Compulsory
Acquisition.
Respondents moved for reconsideration. They contend that their entire
landholding should be exempted as it is devoted exclusively to cattle-
raising. Their motion was denied.
8
They filed a notice of appeal
9
with
the Office of the President assailing: (1) the reasonableness and
validity of DAR A.O. No. 9, s. 1993, which provided for a ratio between
land and livestock in determining the land area qualified for exclusion
from the CARL, and (2) the constitutionality of DAR A.O. No. 9, s.
1993, in view of the Luz Farms case which declared cattle-raising
lands excluded from the coverage of agrarian reform.
On October 9, 2001, the Office of the President affirmed the impugned
Order of petitioner DAR.
10
It ruled that DAR A.O. No. 9, s. 1993, does
not run counter to the Luz Farms case as the A.O. provided the
guidelines to determine whether a certain parcel of land is being used
for cattle-raising. However, the issue on the constitutionality of the
assailed A.O. was left for the determination of the courts as the
sole arbiters of such issue.
On appeal, the Court of Appeals ruled in favor of the respondents. It
declared DAR A.O. No. 9, s. 1993, void for being contrary to the intent
of the 1987 Constitutional Commission to exclude livestock farms from
the land reform program of the government. The dispositive portion
reads:
WHEREFORE, premises considered, DAR Administrative Order No.
09, Series of 1993 is herebyDECLARED null and void. The assailed
order of the Office of the President dated 09 October 2001 in so far as
it affirmed the Department of Agrarian Reform's ruling that petitioners'
landholding is covered by the agrarian reform program of the
government is REVERSED and SET ASIDE.
SO ORDERED.
11

Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O.
No. 9, series of 1993, which prescribes a maximum retention limit for
owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL,
petitioner submits that it issued DAR A.O. No. 9 to limit the area of
livestock farm that may be retained by a landowner pursuant to its
mandate to place all public and private agricultural lands under the
coverage of agrarian reform. Petitioner also contends that the A.O.
seeks to remedy reports that some unscrupulous landowners have
converted their agricultural farms to livestock farms in order to evade
their coverage in the agrarian reform program.
Petitioner's arguments fail to impress.
Administrative agencies are endowed with powers legislative in
nature, i.e., the power to make rules and regulations. They have been
granted by Congress with the authority to issue rules to regulate the
implementation of a law entrusted to them. Delegated rule-making has
become a practical necessity in modern governance due to the
increasing complexity and variety of public functions. However, while
administrative rules and regulations have the force and effect of law,
they are not immune from judicial review.
12
They may be properly
challenged before the courts to ensure that they do not violate the
Constitution and no grave abuse of administrative discretion is
committed by the administrative body concerned.
The fundamental rule in administrative law is that, to be valid,
administrative rules and regulations must be issued by authority of
a law and must not contravene the provisions of the
Constitution.
13
The rule-making power of an administrative agency
may not be used to abridge the authority given to it by Congress or by
the Constitution. Nor can it be used to enlarge the power of the
administrative agency beyond the scope intended. Constitutional
and statutory provisions control with respect to what rules and
regulations may be promulgated by administrative agencies and
the scope of their regulations.
14

In the case at bar, we find that the impugned A.O. is invalid as it
contravenes the Constitution. The A.O. sought to regulate livestock
farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership.
However, the deliberations of the 1987 Constitutional Commission
show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry - raising. The Court
clarified in the Luz Farms casethat livestock, swine and poultry-raising
are industrial activities and do not fall within the definition of
"agriculture" or "agricultural activity." The raising of livestock, swine
and poultry is different from crop or tree farming. It is an industrial, not
an agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal
housing structures and facilities, drainage, waterers and blowers,
feedmill with grinders, mixers, conveyors, exhausts and generators,
extensive warehousing facilities for feeds and other supplies, anti-
pollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.
15

Clearly, petitioner DAR has no power to regulate livestock farms
which have been exempted by the Constitution from the coverage
of agrarian reform. It has exceeded its power in issuing the assailed
A.O.
The subsequent case of Natalia Realty, Inc. v. DAR
16
reiterated our
ruling in the Luz Farms case. In Natalia Realty, the Court heldthat
industrial, commercial and residential lands are not covered by the
CARL.
17
We stressed anew that while Section 4 of R.A. No. 6657
provides that the CARL shall cover all public and private
agricultural lands, the term "agricultural land" does not include
lands classified as mineral, forest, residential, commercial or
industrial.Thus, in Natalia Realty, even portions of the Antipolo Hills
Subdivision, which are arable yet still undeveloped, could not be
considered as agricultural lands subject to agrarian reform as these
lots were already classified as residential lands.
A similar logical deduction should be followed in the case at bar. Lands
devoted to raising of livestock, poultry and swine have been classified
as industrial, not agricultural, lands and thus exempt from agrarian
reform. Petitioner DAR argues that, in issuing the impugned A.O., it
was seeking to address the reports it has received that some
unscrupulous landowners have been converting their agricultural lands
to livestock farms to avoid their coverage by the agrarian reform.
Again, we find neither merit nor logic in this contention. The
undesirable scenario which petitioner seeks to prevent with the
issuance of the A.O. clearly does not apply in this
case. Respondents' family acquired their landholdings as early as
1948. They have long been in the business of breeding cattle in
Masbate which is popularly known as the cattle-breeding capital of the
Philippines.
18
Petitioner DAR does not dispute this fact. Indeed, there is
no evidence on record that respondents have just recently engaged in
or converted to the business of breeding cattle after the enactment of
the CARL that may lead one to suspect that respondents intended to
evade its coverage. It must be stressed that what the CARL prohibits is
the conversion of agricultural lands for non-agricultural
purposes after the effectivity of the CARL. There has been no
change of business interest in the case of respondents.
Moreover, it is a fundamental rule of statutory construction that the
reenactment of a statute by Congress without substantial change is an
implied legislative approval and adoption of the previous law. On the
other hand, by making a new law, Congress seeks to supersede an
earlier one.
19
In the case at bar, after the passage of the 1988 CARL,
Congress enacted R.A. No. 7881
20
which amended certain provisions
of the CARL. Specifically, the new law changed the definition of the
terms "agricultural activity" and "commercial farming" by
dropping from its coverage lands that are devoted to commercial
livestock, poultry and swine-raising.
21
With this significant
modification, Congress clearly sought to align the provisions of
our agrarian laws with the intent of the 1987 Constitutional
Commission to exclude livestock farms from the coverage of
agrarian reform.
In sum, it is doctrinal that rules of administrative bodies must be in
harmony with the provisions of the Constitution. They cannot amend or
extend the Constitution. To be valid, they must conform to and be
consistent with the Constitution. In case of conflict between an
administrative order and the provisions of the Constitution, the latter
prevails.
22
The assailed A.O. of petitioner DAR was properly stricken
down as unconstitutional as it enlarges the coverage of agrarian reform
beyond the scope intended by the 1987 Constitution.
IN VIEW WHEREOF, the petition is DISMISSED. The assailed
Decision and Resolution of the Court of Appeals, dated September 19,
2003 and February 4, 2004, respectively, are AFFIRMED. No
pronouncement as to costs.
SO ORDERED.

REPUBLIC v. SALVADOR LOPEZ AGRI-BUSINESS CORP.
Before us are two Rule 45 Petitions
1
cralaw filed separately by the
Department of Agrarian Reform (DAR), through the Office of the
Solicitor General, and by the Salvador N. Lopez Agri-Business Corp.
(SNLABC). Each Petition partially assails the Court of Appeals
Decision dated 30 June 2006
2
cralaw with respect to the application for
exemption of four parcels of land - located in Mati, Davao Oriental and
owned by SNLABC - from Republic Act No. 6657, otherwise known as
the Comprehensive Agrarian Reform Law (CARL).
There is little dispute as to the facts of the case, as succinctly
discussed by the Court of Appeals and adopted herein by the Court, to
wit: chanrob1esvirtwallawlibrary
Subject of this petition are four (4) parcels of land with an aggregate
area of 160.1161 hectares registered in the name of Salvador N.
Lopez Agri-Business Corporation. Said parcels of land are hereinafter
described as follows: chanrob1esvirtwallawlibrary
Title No. Area Location
TCT No. T-12635 (Lot 1454-A & 1296) 49.5706 has. Bo. Limot, Mati, Davao Oriental
TCT No. T-12637 (Lot 1298) 42.6822 has. Bo. Don Enrique Lopez, Mati, Dvo. Or.
TCT No. T-12639 (Lot 1293-B) 67.8633 has. Bo. Don Enrique Lopez, Mati, Dvo. Or.
On August 2, 1991, Municipal Agrarian Reform Officer (MARO)
Socorro C. Salga issued a Notice of Coverage to petitioner with
regards (sic) to the aforementioned landholdings which were
subsequently placed under Compulsory Acquisition pursuant to R.A.
6657 (Comprehensive Agrarian Reform Law).
On December 10, 1992, petitioner filed with the Provincial Agrarian
Reform Office (PARO), Davao Oriental, an Application for Exemption
of the lots covered by TCT No. T-12637 and T-12639 from CARP
coverage. It alleged that pursuant to the case of Luz Farms v. DAR
Secretary said parcels of land are exempted from coverage as the said
parcels of land with a total area of 110.5455 hectares are used for
grazing and habitat of petitioner's 105 heads of cattle, 5 carabaos, 11
horses, 9 heads of goats and 18 heads of swine, prior to the effectivity
of the Comprehensive Agrarian Reform Law (CARL).
On December 13, 1992 and March 1, 1993, the MARO conducted an
onsite investigation on the two parcels of land confirming the presence
of the livestock as enumerated. The Investigation Report dated March
9, 1993 stated: chanrob1esvirtwallawlibrary
That there are at least 2[5] to 30 heads of cows that farrow every year
and if the trend of farrowing persist (sic), then the cattle shall become
overcrowded and will result to scarcity of grasses for the cattle to
graze; chanroblesvirtualawlibrary
That during the week cycle, the herds are being moved to the different
adjacent lots owned by the corporation. It even reached Lot 1454-A
and Lot 1296. Thereafter, the herds are returned to their respective
night chute corrals which are constructed under Lot 1293-B and Lot
1298. nad
x x x
That the age of coconut trees planted in the area are already 40 to 50
years and have been affected by the recent drought that hit the locality.
That the presence of livestocks (sic) have already existed in the area
prior to the Supreme Court decision on LUZ FARMS vs. Secretary of
Agrarian Reform. We were surprised however, why the management
of the corporation did not apply for Commercial Farm Deferment (CFD)
before, when the two years reglamentary (sic) period which the
landowner was given the chance to file their application pursuant to
R.A. 6657, implementing Administrative Order No. 16, Series of
1989; chanroblesvirtualawlibrary
However, with regards to what venture comes (sic) first, coconut or
livestocks (sic), majority of the farmworkers including the overseer
affirmed that the coconut trees and livestocks (sic) were (sic)
simultaneously and all of these were inherited by his (applicant) parent.
In addition, the financial statement showed 80% of its annual income is
derived from the livestocks (sic) and only 20% from the coconut
industry.
Cognitive thereto, we are favorably recommending for the exemption
from the coverage of CARP based on LUZ FARMS as enunciated by
the Supreme Court the herein Lot No. 1293-B Psd-65835 under TCT
No. T-12639 except Lot No. 1298, Cad. 286 of TCT No. T-12637 which
is already covered under the Compulsory Acquisition (CA) Scheme
and had already been valued by the Land Valuation Office, Land Bank
of the Philippines.
On June 24, 1993, TCT No. T-12635 covering Lots 1454-A & 1296
was cancelled and a new one issued in the name of the Republic of
the Philippines under RP T-16356. On February 7, 1994, petitioner
through its President, Salvador N. Lopez, Jr., executed a letter-affidavit
addressed to the respondent-Secretary requesting for the exclusion
from CARP coverage of Lots 1454-A and 1296 on the ground that they
needed the additional area for its livestock business. On March 28,
1995, petitioner filed before the DAR Regional Director of Davao City
an application for the exemption from CARP coverage of Lots 1454-A
and 1296 stating that it has been operating grazing lands even prior to
June 15, 1988 and that the said two (2) lots form an integral part of its
grazing land.
The DAR Regional Director, after inspecting the properties, issued an
Order dated March 5, 1997 denying the application for exemption of
Lots 1454-A and 1296 on the ground that it was not clearly shown that
the same were actually, directly and exclusively used for livestock
raising since in its application, petitioner itself admitted that it needs the
lots for additional grazing area. The application for exemption, however
of the other two (2) parcels of land was approved.
On its partial motion for reconsideration, petitioner argued that Lots
1454-A & 1296 were taken beyond the operation of the CARP
pursuant to its reclassification to a Pollutive Industrial District (Heavy
Industry) per Resolution No. 39 of the Sangguniang Bayan of Mati,
Davao Oriental, enacted on April 7, 1992. The DAR Regional Director
denied the Motion through an Order dated September 4, 1997,
ratiocinating that the reclassification does not affect agricultural lands
already issued a Notice of Coverage as provided in Memorandum
Circular No. 54-93: Prescribing the Guidelines Governing Section 20 of
R.A. 7160.
Undaunted, petitioner appealed the Regional Director's Orders to
respondent DAR. On June 10, 1998, the latter issued its assailed
Order affirming the Regional Director's ruling on Lots 1454-A & 1296
and further declared Lots 1298 and 1293-B as covered by the CARP.
Respondent ruled in this wise considering the documentary evidence
presented by petitioner such as the Business Permit to engage in
livestock, the certification of ownership of large cattle and the
Corporate Income Tax Returns, which were issued during the
effectivity of the Agrarian Reform Law thereby debunking petitioner's
claim that it has been engaged in livestock farming since the 1960s.
Respondent further ruled that the incorporation by the Lopez family on
February 12, 1988 or four (4) months before the effectivity of R.A. 6657
was an attempt to evade the noble purposes of the said law.
On October 17, 2002, petitioner's Motion for Reconsideration was
denied by respondent prompting the former to file the instant
petition.
3
cralawredlaw
In the assailed Decision dated 30 June 2006,
4
cralaw the Court of
Appeals partially granted the SNLABC Petition and excluded the two
(2) parcels of land (Transfer Certificate of Title [TCT] Nos. T-12637 and
T-12639) located in Barrio Don Enrique Lopez (the "Lopez lands") from
coverage of the CARL. However, it upheld the Decisions of the
Regional Director
5
cralaw and the DAR
6
cralaw Secretary denying the
application for exemption with respect to Lots 1454-A and 1296
(previously under TCT No. T-12635) in Barrio Limot (the "Limot lands").
These lots were already covered by a new title under the name of the
Republic of the Philippines (RP T-16356).
The DAR and SNLABC separately sought a partial reconsideration of
the assailed Decision of the Court of Appeals, but their motions for
reconsideration were subsequently denied in the Court of Appeals
Resolution dated 08 June 2007.
7
cralawredlaw
The DAR and SNLABC elevated the matter to this Court by filing
separate Rule 45 Petitions (docketed as G.R. No. 178895
8
cralaw and
179071,
9
cralaw respectively), which were subsequently ordered
consolidated by the Court.
The main issue for resolution by the Court is whether the Lopez and
Limot lands of SNLABC can be considered grazing lands for its
livestock business and are thus exempted from the coverage of the
CARL under the Court's ruling in Luz Farms v. DAR.
10
cralaw The DAR
questions the disposition of the Court of Appeals, insofar as the latter
allowed the exemption of the Lopez lands, while SNLABC assails the
inclusion of the Limot lands within the coverage of the CARL.
The Court finds no reversible error in the Decision of the Court of
Appeals and dismisses the Petitions of DAR and SNLABC.
Preliminarily, in a petition for review on certiorari filed under Rule 45,
the issues that can be raised are, as a general rule, limited to
questions of law.
11
cralaw However, as pointed out by both the DAR
and SNLABC, there are several recognized exceptions wherein the
Court has found it appropriate to re-examine the evidence
presented.
12
cralaw In this case, the factual findings of the DAR
Regional Director, the DAR Secretary and the CA are contrary to one
another with respect to the following issue: whether the Lopez lands
were actually, directly and exclusively used for SNLABC's livestock
business; and whether there was intent to evade coverage from the
Comprehensive Agrarian Reform Program (CARP) based on the
documentary evidence. On the other hand, SNLABC argues that these
authorities misapprehended and overlooked certain relevant and
undisputed facts as regards the inclusion of the Limot lands under the
CARL. These circumstances fall within the recognized exceptions and,
thus, the Court is persuaded to review the facts and evidence on
record in the disposition of these present Petitions.
The Lopez lands of SNLABC are actually and directly being used
for livestock and are thus exempted from the coverage of the
CARL.
Briefly stated, the DAR questions the object or autoptic evidence relied
upon by the DAR Regional Director in concluding that the Lopez lands
were actually, directly and exclusively being used for SNLABC's
livestock business prior to the enactment of the CARL.
In Luz Farms v. Secretary of the Department of Agrarian
Reform,
13
cralaw the Court declared unconstitutional the CARL
provisions
14
cralaw that included lands devoted to livestock under the
coverage of the CARP. The transcripts of the deliberations of the
Constitutional Commission of 1986 on the meaning of the word
"agricultural" showed that it was never the intention of the framers of
the Constitution to include the livestock and poultry industry in the
coverage of the constitutionally mandated agrarian reform program of
the government.
15
cralaw Thus, lands devoted to the raising of
livestock, poultry and swine have been classified as industrial, not
agricultural, and thus exempt from agrarian reform.
16
cralawredlaw
Under the rules then prevailing, it was the Municipal Agrarian Reform
Officer (MARO) who was primarily responsible for investigating the
legal status, type and areas of the land sought to be
excluded;
17
cralaw and for ascertaining whether the area subject of the
application for exemption had been devoted to livestock-raising as of
15 June 1988.
18
cralaw The MARO's authority to investigate has
subsequently been replicated in the current DAR guidelines regarding
lands that are actually, directly and exclusively used for livestock
raising.
19
cralaw As the primary official in charge of investigating the
land sought to be exempted as livestock land, the MARO's findings on
the use and nature of the land, if supported by substantial evidence on
record, are to be accorded greater weight, if not finality.
Verily, factual findings of administrative officials and agencies that
have acquired expertise in the performance of their official duties and
the exercise of their primary jurisdiction are generally accorded not
only respect but, at times, even finality if such findings are supported
by substantial evidence.
20
cralaw The Court generally accords great
respect, if not finality, to factual findings of administrative agencies
because of their special knowledge and expertise over matters falling
under their jurisdiction.
21
cralawredlaw
In the instant case, the MARO in its ocular inspection
22
cralaw found on
the Lopez lands several heads of cattle, carabaos, horses, goats and
pigs, some of which were covered by several certificates of ownership.
There were likewise structures on the Lopez lands used for its
livestock business, structures consisting of two chutes where the
livestock were kept during nighttime. The existence of the cattle prior to
the enactment of the CARL was positively affirmed by the farm workers
and the overseer who were interviewed by the MARO. Considering
these factual findings and the fact that the lands were in fact being
used for SNLABC's livestock business even prior to 15 June 1988, the
DAR Regional Director ordered the exemption of the Lopez lands from
CARP coverage. The Court gives great probative value to the actual,
on-site investigation made by the MARO as affirmed by the DAR
Regional Director. The Court finds that the Lopez lands were in fact
actually, directly and exclusively being used as industrial lands for
livestock-raising.
Simply because the on-site investigation was belatedly conducted
three or four years after the effectivity of the CARL does not perforce
make it unworthy of belief or unfit to be offered as substantial evidence
in this case. Contrary to DAR's claims, the lack of information as
regards the initial breeders and the specific date when the cattle were
first introduced in the MARO's Report does not conclusively
demonstrate that there was no livestock-raising on the Lopez lands
prior to the CARL. Although information as to these facts are
significant, their non-appearance in the reports does not leave the
MARO without any other means to ascertain the duration of livestock-
raising on the Lopez lands, such as interviews with farm workers, the
presence of livestock infrastructure, and evidence of sales of cattle - all
of which should have formed part of the MARO's Investigation Report.
Hence, the Court looks with favor on the expertise of the MARO in
determining whether livestock-raising on the Lopez lands has only
been recently conducted or has been a going concern for several
years already. Absent any clear showing of grave abuse of discretion
or bias, the findings of the MARO - as affirmed by the DAR Regional
Director - are to be accorded great probative value, owing to the
presumption of regularity in the performance of his official
duties.
23
cralawredlaw
The DAR, however, insisted in its Petition
24
cralaw on giving greater
weight to the inconsistencies appearing in the documentary evidence
presented, and noted by the DAR Secretary, in order to defeat
SNLABC's claim of exemption over the Lopez lands. The Court is not
so persuaded.
In the Petition, the DAR argued that that the tax declarations covering
the Lopez lands characterized them as agricultural lands and, thus,
detracted from the claim that they were used for livestock purposes.
The Court has since held that "there is no law or jurisprudence that
holds that the land classification embodied in the tax declarations is
conclusive and final nor would proscribe any further inquiry"; hence,
"tax declarations are clearly not the sole basis of the classification of a
land."
25
cralawApplying the foregoing principles, the tax declarations of
the Lopez lands as agricultural lands are not conclusive or final, so as
to prevent their exclusion from CARP coverage as lands devoted to
livestock-raising. Indeed, the MARO's on-site inspection and actual
investigation showing that the Lopez lands were being used for
livestock-grazing are more convincing in the determination of the
nature of those lands.
Neither can the DAR in the instant case assail the timing of the
incorporation of SNLABC and the latter's operation shortly before the
enactment of the CARL. That persons employ tactics to precipitously
convert their lands from agricultural use to industrial livestock is not
unheard of; they even exploit the creation of a new corporate vehicle to
operate the livestock business to substantiate the deceitful conversion
in the hopes of evading CARP coverage. Exemption from CARP,
however, is directly a function of the land's usage, and not of the
identity of the entity operating it. Otherwise stated, lands actually,
directly and exclusively used for livestock are exempt from CARP
coverage, regardless of the change of owner.
26
cralaw In the instant
case, whether SNLABC was incorporated prior to the CARL is
immaterial, since the Lopez lands were already being used for
livestock-grazing purposes prior to the enactment of the CARL, as
found by the MARO. Although the managing entity had been changed,
the business interest of raising livestock on the Lopez lands still
remained without any indication that it was initiated after the effectivity
of the CARL.
As stated by SNLABC, the Lopez lands were the legacy of Don
Salvador Lopez, Sr. The ownership of these lands was passed from
Don Salvador Lopez, Sr., to Salvador N. Lopez, Jr., and subsequently
to the latter's children before being registered under the name of
SNLABC. Significantly, SNLABC was incorporated by the same
members of the Lopez family, which had previously owned the lands
and managed the livestock business.
27
cralaw In all these past years,
despite the change in ownership, the Lopez lands have been used for
purposes of grazing and pasturing cattle, horses, carabaos and goats.
Simply put, SNLABC was chosen as the entity to take over the reins of
the livestock business of the Lopez family. Absent any other
compelling evidence, the inopportune timing of the incorporation of the
SNLABC prior to the enactment of the CARL was not by itself a
categorical manifestation of an intent to avoid CARP coverage.
Furthermore, the presence of coconut trees, although an indicia that
the lands may be agricultural, must be placed within the context of how
they figure in the actual, direct and exclusive use of the subject lands.
The DAR failed to demonstrate that the Lopez lands were actually and
primarily agricultural lands planted with coconut trees. This is in fact
contradicted by the findings of its own official, the MARO. Indeed, the
DAR did not adduce any proof to show that the coconut trees on the
Lopez lands were used for agricultural business, as required by the
Court in DAR v. Uy,
28
cralaw wherein we ruled
thus: chanrob1esvirtwallawlibrary
It is not uncommon for an enormous landholding to be intermittently
planted with trees, and this would not necessarily detract it from the
purpose of livestock farming and be immediately considered as an
agricultural land. It would be surprising if there were no trees on the
land. Also, petitioner did not adduce any proof to show that the coconut
trees were planted by respondent and used for agricultural business or
were already existing when the land was purchased in 1979. In the
present case, the area planted with coconut trees bears an
insignificant value to the area used for the cattle and other livestock-
raising, including the infrastructure needed for the business. There can
be no presumption, other than that the "coconut area" is indeed used
for shade and to augment the supply of fodder during the warm
months; any other use would be only be incidental to livestock farming.
The substantial quantity of livestock heads could only mean that
respondent is engaged in farming for this purpose. The single
conclusion gathered here is that the land is entirely devoted to
livestock farming and exempted from the CARP.
On the assumption that five thousand five hundred forty-eight (5,548)
coconut trees were existing on the Lopez land (TCT No. T-12637), the
DAR did not refute the findings of the MARO that these coconut trees
were merely incidental. Given the number of livestock heads of
SNLABC, it is not surprising that the areas planted with coconut trees
on the Lopez lands where forage grass grew were being used as
grazing areas for the livestock. It was never sufficiently adduced that
SNLABC was primarily engaged in agricultural business on the Lopez
lands, specifically, coconut-harvesting. Indeed, the substantial quantity
of SNLABC's livestock amounting to a little over one hundred forty
(140) livestock heads, if measured against the combined 110.5455
hectares of land and applying the DAR-formulated ratio, leads to no
other conclusion than that the Lopez lands were exclusively devoted to
livestock farming.
29
cralawredlaw
In any case, the inconsistencies appearing in the documentation
presented (albeit sufficiently explained) pale in comparison to the
positive assertion made by the MARO in its on-site, actual investigation
- that the Lopez lands were being used actually, directly and
exclusively for its livestock-raising business. The Court affirms the
findings of the DAR Regional Director and the Court of Appeals that
the Lopez lands were actually, directly and exclusively being used for
SNLABC's livestock business and, thus, are exempt from CARP
coverage.
The Limot lands of SNLABC are not actually and directly being
used for livestock and should thus be covered by the CARL.
In contrast, the Limot lands were found to be agricultural lands devoted
to coconut trees and rubber and are thus not subject to exemption from
CARP coverage.
In the Report dated 06 April 1994, the team that conducted the
inspection found that the entire Limot lands were devoted to coconuts
(41.5706 hectares) and rubber (8.000 hectares) and recommended the
denial of the application for exemption.
30
cralaw Verily, the Limot lands
were actually, directly and exclusively used for agricultural activities, a
fact that necessarily makes them subject to the CARP. These findings
of the inspection team were given credence by the DAR Regional
Director who denied the application, and were even subsequently
affirmed by the DAR Secretary and the Court of Appeals.
SNLABC argues that the Court of Appeals misapprehended the factual
circumstances and overlooked certain relevant facts, which deserve a
second look. SNLABC's arguments fail to convince the Court to
reverse the rulings of the Court of Appeals.
In the 07 February 1994 Letter-Affidavit addressed to the DAR
Secretary, SNLABC requested the exemption of the Limot lands on the
ground that the corporation needed the additional area for its livestock
business. As pointed out by the DAR Regional Director, this Letter-
Affidavit is a clear indication that the Limot lands were not directly,
actually and exclusively used for livestock raising. SNLABC casually
dismisses the clear import of their Letter-Affidavit as a "poor choice of
words." Unfortunately, the semantics of the declarations of SNLABC in
its application for exemption are corroborated by the other attendant
factual circumstances and indicate its treatment of the subject
properties as non-livestock.
Verily, the MARO itself, in the Investigation Report cited by no less
than SNLABC, found that the livestock were only moved to the Limot
lands sporadically and were not permanently designated there. The
DAR Secretary even described SNLABC's use of the area as a
"seasonal extension of the applicant's 'grazing lands' during the
summer." Therefore, the Limot lands cannot be claimed to have been
actually, directly and exclusively used for SNLABC's livestock
business, especially since these were only intermittently and
secondarily used as grazing areas. The said lands are more suitable --
and are in fact actually, directly and exclusively being used -- for
agricultural purposes.
SNLABC's treatment of the land for non-livestock purposes is
highlighted by its undue delay in filing the application for exemption of
the Limot lands. SNLABC filed the application only on 07 February
1994, or three years after the Notice of Coverage was issued; two
years after it filed the first application for the Lopez lands; and a year
after the titles to the Limot lands were transferred to the Republic. The
SNLABC slept on its rights and delayed asking for exemption of the
Limot lands. The lands were undoubtedly being used for agricultural
purposes, not for its livestock business; thus, these lands are subject
to CARP coverage. Had SNLABC indeed utilized the Limot lands in
conjunction with the livestock business it was conducting on the
adjacent Lopez lands, there was nothing that would have prevented it
from simultaneously applying for a total exemption of all the lands
necessary for its livestock.
The defense of SNLABC that it wanted to "save" first the Lopez lands
where the corrals and chutes were located, before acting to save the
other properties does not help its cause. The piecemeal application for
exemption of SNLABC speaks of the value or importance of the Lopez
lands, compared with the Limot lands, with respect to its livestock
business. If the Lopez and the Limot lands were equally significant to
its operations and were actually being used for its livestock business, it
would have been more reasonable for it to apply for exemption for the
entire lands. Indeed, the belated filing of the application for exemption
was a mere afterthought on the part of SNLABC, which wanted to
increase the area of its landholdings to be exempted from CARP on
the ground that these were being used for its livestock business.
In any case, SNLABC admits that the title to the Limot lands has
already been transferred to the Republic and subsequently awarded to
SNLABC's farm workers.
31
cralaw This fact only demonstrates that the
land is indeed being used for agricultural activities and not for livestock
grazing.
The confluence of these factual circumstances leads to the logical
conclusion that the Limot lands were not being used for livestock
grazing and, thus, do not qualify for exemption from CARP coverage.
SNLABC's belated filing of the application for exemption of the Limot
lands was a ruse to increase its retention of its landholdings and an
attempt to "save" these from compulsory acquisition.
WHEREFORE, the Petitions of the Department of Agrarian Reform
and the Salvador N. Lopez Agri-Business Corp. areDISMISSED, and
the rulings of the Court of Appeals and the DAR Regional Director are
hereby AFFIRMED.
SO ORDERED.

MILESTONE FARMS, INC. v. OFFICE OF THE PRES.
Before this Court is a Petition for Review on Certiorari
[1]
under Rule 45
of the Rules of Civil Procedure, seeking the reversal of the Court of
Appeals (CA) Amended Decision
[2]
dated October 4, 2006 and its
Resolution
[3]
dated March 27, 2008.


The Facts

Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the
Securities and Exchange Commission on January 8, 1960.
[4]
Among its
pertinent secondary purposes are: (1) to engage in the raising of
cattle, pigs, and other livestock; to acquire lands by purchase or lease,
which may be needed for this purpose; and to sell and otherwise
dispose of said cattle, pigs, and other livestock and their produce when
advisable and beneficial to the corporation; (2) to breed, raise, and
sell poultry; to purchase or acquire and sell, or otherwise dispose of
the supplies, stocks, equipment, accessories, appurtenances,
products, and by-products of said business; and (3) to import cattle,
pigs, and other livestock, and animal food necessary for the raising of
said cattle, pigs, and other livestock as may be authorized by law.
[5]


On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No.
6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL), took effect, which included the raising of livestock, poultry,
and swine in its coverage. However, on December 4, 1990, this Court,
sitting en banc, ruled in Luz Farms v. Secretary of the Department of
Agrarian Reform
[6]
that agricultural lands devoted to livestock, poultry,
and/or swine raising are excluded from the Comprehensive Agrarian
Reform Program (CARP).

Thus, in May 1993, petitioner applied for the exemption/exclusion of its
316.0422-hectare property, covered by Transfer Certificate of Title
Nos. (T-410434) M-15750, (T-486101) M-7307, (T-486102) M-7308,
(T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T-
332694) M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791,
(T-486107) M-7313, (T-486108) M-7314, M-8796, (T-486109) M-7315,
(T-486110) M-9508, and M-6013, and located in Pinugay, Baras, Rizal,
from the coverage of the CARL, pursuant to the aforementioned ruling
of this Court in Luz Farms.

Meanwhile, on December 27, 1993, the Department of Agrarian
Reform (DAR) issued Administrative Order No. 9, Series of 1993 (DAR
A.O. No. 9), setting forth rules and regulations to govern the exclusion
of agricultural lands used for livestock, poultry, and swine raising from
CARP coverage. Thus, on January 10, 1994, petitioner re-documented
its application pursuant to DAR A.O. No. 9.
[7]


Acting on the said application, the DAR's Land Use Conversion and
Exemption Committee (LUCEC) of Region IV conducted an ocular
inspection on petitioner's property and arrived at the following findings:


[T]he actual land utilization for livestock, swine and poultry is 258.8422
hectares; the area which served as infrastructure is 42.0000 hectares;
ten (10) hectares are planted to corn and the remaining five (5)
hectares are devoted to fish culture; that the livestock population are
371 heads of cow, 20 heads of horses, 5,678 heads of swine and 788
heads of cocks; that the area being applied for exclusion is far below
the required or ideal area which is 563 hectares for the total livestock
population; that the approximate area not directly used for livestock
purposes with an area of 15 hectares, more or less, is likewise far
below the allowable 10% variance; and, though not directly used for
livestock purposes, the ten (10) hectares planted to sweet corn and the
five (5) hectares devoted to fishpond could be considered supportive to
livestock production.

The LUCEC, thus, recommended the exemption of petitioner's
316.0422-hectare property from the coverage of CARP. Adopting the
LUCEC's findings and recommendation, DAR Regional Director
Percival Dalugdug (Director Dalugdug) issued an Order dated June 27,
1994, exempting petitioner's 316.0422-hectare property from CARP.
[8]


The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc.
(Pinugay Farmers), represented by Timiano Balajadia, Sr. (Balajadia),
moved for the reconsideration of the said Order, but the same was
denied by Director Dalugdug in his Order dated November 24,
1994.
[9]
Subsequently, the Pinugay Farmers filed a letter-appeal with
the DAR Secretary.

Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible
Entry against Balajadia and company before the Municipal Circuit Trial
Court (MCTC) of Teresa-Baras, Rizal, docketed as Civil Case No. 781-
T.
[10]
The MCTC ruled in favor of petitioner, but the decision was later
reversed by the Regional Trial Court, Branch 80, of Tanay, Rizal.
Ultimately, the case reached the CA, which, in its Decision
[11]
dated
October 8, 1999, reinstated the MCTC's ruling, ordering Balajadia and
all defendants therein to vacate portions of the property covered by
TCT Nos. M-6013, M-8796, and M-8791. In its Resolution
[12]
dated July
31, 2000, the CA held that the defendants therein failed to timely file a
motion for reconsideration, given the fact that their counsel of record
received its October 8, 1999 Decision; hence, the same became final
and executory.

In the meantime, R.A. No. 6657 was amended by R.A. No.
7881,
[13]
which was approved on February 20, 1995. Private
agricultural lands devoted to livestock, poultry, and swine raising were
excluded from the coverage of the CARL. On October 22, 1996, the
fact-finding team formed by the DAR Undersecretary for Field
Operations and Support Services conducted an actual headcount of
the livestock population on the property. The headcount showed that
there were 448 heads of cattle and more than 5,000 heads of swine.


The DAR Secretary's Ruling

On January 21, 1997, then DAR Secretary Ernesto D. Garilao
(Secretary Garilao) issued an Order exempting from CARP only
240.9776 hectares of the 316.0422 hectares previously exempted by
Director Dalugdug, and declaring 75.0646 hectares of the property to
be covered by CARP.
[14]


Secretary Garilao opined that, for private agricultural lands to be
excluded from CARP, they must already be devoted to livestock,
poultry, and swine raising as of June 15, 1988, when the CARL took
effect. He found that the Certificates of Ownership of Large Cattle
submitted by petitioner showed that only 86 heads of cattle were
registered in the name of petitioner's president, Misael Vera, Jr., prior
to June 15, 1988; 133 were subsequently bought in 1990, while 204
were registered from 1992 to 1995. Secretary Garilao gave more
weight to the certificates rather than to the headcount because "the
same explicitly provide for the number of cattle owned by petitioner as
of June 15, 1988."

Applying the animal-land ratio (1 hectare for grazing for every head of
cattle/carabao/horse) and the infrastructure-animal ratio (1.7815
hectares for 21 heads of cattle/carabao/horse, and 0.5126 hectare for
21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted
240.9776 hectares of the property, as follows:


1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;

2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for
every 21 heads of cattle;

3. 8 hectares for the 8 horses;

4. 0.3809 square meters of infrastructure for the 8 horses; [and]

5. 138.5967 hectares for the 5,678 heads of swine.
[15]


Petitioner filed a Motion for Reconsideration,
[16]
submitting therewith
copies of Certificates of Transfer of Large Cattle and additional
Certificates of Ownership of Large Cattle issued to petitioner prior to
June 15, 1988, as additional proof that it had met the required animal-
land ratio. Petitioner also submitted a copy of a Disbursement Voucher
dated December 17, 1986, showing the purchase of 100 heads of
cattle by the Bureau of Animal Industry from petitioner, as further proof
that it had been actively operating a livestock farm even before June
15, 1988. However, in his Order dated April 15, 1997, Secretary
Garilao denied petitioner's Motion for Reconsideration.
[17]


Aggrieved, petitioner filed its Memorandum on Appeal
[18]
before the
Office of the President (OP).


The OP's Ruling

On February 4, 2000, the OP rendered a decision
[19]
reinstating
Director Dalugdug's Order dated June 27, 1994 and declared the entire
316.0422-hectare property exempt from the coverage of CARP.

However, on separate motions for reconsideration of the aforesaid
decision filed by farmer-groups Samahang Anak-Pawis ng Lagundi
(SAPLAG) and Pinugay Farmers, and the Bureau of Agrarian Legal
Assistance of DAR, the OP issued a resolution
[20]
dated September 16,
2002, setting aside its previous decision. The dispositive portion of the
OP resolution reads:


WHEREFORE, the Decision subject of the instant separate motions for
reconsideration is hereby SET ASIDE and a new one entered
REINSTATING the Order dated 21 January 1997 of then DAR
Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April
1997, without prejudice to the outcome of the continuing review and
verification proceedings that DAR, thru the appropriate Municipal
Agrarian Reform Officer, may undertake pursuant to Rule III (D) of
DAR Administrative Order No. 09, series of 1993.
br>SO ORDERED.
[21]


The OP held that, when it comes to proof of ownership, the reference
is the Certificate of Ownership of Large Cattle. Certificates of cattle
ownership, which are readily available - being issued by the
appropriate government office - ought to match the number of heads of
cattle counted as existing during the actual headcount. The presence
of large cattle on the land, without sufficient proof of ownership thereof,
only proves such presence.

Taking note of Secretary Garilao's observations, the OP also held that,
before an ocular investigation is conducted on the property, the
landowners are notified in advance; hence, mere reliance on the
physical headcount is dangerous because there is a possibility that the
landowners would increase the number of their cattle for headcount
purposes only. The OP observed that there was a big variance
between the actual headcount of 448 heads of cattle and only 86
certificates of ownership of large cattle.

Consequently, petitioner sought recourse from the CA.
[22]



The Proceedings Before the CA and Its Rulings


On April 29, 2005, the CA found that, based on the documentary
evidence presented, the property subject of the application for
exclusion had more than satisfied the animal-land and infrastructure-
animal ratios under DAR A.O. No. 9. The CA also found that petitioner
applied for exclusion long before the effectivity of DAR A.O. No. 9,
thus, negating the claim that petitioner merely converted the property
for livestock, poultry, and swine raising in order to exclude it from
CARP coverage. Petitioner was held to have actually engaged in the
said business on the property even before June 15, 1988. The CA
disposed of the case in this wise:


WHEREFORE, the instant petition is hereby GRANTED. The
assailed Resolution of the Office of the President dated September 16,
2002 is hereby SET ASIDE, and itsDecision dated February 4, 2000
declaring the entire 316.0422 hectares exempt from the coverage of
the Comprehensive Agrarian Reform Program is
hereby REINSTATEDwithout prejudice to the outcome of the
continuing review and verification proceedings which the Department
of Agrarian Reform, through the proper Municipal Agrarian Reform
Officer, may undertake pursuant to Policy Statement (D) of DAR
Administrative Order No. 9, Series of 1993.

SO ORDERED.
[23]


Meanwhile, six months earlier, or on November 4, 2004, without the
knowledge of the CA - as the parties did not inform the appellate court
- then DAR Secretary Rene C. Villa (Secretary Villa) issued DAR
Conversion Order No. CON-0410-0016
[24]
(Conversion Order), granting
petitioner's application to convert portions of the 316.0422-hectare
property from agricultural to residential and golf courses use. The
portions converted - with a total area of 153.3049 hectares - were
covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and
M-15750 (T-410434). With this Conversion Order, the area of the
property subject of the controversy was effectively reduced to
162.7373 hectares.

On the CA's decision of April 29, 2005, Motions for Reconsideration
were filed by farmer-groups, namely: the farmers represented by
Miguel Espinas
[25]
(Espinas group), the Pinugay Farmers,
[26]
and the
SAPLAG.
[27]
The farmer-groups all claimed that the CA should have
accorded respect to the factual findings of the OP. Moreover, the
farmer-groups unanimously intimated that petitioner already converted
and developed a portion of the property into a leisure-residential-
commercial estate known as the Palo Alto Leisure and Sports Complex
(Palo Alto).

Subsequently, in a Supplement to the Motion for Reconsideration on
Newly Secured Evidence pursuant to DAR Administrative Order No. 9,
Series of 1993
[28]
(Supplement) dated June 15, 2005, the Espinas
group submitted the following as evidence:

1) Conversion Order
[29]
dated November 4, 2004, issued by Secretary
Villa, converting portions of the property from agricultural to residential
and golf courses use, with a total area of 153.3049 hectares; thus, the
Espinas group prayed that the remaining 162.7373 hectares (subject
property) be covered by the CARP;

2) Letter
[30]
dated June 7, 2005 of both incoming Municipal Agrarian
Reform Officer (MARO) Bismark M. Elma (MARO Elma) and outgoing
MARO Cesar C. Celi (MARO Celi) of Baras, Rizal, addressed to
Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q.
Kagahastian, (MARO Report), informing the latter, among others, that
Palo Alto was already under development and the lots therein were
being offered for sale; that there were actual tillers on the subject
property; that there were agricultural improvements thereon, including
an irrigation system and road projects funded by the Government; that
there was no existing livestock farm on the subject property; and that
the same was not in the possession and/or control of petitioner; and

3) Certification
[31]
dated June 8, 2005, issued by both MARO Elma and
MARO Celi, manifesting that the subject property was in the
possession and cultivation of actual occupants and tillers, and that,
upon inspection, petitioner maintained no livestock farm thereon.

Four months later, the Espinas group and the DAR filed their
respective Manifestations.
[32]
In its Manifestation dated November 29,
2005, the DAR confirmed that the subject property was no longer
devoted to cattle raising. Hence, in its Resolution
[33]
dated December
21, 2005, the CA directed petitioner to file its comment on the
Supplement and the aforementioned Manifestations. Employing the
services of a new counsel, petitioner filed a Motion to Admit
Rejoinder,
[34]
and prayed that the MARO Report be disregarded and
expunged from the records for lack of factual and legal basis.

With the CA now made aware of these developments, particularly
Secretary Villa's Conversion Order of November 4, 2004, the appellate
court had to acknowledge that the property subject of the controversy
would now be limited to the remaining 162.7373 hectares. In the same
token, the Espinas group prayed that this remaining area be covered
by the CARP.
[35]


On October 4, 2006, the CA amended its earlier Decision. It held that
its April 29, 2005 Decision was theoretically not final because DAR
A.O. No. 9 required the MARO to make a continuing review and
verification of the subject property. While the CA was cognizant of our
ruling in Department of Agrarian Reform v. Sutton,
[36]
wherein we
declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift the
exemption of the subject property from the CARP, not on the basis of
DAR A.O. No. 9, but on the strength of evidence such as the MARO
Report and Certification, and theKatunayan
[37]
issued by the Punong
Barangay, Alfredo Ruba (Chairman Ruba), of Pinugay, Baras, Rizal,
showing that the subject property was no longer operated as a
livestock farm. Moreover, the CA held that the lease
agreements,
[38]
which petitioner submitted to prove that it was
compelled to lease a ranch as temporary shelter for its cattle, only
reinforced the DAR's finding that there was indeed no existing livestock
farm on the subject property. While petitioner claimed that it was
merely forced to do so to prevent further slaughtering of its cattle
allegedly committed by the occupants, the CA found the claim
unsubstantiated. Furthermore, the CA opined that petitioner should
have asserted its rights when the irrigation and road projects were
introduced by the Government within its property. Finally, the CA
accorded the findings of MARO Elma and MARO Celi the presumption
of regularity in the performance of official functions in the absence of
evidence proving misconduct and/or dishonesty when they inspected
the subject property and rendered their report. Thus, the CA disposed:


WHEREFORE, this Court's Decision dated April 29, 2005 is hereby
amended in that the exemption of the subject landholding from the
coverage of the Comprehensive Agrarian Reform Program is hereby
lifted, and the 162.7373 hectare-agricultural portion thereof is hereby
declared covered by the Comprehensive Agrarian Reform Program.

SO ORDERED.
[39]


Unperturbed, petitioner filed a Motion for Reconsideration.
[40]
On
January 8, 2007, MARO Elma, in compliance with the Memorandum of
DAR Regional Director Dominador B. Andres, tendered another
Report
[41]
reiterating that, upon inspection of the subject property,
together with petitioner's counsel-turned witness, Atty. Grace Eloisa J.
Que (Atty. Que), PARO Danilo M. Obarse, Chairman Ruba, and
several occupants thereof, he, among others, found no livestock farm
within the subject property. About 43 heads of cattle were shown, but
MARO Elma observed that the same were inside an area adjacent to
Palo Alto. Subsequently, upon Atty. Que's request for reinvestigation,
designated personnel of the DAR Provincial and Regional Offices
(Investigating Team) conducted another ocular inspection on the
subject property on February 20, 2007. The Investigating Team, in its
Report
[42]
dated February 21, 2007, found that, per testimony of
petitioner's caretaker, Rogelio Ludivices (Roger),
[43]
petitioner has 43
heads of cattle taken care of by the following individuals: i) Josefino
Custodio (Josefino) - 18 heads; ii) Andy Amahit - 15 heads; and iii)
Bert Pangan - 2 heads; that these individuals pastured the herd of
cattle outside the subject property, while Roger took care of 8 heads of
cattle inside the Palo Alto area; that 21 heads of cattle owned by
petitioner were seen in the area adjacent to Palo Alto; that Josefino
confirmed to the Investigating Team that he takes care of 18 heads of
cattle owned by petitioner; that the said Investigating Team saw 9
heads of cattle in the Palo Alto area, 2 of which bore "MFI" marks; and
that the 9 heads of cattle appear to have matched the Certificates of
Ownership of Large Cattle submitted by petitioner.

Because of the contentious factual issues and the conflicting
averments of the parties, the CA set the case for hearing and reception
of evidence on April 24, 2007.
[44]
Thereafter, as narrated by the CA, the
following events transpired:


On May 17, 2007, [petitioner] presented the Judicial Affidavits of its
witnesses, namely, [petitioner's] counsel, [Atty. Que], and the alleged
caretaker of [petitioner's] farm, [Roger], who were both cross-examined
by counsel for farmers-movants and SAPLAG. [Petitioner] and
SAPLAG then marked their documentary exhibits.

On May 24, 2007, [petitioner's] security guard and third witness,
Rodolfo G. Febrada, submitted his Judicial Affidavit and was cross-
examined by counsel for fa[r]mers-movants and SAPLAG. Farmers-
movants also marked their documentary exhibits.

Thereafter, the parties submitted their respective Formal Offers of
Evidence. Farmers-movants and SAPLAG filed their objections to
[petitioner's] Formal Offer of Evidence. Later, [petitioner] and farmers-
movants filed their respective Memoranda.

In December 2007, this Court issued a Resolution on the parties' offer
of evidence and considered [petitioner's] Motion for
Reconsideration submitted for resolution.
[45]


Finally, petitioner's motion for reconsideration was denied by the CA in
its Resolution
[46]
dated March 27, 2008. The CA discarded petitioner's
reliance on Sutton. It ratiocinated that the MARO Reports and the
DAR's Manifestation could not be disregarded simply because DAR
A.O. No. 9 was declared unconstitutional. The Sutton ruling was
premised on the fact that the Sutton property continued to operate as a
livestock farm. The CA also reasoned that, in Sutton, this Court did not
remove from the DAR the power to implement the CARP, pursuant to
the latter's authority to oversee the implementation of agrarian reform
laws under Section 50
[47]
of the CARL. Moreover, the CA found:


Petitioner-appellant claimed that they had 43 heads of cattle which are
being cared for and pastured by 4 individuals. To prove its ownership
of the said cattle, petitioner-appellant offered in evidence
43 Certificates of Ownership of Large Cattle. Significantly, however,
the said Certificates were all dated and issued on November 24, 2006,
nearly 2 months after this Court rendered its Amended Decision lifting
the exemption of the 162-hectare portion of the subject
landholding. The acquisition of such cattle after the lifting of the
exemption clearly reveals that petitioner-appellant was no longer
operating a livestock farm, and suggests an effort to create a
semblance of livestock-raising for the purpose of its Motion for
Reconsideration.
[48]


On petitioner's assertion that between MARO Elma's Report dated
January 8, 2007 and the Investigating Team's Report, the latter should
be given credence, the CA held that there were no material
inconsistencies between the two reports because both showed that the
43 heads of cattle were found outside the subject property.

Hence, this Petition assigning the following errors:


I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN
IT HELD THAT LANDS DEVOTED TO LIVESTOCK FARMING
WITHIN THE MEANING OF LUZ FARMS ANDSUTTON, AND WHICH
ARE THEREBY EXEMPT FROM CARL COVERAGE, ARE
NEVERTHELESS SUBJECT TO DAR'S CONTINUING
VERIFICATION AS TO USE, AND, ON THE BASIS OF SUCH
VERIFICATION, MAY BE ORDERED REVERTED TO
AGRICULTURAL CLASSIFICATION AND COMPULSORY
ACQUISITION[;]
II.

GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO
REVERTED TO AGRICULTURAL CLASSIFICATION, STILL THE
PROCEEDINGS FOR SUCH PURPOSE BELONGS TO THE
EXCLUSIVE ORIGINAL JURISDICTION OF THE DAR, BEFORE
WHICH THE CONTENDING PARTIES MAY VENTILATE FACTUAL
ISSUES, AND AVAIL THEMSELVES OF USUAL REVIEW
PROCESSES, AND NOT TO THE COURT OF APPEALS
EXERCISING APPELLATE JURISDICTION OVER ISSUES
COMPLETELY UNRELATED TO REVERSION [; AND]
III.

IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT HELD
THAT THE PROPERTY IN DISPUTE IS NO LONGER BEING USED
FOR LIVESTOCK FARMING.
[49]


Petitioner asseverates that lands devoted to livestock farming as of
June 15, 1988 are classified as industrial lands, hence, outside the
ambit of the CARP; that Luz Farms, Sutton, and R.A. No. 7881 clearly
excluded such lands on constitutional grounds; that petitioner's lands
were actually devoted to livestock even before the enactment of the
CARL; that livestock farms are exempt from the CARL, not by reason
of any act of the DAR, but because of their nature as industrial lands;
that petitioner's property was admittedly devoted to livestock farming
as of June 1988 and the only issue before was whether or not
petitioner's pieces of evidence comply with the ratios provided under
DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared as
unconstitutional, DAR had no more legal basis to conduct a continuing
review and verification proceedings over livestock farms. Petitioner
argues that, in cases where reversion of properties to agricultural use
is proper, only the DAR has the exclusive original jurisdiction to hear
and decide the same; hence, the CA, in this case, committed serious
errors when it ordered the reversion of the property and when it
considered pieces of evidence not existing as of June 15, 1988,
despite its lack of jurisdiction; that the CA should have remanded the
case to the DAR due to conflicting factual claims; that the CA cannot
ventilate allegations of fact that were introduced for the first time on
appeal as a supplement to a motion for reconsideration of its first
decision, use the same to deviate from the issues pending review, and,
on the basis thereof, declare exempt lands reverted to agricultural use
and compulsorily covered by the CARP; that the "newly discovered
[pieces of] evidence" were not introduced in the proceedings before the
DAR, hence, it was erroneous for the CA to consider them; and that
piecemeal presentation of evidence is not in accord with orderly
justice. Finally, petitioner submits that, in any case, the CA gravely
erred and committed grave abuse of discretion when it held that the
subject property was no longer used for livestock farming as shown by
the Report of the Investigating Team. Petitioner relies on the 1997
LUCEC and DAR findings that the subject property was devoted to
livestock farming, and on the 1999 CA Decision which held that the
occupants of the property were squatters, bereft of any authority to
stay and possess the property.
[50]


On one hand, the farmer-groups, represented by the Espinas group,
contend that they have been planting rice and fruit-bearing trees on the
subject property, and helped the National Irrigation Administration in
setting up an irrigation system therein in 1997, with a produce of 1,500
to 1,600 sacks of palay each year; that petitioner came to court with
unclean hands because, while it sought the exemption and exclusion
of the entire property, unknown to the CA, petitioner surreptitiously filed
for conversion of the property now known as Palo Alto, which was
actually granted by the DAR Secretary; that petitioner's bad faith is
more apparent since, despite the conversion of the 153.3049-hectare
portion of the property, it still seeks to exempt the entire property in this
case; and that the fact that petitioner applied for conversion is an
admission that indeed the property is agricultural. The farmer-groups
also contend that petitioner's reliance on Luz Farms and Sutton is
unavailing because in these cases there was actually no cessation of
the business of raising cattle; that what is being exempted is the
activity of raising cattle and not the property itself; that exemptions due
to cattle raising are not permanent; that the declaration of DAR A.O.
No. 9 as unconstitutional does not at all diminish the mandated duty of
the DAR, as the lead agency of the Government, to implement the
CARL; that the DAR, vested with the power to identify lands subject to
CARP, logically also has the power to identify lands which are
excluded and/or exempted therefrom; that to disregard DAR's authority
on the matter would open the floodgates to abuse and fraud by
unscrupulous landowners; that the factual finding of the CA that the
subject property is no longer a livestock farm may not be disturbed on
appeal, as enunciated by this Court; that DAR conducted a review and
monitoring of the subject property by virtue of its powers under the
CARL; and that the CA has sufficient discretion to admit evidence in
order that it could arrive at a fair, just, and equitable ruling in this
case.
[51]


On the other hand, respondent OP, through the Office of the Solicitor
General (OSG), claims that the CA correctly held that the subject
property is not exempt from the coverage of the CARP, as substantial
pieces of evidence show that the said property is not exclusively
devoted to livestock, swine, and/or poultry raising; that the issues
presented by petitioner are factual in nature and not proper in this
case; that under Rule 43 of the 1997 Rules of Civil Procedure,
questions of fact may be raised by the parties and resolved by the CA;
that due to the divergence in the factual findings of the DAR and the
OP, the CA was duty bound to review and ascertain which of the said
findings are duly supported by substantial evidence; that the subject
property was subject to continuing review and verification proceedings
due to the then prevailing DAR A.O. No. 9; that there is no question
that the power to determine if a property is subject to CARP coverage
lies with the DAR Secretary; that pursuant to such power, the MARO
rendered the assailed reports and certification, and the DAR itself
manifested before the CA that the subject property is no longer
devoted to livestock farming; and that, while it is true that this Court's
ruling in Luz Farms declared that agricultural lands devoted to
livestock, poultry, and/or swine raising are excluded from the CARP,
the said ruling is not without any qualification.
[52]


In its Reply
[53]
to the farmer-groups' and to the OSG's comment,
petitioner counters that the farmer-groups have no legal basis to their
claims as they admitted that they entered the subject property without
the consent of petitioner; that the rice plots actually found in the subject
property, which were subsequently taken over by squatters, were, in
fact, planted by petitioner in compliance with the directive of then
President Ferdinand Marcos for the employer to provide rice to its
employees; that when a land is declared exempt from the CARP on the
ground that it is not agricultural as of the time the CARL took effect, the
use and disposition of that land is entirely and forever beyond DAR's
jurisdiction; and that, inasmuch as the subject property was not
agricultural from the very beginning, DAR has no power to regulate the
same. Petitioner also asserts that the CA cannot uncharacteristically
assume the role of trier of facts and resolve factual questions not
previously adjudicated by the lower tribunals; that MARO Elma
rendered the assailed MARO reports with bias against petitioner, and
the same were contradicted by the Investigating Team's Report, which
confirmed that the subject property is still devoted to livestock farming;
and that there has been no change in petitioner's business interest as
an entity engaged in livestock farming since its inception in 1960,
though there was admittedly a decline in the scale of its operations due
to the illegal acts of the squatter-occupants.


Our Ruling

The Petition is bereft of merit.

Let it be stressed that when the CA provided in its first Decision that
continuing review and verification may be conducted by the DAR
pursuant to DAR A.O. No. 9, the latter was not yet declared
unconstitutional by this Court. The first CA Decision was promulgated
on April 29, 2005, while this Court struck down as unconstitutional
DAR A.O. No. 9, by way of Sutton, on October 19, 2005. Likewise, let it
be emphasized that the Espinas group filed the Supplement and
submitted the assailed MARO reports and certification on June 15,
2005, which proved to be adverse to petitioner's case. Thus, it could
not be said that the CA erred or gravely abused its discretion in
respecting the mandate of DAR A.O. No. 9, which was then subsisting
and in full force and effect.

While it is true that an issue which was neither alleged in the complaint
nor raised during the trial cannot be raised for the first time on appeal
as it would be offensive to the basic rules of fair play, justice, and due
process,
[54]
the same is not without exception,
[55]
such as this case. The
CA, under Section 3,
[56]
Rule 43 of the Rules of Civil Procedure, can, in
the interest of justice, entertain and resolve factual issues. After all,
technical and procedural rules are intended to help secure, and not
suppress, substantial justice. A deviation from a rigid enforcement of
the rules may thus be allowed to attain the prime objective of
dispensing justice, for dispensation of justice is the core reason for the
existence of courts.
[57]
Moreover, petitioner cannot validly claim that it
was deprived of due process because the CA afforded it all the
opportunity to be heard.
[58]
The CA even directed petitioner to file its
comment on the Supplement, and to prove and establish its claim that
the subject property was excluded from the coverage of the CARP.
Petitioner actively participated in the proceedings before the CA by
submitting pleadings and pieces of documentary evidence, such as the
Investigating Team's Report and judicial affidavits. The CA also went
further by setting the case for hearing. In all these proceedings, all the
parties' rights to due process were amply protected and recognized.

With the procedural issue disposed of, we find that petitioner's
arguments fail to persuade. Its invocation of Sutton is unavailing.
In Sutton, we held:


In the case at bar, we find that the impugned A.O. is invalid as it
contravenes the Constitution. The A.O. sought to regulate livestock
farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership.
However, the deliberations of the 1987 Constitutional Commission
show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry-raising. The Court clarified
in the Luz Farms case that livestock, swine and poultry-raising are
industrial activities and do not fall within the definition of "agriculture" or
"agricultural activity." The raising of livestock, swine and poultry is
different from crop or tree farming. It is an industrial, not an agricultural,
activity. A great portion of the investment in this enterprise is in the
form of industrial fixed assets, such as: animal housing structures and
facilities, drainage, waterers and blowers, feedmill with grinders,
mixers, conveyors, exhausts and generators, extensive warehousing
facilities for feeds and other supplies, anti-pollution equipment like bio-
gas and digester plants augmented by lagoons and concrete ponds,
deepwells, elevated water tanks, pumphouses, sprayers, and other
technological appurtenances.

Clearly, petitioner DAR has no power to regulate livestock farms which
have been exempted by the Constitution from the coverage of agrarian
reform. It has exceeded its power in issuing the assailed A.O.
[59]


Indeed, as pointed out by the CA, the instant case does not rest on
facts parallel to those of Suttonbecause, in Sutton, the subject property
remained a livestock farm. We even highlighted therein the fact that
"there has been no change of business interest in the case of
respondents."
[60]
Similarly, inDepartment of Agrarian Reform v.
Uy,
[61]
we excluded a parcel of land from CARP coverage due to the
factual findings of the MARO, which were confirmed by the DAR, that
the property was entirely devoted to livestock farming. However,
in A.Z. Arnaiz Realty, Inc., represented by Carmen Z. Arnaiz v. Office
of the President; Department of Agrarian Reform; Regional Director,
DAR Region V, Legaspi City; Provincial Agrarian Reform Officer, DAR
Provincial Office, Masbate, Masbate; and Municipal Agrarian Reform
Officer, DAR Municipal Office, Masbate, Masbate,
[62]
we denied a
similar petition for exemption and/or exclusion, by according respect to
the CA's factual findings and its reliance on the findings of the DAR
and the OP that the subject parcels of land were not directly, actually,
and exclusively used for pasture.
[63]


Petitioner's admission that, since 2001, it leased another ranch for its
own livestock is fatal to its cause.
[64]
While petitioner advances a
defense that it leased this ranch because the occupants of the subject
property harmed its cattle, like the CA, we find it surprising that not
even a single police and/or barangay report was filed by petitioner to
amplify its indignation over these alleged illegal acts. Moreover, we
accord respect to the CA's keen observation that the assailed MARO
reports and the Investigating Team's Report do not actually contradict
one another, finding that the 43 cows, while owned by petitioner, were
actually pastured outside the subject property.

Finally, it is established that issues of Exclusion and/or Exemption are
characterized as Agrarian Law Implementation (ALI) cases which are
well within the DAR Secretary's competence and
jurisdiction.
[65]
Section 3, Rule II of the 2003 Department of Agrarian
Reform Adjudication Board Rules of Procedure provides:


Section 3. Agrarian Law Implementation Cases.

The Adjudicator or the Board shall have no jurisdiction over matters
involving the administrative implementation of RA No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL) of 1988
and other agrarian laws as enunciated by pertinent rules and
administrative orders, which shall be under the exclusive prerogative of
and cognizable by the Office of the Secretary of the DAR in
accordance with his issuances, to wit:

x x x x

3.8 Exclusion from CARP coverage of agricultural land used for
livestock, swine, and poultry raising.

Thus, we cannot, without going against the law, arbitrarily strip the
DAR Secretary of his legal mandate to exercise jurisdiction and
authority over all ALI cases. To succumb to petitioner's contention that
"when a land is declared exempt from the CARP on the ground that it
is not agricultural as of the time the CARL took effect, the use and
disposition of that land is entirely and forever beyond DAR's
jurisdiction" is dangerous, suggestive of self-regulation. Precisely, it is
the DAR Secretary who is vested with such jurisdiction and authority to
exempt and/or exclude a property from CARP coverage based on the
factual circumstances of each case and in accordance with law and
applicable jurisprudence. In addition, albeit parenthetically, Secretary
Villa had already granted the conversion into residential and golf
courses use of nearly one-half of the entire area originally claimed as
exempt from CARP coverage because it was allegedly devoted to
livestock production.

In sum, we find no reversible error in the assailed Amended Decision
and Resolution of the CA which would warrant the modification, much
less the reversal, thereof.

WHEREFORE, the Petition is DENIED and the Court of Appeals
Amended Decision dated October 4, 2006 and Resolution dated March
27, 2008 are AFFIRMED. No costs.

SO ORDERED.

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